Iii Durawood v CA
Neri then
Facts:
On June 3, 2004, Durawood led an action for sum of money plus
damages with a prayer for the issuance of a writ of preliminary
attachment against LBB Construction. Durawood prayed for the sum of
P665,385.50 as payment for construction materials delivered to LBB
Construction. On June 17, 2004, Sheriff Leyva levied on a 344-square
meter parcel of land and a Notice of Levy on Attachment was annotated
on the title on the same day (June 17, 2004). Candice filed a motion
seeking leave to intervene claiming to be the co-owner of the levied
property. She alleged that LBB Construction had sold the property to her
and her siblings. Candice asserted that the sale is the subject of Entry
No. 30549 dated June 16, 2004 in the books of the Registry of Deeds,
while the levy on attachment is only Entry No. 30590 dated June 17,
2004.
It would appear from the records that on June 16, 2004, the
supposed Register of Deeds of Antipolo City, Atty. Rutaquio, cancelled
TCT No. R- 17571 and issued TCT No. R-22522 in the name of Candice
and her co-owners. The two transactions were assigned to different
examiners and it just so happened that the examiner to whom the levy on
attachment was assigned was able to inscribe the memorandum ahead of
the sale, although the inscription of the sale was entered ahead of the
levy. The RTC issued an Order dated March 2, 2006, ruling in favor of
Durawood, reinstating the notice of levy on attachment. On April 11,
2006, Sheriff Leyva sold the subject property at public auction for
P1,259,727.90 with Durawood being the lone bidder, and issued the
corresponding Certificate of Sale. The sale was inscribed in TCT No. R-
22522 on the same date.
Issue:
WON there was grave abuse of discretion in reinstating the
notice of levy on attachment
Ruling:
No. Ruling cited Sec 56 of PD 1529—in determining the date in
which an instrument is considered registered, the reckoning point is the
time of the reception of such instrument as noted in the Primary Entry
Book; and when the memorandum of the instrument is later made on the
certificate of title to which it refers, such memorandum shall bear the
same date as that of the reception of the instrument as noted in the
Primary Entry Book.
Based on this alone, it appears that the RTC was in error when it
considered the registration of the Absolute Deed of Sale on June 16,
2004 inferior to the registration of the Notice of Levy on Attachment on
June 17, 2004 on the ground that the Attachment was annotated on TCT
No. R-17571 earlier than the Deed of Sale. As discussed in the above-
mentioned cases, the annotation in the certificate of title is not
determinative of the effectivity of the registration of the subject
instrument. However, for the entry to be equivalent to registration,
requirements have to be met—“if no payment of registration fees be
made within 15 days, entry in the day book of the deed of sale does not
operate to convey and affect the land sold”. Pronouncement in DBP v
Register of Deeds of Nueva Ecija was reiterated in National Housing
Authority v. Basa, Jr., which shows that for the entry to be considered to
have the effect of registration, there is still a need to comply with all that
is required for entry and registration, including the payment of the
prescribed fees.
Records in the case at bar reveal that as of June 25, 2004, the required
registration fees for the Deed of Sale has not yet been paid. Since there
was still no compliance of the requirements as of June 25, 2004 with
regard the Deed of Sale, the Notice of Levy on Attachement on June 17,
2004 should take precedence.
b. Double Sales
i. Rodriguez v Sioson
Facts:
This case involves a series of transactions by Neri delos Reyes,
owner `of Lot 398. By virtue of a transaction with the Municipality, Lot
398 was subdivided. As a result of which, only Lots 398-A and 398-B
remained as the portions over which Neri retained absolute title to. they
were both registered in the name of “Neri de los Reyes, married to
Violeta Lacuata”. As per the suggestion of the Municipality, Neri sold
Lot 398-A to Thelma Rodriguez. The circumstances show that Neri
agreed to sell the property to Thelma on the condition that title and
ownership would pass or be transferred upon full payment of the
purchase price. Thelma failed to pay the full purchase price. In 2001,
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Thelma caused the annotation of an adverse claim on the land.
caused the cancellation of Thelma’s adverse claim and subsequently
sold Lot 398-A to Sps Sioson, Sps Camacho and Samonte in a deed of
sale. Upon issuance of the TCT in favor of the respondents, Thelma sent
2 armed blue guards and set up a tent therein when respondents sought
to take actual possession of the lot. After Thelma leaned of the second
sale, she filed against the respondents a complaint for the Declaration of
Nullity of the Second Sale. The respondents countered that they are
innocent purchasers for value having bought the lot when Thelma’s
adverse claim was already cancelled.
Issue:
WON the transaction between Neri and Thelma was a contract to
sell or a contract of sale (if contract to sell then the rule on double sale
does not apply)
Ruling:
Contract to sell. The circumstances tend to show that Neri agreed
to sell the subject property to Thelma on the condition that title and
ownership would pass or be transferred upon the full payment of the
purchase price. This is the very nature of a contract to sell, which is a
"bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the property despite delivery thereof to the
prospective buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, i.e., the
full payment of the purchase price." As stated by the Court, the
agreement to execute a deed of sale upon full payment of the purchase
price "shows that the vendors reserved title to the subject property until
full payment of the purchase price." It was likewise established that
Thelma was not able to pay the full purchase price, and that she was
only able to pay P442,293.50 of the agreed selling price of
P1,243,000.00.
Having failed to pay the purchase price in full, Thelma cannot
claim ownership over Lot 398-A and Neri is not legally proscribed from
alienating the same lot to other buyers."
Sideline topic: Property is not a conjugal property. The title
“married to…” merely states the fact that the owner, Neri is married to
Violeta. The property was not also proved to have been acquired during
Neri and Violeta’s marriage.
ii. Melencion v CA
Facts:
Petitioners Amodia, heirs of Esteban Bonghanoy (original owner
of subject property) allegedly executed an Extra-judicial Partition of
Real Estate with Deed of Absolute Sale to Aznar Brothers Realty
Company in 1964. Because, the title under the Torrens System of the lot
was lost during the Second World War, the sale was registered under
Act 3344. In 1989, petitioners Amodia then executed a Deed of Extra-
judicial Settlement with Absolute Sale in favor of Go Kim Chuan over
the lot. The lost title over the same was reconstituted and a TCT was
issued in the name of Go Kim Chuan. In 1990, Aznar filed a case
against petitioners and Go Kim Chuan for Annulment of Sale and
Cancellation of the TCT, alleging tha the second sale was invalid.
Petitioners Amodia denied the sale in favor of Aznar claiming that the
signatures were forged.
Issue:
Who between Aznar or Go Kim Chuan has a better right over the
lot
Ruling:
First of all, forgery cannot be presumed. It was erroneous for the
RTC to conclude that the signatures were forged. Herein, this is a case
of double sale to which Article 1544 of the NCC is applicable.
Registration contemplated in this provision refers to registration under
the Torrens System, which considers the act of registration as the
operative act that gives validity to the transfer or creates a lien upon the
land. The subject property was under the operation of the Torrens
System even before the respective conveyances to Aznar and Go Kim
Chuan were made. Aznar knew of this, and admits this as fact. Yet,
despite this knowledge, Aznar registered the sale in its favor under Act
3344 on the contention that at the time of sale, there was no title on file.
Act 3344 provides for the system of recording of transactions or
claims over unregistered real estate without prejudice to a third party
with a better right. But if the land is registered under the Land
Registration Act (and therefore has a Torrens Title), and it is sold and
the sale is registered not under the Land Registration Act but under Act
3344, as amended, such sale is not considered registered, as the term is
1
used under Art. 1544 of the New Civil Code. Aznar should have availed
itself of the legal remedy of reconstitution of the lost certificate of title,
instead of registration under Act 3344.
To award the property to Go Kim Chuan, mere registration is not
enough—registration must be coupled with good faith. Totality of the
circumstances must be taken into account. The Notice of Adverse Claim
which may indicate bad faith had Go been aware of the same prior to
purchasing, was only annotated in 1990, after Go had purchased the lot.
It is, therefore, absurd to say that Go Kim Chuan should be bound by an
adverse claim which was not previously annotated on the lost title or on
the new one, or be shackled by a claim which he did not have any
knowledge of. Also, the registration under Act 3344 cannot serve as a
constructive notice to the Go. Additionally, upon purchase, Go made
verifications and the like to make sure the land was not subject of any
adverse claim. Good faith, on the part of Go cannot be doubted.
iii. Antonio v Santos
Facts:
In 1988, Antonio filed a complaint for Reconveyance, Annulment
of Title and Damages against respondents, Sps. Santos. He alleged that
he is the absolute owner of Lot no. 11703. As evidenced by certificates
of payment of realty taxes in 1918 and 1918, the property was
previously owned by his father and that in 1984, he filed before the
RTC, an application for the registration of the 2 parcels of land (one of
which was Lot No 11703). His application was docketed as Land
Registration Case No 142-A. Then, the RTC set aside its adjudication of
the lots to Antonio with regard to Lot 11703 to avoid duplication of
issuance of titles. He discovered that the said lot was already titled in the
name of respondents. He then filed this complaint and averred that
respondents committed fraud in their application for titling.
Issue:
WON complaint of Antonio can prosper and the Santos’ title over
the lot be invalidated
Ruling:
No. Petitioner cannot rely on the decision in LRC No. 142-A as a
sufficient basis of petitioner’s claim of ownership over the lot. However,
even if a title had been issued to petitioner based on said decision, his
title would be of a later date than the title of respondents, hence
inefficacious and ineffective. This Court has ruled that, when two
certificates of title are issued to different persons covering the same land
in whole or in part, the earlier in date must prevail; and in case of
successive registrations where more than one certificate is issued over
the same land, the person holding a prior certificate is entitled to the
land as against a person who relies on a subsequent certificate.
Also, with regard to an action for recoveyance based on fraud to
prosper, the party seeking reconveyance must prove by clear and
convincing evidence that his title to the property and the fact of fraud
within 4 years from the discovery of fraud. Such discovery is deemed to
have taken place upon the issuance of the certificate of title over the
property. Registration of real property is considered a constructive
notice to all persons, thus, the four-year period shall be counted
therefrom. Herein, more than 4 years had already elapsed from the time
of registration of the land in the name of the respondents (1977) to the
filing of the complaint (1988). Hence, action has already prescribed.
c. Buyer in Good Faith
i. LBP vs. Poblete
G.R. No. 196577; February 25, 2013
Doctrine:
The doctrine―the mortgagee in good faith as a rule does not apply to
banks which are required to observe a higher standard of diligence.
Facts:
Poblete obtained a loan worth P300k from Kabalikat ng Pamayanan ng
Nagnanais Tumulong at Yumaman Multi-Purpose Cooperative
(Kapantay). She mortgaged her lot under OCT to Kapantay, which in
turn, used it as collateral under its Loan Account with Land Bank-
Sablayan Branch. After a year, Poblete instructed Balen to look for a
buyer in order to pay her loan. Balen referred Maniego. Both parties
agreed that the lot shall amount to P900k but in order to reduce taxes,
they will execute a P300k agreed price appearing in the Deed of
Absolute Sale. In the Deed, Poblete specifically described herself as a
widow. Balen, then, delivered the Deed to Maniego. Instead of paying
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the price, Maniego promised in an affidavit stating that the said amount
will be deposited to her Land Bank Savings Account, but he failed to do
so.
Maniego paid Kapantay’s Loan Account and on subsequent year, he
applied for a loan worth P1M from Land Bank using the same OCT as a
collateral with a condition that the title must be first transferred on his
name. The Registry of Deeds then issued a TCT in Maniego’s name
pursuant to a Deed of Absolute Sale with the signatures of Mrs. Poblete
and her husband. Maniego successfully availed the Credit Line
Agreement for P1M and a Real Estate Mortgage over such TCT. Upon
Maniego’s failure to pay his loan, Land Bank filed an Application for an
Extra-judicial Foreclosure.
Poblete filed a complaint for nullification of the Deed of Sale and the
TCT, alleging that despite numerous demands, she did not receive the
consideration of P900k and that the signatures in the deed were forged.
Issue:
WON Land Bank is an innocent mortgagee?
Ruling:
NO.
A forged or fraudulent deed is a nullity and conveys no title. Moreover,
where the deed of sale states that the purchase price has been paid but in
fact has never been, the deed is void ab initio for lack of consideration.
Since the deed, is void, the title is also void. Since the land title has been
declared void by final judgment, the Real Estate Mortgage over it is also
void.
The doctrine of "the mortgagee in good faith" provides that buyers or
mortgagees dealing with property covered by a Torrens Certificate of
Title are not required to go beyond what appears on the face of the title.
However, this rule does not apply to banks, which are required to
observe a higher standard of diligence. A bank whose business is
impressed with public interest is expected to exercise more care and
prudence in its dealings than a private individual, even in cases
involving registered lands.
According to jurisprudence, when "the person applying for the loan is
other than the registered owner of the real property being mortgaged,
[such fact] should have already raised a red flag and which should have
induced the Bank . . . to make inquiries into and confirm . . . [the]
authority to mortgage . . . . A person who deliberately ignores a
significant fact that could create suspicion in an otherwise reasonable
person is not an innocent purchaser for value." Where said mortgagee
acted with haste in granting the mortgage loan and did not ascertain the
ownership of the land being mortgaged, it cannot be considered innocent
mortgagee.
ii. Legarda vs CA, et al.
G.R. No. 94457; October 16, 1997
Doctrine:
A purchaser in good faith is one who buys property of another, without
notice that some other person has a right to, or interest in, such
property and pays a full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other
persons in the property. Good faith consists in an honest intention to
abstain from taking any unconscientious advantage of another.
Facts:
The parties entered into a lease agreement over a certain property owned
by Legarda. Legarda, however, refused to sign a contract although New
Cathay House already made a deposit and a down payment of rentals.
Cathay, therefore, filed a complaint against Legarda for specific
performance with preliminary injunction and damages. The court a quo
issued an injunction. Legarda's counsel, Atty. Coronel, failed to file an
answer, thereby prompting the court to declare her in default. Cathay
was allowed to present evidence ex-parte and a judgment by default was
reached by the trial court ordering Legarda to execute the lease contract
in favor of Cathay. When the judgment became final and executory, the
trial court issued a writ of execution and a public auction was held
where Cathay's Manager, Roberto V. Cabrera, Jr. was the highest bidder.
The sheriff issued a Certificate of Sale. Upon failure of Legarda to
redeem her property within the one-year redemption period, a final Deed
of Sale was issued by the sheriff which was registered by Cabrera with
the Register of Deeds. Legarda's TCT was cancelled with the issuance of
a new TCT in favor of Cabrera. Atty. Coronel did not inform Legarda of
all these developments. He then filed a petition for annulment of
2
judgment before the CA. The appellate court affirmed the decision of
the trial court by dismissing the petition for annulment of judgment and
holding Legarda bound by the negligence of her counsel. Legarda then
hired a new lawyer for the purpose of elevating her case to the SC. The
SC’s decision reversed the decision of the CA and declared that Atty.
Coronel committed reckless, inexcusable and gross negligence which
deprived his client of her property without due process of law.
Aggrieved, Cathay filed the instant motion for reconsideration alleging
that the reconveyance would not be possible because its owner Cabrera,
even prior to the promulgation of the decision, had already sold the
subject property.
Issue:
WON the action for reconveyance can prosper?
Ruling:
NO. We do not have to belabor the fact that all the successors-in-interest
of Cabrera to the subject lot were transferees for value and in good faith,
having relied as they did on the clean titles of their predecessors. It is a
settled doctrine that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely on the
title. In the case at bar, it is not disputed that no notice of lis pendens
was ever annotated on any of the titles of the subsequent owners. And
even if there were such a notice, it would not have created a lien over
the property because the main office of a lien is to warn prospective
buyers that the property they intend to purchase is the subject of a
pending litigation. Therefore, since the property is already in the hands
of Luminlun, an innocent purchaser for value, it can no longer be
returned to its original owner by Cabrera, much less by Cathay itself.
Under the Gancayco ruling, the order of reconveyance was premised on
the alleged gross negligence of Legarda's counsel which should not be
allowed to bind her as she was deprived of her property "without due
process of law." It is, however, basic that as long as a party was given
the opportunity to defend her interests in due course, she cannot be said
to have been denied due process of law, for this opportunity to be heard
is the very essence of due process. It cannot be denied that the judgment
by default was valid, so was the ensuing sale at public auction. If
Cabrera was adjudged highest bidder in said auction sale, it was not
through any machination on his part. The fact that Cabrera is an officer
of Cathay does not make him a purchaser in bad faith. There is no call to
be alarmed in case an official of the company emerges as the winning
bidder since in some cases, the judgment creditor himself personally
participates in the bidding.
(From Dissenting Opinion)
Reconveyance is a remedy of the landowner whose property has been
wrongfully or erroneously registered in the name of another but which
recourse cannot be availed of if the property has passed to an innocent
purchaser for value. Here, there has been no definite finding that New
Cathay House, Inc. or its representative, Mr. Roberto V. Cabrera, Jr. has
committed any wrongful, unlawful or fraudulent act which deprived
petitioner of her land. As between two innocent parties, the one who
made it possible for the wrong to be done should suffer the loss.
Certainly, New Cathay House, Inc. cannot be made to suffer the loss by
compelling it to reconvey the land to petitioner who lost her property
due to the gross and inexcusable negligence of her counsel. Moreover,
the remedy of reconveyance cannot be availed of if the property has
passed to innocent third parties for value.
A purchaser in good faith is one who buys property of another, without
notice that some other person has a right to, or interest in, such property
and pays a full and fair price for the same, at the time of such purchase,
or before he has notice of the claim or interest of some other persons in
the property. Good faith consists in an honest intention to abstain from
taking any unconscientious advantage of another. Good faith, or the lack
of it, is in its last analysis a question of intention; but in ascertaining the
intention by which one is actuated on a given occasion, we are
necessarily controlled by the evidence as to the conduct and outward
acts by which alone the inward motive may, with safety, be determined.
Truly, good faith is not a visible, tangible fact that can be seen or
touched, but rather a state or condition of mind which can only be
judged by actual or fancied tokens or signs. Otherwise stated, good faith
is the opposite of fraud and it refers to the state of mind which is
manifested by the acts of the individual concerned.
iii. Gabutan vs Nacalaban
G.R. No. 185857-58; June 29, 2016
Doctrine:
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The "honesty of intention" which constitutes good faith implies a
freedom from knowledge of circumstances which ought to put a person
on inquiry.
Facts:
On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an
800-square meter parcel of prime land (property) in Poblacion, Cagayan
de Oro City from Petra, Fortunata, Francisco and Dolores, all surnamed
Daamo. Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-
2259 covering the property was issued in the name of Godofredo. He
thereafter built a house on it.
Godofredo died on January 7, 1974. 9 He was survived by his wife,
Baldomera, and their children, Dante, Helen, and Susan. On March 19,
1979, Baldomera issued a Certification 10 in favor of her mother,
Melecia. It provided, in effect, that Baldomera was allowing her mother
to build and occupy a house on the portion of the property. Accordingly,
the house was declared for taxation purposes. The tax declaration
presented in evidence showed that Melecia owned the building on the
land owned by Godofredo.
Baldomera died on September 11, 1994. On July 3, 1996, her children
executed an Extrajudicial Settlement of Estate of Deceased Person with
Sale 15 (Extrajudicial Settlement with Sale) where they adjudicated unto
themselves the property and sold it to the College. On August 22, 1996,
TCT No. T-2259 was cancelled and TCT No. T-111846 covering the
property was issued in the name of the College.
Melecia died and was survived by her children, who continued living in
the house, Gabutan was one of these children. College demanded that
said heirs vacate their premises.
On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of
Real Property, Declaration of Nullity of Contracts, Partition and
Damages with Writ of Preliminary Attachment and Injunction against
Nacalaban, et al. and the College. They alleged that: (1) Melecia bought
the property using her own money but Godofredo had the Deed of
Absolute Sale executed in his name instead of his mother-in-law; (2)
Godofredo and Baldomera were only trustees of the property in favor of
the real owner and beneficiary, Melecia; (3) they only knew about the
Extrajudicial Settlement with Sale upon verification with the Registry of
Deeds; and (4) the College was a buyer in bad faith, being aware they
were co-owners of the property.
Issues:
1. WON the action for reconveyance was proper?
2. WON the College is a buyer in good faith?
Ruling:
1. YES. Article 1448 of the Civil Code provides in part that there is an
implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having
the beneficial interest of the property. The former is the trustee,
while the latter is the beneficiary. The trust created here, which is
also referred to as a purchase money resulting trust, occurs when
there is (1) an actual payment of money, property or services, or an
equivalent, constituting valuable consideration; (2) and such
consideration must be furnished by the alleged beneficiary of a
resulting trust. These two elements are present here.
Having established the creation of an implied resulting trust, the
action for reconveyance filed by Gabutan, et al., the heirs of Melecia
in whose benefit the trust was created, is proper. An action for
reconveyance is a legal and equitable remedy granted to the rightful
landowner, whose land was wrongfully or erroneously registered in
the name of another, to compel the registered owner to transfer or
reconvey the land to him.
2. NO. 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.
Thus, the College, which has the burden to prove the status of being
a purchaser in good faith, is required to prove the concurrence of the
above conditions. The College, however, failed to discharge this
3
 burden. They knew that the heirs of Melecia lived on the property
yet did not conduct a proper inquiry into it. The "honesty of
intention" which constitutes good faith implies a freedom from
knowledge of circumstances which ought to put a person on inquiry.
If the land purchased is in the possession of a person other than the
vendor, the purchaser must be wary and must investigate the rights
of the actual possessor. Without such inquiry, the purchaser cannot
be said to be in good faith and cannot have any right over the
property.
iv. Cusi vs. Domingo
G.R. No. 195825; February 27, 2013
Doctrine:
For the fact that a reconstituted TCT of registered land is issued, after
the proper proceedings, on the representation of the registered owner
that the original of the said TCT was lost and could not be located or
found despite diligent efforts exerted for that purpose, and that such is a
subsequent copy of the original thereof, would put on notice and warn
anyone dealing with such copies to be extra-careful.
Facts:
The property in dispute is covered by TCT issued in the name of
Domingo. Domingo learned that construction activities were being
undertaken on her property without her consent. She soon unearthed the
series of anomalous transactions affecting her property. One Sy,
representing herself as the owner of the property, petitioned the RTC for
the issuance of a new owner's copy of Domingo's TCT, appending to her
petition a deed of absolute sale purportedly executed in her favor by
Domingo; and an affidavit of loss, whereby she claimed that her bag
containing the owner's copy of the TCT had been snatched from her.
The RTC granted Sy's petition. The Registry of Deeds then issued a new
owner's duplicate copy of such TCT, which was later cancelled by virtue
of the deed of absolute sale, and in its stead the Registry of Deeds of
Quezon City issued the new TCT in Sy's name. Sy subsequently
subdivided the property into two, and sold each half by way of contract
to sell to Spouses De Vera and to Spouses Cusi. The existence of the
individual contracts to sell was annotated on the dorsal portion of Sy's
TCT, stating that the consideration of the sale was P1,000,000.00 for
each set of buyers, or for a total of P2,000,000.00 for the entire property
that had an actual worth of not less than P14,000,000.00. The TCT in the
name of Sy was then cancelled by virtue of the deeds of sale executed
between Sy and Spouses De Vera, and between Sy and Spouses Cusi, to
whom were respectively issued TCTs. All the while, the transactions
between Sy and the De Veras, and between Sy and the Cusis were
unknown to Domingo, whose TCT remained in her undisturbed
possession. It turned out that the construction activities taking place on
the property that Domingo learned about were upon the initiative of the
De Veras in the exercise of their dominical and possessory rights.
Domingo commenced this action, seeking the annulment or cancellation
of titles, injunction and damages.
Issue:
WON the petitioners are buyers in good faith and for value?
Ruling:
NO.
Good faith is the honest intention to abstain from taking unconscientious
advantage of another. It means the "freedom from knowledge and
circumstances which ought to put a person on inquiry." 38 Given this
notion of good faith, therefore, a purchaser in good faith is one who
buys the property of another without notice that some other person has a
right to, or interest in, such property and pays full and fair price for the
same.
One of the guiding tenets underlying the Torrens system is the curtain
principle, in that one does not need to go behind the certificate of title
because it contains all the information about the title of its holder. A
person dealing in registered land has the right to rely on the Torrens
certificate of title and to dispense with the need of inquiring further,
except when the party has actual knowledge of facts and circumstances
that would impel a reasonably cautious man to make such inquiry. To
obtain a grasp of whether a person has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such
inquiry, an internal matter, necessitates an analysis of evidence of a
person's conduct. There is no question that the petitioners exerted some
effort as buyers to determine whether the property did rightfully belong
to Sy. For one, they did not find any encumbrance, like a notice of lis
pendens, being annotated on the TCT of Sy. Nonetheless, their
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observance of a certain degree of diligence within the context of the
principles underlying the Torrens system was not their only barometer
under the law and jurisprudence by which to gauge the validity of their
acquisition of title. As the purchasers of the property, they also came
under the clear obligation to purchase the property not only in good faith
but also for value. The petitioners were shown to have been deficient in
their vigilance as buyers of the property. It was not enough for them to
show that the property was unfenced and vacant; nor was it safe for
them to simply rely on the face of Sy's TCT in view of the fact that they
were aware that her TCT was derived from a duplicate owner's copy
reissued by virtue of the loss of the original duplicate owner's copy. In
Barstowe Philippines Corporation v. Republic, "the nature of a
reconstituted TCT of registered land is similar to that of a second
Owner's Duplicate TCT, in that both are issued, after the proper
proceedings, on the representation of the registered owner that the
original of the said TCT or the original of the Owner's Duplicate TCT,
respectively, was lost and could not be located or found despite diligent
efforts exerted for that purpose; and that both were subsequent copies of
the originals thereof, a fact that a cursory examination of these
subsequent copies would show and put on notice of such fact that
anyone dealing with such copies is thus warned to be extra-careful."
The Cusis and the De Veras did not investigate beyond the face of Sy's,
despite the certificate derived from the reissued duplicate owner's copy
being akin to a reconstituted TCT. Thereby, they denied themselves the
innocence and good faith they supposedly clothed themselves with when
they dealt with Sy on the property. Their failure also to investigate Sy's
title despite the nearly simultaneous transactions on the property that
ought to have put them on inquiry manifested their awareness of the
flaw in Sy's title.
Another circumstance indicating that the Cusis and the De Veras were
not innocent purchasers for value was the gross undervaluation of the
property in the deeds of sale at the measly price of P1,000,000.00 for
each half when the true market value was then in the aggregate of at
least P14,000,000.00 for the entire property. Even if the undervaluation
was to accommodate the request of Sy to enable her to minimize her
liabilities for the capital gains tax, their acquiescence to the fraud
perpetrated against the Government, no less, still rendered them as
parties to the wrongdoing. Furthermore, they knew as buyers that they
were not personally liable for the capital gains taxes and thus had
nothing to gain by their acquiescence.
v. SABERON vs. VENTANILLA, JR.
FACTS: On March 3, 1970, Manila Remnant Co., Inc. (MRCI) and
A.U. Valencia & Co. Inc. (AUVC) executed two (2) contracts to sell in
favor of the Ventanillas.
At that time, the president of AUVC was Artemio Valencia (Valencia)
(Naa pa to ni mga drama dri where Valencia, holding out himself as
pres. Of MRCI, without the knowledge of the Ventianillas resold the
same property to Carlos Crisostomo (Crisostomo) without any
considerstion. Valencia transmitted the fictitious contact with
Crisostomo to MRCI while he kept the contracts to sell with the
Ventanillas in his private office files…Then dili na kaayo impt ang uban
bsta nasakpan ra to kay naay irregularities ang relationship sa mrci and
auvc so na terminate ila business relationship unya gipa publish mn to sa
mrci ang notice sa cancelling of the contracts to sell kay wla naka
forward sa collections sa trial court ang auvc mao to na discover sa
Ventanillas ang deception ni Valencia)
Aggrieved, the Ventanillas commenced an action for specific
performance, annulment of deeds and damages against MRCI, AUVC,
and Crisostomo with the Court of First Instance. The CFI Quezon City
rendered a decision in favor of the Ventanillas. The CA sustained the
CFI Quezon City’s decision in toto. The Ventanillas moved for the
issuance of a writ of execution. The writ was issued and served upon
MRCI.
However, MRCI alleged that the subject properties could not longer be
delivered to the Ventanillas because they had already been sold to
Samuel Marquez (Marquez)
The case was elevated to this Court where MRCI argued that the sale of
the properties to Marquez was valid because at the time of the sale, the
issue of the validity of the sale to the Ventanillas had not yet been
resolved. Further, there was no specific injunction against it re-selling
the property. As a buyer in good faith, Marquez had a right to rely on the
recitals in the certificate of title. The subject matter of the controversy
having been passed to an innocent purchaser for value, the execution of
4
the absolute deed of sale in favor of the Ventanillas could not be ordered
by the trial court. Yet the court ruled in favor of the Vetanillas. As it
turned out, the execution of the judgment in favor of the Ventanillas was
yet far from fruition. Samuel Cleofe, Register of Deeds for Quezon City
(ROD Cleofe) revealed to them, that on March 11, 1992, MRCI
registered a deed of absolute sale to Marquez who eventually sold the
same property to the Saberons, which conveyance was registered in July
1992. ROD Cleofe opined that a judicial order for the cancellation of the
titles in the name of the Saberons was essential before he complied with
the writ of execution in Civil Case No. 26411. Apparently, the notice of
levy, through inadvertence, was not carried over to the title issued to
Marquez, the same being a junior encumbrance which was entered after
the contract to sell to Marquez had already been annotated.
Once again, the Ventanillas were constrained to go to court to seek the
annulment of the deed of sale executed between MRCI and Marquez as
well as the deed of sale between Marquez and the Saberons, as the fruits
of void conveyances. RTC ruled in favor of the Ventanillas
Meanwhile, the Saberons filed a case in the CA relying on one central
argument—that they were purchasers in good faith, having relied on the
correctness of the certificates of title covering the lots in question; and
therefore, holders of a valid and indefeasible title. CA ruled in favor of
the Ventanillas.
The Saberons filed the present petition.
Unknown to the Saberons, the former owner of the properties had
entered into contracts to sell with the Ventanillas, way back in 1970. It
was only upon receipt of the summons in the case filed by the
Ventanillas with the RTC that they learned of the present controversy.
With the RTC and the CA rulings against their title over the properties,
the Saberons now come to the Court with their vehement insistence that
they were purchasers in good faith and for value. Before purchasing the
lots, they exercised due diligence and found no encumbrance or
annotations on the titles. At the same time, the Ventanillas also failed to
rebut the presumption of their good faith as there was no showing that
they confederated with MRCI and its officers to deprive the Ventanillas
of their right over the subject properties.
According to the Saberons, the CA likewise erred in ruling that there
was no constructive notice of the levy made upon the subject lands.
(The main issue jud ani nga case is w/n the notice of levy had produced
constructive notice that would bind third parties despite the failure of the
ROD of QC to annotate the same in the cert. of title?
Ruling is that fault jud ni sa tanga nga ROD. However, SC said that the
notice of levy covering the subj property was annotated in the entry
book of the ROD-QC prior to the issuance of a TCT in the name of the
Saberons. Clearly, the Ventanillas’ levy was placed on record prior to
the sale. This shows nga mas superior jud ang rights sa Ventanillas over
the property as against the Saberons)
ISSUE:
Whether or not the Saberons are in good faith?
RULING:
Yes. The Saberons are builders in good faith.
The court a quo observed that “no actual evidence that the Saberons
connived with the MRCI and Marquez to have the titles registered in
their names to the prejudice of the Ventanillas” and that it was obvious
that “the Saberons dealt with clean certificates of titles”. Also quite
telling is that mrci and marquez are liable to the Saberons.
On the contrary, the Saberons may be considered victims of the same
fraudulent employed by the defendants MRCI and Marquez, and thus
can rightfully claim damages from the same.
Consequently, (additional ruling nlang ni; not related to good faith shiz)
Art 448 in relation to Art. 546 of the civil code will apply.
Thus, the two options are available to the Ventanillas
1.) They may exercise the right to appropriate after payment of
indemnity representing the value of the improvements or;
2.) They may forego payment of the said indemnity and instead, oblige
the Saberons to pay the price of the land.
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d. Real Estate Mortgage
i. Home bankers Savings vs CA
Doctrine: The jurisdiction of the HLURB to regulate the real estate trade
is broad enough to include jurisdiction over complaints for specific
performance of the sale, or annulment of the mortgage, of a
condominium unit, with damages.
Facts:Respondent Pablo N. Arevalo purchased the portion of land
denominated as Unit No. 5for the amount of P750,000.00 on August 21,
1988 and had already fully paid the purchase price on September 3,
1988;Respondent Alfredo Lim purchased the portion of land
denominated as Unit No. 1for the amount of P800,000.00 on December
22, 1988 and fully paid the same upon execution of the agreement on the
same day;Respondent Francisco A. Uy purchased the portion of land
denominated as Unit No. 6 on October 29, 1988 in the amount
of P800,000.00 payable in installments and had allegedly made a total
payment of P581,507.41. He ordered to stop the payment of all
[postdated] checks from September 1990 to November 1995 on the
ground of non-completion of his unit and had later learned of the
foreclosure of the property;
Respondent spouses Leandro A. Soriano, Jr. and Lilian Soriano
purchased the portion of land denominated as Unit No. 3 on00,000.00
and had allegedly made a payment of P669,960.00. They had stopped
paying because February 15, 1990 in the amount of P1,6 of non-
completion of the project and had later learned of the foreclosure of the
property;
Respondents Alfredo Lim and Santos Lim purchased the portion of land
denominated as Unit No. 7for P700,000.00 on October 1988 and had
been fully paid as of March 18, 1989; Santos Lim subsequently sold and
assigned his share of the property to private respondent Felisa Chi Lim
on May 12, 1989.
It is stipulated in their respective contracts that their individual
townhouses will be fully completed and constructed as per plans and
specifications and the respective titles thereto shall be delivered and
transferred to private respondents free from all liens and encumbrances
upon their full payment of the purchase price. However, despite repeated
demands, Garcia/TransAmerican failed to comply with their
undertakings.
On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained
from petitioner Home Bankers Savings and Trust Company (formerly
Home Savings Bank and Trust Company) a loan in the amount
of P4,000,000.00 and without the prior approval of the Housing and
Land Use Regulatory Board (HLURB), the spouses mortgagedeight lots
covered by TCT Nos. 3349 to 3356 as collateral. Petitioner registered its
mortgage on these titles without any other encumbrance or lien
annotated therein. The proceeds of the loan were intended for the
development of the lots into an eight-unit townhouse project. However,
five out of these eight titles turned out to be private respondents
townhouses subject of the contracts to sell with Garcia/TransAmerican.
When the loan became due, Garcia failed to pay his obligation to
petitioner. Consequently, petitioner instituted an extrajudicial
foreclosureon the subject lots and being the highest bidder in the public
auction, a certificate of salein its favor was issued by the sheriff on
February 26, 1990. Subsequently, the sheriffs certificate of sale was
registered and annotated on the titles of the subject lots in the Register of
Deeds of Quezon City.
Issue: WON HLURB has power to declare the mortgage contract over
real property executed between a real estate developer and petitioner?
Ruling: Yes.
Petitioner’s argument is untenable.
HLURB has jurisdiction to declare invalid the mortgage contract
executed between Garcia/TransAmerican and petitioner over the subject
lots insofar as private respondents are concerned.
It correctly relied on Union Bank of the Philippines vs. HLURB, et
al. where we squarely ruled on the question of HLURBs jurisdiction to
hear and decide a condominium buyers complaint for:
5
(a) annulment of a real estate mortgage constituted by the project owner
without the consent of the buyer and without the prior written approval
of the NHA;
(b) annulment of the foreclosure sale; and
(c) annulment of the condominium certificate of title that was issued to
the highest bidder at the foreclosure sale, thus:
. . . The issue in HLURB Case is the validity of the real estate mortgage
of Davids condominium unit that FRDC executed in favor of the Union
Bank and Far East Bank without prior approval of the National Housing
Authority and the legality of the title which the mortgage banks acquired
as highest bidder therefore in the extrajudicial foreclosure sale. The
applicable provisions of P.D. No. 957, otherwise known as The
Subdivision and Condominium Buyers Protective Decree are quoted
hereunder as follows:
Sec. 3. NATIONAL HOUSING AUTHORITY. The National Housing
Authority shall have exclusive jurisdiction to regulate the real estate
trade and business in accordance with the provisions of this Decree.
Section 18. Mortgages No mortgage on any unit or lot shall be made by
the owner or developer without prior written approval of the authority.
Such approval shall not be granted unless it is shown that the proceeds
of the mortgage loan shall be used for the development of the
condominium or subdivision project and effective measures have been
provided to ensure such utilization. The loan value of each lot or unit
covered by the mortgage shall be determined and the buyer thereof if
any shall be notified before the release of the loan. The buyer may, at his
option, pay his installment for the lot or unit directly to the mortgagee
who shall apply the payments to the corresponding mortgage
indebtedness secured by the particular lot or unit being paid for, with a
view to enabling said buyer to obtain title over the lot or unit promptly
after full payment thereof.
P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the National
Housing Authority to include the following:
Sec. 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot
or condominium unit buyer against the project owner, developer, dealer,
broker or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, broker or salesman.
On February 7, 1981, Executive Order No. 648 transferred the
regulatory and quasi-judicial functions of the NHA to the Human
Settlements Regulatory Commission.
Sec. 8. TRANSFER OF FUNCTIONS. The regulatory functions of the
National Housing Authority pursuant to Presidential Decree Nos. 957,
1216, 1344 and other related laws are hereby transferred to the
Commission, together with such applicable personnel, appropriation,
records, equipment and property necessary for the enforcement and
implementation of such functions. Among these regulatory functions
are:
1. Regulation of the real estate trade and business:
...
7. Approval of mortgage on any subdivision lot or condominium unit
made by the owner or developer;
...
Hear and decide cases on unsound real estate business practices; claims
involving refund filed against project owners, developers, dealers,
brokers, or salesmen; and cases of specific performance.
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Executive Order No. 90 changed the name of the Human Settlements
Regulatory Commission to Housing and Land Use Regulatory Board
(HLURB).
Clearly, FRDCs act of mortgaging the condominium project to Bancom
and FEBTC, without the knowledge and consent of David as buyer of a
unit therein, and without the approval of the NHA (now HLURB) as
required by P.D. No. 957, was not only an unsound real estate business
practice but also highly prejudicial to the buyer. David, who has a cause
of action for annulment of the mortgage, the mortgage foreclosure sale,
and the condominium certificate of title that was issued to the UBP and
FEBTC as the highest bidders at the sale. The case falls within the
exclusive jurisdiction of the NHA (now HLURB) as provided in P.D.
No. 957 of 1976 and P.D. No. 1344 of 1978.
ii. De La Merced vs GSIS
Facts:
Governor Jose C. Zulueta and his wife Soledad Ramos were the owners
of parcels of land consisting of 100,986 square meters, known as the
Antonio Village Subdivision, Orambo, Pasig City. The parcels of land
were registered in their names under TCT Nos. 26105, 37177 and
50256 of the Registry of Deeds of the Province of Rizal.
On September 25, 1956, the Zuluetas obtained a loan of P520,000.00
from the Government Service Insurance System, as security for which
they mortgaged the lands covered by TCT No. 26105. It was expressly
stipulated in the mortgage deed that certain lots within TCT No. 26105
shall be excluded from the mortgage because they have been either
previously sold to third parties or donated to the government.
The Zulueta spouses obtained an additional loan from the GSIS on
March 6, 1957 in the amount of P190,000.00, as security for which they
mortgaged the land covered by TCT No. 50256. On April 4, 1957, the
Zuluetas obtained another loan from GSIS this time in the amount of
P1,000,000.00, which they secured by mortgaging parcels of land
included in TCT Nos. 26105 and 37177.
On September 3, 1957, the Zulueta spouses executed a contract to sell
whereby they undertook to sell to Francisco dela Merced and Evarista
Mendoza lots identified as Lots 6, 7, 8 and 10, Block 2 (formerly Block
4), Antonio Subdivision covered by TCT No. 26105. On October 26,
1972, after full payment by Col. dela Merced of the purchase price, a
Deed of Absolute Sale was executed by the Zuluetas in his favor.
On October 15, 1957, another loan was extended by GSIS to the Zulueta
spouses in the amount of P1,398,000.00, secured by a mortgage on the
properties included in TCT Nos. 26105 and 50256.
The Zuluetas defaulted in the payment of their loans. Thus, GSIS
extrajudicially foreclosed the mortgages and, at the foreclosure sale held
on August 16, 1974, GSIS was awarded the mortgaged properties as the
highest bidder. Since the Zuluetas did not redeem the properties within
the reglementary period, title to the properties was consolidated to GSIS.
Later, on March 25, 1982, GSIS held a sale at public auction of its
acquired assets. Elizabeth D. Manlongat and Ma. Therese D. Manlongat,
the children of Victor and Milagros Manlongat, purchased Lot 6, Block
2 of Antonio Village.
Issue: Who has the better right over the property in dispute?
Ruling: Petitioner.
The petition is impressed with merit.
Petitioners rights of ownership over the properties in dispute, albeit
unregistered, are superior to the registered mortgage rights of GSIS over
the same. The execution and validity of the contract to sell dated
September 3, 1957 executed by the Zulueta spouses, as the former
subdivision owner, in favor of Francisco dela Merced, are beyond
cavil. There is also no dispute that the contract to sell was entered into
by the parties before the third mortgage was constituted on October 15,
1957 by the Zuluetas in favor of GSIS on the property covered by TCT
No. 26105, which included the subject lots. Francisco dela Merced was
able to fully pay the purchase price to the vendor, who later executed a
deed of absolute sale in his favor. However, the Zuluetas defaulted on
their loans; hence, the mortgage was foreclosed and the properties were
sold at public auction to GSIS as the highest bidder.
In the case of State Investment House, Inc. v. Court of Appeals, it was
held that:
6
STATEs registered mortgage right over the property is preferred for the
reason that if the original owner (SOLID, in this case) had parted with
his ownership of the thing sold then he no longer had ownership and free
disposal of that thing so as to be able to mortgage it again. Registration
of the mortgage is of no moment since it is understood to be without
inferior to that of respondents-spouses unregistered right. The
unrecorded sale between respondents-spouses and SOLID is prejudice to
the better right of third parties.
In the same vein, therefore, the registered right of GSIS as mortgagee of
the property is inferior to the unregistered right of Francisco dela
Merced. The unrecorded sale between Francisco dela Merced as the
vendee of the property and the Zuluetas, the original owners, is preferred
for the same reason stated above.
iii. Ruiz vs Dimailig
Facts:
Respondent Bernardo F. Dimailig was the registered owner of a parcel
of land located in Alapan, Imus, Cavite.In October 1997, he entrusted
the owner’s copy of the said TCT to his brother, Jovannie, who in turn
gave the title to Editha Sanggalang, a broker, for its intended sale.
However, in January 1998, the property was mortgaged to Evelyn V.
Ruiz as evidenced by a Deed of REM without Bernardo’s knowledge
and consent. Hence, Bernardo instituted this suit for annulment of the
Deed of REM.
In her Answer, Evelyn contended that she met Jovannie when she
inspected the subject property and assured her that Bernardo owned the
property and his title thereto was genuine. She further claimed that
Jovannie mortgaged the property to her. She also insisted that as a
mortgagee in good faith and for value, the REM cannot be annulled and
that she had the right to keep the owner's copy of TCT until the loan was
fully paid to her.
Bernardo testified that when he went abroad on October 19, 1997, he
left the owner's copy of the TCT of the subject property to Jovannie as
they intended to sell the subject property. However, on January 26,
1998, a REM was executed on the subject property. Bernardo argued
that his alleged signature appearing therein was merely forged11as he
was still abroad at that time. When he learned in September or
November 1998 that Editha mortgaged the subject property, be
personally told Evelyn that the REM was fake and demanded the return
of his title. Not heeding his request, he filed a complaint for estafa
through falsification of public document against Editha and Evelyn, The
criminal case against Evelyn was dismissed while Editha was found
guilty as charged.
Jovannie also took the witness stand. He testified that sometime in
December 1997, Editha convinced him to surrender the owner's copy of
TCT which she would show her buyer. Subsequently, however, Editha
informed him that she misplaced the title. Hence, he executed in August
1998 an affidavit of loss and registered it with the Register of Deeds. In
September 1998, Editha finally admitted that the title was not lost but
was in Evelyn's possession because of the REM. Upon learning this,
Jovannie inquired from Evelyn if Editha mortgaged Bernardo's property
to her. Purportedly, Evelyn confirmed said mortgage and told him that
she would not return the owner's copy of TCT unless Editha pay the
loan, Jovannie also alleged that he told Evelyn that Bernardo's alleged
signature in the REM was not genuine since he was abroad at the time of
its execution.
On the other hand, Evelyn maintained that she was a mortgagee in good
faith. She testified that sales agents - Editha, Corazon Encarnacion, and
a certain Parani, - and a person introducing himself as "Bernardo"
mortgaged the subject property to her for ₱300,000.00 payable within a
period of three months. She asserted that even after the expiration of
said period, "Bernardo" failed to pay the loan.
Evelyn narrated that before accepting the mortgage of the subject
property, she, the sales agents, her aunt, and "Bernardo," visited the
property. She pointed out that her companions inspected it while she
stayed in the vehicle as she was still recuperating from an operation. She
admitted that she neither verified from the neighborhood the owner of
the property nor approached the occupant thereof.
Moreover, Evelyn asserted that when the Deed of REM was executed,
the person who introduced himself as Bernardo presented a community
tax certificate and his picture as proof of identity. She admitted that she
did not ask for any identification card from "Bernardo."
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Contrary to the allegation in her Answer that Jovannie mortgaged the
property, Evelyn clarified that she met Jovannie for the first time when
he went to her house and told her that Bernardo could not have
mortgaged the property to her as he was abroad.
Petitioner’s Arguments
Petitioner insists that she is a mortgagee in good faith. She claims that
she was totally unaware of the fraudulent acts employed by Editha,
Jovannie, and the impostor to obtain a loan from her. She stresses that a
person dealing with a property covered by a certificate of title is not
required to look beyond what appears on the face of the title.
Respondent’s Arguments
Bernardo, on his end, contends that since the person who mortgaged the
property was a mere impostor, then Evelyn cannot claim that she was a
mortgagee in good faith. This is because a mortgage is void where the
mortgagor has no title at all to the property subject of such mortgage.
Bernardo asserts that there were circumstances that should have aroused
suspicion on the part of Evelyn relative to the mortgagor's title over the
property. He specifies that throughout the negotiation of the mortgage,
Evelyn transacted only with Editha, not with "Bernardo," despite the fact
that Editha and the other real estate agents who assisted Evelyn in the
mortgage transaction were not armed with a power of attorney.
Bernardo likewise stresses that although Evelyn caused the inspection of
the subject property, she herself admitted that she did not alight from the
vehicle during the inspection, and she failed to verify the actual
occupant of the property.
Issue: WON the CA erred in holding that petitioner is not a mortgagee in
good faith despite the presence of substantial evidence to support such
conclusion of fact.
Ruling: YES.
The Petition is without merit.
In order for a mortgagee to invoke the doctrine of mortgagee in good
faith, the impostor must have succeeded in obtaining a Torrens title in
his name and thereafter in mortgaging the property. Where the
mortgagor is an impostor who only pretended to be the registered owner,
and acting on such pretense, mortgaged the property to another, the
mortgagor evidently did not succeed in having the property titled in his
or her name, and the mortgagee cannot rely on such pretense as what
appears on the title is not the impostor's name but that of the registered
owner.
In this case, Evelyn insists that she is a mortgagee in good faith and for
value. Thus, she has the burden to prove such claim and must provide
necessary evidence to support the same. Unfortunately, Evelyn failed to
discharge her burden.
First, the Deed of REM was established to be a forged instrument. As
aptly discussed by the CA, Bernardo did not and could not have
executed it as he was abroad at the time of its execution.In fact, during
pre-trial, both parties agreed that it was not Bernardo who signed as the
mortgagor in the Deed of REM. It was only an impostor - representing
himself as Bernardo - who mortgaged the property. This impostor is not
only without rightful ownership on the mortgaged property, he also has
no Torrens title in his own name involving said property.
Simply put, for being a forged instrument, the Deed of REM is a nullity
and conveys no title.
Second, Evelyn cannot invoke the protection given to a mortgagee in
good faith. As discussed, the title to the subject property remained
registered in the name of Bernardo. It was not transferred to the
impostor's name when Evelyn transacted with the latter. Hence, the
principle of mortgagee in good faith finds no application;
correspondingly, Evelyn cannot not seek refuge therefrom.
Third, even assuming that the impostor has caused the property to be
titled in his name as if he had rightful ownership thereof, Evelyn would
still not be deemed a mortgagee in good faith. This is because Evelyn
did not take the necessary steps to dete1mine any defect in the title of
the alleged owner of the mortgaged property. She deliberately ignored
pertinent facts that should have aroused suspicion on the veracity of the
title of the mortgagor "Bernardo."
7
Thus, considering that the mortgage contract was forged as it was
entered into by Evelyn with an impostor, the registered owner of the
property, Bernardo, correspondingly did not lose his title thereon, and
Evelyn did not acquire any right or title on the property and cannot
invoke that she is a mortgagee in good faith and for value.
e. Sale Involving Real Estate
i. Esguerra v. Trinidad
G.R. No. 169890, 12 March 2007
Facts:Involved in the present controversy are two parcels of land located
in Camalig, Meycauayan, Bulacan. The Esguerra spouses, owners of the
disputed parcels, executed a Deed of Sale in favor of petitioners on
August 11, 1937, and that in favor of Eulalio and Julian Trinidad on
August 17, 1937.
Eulalio Trinidad later sold his share of the land to his daughters-
respondents herein, via a notarized Kasulatan ng Bilihang Tuluyan ng
Lupa dated October 13, 1965.Meanwhile, under a notarized Bilihan ng
Lupa dated November 10, 1958, petitioners sold to respondents' parents
Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion
of about 5,000 square meters of the 23,489-square meter of land which
they previously acquired from the Esguerra spouses.
During a cadastral survey conducted in the late 1960s, it was discovered
that the about 5,000-square meter portion of petitioners' parcel of land
which was assigned Lot No. 3591sold to the Trinidad spouses actually
measured 6,268 square meters.
In a subsequent application for registration of title over Lot No. 3591,
the CFI, by Decision of August 21, 1972, awarded Lot No. 3591 in favor
of Eulalio Trinidad. Pursuant to the Decision, the LRC issued Decree
No. N-149491 by virtue of which the Register of Deeds of Bulacan
issued OCT No. 0-6498 in the name of Trinidad. Upon the death of the
Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was
transmitted to respondents by succession.
Petitioners, alleging that upon verification with the LRA they discovered
the issuance of the above-stated two OCTs, filed on August 29, 1994
before the Regional Trial Court (RTC) of Malolos, Bulacan two separate
complaints for their nullification on the ground that they were procured
through fraud or misrepresentation. Moreover, While petitioners
admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that
what they sold were only 5,000 square meters and not 6,268 square
meters, and thus claim the excess of 1,268 square meters.
Issues:
1. Whether or not the act of the respondent Eulalio Trinidad in
acquiring the property from Felipe Esguerra constituted fraud;
2. Whether or not the provisions of Article 1542 of the Civil
Code were properly applied; and
3. Whether or not prescription and res judicata apply.
Ruling:
1. No, the act of the respondent Eulalio Trinidad in acquiring the
property from Felipe Esguerra did not constitute fraud.
In the present cases, as did the trial court, the appellate court found no
fraud in respondents' acquisition and registration of the land. Factual
findings of the trial court, when affirmed by the Court of Appeals, are
final, conclusive and binding on this Court.
Under the Torrens System, an OCT enjoys a presumption of validity,
which correlatively carries a strong presumption that the provisions of
the law governing the registration of land which led to its issuance have
been duly followed. Fraud being a serious charge, it must be supported
by clear and convincing proof. Petitioners failed to discharge the burden
of proof, however.
2. Yes, the provisions of Article 1542 of the New Civil Code
were properly applied.
In the sale of real estate, made for a lump sum and not at the rate of a
certain sum for a unit of measure or number, there shall be no increase
or decrease of the price, although there be a greater or less areas or
number than that stated in the contract.The lower courts correctly
characterized the sale of Lot No. 3591 as one involving a lumpsum
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contract. The Bilihan ng Lupa shows that the parties agreed on the
purchase price ofP1,000.00 on a predetermined, albeit unsurveyed, area
of 5,000 square meters and not on a particular rate per unit area. As
noted by the Court of Appeals, the identity of the realty was sufficiently
described.
Under Article 1542, what is controlling is the entire land included within
the boundaries, regardless of whether the real area should be greater or
smaller than that recited in the deed.Though measured as 5,000 square
meters, more or less, such measurement is only an approximation, and
not an exact measurement. Moreover, we take note of the fact that the
said deed of sale mentioned the boundaries covering the whole area of
33,489 square meters, including the "bahagingpalayan." Had appellants
intended to sell only a portion of the "bahagingpalayan," they could have
stated the specific area in the deed of sale and not the entire
"bahagingpalayan".
3. Yes, prescription and res judicata apply.
It is a fundamental principle in land registration that a certificate of title
serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein. Such
indefeasibility commences after the lapse or expiration of one year from
the date of entry of the decree of registration when all persons are
considered to have a constructive notice of the title to the property. After
the lapse of one year, therefore, title to the property can no longer be
contested.
Even assuming that petitioners' actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail
since petitioners failed to establish the existence of fraud.
ii. Del Prado v. Caballero
G.R. No. 148225, 3 March 2010
Facts:
Spouses Antonio L. Caballero and Leonarda B. Caballero obtained a
favorable judgment over several parcels of land situated in Guba, Cebu
City, one of which was Cadastral Lot No.11909, the subject of this
controversy. Consequently, on May 25,1987, the same court, ordered the
National Land Titles and Deeds Registration Administration to issue the
decree of registration and the corresponding titles of the lots in favor of
the Caballeros.
On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot
No. 11909 on the basis of the tax declaration covering the property. On
March 20, 1991, petitioner filed in the same cadastral proceedings a
"Petition for Registration of Document Under Presidential Decree (P.D.)
1529" in order that a certificate of title be issued in her name, covering
the whole Lot No. 11909. In the petition, petitioner alleged that the tenor
of the instrument of sale indicated that the sale was for a lump sum or
cuerpocierto, in which case, the vendor was bound to deliver all that was
included within said boundaries even when it exceeded the area
specified in the contract. Respondents opposed, on the main ground that
only 4,000 sqm of Lot No. 11909 was sold to petitioner. They claimed
that the sale was not for a cuerpocierto. They moved for the outright
dismissal of the petition on grounds of prescription and lack of
jurisdiction.
After trial on the merits, the RTC found that petitioner had established a
clear and positive right to Lot No. 11909. The intended sale between the
parties was for a lump sum, since there was no evidence presented that
the property was sold for a price per unit. The CA, however,
promulgated the assailed decision, reversing and setting aside the
decision of the RTC.
Issue:
Whether or not the sale of the land was for a lumpsum or not.
Ruling:
In sales involving real estate, the parties may choose between two types
of pricing agreement: a unit price contract wherein the purchase price is
determined by way of reference to a stated rate per unit area (e.g.,
P1,000 per square meter), or a lump sum contract which states a full
purchase price for an immovable the area of which may be declared
based on the estimate or where both the area and boundaries are stated
(e.g., P1 million for 1,000 square meters, etc.).
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However, the rule laid down in Article 1542 is not hard and fast and
admits of an exception. The use of "more or less" or similar words in
designating quantity covers only a reasonable excess or deficiency. A
vendee of land sold in gross or with the description "more or less" with
reference to its area does not thereby ipso facto take all risk of quantity
in the land. Numerical data are not of course the sole gauge of
unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors.
In the instant case, the deed of sale is not one of a unit price contract.
The parties agreed on the purchase price of P40,000.00 for a
predetermined area of 4,000 sq m, more or less, bounded on the North
by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot
Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract
of sale of land in a mass, the specific boundaries stated in the contract
must control over any other statement, with respect to the area contained
within its boundaries.
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight
difference in quantity. The difference in the area is obviously sizeable
and too substantial to be overlooked. It is not a reasonable excess or
deficiency that should be deemed included in the deed of sale.
iii. Agatep V Rodriguez
GR 170540, October 28, 2009
Respondent Natalia Vda Lim owned a parcel of land in Zinundungan,
Lasam, Cagayan. Lim mortgaged said lot to the PNB to secure a loan
worth 30,000 and the mortgage was duly annotated on the TCT of the
land. While the mortgage was in effect, Lim sold the property to the
husband (Isaac Agatep) of the petitioner Eufemia Balatico Vda De
Agatep for 18,000.
The sale was not registered on the TCT and Lim also did not deliver the
title to Balatico or her husband Agatep. In spite of this, Agatep still took
possession of the same and fenced said lot. When Agatep died, his heirs
including petitioner continued possession of said property.
PNB foreclosed the said property when Lim could not pay her loan. Lim
also failed to redeem her property during the one year period of
redemption. PNB thus consolidated ownership over the land and a new
TCT was issued in PNBs name. PNB subsequently put up some of its
acquired assets for sale which included the subject lot. Roberta
Rodriguez (the daughter of respondent Lim) bought the same during the
sale.This prompts Balatico to file a complaint for reconveyance and/or
damages with the RTC.
RTC- dismissed complaint but awarded damages to Balatico
CA- affirmed decision of RTC
ISSUE/S:
Whether PNB is a mortgagee, buyer and later seller in good faith
Whether PNB acquired ownership over the property
Ruling:
PNB was a mortgagee, buyer, and later on, seller in good faith.
Petitioner insists that PNB is not a mortgagee in good faith asserting
that, if it only exercised due diligence, it would have found out that
petitioner and her husband were already in adverse possession of the
subject property as early as two years before the same was sold to them.
This claim, however, is contradicted by no less than petitioner's
averments in her Brief filed with the CA wherein she stated that
"[i]mmediately after the sale, the land was delivered to Isaac Agatep . . .
Since that timeup to the present, Isaac Agatep and after his death, the
Appellant have been in continuous, uninterrupted, adverse and public
possession of the said parcel of land". The foregoing assertion only
shows that petitioner's husband took possession of the subject lot only
after the same was sold to him.
In any case, the Court finds no error in the findings of both the RTC and
the CA that PNB is indeed an innocent mortgagee for value. When the
lots were mortgaged to PNB by Lim, the titles thereto were in the latter's
name, and they showed neither vice nor infirmity. In accepting the
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mortgage, PNB was not required to make any further investigation of
the titles to the properties being given as security, and could rely entirely
on what was stated in the aforesaid title. The public interest in upholding
the indefeasibility of a certificate of title, as evidence of the lawful
ownership of the land or of any encumbrance thereon, protects a buyer
or mortgagee who, in good faith, relies upon what appears on the face of
the certificate of title.
PNB acquired ownership over the land.
Petitioner contends that PNB did not acquire ownership over the
disputed lot because the said property was not delivered to it. Petitioner
asserts that the execution of a public document does not constitute
sufficient delivery to PNB, considering that the subject property is in the
adverse possession, under claim of ownership, of petitioner and her
predecessor-in-interest.
The court finds the argument untenable.
When the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the
object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred.(Art 1498, CC) Therefore, prior physical
delivery or possession is not legally required since the execution of the
Deed of Sale is deemed equivalent to delivery. Thus, the execution of
the Deed of Sale in favor of PNB, after the expiration of the redemption
period, is deemed equivalent to delivery.
Petitioner avers that she and her husband were not aware of the
mortgage contract which was executed between PNB and Lim prior to
the sale of the subject property by the latter to her husband. The fact
remains, however, that the mortgage was registered and annotated on the
certificate of title covering the subject property.
It is settled that registration in the public registry is notice to the whole
world. Under the rule of notice, it is presumed that the purchaser has
examined every instrument of record affecting the title. Such
presumption may not be rebutted. He is charged with notice of every
fact shown by the record and is presumed to know every fact shown by
the record and to know every fact which an examination of the record
would have disclosed.
In the present case, since the mortgage contract was registered,
petitioner may not claim lack of knowledge thereof as a valid defense.
The subsequent sale of the property to petitioner's husband cannot defeat
the rights of PNB as the mortgagee and, subsequently, the purchaser at
the auction sale whose rights were derived from a prior mortgage validly
registered.
f. Caveat Emptor Principle
i. Sy v. Capistrano
G.R. No. 154450, July 28, 2008
Facts:
Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas
Capistrano, Jr. (Capistrano) and offered her services to help him sell his
13,785 square meters of land covered by Transfer Certificate of Title
(TCT) No. 76496 of the Register of Deeds of Caloocan City. Capistrano
gave her a temporary authority to sell which expired without any sale
transaction being made. To his shock, he discovered later that TCT No.
76496, which was in his name, had already been cancelled on June 24,
1992 and a new one, TCT No. 249959, issued over the same property on
the same date to Josefina A. Jamilar. TCT No. 249959 likewise had
already been cancelled and replaced by three (3) TCTs (Nos. 251524,
251525, and 251526), all in the names of the Jamilar spouses. TCT Nos.
251524 and 251526 had also been cancelled and replaced by TCT Nos.
262286 and 262287 issued to Nelson Golpeo and John B. Tan,
respectively.
Capistrano further discovered that on March 9,1980, he purportedly
executed in favor of Scott two deeds of sale and a Deed of Absolute Sale
was allegedly executed by Scott in favor of the Jamilar spouses on May
17, 1990. Although the deed in favor of Scott states that it was executed
on March 9, 1980, the annotation thereof at the back of TCT No. 76496
states that the date of the instrument is March 9, 1990. Even if there was
no direct sale from Capistrano to Jamilar, the transfer of title was made
directly to the latter. No TCT was issued in favor of Scott. The issuance
of TCT No. 249959 in favor of Jamilar was with the help of Joseph Sy,
who provided for (sic) money for the payment of the capital gains tax,
documentary stamps, transfer fees and other expenses of registration of
9
the deeds of sale. On July 8, 1992, an Affidavit of Adverse Claim was
annotated at the back of Jamilar’s TCT No. 249959 at the instance of Sy,
Golpeo, and Tan under a Contract to Sell in their favor by the Jamilar
spouses. Said contract was executed sometime in May, 1992 when the
title to the property was still in the name of Capistrano. On January 26,
1993, a Deed of Absolute Sale was executed by the Jamilars and the
Gilturas, in favor of Golpeo and Tan.
Thus, TCT Nos. 251524 and 251526 were cancelled and TCT Nos.
262286 and 262287 were issued to Golpeo and Tan, respectively. TCT
No. 251525 remained in the name of Jamilar.
Thus, the action for reconveyance filed by Capistrano, alleging that his
and his wife’s signatures on the purported deed of absolute sale in favor
of Scott were forgeries; that the owner’s duplicate copy of TCT No.
76496 in his name had always been in his possession; and that Scott, the
Jamilar spouses, Golpeo, and Tan were not innocent purchasers for
value because they all participated in defrauding him of his property.
The Jamilar spouses denied the allegations in the complaint and claimed
that Capistrano had no cause of action against them, as there was no
privity of transaction between them; the issuance of TCT No. 249959 in
their names was proper, valid, and legal; and that Capistrano was in
estoppel. By way of counterclaim while Sy, Golpeo, and Tan denied the
allegations in the complaint and alleged that Capistrano had no cause of
action against them; that at the time they bought the property from the
Jamilars and the Gilturas as unregistered owners, there was nothing in
the certificates of title that would indicate any vice in its ownership; that
a buyer in good faith of a registered realty need not look beyond the
Torrens title to search for any defect; and that they were innocent
purchasers of the land for value.
Issue:
Whether or not the petitioners and the Jamilar spouses are innocent
purchasers for value?
Ruling:
No, they are not innocent purchasers for value. In finding that the
Jamilar spouses were not innocent purchasers for value of the subject
property, the CA properly held that they should have known that the
signatures of Scott and Capistrano were forgeries due to the patent
variance of the signatures in the two deeds of sale shown to them by
Scott, when Scott presented to them the deeds of sale, one allegedly
executed by Capistrano in her favor covering his property; and the other
allegedly executed by Scott in favor of Capistrano over her property, the
P40,000.00 consideration for which ostensibly constituted her initial and
partial payment for the sale of Capistrano’s property to her.
The CA also correctly found the Gilturas not innocent purchasers for
value, because they failed to check the veracity of the allegation of
Jamilar that he acquired the property from Capistrano.
In ruling that Sy was not an innocent purchaser for value, we share the
observation of the appellate court that Sy knew that the title to the
property was still in the name of Capistrano, but failed to verify the
claim of the Jamilar spouses regarding the transfer of ownership of the
property by asking for the copies of the deeds of absolute sale between
Capistrano and Scott, and between Scott and Jamilar. Sy should have
likewise inquired why the Gilturas had to affix their conformity to the
contract to sell by asking for a copy of the deed of sale between the
Jamilars and the Gilturas. Had Sy done so, he would have learned that
the Jamilars claimed that they purchased the property from Capistrano
and not from Scott.
Notable likewise is that the owner’s duplicate copy of TCT No. 76496 in
the name of Capistrano had always been in his possession since he gave
Scott only a photocopy thereof pursuant to the latter’s authority to look
for a buyer of the property. On the other hand, the Jamilars were able to
acquire a new owner’s duplicate copy thereof by filing an affidavit of
loss and a petition for the issuance of another owner’s duplicate copy of
TCT No. 76496. The minimum requirement of a good faith buyer is that
the vendee of the real property should at least see the owner’s duplicate
copy of the title.6 A person who deals with registered land through
someone who is not the registered owner is expected to look beyond the
certificate of title and examine all the factual circumstances thereof in
order to determine if the vendor has the capacity to transfer any interest
in the land. He has the duty to ascertain the identity of the person with
whom he is dealing and the latter’s legal authority to convey.
ii. DOMINGO REALTY vs COURT OF APPEALS and ANTONIO
M. ACERO
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Doctrine: Caveat emptor principle; the Court has no power to make or
alter contracts to save negligient parties from the adverse stipulations of
the compromise agreement; parties are cautioned to exercise the
diligence of a reasonably prudent person by undertaking measures to
ensure the legality of the title and the accurate metes and bounds of the
lot embraced in the title.
Facts:
Domingo Realty filed a complaint in the RTC against Antonio Acero
who conducted a business under A.M. Acero Trading and others for
recovery of possession of 2 parcels of land covered by a single TCT.
The said lots have an aggregate area of 26, 705 sqm n a portion of which
Acerto had constructed a factory for hollow blocks. Acero and Victorio
alleged that he merely leased the land from Victorio who in turn claimed
to be the owner of the property on which the building stood. Victorio on
the other hand questioned the validity of the TCT of Domingo Realty
that he and his predecessor-in-interest had been in possession for 70
years. A compromise agreement however was reached signed by Acero
and Mariano Yu (representing Domingo Realty), in which Acero
recognizes the ownership of Domingo Realty over the property that they
recognizes the TCT, that the property he is occupying by way of lease
encroaches on a portion of Domingo Realty, that Domingo admits and
recognizes the occupation of Dy in good faith and for value as well as
that of Acero; that Acero waves claims for damages and that Domingo
Realty acknowledge the benefits done by Dy in the property. The RTC
adopted the compromise agreement.
Domingo Realty then moved for a re-survey which was granted. Acero
opposed this arguing that the resurvey would violate the compromise
agreement. Acero then filed for a resurvey whereby it was alleged that
parties agreed to have the Bureau of Lands resurvey the property. This
was granted by the TC. It was established that Domingo Realty’s TCT
covered the entire land occupied by the factory of Acero. Ayala Steel
filed a motion for Substitution alleging that it had purchased the subject
lot. This was opposed by Acero claiming that "this case has already been
terminated in accordance with the compromise agreement of the parties,
hence, substitution will no longer be necessary and justified under the
circumstances." This was not resolved hence appearing as both
petitioners.
The TC ordered Acero to conduct his own resurvey according to the
TCT of Domingo Realty. From the results, Acero contended that he only
occupied 2,000 sqm. The survey however was disapproved by Bureau of
Lands on the grounds that it did not comply with the requirements.
Given the conflicting Verification Survey Plans, the RTC issued an
order requiring the Bureau of Lands to determine which survey was
correct. The LRA issued an order that the survey conducted by Engr.
Lara which was commissioned by Domingo Realty as the correct plan.
On appeal, the CA ruled in favor of Acero. Hence this petition.
On the first issue, Domingo Realty assail the ruling of the appellate
court that David Victorio who is claimed to be the lessor of Acero, and
who is impleaded as a defendan, was not made a party to the
Compromise Agreement and hence, he may later "assail the compromise
agreement as not binding upon him, thereby giving rise to another suit."
On the second issue, Domingo Realty contends that the ruling of the CA
that the Compromise Agreement is vague as there is still a need to
determine the exact metes and bounds of the encroachment on the
petitioners’ lot. Acero however contends that the term "portion" in
paragraph 3 of the Compromise Agreement refers to the property which
they are occupying.
On the third issue, Domingo Realty assails the finding of the CA that the
compromise judgment can be set aside on the ground of mistake under
Article 2038 of the Civil Code, because respondent Acero gave his
consent to the Compromise Agreement in good faith that he would only
vacate a portion of his lot in favor of petitioner Domingo Realty.
Issues:
WON the non-inclusion of Victorio would nullify the agreement?
WON the compromise agreement would be set aside on the ground of
mistake?
WON the judgment on the compromise agreement be set aside on the
basis of mistake?
Held:
No. The issue of ownership between petitioners and David Victorio can
be threshed out by the trial court in Civil Case No. 9581-P. The proper
thing to do is to remand the case for continuation of the proceedings
between petitioners and defendant David Victorio but not to annul the
10
partial judgment between petitioners and respondent Acero which has
been pending execution for 20 years.
No. In the instant case, the title over the subject property contains a
technical description that provides the metes and bounds of the property
of petitioners. Such technical description is the final determinant of the
extent of the property of petitioners. Thus, the area of petitioners’
property is determinable based on the technical descriptions contained in
the TCTs. A perusal of the entire Compromise Agreement will negate
any contention that there is vagueness in its provisions.
The agreement is clear that respondent Acero admitted that "the property
he is presently occupying by way of lease is encroaching on a portion of
the property of Domingo Realty." Thus, whether it is only a portion or
the entire lot Acero is leasing that will be affected by the agreement is of
no importance. What controls is the encroachment on the lot of
Domingo Realty regardless of whether the entire lot or only a portion
occupied by Acero will be covered by the encroachment. While it may
be the honest belief of respondent Acero that only a portion of the lot he
is occupying encroaches on the 26,705-square meter lot of petitioner
Domingo Realty and later, Ayala Steel, the Court finds that the true and
real agreement between the parties is that any encroachment by
respondent Acero on the lot of petitioners will be surrendered to the
latter. This is apparent from the undertaking in paragraph 3 that
defendant Acero "undertakes to vacate, remove and clear any and all
structures erected inside the property of the plaintiff." To reiterate, the
word "portion" refers to petitioners’ lot and not that of Acero’s. The
Compromise Agreement are clear and leave no doubt upon the intent of
the parties that Acero will vacate, remove, and clear any and all
structures erected inside petitioners’ property, the ownership of which is
not denied by him.
To invalidate consent, the error must be excusable. It must be real error,
and not one that could have been avoided by the party alleging it. The
error must arise from facts unknown to him. An error so patent and
obvious that nobody could have made it, or one which could have been
avoided by ordinary prudence, cannot be invoked by the one who made
it in order to annul his contract. A mistake that is caused by manifest
negligence cannot invalidate a juridical act
Prior to the execution of the Compromise Agreement, respondent Acero
was already aware of the technical description of the titled lots of
petitioner Domingo Realty and more so, of the boundaries and area of
the lot he leased from David Victorio. Before consenting to the
agreement, he could have simply hired a geodetic engineer to conduct a
verification survey and determine the actual encroachment of the area he
was leasing on the titled lot of petitioner Domingo Realty. Had he
undertaken such a precautionary measure, he would have known that the
entire area he was occupying intruded into the titled lot of petitioners
and possibly, he would not have signed the agreement. In this factual
milieu, respondent Acero could have easily averted the alleged mistake
in the contract; but through palpable neglect, he failed to undertake the
measures expected of a person of ordinary prudence. Without doubt, this
kind of mistake cannot be resorted to by respondent Acero as a ground
to nullify an otherwise clear, legal, and valid agreement, even though the
document may become adverse and even ruinous to his business.
iii. ENRIQUETA M. LOCSIN vs. BERNARDO HIZON et al
Doctrine: Principle of Caveat Emptor; Innocent purchaser for value are
those who inquire the status of the title of the property in order to protect
their rights
Facts:
Locsin is the registered owner of a parcel of land subject in this case.
She filed an ejectment case against Aceron where eventually a
compromise agreement was reached and was approved by the MTC.
Locsin then went to the US without knowing whether Aceron had
complied with the bargain under the compromise agreement. She
continued to pay property tax despite her absence. When he discovered
that the TCT was missing, she applied for an administrative
reconstitution in order to secure a new one it was then she discovered
that the said parcel was already sold to Bernardo Hizon, titled under
Carlos Hizon sold by Marylou Bolos which in turn purchased it
allegedly from Locson as borne by the records of the Registry of Deeds.
At present the property is occupied and is up for sale. Carlos, in a letter
sent through Locsin’s counsel denied that there was forgery and that it
was obtained in good faith and for value. It was later established that
Carlos had the property sold to spouses Guevarra which in turn
mortgaged to Damar Ctedit Corporation (DCC). Hence Locson filed for
a reconveyance, annulment and cancellation of the mortgage.
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The RTC rendered a decision dismissing the complaint, ruling that there
is insufficient evidence of forgery of Locsin’s signature, the questioned
deed is notarized and hence enjoy the presumption of regularity; the
subsequent transfers are valid and the subsequent buyers are acting in
good faith. The CA ruled that it was erroneous for the RTC to hold that
Locsin failed to prove that her signature was forged. In its appreciation
of the evidence, the CA found that, indeed, Locsin’s signature in the
Deed of Absolute Sale in favor of Bolos differs from her signatures in
the other documents offered as evidence. The CA however affirmed the
RTC’s finding that herein respondents are innocent purchasers for value.
The Hizons having dealt with property registered under the Torrens
System, need not go beyond the certificate of title, but only has to rely
on the said certificate. Moreover, as the CA added, any notice of defect
or flaw in the title of the vendor should encompass facts and
circumstances that would impel a reasonably prudent man to inquire into
the status of the title of the property in order to amount to bad faith.
Locsin argued that when Bernardo was about to purchase the property,
he knows of the defect since he knew another person was occupying,
Aceron. As a matter of fact he even moved for the execution of the
compromise agreement in order to oust Aceron from his possession.
Bernardo, knowing as he did the incidents involving the subject
property, should have acted as a reasonably diligent buyer in verifying
the authenticity of Bolos’ title instead of closing his eyes to the
possibility of a defect therein.
Bernardo et al argued that they had the right to rely solely upon the face
of Bolos’ clean title, considering that it was free from any lien or
encumbrance. They are not even required, so they claim, to check on the
validity of the sale from which they derived their title. Bernardo et al’s
their knowledge of Aceron’s possession cannot be the basis for an
allegation of bad faith, for the property was purchased on an "asis
where-is" basis.
Issue:
WON Carlo Hizon is an innocent purchase for value?
WON the Spouses Guevarra are innocent purchaser for value?
Held:
No. Carlos is not an innocent purchaser for value. Bernardo negotiated
with Bolos for the property as Carlos’ agent. This is bolstered by the fact
that he was the one who arranged for the saleand eventual registration of
the property in Carlos’ favor.
Consistent with the rule that the principal is chargeable and bound by
the knowledge of, or notice to, his agent received in that capacity, any
information available and known to Bernardo is deemed similarly
available and known to Carlos: Bernardo knew that Bolos purchase of
the property, the Deed of Sale of Bolos was earlier than the ejectment of
Aceron by Locsin.
Having knowledge of the foregoing facts, Bernardo and Carlos, to our
mind, should have been impelled to investigate the reason behind the
arrangement. They should have been pressed to inquire into the status of
the title of the property in litigation in order to protect Carlos’ interest. It
should have struck them as odd that it was Locsin, not Bolos, who
sought the recovery of possession by commencing an ejectment case
against Aceron, and even entered into a compromise agreement with the
latter years after the purported sale in Bolos’ favor.
No. The existence of the sale highly suspicious. For one, there is a
dearth of evidence to support the Spouses Guevarra’s position that the
sale was a bona fide transaction. Furthermore, and noticeably
enough,the transfer from Carlos to the spouses Guevara was effected
only fifteen(15) days after Locsin demanded the surrender of the
property from Carlos. Also, the fact that Lourdes Guevara and Carlos
are siblings, and that Carlos’ agent in his dealings concerning the
property is his own father, renders incredible the argument that Lourdes
had no knowledge whatsoever of Locsin’s claim of ownership at the
time of the purported sale.
Indeed, the fact that the spouses Guevara never intended to be the owner
in good faith and for value of the lot is further made manifest by their
lack of interest in protecting themselvesin the case. It does not even
appear in their testimonies that they, at the very least, intended to
vigilantly protect their claim over the property and prevent Locsin take it
away from them. What they did was to simply appoint Bernardo as their
attorney-in-fact to handle the situation and never bothered acquainting
themselves with the developments in the case.28 To be sure, respondent
Jose Manuel Guevara was not even presented asa witness in the case.
The mortgage in favor of DCC was a mere ploy tomake it appear that
the Sps. Guevara exercised acts of dominion over the subject property.
This is so considering the proximity between the property’s registration
in their names and its being subjected to the mortgage.
These circumstances, taken altogether, strongly indicate that Carlos and
the spouses Guevara failed to exercise the necessary level of caution
11
expected of a bona fide buyer and even performed acts that are highly
suspect. Consequently, this Court could not give respondents the
protection accorded to innocent purchasers in good faith and for value.
2. Involuntary Dealings
Held:
a. Attachments
b. Adverse Claims
i. ALFREDO SAJONAS and CONCHITA SAJONAS vs. CA,
DOMINGO A. PILARES et al
Doctrine: Adverse Claim; Annotation of an adverse claim is a measure
designed to protect the interest of a person over a piece of real property
where the registration of such interest or right not otherwise provided
for by the Land Registration Act or Act 496 (now P.D. 1529 or the
Property Registration Decree), and serves a warning to third parties
dealing with said property that someone is claiming an interest on the
same or a better right than that of the registered owner thereof;
Effectivity; the effectivity period of the adverse claim as absolute and
without qualification limited to thirty days defeats the very purpose for
which the statute provides for the remedy of an inscription of adverse
claim, as the annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property
Facts:
Spouses Uychocde and Lucita Jarin agreed to sell a parcel of residential
land to the Spuses Sajonas on installment basis. The Sajonas caused the
annotation of an adverse claim based on the said Contract to Sell in the
title of the subject ptoperty. Upon full payment, the Uychocdes executed
a Deed of Sale involving the property in question in favor of Spouses
Sajonas which was registered almost a year after. It appears the
Domingo Pilares has a collection of sum of money against Mr.
Uychocde where a compromise agreement was reached in which Mr.
Uychocde recognize his monetary obligation and to pay Domingo
Pilares in 2 years. When he failed to comply with the compromise
agreement, Mr. Uychocde issued a writ of execution based on the
compromise agreement which was granted by the court. When the deed
of sale was registered, a new TCT was issued in favor of Spouses
Sajonas. The notice of levy was carried over to the new title. A third
party claim was filed by the Sajonas hence the auction sale of the subject
property did not push through. When the Spouses Sajonas demanded the
cancellation of the annotation, the counsel of Pilares refused to cause the
cancellation of said annotation.
execution to be registered and annotated in the said title
considering that 30 days had lapsed since it was annotated?
3. WON the Sajonas are innocent purchaser for value and in
good faith?
1. No. Annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property
where the registration of such interest or right not otherwise
provided for by the Land Registration Act or Act 496 (now
P.D. 1529 or the Property Registration Decree), and serves a
warning to third parties dealing with said property that
someone is claiming an interest on the same or a better right
than that of the registered owner thereof. Such notice is
registered by filing a sworn statement with the Register of
Deeds of the province where the property is located, setting
forth the basis of the claimed right together with other dates
pertinent thereto. Thus, the sale in favor of the petitioners by
the Uychocdes was made in order to defraud their creditor
(Pilares), as the same was executed subsequent to their having
defaulted in the payment of their obligation based on a
compromise agreement. Under the Torrens system,
registration is the operative act which gives validity to the
transfer or creates a lien upon the land. While it is the act of
registration which is the operative act which conveys or
affects the land insofar as third persons are concerned, it is
likewise true, that the subsequent sale of property covered by a
Certificate of Title cannot prevail over an adverse claim, duly
sworn to and annotated on the certificate of title previous to
the sale.
While it is true that under the provisions of the Property
Registration Decree, deeds of conveyance of property
registered under the system, or any interest therein only take
effect as a conveyance to bind the land upon its registration,
and that a purchaser is not required to explore further 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, nonetheless, this rule is not absolute. Thus,
one who buys from the registered owner need not have to look
behind the certificate of title, he is, nevertheless, bound by the
liens and encumbrances annotated thereon. One who buys
without checking the vendor's title takes all the risks and
losses consequent to such failure.

Hence a complaint was filed by the spouses filed the complaint against
Pilares. The Spouses Sajonas alleged that at the notice of levy was
annotated, the Uychocde spouses conveyed and assigned all their title
and rights to the Sposues Sajonas; that the annotation of the levy on
execution which was carried over to the title of the Sajonas is illegal and
invalid , in view of the existence of the Adverse Claim annotated by the
plaintiffs on the corresponding title of the Uychocde spouses; that a
demand was made on Domingo Pilares. Pilares however avers that the
Spouses Sajonas has no cause of action; assuming that they filed their
adverse claim, the same has no legal effect after 30 days; the notice of
levy is pursuant to the writ of execution issued by the CFI in favor of
Domingo Pilares.
2. To interpret the effectivity period of the adverse claim as
absolute and without qualification limited to thirty days
defeats the very purpose for which the statute provides for the
remedy of an inscription of adverse claim, as the annotation of
an adverse claim is a measure designed to protect the interest
of a person over a piece of real property where the registration
of such interest or right is not otherwise provided for by the
Land Registration Act or Act 496 (now P.D. 1529 or the
Property Registration Decree), and serves as a warning to third
parties dealing with said property that someone is claiming an
interest or the same or a better right than the registered owner
thereof.

The TC ruled in favor of Sajonas, the subject matter of the Notice of
Levy on Execution was still in the name of the Spouses Uychocde when
the same was annotated on the said title, an earlier Affidavit of Adverse
of claim was annotated on the same title by the Sajonas who earlier
bought said property from the Uychocdes; that actual notice of an
adverse claim is equivalent to registration and the subsequent
registration of the Notice of Levy could not have any legal effect in any
respect on account of prior inscription of the adverse claim annotated on
the title of the Uychocdes. The ruling was reversed on appeal by the CA.
Hence this petition.
The Sajonas argue that their claim is derived claim from the right of
ownership arising from a perfected contract of absolute sale between
them and the registered owners of the property, such right being attested
to by the notice of adverse claim.
Domingo Pilares however claims the right to levy on the property, and
2.
have it sold on execution to satisfy his judgment credit, arising from a
civil case against the Uychocdes, from whose title, petitioners derived
their own.
Issue:
1. WON the Sajonas has a better claim against Pilares?
2. WON the adverse claim inscribed in the TCT still in force
when Domingo Pilares caused the annotation of levy on
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The reason why the law provides for a hearing where the
validity of the adverse claim is to be threshed out is to afford
the adverse claimant an opportunity to be heard, providing a
venue where the propriety of his claimed interest can be
established or revoked, all for the purpose of determining at
last the existence of any encumbrance on the title arising from
such adverse claim. In sum, the disputed inscription of an
adverse claim on the Transfer Certificate was still in effect
when Quezon City Sheriff Roberto Garcia annotated the
notice of levy on execution thereto. Consequently, he is
charged with knowledge that the property sought to be levied
upon the execution was encumbered by an interest the same as
or better than that of the registered owner thereof.
A purchaser in good faith and for value is one who buys
property of another without notice that some other person has
a right to or interest in such property and pays a full and fair
price for the same, at the time of such purchase, or before he
has notice of the claims or interest of some other person in the
property. Thus, the claim of the private respondent that the
sale executed by the spouses was made in fraud of creditors
has no basis in fact, there being no evidence that the
12
 petitioners had any knowledge or notice of the debt of the
Uychocdes in favor of the private respondent, nor of any claim
by the latter over the Uychocdes' properties or that the same
was involved in any litigation between said spouses and the
private respondent. While it may be stated that good faith is
presumed, conversely, bad faith must be established by
competent proof by the party alleging the same.
ii. Sps. RODRIGUEZ vs. CA, Sps. BARRAMEDA and Sps.
CALINGO
Doctrine: Notice of Adverse Claim; the annotation of an adverse claim
is a measure designed to protect the interest of a person over a piece of
property where the registration of such interest or right is not otherwise
provided for by the law on registration of real property.
Facts:
Spouses Calingo were the registered owners of a house and lot. The
property was mortgaged to DBP which was absorbed by Pag-Ibig/
HDMF. The Spouses Calingo entered into a contract of sale with
assumption to mortgage with the Spouses Barrameda. Hence, the
Barramedas issued 2 checks in favor of the Calingos. Mr. Calingo
informed HDMF about the sale of the property with assumption to
mortgage on April 1992, but said letter was served to HDMF on October
1992 only. The Spouses Barrameda filed with the RD an affidavit of
adverse claim on the property inscribed at the back of the certificate.
Mrs. Barrameda wrote HDMF informing the office that they have
purchased the subject property from the Calingo spouses and that they
filed a notice of adverse claim with the Register of Deeds of Parañaque.
They also sought assistance from said office as regards the procedure for
the full settlement of the loan arrearages and the transfer of the property
in their names. They then moved in to the property. However, a notice
of levy was inscribed also on said property as ordered by the RC in
connection with the civil case involving Sppuses Calingo and Spouses
Rodriguez. Subsequently, the Spouses Barrameda found a Notice of
Sheriff’s sale posted in their front gate announcing the auction sale of
their house.
Hence a petition for quieting of title was filed by the Spouses Barrameda
with the RTC, enjoining the sale, the notice of levy and attachment
inscribed be cancelled and they be declared the owners of the property.
The TC however dismissed the petition ruling that the annotation of
respondents Barrameda’s adverse claim at the back of the certificate of
title was insufficient to establish their claim over the property. It said
that respondents Barrameda, as buyers of the property, should have
registered the title in their names. Furthermore, respondents
Barrameda’s adverse claim had lost its efficacy after the lapse of thirty
days in accordance with the provisions of the Land Registration Act.
The CA reversed the RTC decision on appeal in the light of Sajonas vs
CA that respondents Barrameda’s adverse claim inscribed on the
certificate of title was still effective at the time the property was levied
on execution. Hence this petition.
The Spouses Rodriguez contends the remedy of a petition for quieting of
title was not available to the Barramedas as they did not have a valid
title to the property in question; that the affidavit of adverse claim
inscribed by the Barramedas at the back of the certificate of title was not
sufficient to establish their claim to the property; and there was collusion
between the Spouses Barrameda and Spouses Calingo.
Issue:
WON the Barrameda’s adverse claim on the property should prevail
over the levy on execution issued by another court in satisfaction of a
judgment against respondents Calingo?
Held:
No. An agreement to sell is a voluntary instrument as it is a wilful act of
the registered owner. As such voluntary instrument, Section 50 of Act
No. 496 [now Presidential Decree No. 1529] expressly provides that the
act of registration shall be the operative act to convey and affect the
land. And Section 55 of the same Act requires the presentation of the
owner’s duplicate certificate of title for the registration of any deed or
voluntary instrument. As the agreement to sell involves an interest less
than an estate in fee simple, the same should have been registered by
filing it with the Register of Deeds who, in turn, makes a brief
memorandum thereof upon the original and owner’s duplicate certificate
of title.
However, where the owner refuses to surrender the duplicate certificate
for the annotation of the voluntary instrument, the grantee may file with
the Register of Deeds a statement setting forth his adverse claim, as
provided for in Section 110 of Act No. 496. The annotation of an
adverse claim is a measure designed to protect the interest of a person
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over a piece of real property where the registration of such interest or
right is not otherwise provided for by the Land Registration Act, and
serves as a notice and warning to third parties dealing with said property
that someone is claiming an interest on the same or a better right than
the registered owner thereof.
In the case at bar, the reason given for the non-registration of the deed of
sale with assumption of mortgage was that the owner’s duplicate copy of
the certificate of title was in the possession of HMDF. It was not shown,
however, that either respondents Barrameda or respondents Calingo
exerted any effort to retrieve the owner’s duplicate copy from the
HMDF for the purpose of registering the deed of sale with assumption
of mortgage. In fact, the parties did not even seek to obtain the consent
of, much less inform, the HMDF of the sale of the property. This,
despite the provision in the contract of mortgage prohibiting the
mortgagor (respondents Calingo) from selling or disposing the property
without the written consent of the mortgagee. There was no reason for
the parties’ failure to seek the approval of the HMDF to the sale as it
appears from the letter of respondent Angelica Paez-Barrameda to
HMDF that they were ready to pay in full the balance of the loan plus
interest. What is more suspect is that the judgment against respondents
Calingo.
Again, we stress that the annotation of an adverse claim is a measure
designed to protect the interest of a person over a piece of property
where the registration of such interest or right is not otherwise provided
for by the law on registration of real property.
iii. Golden Haven Memorial Park vs Filinvest, GR. No. 188265, Nov.
17, 2010
Doctrine: The annotation of an adverse claim is intended to protect the
claimants’ interest in the property. The notice is a warning to 3 rd parties
dealing with the property that someone claims an interest in it or asserts
a better right than the registered owner.
Facts: Subject parcel of land is an inherited land (heirs: Yap, the Vivars,
Cruz, Aquino, Corpuz, Sobremesana, etc) located in Las Piñas City
covered by TCT 67462 RT-1. The heirs have divided the land into 13
lots, and in a juridical partition, the court distributed four of the lots as
follows: a) Lots 1 and 12 to Aquino; b) Lot 2 to Corpuz and
Sobremesana; and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots
were distributed to the other heirs.
On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars,
executed an agreement to sell Lot 6 in favor of Golden Haven Memorial
Park, Inc. (GHM), payable in three installments. On July 31, 1989
another heir, Aquino, acting for himself and for Corpuz and
Sobremesana, also executed an agreement to sell Lots 1, 2, and 12 in
favor of GHM, payable in the same manner. In both instances, GHM
paid the first installment upon execution of the contract.
On August 4, 1989 GHM caused to be annotated a Notice of Adverse
Claim on TCT 67462 RT-1.
Sometime in August of 1989, Filinvest Development Corporation
(Filinvest) applied for the transfer in its name of the titles over Lots 2, 4,
and 5 but the Las Piñas RD declined its application. Upon inquiry,
Filinvest learned that Lot 8, a lot belonging to some other heir or heirs
and covered by the same mother title, had been sold to Household
Development Corporation (HDC), a sister company of GHM. HDC held
the owner’s duplicate copy of that title.
Filinvest immediately filed against HDC a petition for the surrender and
cancellation of the co-owners’ duplicate copy of TCT 67462 RT-1.
Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the property from
their respective owners as evidenced by three deeds of absolute sale in
its favor.
RTC: On January 14, 1991 GHM filed against the sellers and Filinvest a
complaint for the annulment of the deeds of sale issued in the latter’s
favor. RTC declared the contracts to sell executed by some of the heirs
in GHM’s favor valid and enforceable and the sale in favor of Filinvest
null and void.
CA: Affirmed RTC decision on validity of contract to sell in Lot 6 in
GHM’s favor BUT declared the contract to sell in Lots 1. 2 and 12 in
GHM’s favor void and the sale of the same lots in favor of Filinvest
valid.
13

Issue: WON contracts to sell that the sellers executed in GHM’s favor
covering the same lots sold to Filinvest are valid and enforceable.
Ruling: Yes.
The Court upholds the validity of the contracts between GHM and its
sellers.
To prove good faith, the rule is that the buyer of registered land needs
only show that he relied on the title that covers the property. But this is
true only when, at the time of the sale, the buyer was unaware of any
adverse claim to the property. Otherwise, the law requires the buyer to
exercise a higher degree of diligence before proceeding with his
purchase. He must examine not only the certificate of title, but also the
seller’s right and capacity to transfer any interest in the property.
Filinvest was on notice that GHM had caused to be annotated on the
TCT, the mother title, as early as August 4, 1989 a notice of adverse
claim covering Lot 6 but it still proceeded to buy Lots 1, 2, 6, and 12 on
September 10, November 18, and December 29, 1989.
The annotation of an adverse claim is intended to protect the
claimant’s interest in the property. The notice is a warning to third
parties dealing with the property that someone claims an interest in
it or asserts a better right than the registered owner. Such notice
constitutes, by operation of law, notice to the whole world.
Filinvest’s knowledge that GHM had bought Lot 6, that GHM had
annotated an adverse claim to such lot, and that GHM had physical
possession of the title, should have put Filinvest on its toes regarding the
prospects it faced if it bought the other lots covered by the title in
question.
(As to award of exemplary damages. - This species of damages is
allowed only in addition to moral damages such that exemplary damages
cannot be awarded unless the claimant first establishes a clear right to
moral damages. Since GHM failed to prove that it is entitled to moral
damages, the RTC’s award of exemplary damages had no basis. But the
grant of attorney’s fees is proper since this case has been pending since
1991, or for 19 yrs. GHM was forced to litigate and incur expenses in
order to protect its rights and interests.)
iv. Martinez vs Garcia, GR No. 166536, Feb. 4, 2010
Doctrine: The annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property and serves a
warning to 3rd parties dealing with said property that someone is
claiming an interest on the same or a better right than that of the
registered owner thereof.
Facts: Respondent Brua was the registered owner of a parcel of land
located in Mandaluyong, covered by TCT 346026. The property was
first mortgaged to the GSIS such mortgage was annotated at the back of
TCT No. 346026, inscribed on June 5, 1974.
On February 5, 1980, respondent Brua obtained a loan from respondent
Garcia, in the amount of P150,000.00 and as security mortgaged the
subject property to respondent Garcia, as evidenced by a Deed of Real
Estate Mortgage executed in respondent Garcia's favor. Since the title to
the subject property was in the possession of the GSIS and respondent
Garcia could not register the Deed of Real Estate Mortgage, he then
executed an Affidavit of Adverse Claim and registered it with the
Registry of Deeds of Rizal on June 23, 1980 which remained un-
cancelled up to this time.
Sometime in October 1991, respondent Brua requested respondent
Garcia to pay the former's loan with the GSIS. Respondent Garcia then
paid GSIS the amount of P400,000.00 and, thus, the title to the subject
property was released to him.
On October 22, 1991, a Deed of Absolute Sale was executed between
respondents Garcia and Brua over the subject property (for
P705,000.00). Such deed stated that the subject property was only a
partial payment of respondent Brua's mortgage indebtedness to
respondent Garcia, which he could no longer redeem from the latter.
Respondent Garcia then registered the Deed of Sale with the ROD of
Rizal on October 24 1991, and a new TCT No. 5204 was issued in the
names of respondent Garcia and his wife. However, the annotations at
the back of the previous title were carried over to the new title.
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 Entry No. 56837, a Notice of Levy on Attachment and/or Levy
inscribed on January 8, 1981
 Entry No. 2881 showing a Notice of Levy on Execution in favor of
petitioner Flor Martinez, which was inscribed on July 11, 1988
 Entry No. 3706, which was a Certificate of Sale in favor of
petitioner inscribed on September 2, 1988
 Entry No. 72854, which was a Notice of Levy on Execution in
favor of Pilipinas Bank inscribed on December 8, 1981
 Entry No. 16611 inscribed on October 24, 1991, which was the
cancellation of respondent Brua's mortgage with GSIS
The annotations found in favor of petitioner (underlined above) were all
made in connection with petitioner's action for Collection of Sum of
Money, which she filed against respondent Brua. In that case, a decision
was rendered in favor of petitioner (Brua failed to appeal), and a notice
of levy on execution was issued. A public auction was subsequently
conducted, where the subject property was awarded to petitioner as the
sole bidder in the amount of P10,000.00, and a Certificate of Sale was
issued in her favor.
The annotation of Pilipinas Bank's Notice of Levy on Execution was by
virtue of a civil case filed by Filipinas Manufacturers Bank, now known
as Pilipinas Bank, against respondent Brua.
On February 9, 1994, respondents Garcia and Brua filed with the RTC
an Action to Quiet Title, initially against petitioner due to the
encumbrances/liens annotated on respondent Garcia's new title. They
contended that these encumbrances/liens were registered subsequent to
the annotation of respondent Garcia's adverse claim made in 1980, and
prayed that these be cancelled. Subsequently, the complaint was
amended to include Pilipinas Bank as an additional defendant.
RTC: Dismissed respondent Garcia's action for quieting of title. MR
denied.
CA: Reversed and set aside RTC decision. MR denied.
Petitioner: Contends that respondent Garcia's adverse claim is nothing
but a notice that he has an interest adverse to that of respondent Brua to
the extent of the amount of the loan secured by a Deed of Real Estate
Mortgage executed by respondent Brua in favor of respondent Garcia
and that the adverse claim cannot be said to be superior to a final sale
conducted by the sheriff by authority of the court pursuant to a judgment
that has attained finality.
Respondent: Claims that the petition faces outright dismissal, since the
appropriate remedy of the petitioner should have been a petition for
review under Rule 45 which had already lapsed.
Issue:
1. WON petition for review under Rule 45 of the Rules of Court is
proper
2. WON respondent’s adverse claim sufficient to constitute
constructive notice to petitioner regarding the subject property
Ruling:
1. NO.
Petitioner should have filed a petition for review under Rule 45 of
the Rules of Court instead of a petition for certiorari under Rule 65,
since she is assailing the CA decision and resolution which are final
judgments. Rule 45 clearly provides that decisions, final orders or
resolutions of the CA in any case, i.e., regardless of the nature of
the action or proceedings involved, may be appealed to us by filing
a petition for review, which is just a continuation of the appellate
process over the original case.
A petition for certiorari under Rule 65 is proper if a tribunal, a
board or an officer exercising judicial or quasi-judicial functions
has acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction and there is
no appeal, or any plain, speedy and adequate remedy in the
ordinary course of law. Thus, a special civil action for certiorari, as
a general rule, cannot be used as a substitute for an appeal that the
petitioner has already lost. Exceptions are: (1) when public welfare
and the advancement of public policy dictate; (2) when the broader
interests of justice so require; (3) when the writs issued are null; (4)
when the questioned order amounts to an oppressive exercise of
judicial authority, which we find to be not present in this case.
2. YES
Levy does not make the judgment creditor the owner of the
property levied upon. He merely obtains a lien and is subject and
14
 subordinate to all valid claims and liens existing against the
property at the time the execution lien attached, such as real estate
mortgages.
Respondent Garcia's adverse claim (deed of mortgage) was
annotated on respondent Brua's title on 1980. The adverse claim
was already existing when the Notice of Levy on Execution, as
well as the Certificate of Sale in favor of petitioner, was inscribed
on 1988, hence, the adverse claim is sufficient to constitute
constructive notice to petitioner regarding the subject property.
When petitioner registered her Notice of Levy on Execution on the
title of the subject property, she was charged with the knowledge
that the subject property sought to be levied upon on execution was
encumbered by an interest the same as or better than that of the
registered owner thereof.
The annotation of an adverse claim is a measure designed to protect
the interest of a person over a piece of real property and serves a
warning to third parties dealing with said property that someone is
claiming an interest on the same or a better right than that of the
registered owner thereof.
Petitioner cannot be considered as a buyer in good faith. A
purchaser in good faith and for value is one who buys the property
of another without notice that some other person has a right to or
interest in such property and pays a full and fair price for the same
at the time of such purchase, or before he has notice of the claims
or interest of some other person in the property.
c. Enforcement of Liens on Registered Lands and Application of New
Certificate Upon Expiration of Redemption Period ( Sec 74-75)
i. Padilla, Jr vs Producer’s Cooperative, GR No. 141256, July 15,
2005
Doctrine: Mere motion for the cancellation of the old TCTs and the
issuance of new ones as a result of petitioners refusal to surrender his
owners duplicate TCTs in improper. The proper course of action was to
file a petition in court, rather than merely move, for the issuance of new
titles.
Facts: Petitioner and his wife are the registered owners of Lot Nos.
2904-A (covered by TCT No. T-36090), 2312-C-5 (covered by TCT No.
T-3849), and 2654 (covered by TCT No. T-8053), all situated in Bago
City. Respondent is a marketing cooperative which had a money claim
against petitioner. Petitioner was declared in default after not filing an
answer and upon motion of respondent and was furnished a copy of this
decision by mail but, because of his failure to claim it, the copy was
returned.
Petitioner did not redeem within the 12-month period. The court, on
motion of respondent, ordered on February 5, 1992 the issuance of a
writ of possession for the sheriff to cause the delivery of the physical
possession of the properties in favor of respondent. On May 17, 1995,
respondent filed a motion to direct the RD to issue new titles over the
properties in its name, alleging that RD of Bago City would not issue
new titles (in respondents’ name) unless the owner’s copies were first
surrendered to him. Respondent countered that such surrender was
impossible because this was an involuntary sale and the owner’s copies
were with petitioner.
RTC: Issued an order granting the motion. MR by petitioner denied.
CA: 4 years later, CA affirmed RTC decision.
Petitioner: Claims that under Section 6 of Rule 39 of the 1997 Rules of
Civil Procedure, the execution of the judgment was barred by
prescription, given that the motion was filed more than 5 years after the
writ of execution was issued on March 23, 1990 and also argues that
respondent failed to follow the correct procedure for the cancellation of
a certificate of title and the issuance of a new one, which is contained in
Section 107 of PD 1529.
Respondent: Claims that the motion dated May 15, 1995 to direct the
RD to issue new certificates of title was but a continuation of the series
of events that began with the decision in its favor on November 28,
1989, and from there, the auction of the properties and the issuance of a
certificate of sale in 1990.
Issue:
1. WON respondent’s right to have new titles issued in its name is
now barred by prescription
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2. WON the motion in question is the proper remedy for cancelling
petitioner’s certificates of title and new ones issued in its name.
Ruling:
1. NO
The respondent’s right to petition the court for the issuance of new
certificates of title has not yet prescribed.
It is settled that execution is enforced by the fact of levy and sale.
The right acquired by the purchaser at an execution sale is inchoate
and does not become absolute until after the expiration of the
redemption period without the right of redemption having been
exercised. But inchoate though it be, it is like any other right,
entitled to protection and must be respected until extinguished by
redemption.
The fact of levy and sale constitutes execution, and not the action
for the issuance of a new title. Here, because the levy and sale of
the properties took place in June and July of 1990, respectively, or
less than a year after the decision became final and executory, the
respondent clearly exercised its rights in timely fashion.
2. NO
Petitioner is correct in assailing as improper respondents filing of a
mere motion for the cancellation of the old TCTs and the issuance
of new ones as a result of petitioners refusal to surrender his
owners duplicate TCTs.
The proper course of action was to file a petition in court, rather
than merely move, for the issuance of new titles.
Section 75 of PD 1529 provides:
Sec. 75. Application for new certificate upon expiration of
redemption period. Upon the expiration of the time, if any,
allowed by law for redemption after the registered land has
been sold on execution, or taken or sold for the enforcement of
a lien of any description, except a mortgage lien, the
purchaser at such sale or anyone claiming under him may
petition the court for the entry of a new certificate to him.
Before the entry of a new certificate of title, the registered owner
may pursue all legal and equitable remedies to impeach or
annul such proceedings.
ii. Reyes vs Tang Soat Ing, GR No. 185620, Dec 14, 2011
Doctrine: In implementing the involuntary transfer of title of real
property levied and sold on execution, it is NOT enough for the
executing party to file a motion with the court which rendered judgment,
he needs to file a separate action with the RTC for the cancellation of
the old TCTs and the issuance of new ones.
Facts: The controversy arose from a complaint for Enforcement of
Easement and Damages with Prayer for Preliminary Injunction and
Restraining Order filed by MFR Farms, Inc. (MFR) against respondents.
MFR complained of respondents’ commercial and industrial use of their
property covered by TCT No. T-198753, and sought the enforcement of
the encumbrance contained in their title. MFR likewise asked for the
payment of damages suffered by its pig farm resulting from
respondents’ illegal use of their property.
RTC granted MFR’s complaint and held that respondents’ have defied
the clear undertaking stated in the title to the subject property to limit the
use thereof to purposes not commercial or industrial in character. Using
the land as a chemical processing site and as a storage facility for
chemicals is devoting it to industrial purposes, which is not allowed
under the subsisting encumbrance on the property.
CA affirmed with modification but reduced the rate of interest to 6%.
Upon motion of MFR, the RTC issued a Writ of Execution. Sheriff
Legaspi was commanded to execute the Decision dated September 12,
1991 as modified by the CA.
October 9, 1998, and on two occasions thereafter, December 10 & 28,
1998, Sheriff Legaspi served a copy of the Writ of Execution on
respondents, and followed up thereon.
A few days thereafter, on January 7, 1999, Sheriff Legaspi presented the
Writ of Execution and the Notice of Levy on Execution of Real Property
15
covering TCT No. T-198753 to the RD. On February 4, 1999, the Notice
of Levy was inscribed on TCT No. T-198753. On May 7, 1999, Sheriff
Legaspi issued a Notice of Sale on Execution of Real Property which he
posted on conspicuous areas. On June 12, 19 & 26, 1999, the Notice of
Sale on Execution of Real Property was published in The Times
Newsweekly.
On July 19, 1999, at the public auction of the subject property, MFR
was declared as the highest bidder and was issued a Certificate of Sale
which was registered with the RD.
After more than 5 years, on September 17, 2004, with respondents
failing to exercise their right of redemption, MFR filed a Motion asking
the RTC to issue an order directing the RD to cancel TCT No. T-198753
in the name of respondents and issue a new certificate of title in the
name of MFR. RTC denied the Motion holding that a mere motion is not
sufficient for the cancellation of a certificate of title. Respondents failed
to file an Answer and was declared in default upon petitioner's motion.
During presentation of evidence ex-parte, MFR filed a Motion for
Substitution of Party Petitioner attaching thereto a Deed of Transfer of
Interest declaring petitioner Reyes acquisition of MFRs rights over the
subject property.
RTC: RTC granted petition and directed respondent to surrender to the
Court her duplicate owners copy. Copies of the Order were separately
served on parties' counsel and to the RD. However, service thereof to
respondents counsel was returned and rendered impossible since Atty.
Sumawang already died.
CA: Annulled and set aside RTC decision.
Issues:
1. WON the execution sale of the subject property is void
2. Proceeding from the validity of the execution sale and the
consolidation of Reyes ownership over the subject property, WON
Section 107 of Presidential Decree No. 1529 contemplates the
filing of a separate cadastral case before the RTC acting as a land
registration court
Ruling:
1. NO. Execution sale is valid.
Whoever asserts a right dependent for its existence upon a negative,
must establish the truth of the negative by a preponderance of the
evidence. This must be the rule, or it must follow that rights, of
which a negative forms an essential element, may be enforced
without proof. Thus, whenever the right depends upon the truth of a
negative, upon him is cast the onus probandi, except in cases where
the matter is peculiarly within the knowledge of the adverse party.
Respondents made no attempt to meet this burden of evidence,
simply maintaining lack of notice of the entire proceedings
(execution and issuance of a new title over the subject property)
before the trial court. We cannot subscribe to respondents belated
posturing. The disputable presumption that official duty has been
regularly performed was not overcome by respondents.
There was substantial compliance with Section 15, Rule 39 of the
Rules of Court: the documents in support thereof, i.e., the
Certificate of Posting issued by Sheriff Legaspi and the Affidavit of
Publication executed by the publisher of The Times Newsweekly,
appear to be in order. In this case, the purpose of giving notice
through posting and publication under Section 15(c) of the same
rule to let the public know of the sale to the end that the best price
or a better bid may be made possible to minimize prejudice to the
judgment debtor was realized.
Respondents attack on the validity of the execution proceedings,
culminating in the execution sale of the subject property, is barred
by laches, by their utter failure to respond to the processes of the
RTC in the execution proceedings despite their receipt of notice at
each stage thereof.
Laches is the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due
diligence could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
it or declined to assert it. Laches thus operates as a bar in equity.
2. YES.
A succeeding registration of property in another’s name, after its
original registration, contemplates a separate original action.
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In implementing the involuntary transfer of title of real property
levied and sold on execution, it is NOT enough for the executing
party to file a motion with the court which rendered judgment, he
needs to file a separate action with the RTC for the cancellation of
the old TCTs and the issuance of new ones.
Plainly, Reyes must institute a separate cadastral action initiated via
petition.
d. Lis Pendens (sec. 76)
i. Viewmaster Construction Vs. Maulit
Facts:
 Subject Property is known as the Las Pinas property registered
in the name of State Properties Corporation which is
collectively owned by the Chiong/Roxas Family.
 the said family decided to give control and ownership over the
said corporations to only one member of the family, through
the process of bidding among the family
members/stockholders of the said companies. It was agreed
that the bidder who acquires 51% or more of the said
companies shall be deemed the winner.
 Allen Roxas (Defendant) applied for a loan with First Metro
for 36,000,000 million pesos to participate in the bidding, with
the condition that Allen Roxas procure a guarantor.
 Viewmaster agreed to act as guarantor with the agreement that
should Roxas prevail in the bidding that they would participate
in the Project to Co-Develop the Real Estate Assets of State
Investment Trust, Inc. and Roxas should sell 50 percent shares
of stock to them
 Allen Roxas eventually gained control of the company but 2
years had passed he did not implement the Joint Venture
Project with View Master.
 Viewmaster filed a specific performance case and annotated a
NOTICE OF LIS PENDENS on a property registered in the
name State Properties Corporation
 "In a letter dated September 15, 1995, the
respondent Register of Deeds of Las Piñas denied
the request for annotation of the Notice of Lis
Pendens on the following grounds:
 1. the request for annotation and the complaint [do]
not contain an adequate description of the subject
property;
 2. petitioner's action only has an incidental effect on
the property in question.
 "On September 20, 1995, petitioner filed an appeal
to the respondent Land Registration Authority,
which was docketed as Consulta No. 2381.
 "On December 14, 1995, the Respondent Land
Registration Authority issued the assailed
Resolution holding that the petitioner's 'Notice of Lis
Pendens' was not registrable
Issue Number 1: W/N there was an adequate description on the
property?
Ruling:
respondents argue that petitioner failed to provide an accurate
description of the Las Piñas property, which was merely referred to as a
"parcel of land." |||
The notice of lis pendens described the property as follows:
"A parcel of land situated in the Barrio of Tindig
na Manga, Municipality of Las Piñas, Province of
Rizal . . . containing an area of Seven Hundred
Eighty-Six Thousand One Hundred Sixty-Seven
(786,167) square meters, more or less."
By itself, the above does not adequately describe the subject property,
pursuant to Section 14 of Rule 13 of the Rules of Court and Section 76
of Presidential Decree (PD) No. 1529. It does not distinguish the said
property from other properties similarly located in the Barrio of Tindig
na Manga, Municipality of Las Piñas, Province of Rizal. Indeed, by the
above description alone, it would be impossible to identify the property.
LexLib
16
In the paragraph directly preceding the description quoted above,
however, petitioner specifically stated that the property referred to in the
notice of lis pendens was the same parcel of land covered by TCT No.
(S-17992) 12473-A:
"Please be notified that on 08 September 1995,
the [p]laintiff in the above-entitled case filed an
action against the above-named [d]efendants for
specific performance, enforcement of an implied
trust and damages, now pending in the Regional
Trial Court of Pasig, Branch 166, which action
involves a parcel of land covered by Transfer
Certificate Title (TCT) No. (S-17992) 12473-A,
registered in the name of Peltan Development
Incorporated which changed its corporate name to
State Properties Corporation, one of the
[d]efendants in the aforesaid case. The said parcel
of land is more particularly described as follows:
'A parcel of land situated in the Barrio
of Tindig na Manga, Municipality of
Las Piñas, Province of Rizal . . .
containing an area of Seven Hundred
Eighty-Six Thousand One Hundred
Sixty-Seven (786,167) square meters,
more or less.'
"Request is therefore made [for] your good office
to record this notice of pendency of the
aforementioned action in TCT No. (S-17992)
12473-A for all legal purposes." 10
As earlier noted, a copy of the TCT was attached to and made an
integral part of both documents. Consequently, the notice of lis pendens
submitted for registration, taken as a whole, leaves no doubt as to the
identity of the property, the technical description of which appears on
the attached TCT. We stress that the main purpose of the requirement
that the notice should contain a technical description of the property is to
ensure that the same can be distinguished and readily identified. In this
case, we agree with petitioner that there was substantial compliance with
this requirement.
Issue Number 2: W/N Property is directly involved in the Specific
Performance Case?
Ruling: A notice of lis pendens, which literally means "pending suit,"
may involve actions that deal not only with the title or possession of a
property, but even with the use or occupation thereof.
In Magdalena Homeowners Association, Inc. vs. Court of Appeals, 184
SCRA 325, 329-330, April 17, 1990 per Narvasa, C.J., the Court did not
confine the availability of lis pendens to cases involving the title to or
possession of real property. Thus, it held: "According to Section 24,
Rule 14 of the Rules of Court and Section 76 of Presidential Decree No.
1529:
A notice of lis pendens is proper in the following cases, viz.:
a) An action to recover possession of real estate;
b) An action to quiet title thereto;
c) An action to remove clouds thereon;
d) An action for partition; and
e) Any other proceedings of any kind in Court directly affecting the title
to the land or the use or occupation thereof or the buildings thereon."
In Villanueva vs. Court of Appeals, 281 SCRA 298, this Court further
declared that the rule of lis pendens applied to suits brought "to establish
an equitable estate, interest, or right in specific real property or to
enforce any lien, charge, or encumbrance against it . . . ." Thus, this
Court observed that the said notice pertained to the following: ". . . all
suits or actions which directly affect real property and not only those
which involve the question of title, but also those which are brought to
establish an equitable estate, interest, or right, in specific rel property
or to enforce any lien, charge, or encumbrance against it, there being in
some cases a lis pendens, although at the commencement of the suit
there is no present vested interest, claim, or lien in or on the property
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which it seeks to charge. It has also been held to apply in the case of a
proceeding to declare an absolute deed of mortgage, or to redeem from a
foreclosure sale, or to establish a trust, or to suits for the settlement and
adjustment of partnership interests.”
Important Doctrine:
The Court must stress that the purpose of lis pendens is
(1) to protect the rights of the party causing the registration thereof and
(2) to advise third persons who purchase or contract on the subject
property that they do so at their peril and subject to the result of the
pending litigation. One who deals with property subject of a notice of lis
pendens cannot acquire better rights than those of his predecessors-in-
interest.|||
ii. Atlantic Erectors V Herbal Cove Realty
Facts;
 Herbal Cove Reality and Atlantic Erectors entered into a
construction contract whereby Herbal agreed to construct 4
townhouses within a period of 180 days
 Atlantic claimed that such period was not followed due to
suspension orders, additional work, force majeure, etc.
 Herbal denied such claim and instead pointed out to Atlantic
that the contract period was aggravated by defective
worksmanship and utilization of materials.
 Atlantic filed for collection of sum of money and damages
against Herbal for non-compliance of the period agreed upon.
 Atlantic filed a notice of lis pendens on the subject properties
were the town houses were built.
Issue: W/N Money claims representing cost of materials [for] and labor
[on] the houses constructed on a property [are] a proper lien for
annotation of lis pendens on the property title[.]|||
Ruling: NO.
As a general rule, the only instances in which a notice of lis pendens
may be availed of are as follows: (a) an action to recover possession of
real estate; (b) an action for partition; and (c) any other court
proceedings that directly affect the title to the land or the building
thereon or the use or the occupation thereof. Additionally, this Court has
held that resorting to lis pendens is not necessarily confined to cases that
involve title to or possession of real property. This annotation also
applies to suits seeking to establish a right to, or an equitable estate or
interest in, a specific real property; or to enforce a lien, a charge or an
encumbrance against it.
Apparently, petitioner proceeds on the premise that its money claim
involves the enforcement of a lien. Since the money claim is for the
nonpayment of materials and labor used in the construction of
townhouses, the lien referred to would have to be that provided under
Article 2242 of the Civil Code. This provision describes a contractor's
lien over an immovable property as follows:
"Art. 2242. With reference to specific immovable
property and real rights of the debtor, the
following claims, mortgages and liens shall be
preferred, and shall constitute an encumbrance on
the immovable or real right:
xxx xxx xxx
"(3) Claims of laborers, masons, mechanics and
other workmen, as well as of architects, engineers
and contractors, engaged in the construction,
reconstruction or repair of buildings, canals or
other works, upon said buildings, canals or other
works;
"(4) Claims of furnishers of materials used in the
construction, reconstruction, or repair of
buildings, canals or other works, upon said
buildings, canals or other works[.]"
However, a careful examination of petitioner's Complaint, as well as the
reliefs it seeks, reveals that no such lien or interest over the property was
ever alleged. The Complaint merely asked for the payment of
construction services and materials plus damages, without mentioning
— much less asserting — a lien or an encumbrance over the property.
17
Verily, it was a purely personal action and a simple collection case. It
did not contain any material averment of any enforceable right, interest
or lien in connection with the subject property.
Even assuming that petitioner had sufficiently alleged such lien or
encumbrance in its Complaint, the annotation of the Notice of Lis
Pendens would still be unjustified, because a complaint for collection
and damages is not the proper mode for the enforcement of a
contractor's lien.|||
Clearly then, neither Article 2242 of the Civil Code nor the enforcement
of the lien thereunder is applicable here, because petitioner's Complaint
failed to satisfy the foregoing requirements. Nowhere does it show that
respondent's property was subject to the claims of other creditors or was
insufficient to pay for all concurring debts. Moreover, the Complaint did
not pertain to insolvency proceedings or to any other action in which the
adjudication of claims of preferred creditors could be ascertained. |||
iii. Homeowners Savings V Delgado
Facts:
 Felonia and De Guzman were registered owners of a parcel of
land with a 5 bedroom house, in Las Pinas
 They mortgaged the property to Delgado to secure a loan in
the amount of 1,655,000 but the mortgage was in a form of
Deed of Absolute Sale with an Option to Repuchase.
 Felonia and De Guzman filed an action for Reformation of
Contract (Reformation Case) that the parties executed a
mortage not a deed of sale with a right to repurchase which
was later approved by the RTC and Affirmed by the CA
 Aggrieved, Delgado filed a petition for Consolidation of
Ownership of Propety was sold and an Option to Repurchase
and Issuance of a New Certificate of Title (Consolidation
Case). An ex parte hearing was set, RTC ordered the issuance
of a new title.
 By virtue of that order Delgado transferred the title of the
property in her name and the names of Felonia and De
Guzman were cancelled.
 Felonia and De Guzman’s feelings were hurts so they counter
filed a case in the CA through a petition for annulment of
Judgement.
 Meanwhile, Delgado mortgaged the Subject property to
Homeowners Savings and Loan Bank (HLSB) using her new
newly registered title.
 Felonia and De Guzman caused the annotation of a Notice of
Lis Pendens on Delgado’s Title.
 HSLB foreclosed the subject property and later consolidated
ownership in its favor, causing the issuance of a new title in its
name|||
 the CA annulled and set aside the decision of the RTC, Las
Piñas City in the Consolidation case. The decision of the CA,
declaring Felonia and De Guzman as the absolute owners of
the subject property and ordering the cancellation of Delgado's
title, became final and executory.
Issue: W/N HSLB was a mortgagee and purchaser in good faith?
Ruling: Yes, he was a mortgagee in good faith but was not a purchaser
in good faith, Get it?
When the property was mortgaged to HSLB, the registered owner of the
subject property was Delgado who had in her name TCT No. 44848.
Thus, HSLB cannot be faulted in relying on the face of Delgado's title.
The records indicate that Delgado was at the time of the mortgage in
possession of the subject property and Delgado's title did not contain any
annotation that would arouse HSLB's suspicion. HSLB, as a mortgagee,
had a right to rely in good faith on Delgado's title, and in the absence of
any sign that might arouse suspicion, HSLB had no obligation to
undertake further investigation.|||
However, the rights of the parties to the present case are defined not by
the determination of whether or not HSLB is a mortgagee in good faith,
but of whether or not HSLB is a purchaser in good faith. And, HSLB is
not such a purchaser.
In the case at bar, HSLB utterly failed to take the necessary precautions.
At the time the subject property was mortgaged, there was yet no
annotated Notice of Lis Pendens. However, at the time HSLB purchased
the subject property, the Notice of Lis Pendens was already annotated on
the title.|||
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Indeed, at the time HSLB bought the subject property, HSLB had actual
knowledge of the annotated Notice of Lis Pendens. Instead of heeding
the same, HSLB continued with the purchase knowing the legal
repercussions a notice of lis pendens entails. HSLB took upon itself the
risk that the Notice of Lis Pendens leads to. As correctly found by the
CA, "the notice of lis pendens was annotated on 14 September 1995,
whereas the foreclosure sale, where the appellant was declared as the
highest bidder, took place sometime in 1997. There is no doubt that at
the time appellant purchased the subject property, it was aware of the
pending litigation concerning the same property and thus, the title issued
in its favor was subject to the outcome of said litigation|||
Doctrines/Discussions on Lis Pendens (If ganahan pamo mubasa):
 Lis pendens is a Latin term which literally means, "a pending
suit or a pending litigation" while a notice of lis pendens is an
announcement to the whole world that a real property is in
litigation, serving as a warning that anyone who acquires an
interest over the property does so at his/her own risk, or that
he/she gambles on the result of the litigation over the property.
It is a warning to prospective buyers to take precautions and
investigate the pending litigation.
 The purpose of a notice of lis pendens is to protect the rights
of the registrant while the case is pending resolution or
decision. With the notice of lis pendens duly recorded and
remaining uncancelled, the registrant could rest secure that
he/she will not lose the property or any part thereof during
litigation.
 The doctrine of lis pendens is founded upon reason of public
policy and necessity, the purpose of which is to keep the
subject matter of the litigation within the Court's jurisdiction
until the judgment or the decree have been entered; otherwise,
by successive alienations pending the litigation, its judgment
or decree shall be rendered abortive and impossible of
execution.
iv. Casim V Register of Deeds of Las Pinas
Facts:
 J Casim Consteruction Supplies is represented by Rogelio
Casim who is the registerd owner of the parcel of land in
dispute. Casim acquired the property by virtue of a Deed of
Absolute Sale.
 Casim filed with the RTC of Las Piñas City, Branch 253 an
original petition for the cancellation of the notice of lis
pendens, as well as of all the other entries of involuntary
encumbrances annotated on the original copy of TCT.
 Petitioner claimed that its owner's duplicate copy of the TCT
was clean at the time of its delivery and that it was surprised to
learn later on that the original copy of its TCT, on file with the
Register of Deeds, contained several entries which all
signified that the covered property had been subjected to
various claims. The subject notice of lis pendens is one of
such entries.
 To justify the cancellation, petitioner alleged that the notice of
lis pendens, in particular, was a forgery judging from the
inconsistencies in the inscriber's signature as well as from the
fact that the notice was entered non-chronologically, that is,
the date thereof is much earlier than that of the preceding
entry. In this regard, it noted the lack of any transaction record
on file with the Register of Deeds that would support the
notice of lis pendens annotation.
 Petitioner also stated that while Section 59 of Presidential
Decree (P.D.) No. 1529 requires the carry-over of subsisting
encumbrances in the new issuances of TCTs, petitioner's
duplicate copy of the title did not contain any such carry-over,
which means that it was an innocent purchaser for value,
especially since it was never a party to the civil case referred
to in the notice of lis pendens. Lastly, it alludes to the
indefeasibility of its title despite the fact that the mother title,
TCT No. 30459, might have suffered from certain defects and
constraints
 The Intestate Estate of Bruneo F. Casim, representing Bruneo
F. Casim, intervened in the instant case and filed a
Comment/Opposition in which it maintained that the RTC of
Las Piñas did not have jurisdiction over the present action,
because the matter of canceling a notice of lis pendens lies
within the jurisdiction of the court before which the main
action referred to in the notice is pending. In this regard, it
emphasized that the case referred to in the said notice had
already attained finality as the Supreme Court had issued an
18
 entry of judgment therein and that the RTC of Makati City had
ordered execution in that case
 Raising the purely legal question of whether the RTC of Las
Piñas City, Branch 253 has jurisdiction in an original action to
cancel the notice of lis pendens annotated on the subject title
as an incident in a previous case, petitioner, in this present
petition, ascribes error to the trial court in dismissing its
petition for cancellation. An action for cancellation of notice
of lis pendens, petitioner believes, is not always ancillary to an
existing main action because a trial court has the inherent
power to cause such cancellation, especially in this case that
petitioner was never a party to the litigation to which the
notice of lis pendens relates.
Issue: Jurisdiction of a court on who has a the right to cancel a notice of
a lis pendens.
Ruling:
Lis pendens — which literally means pending suit —
refers to the jurisdiction, power or control which a court acquires
over the property involved in a suit, pending the continuance of the
action, and until final judgment. Founded upon public policy and
necessity, lis pendens is intended to keep the properties in litigation
within the power of the court until the litigation is terminated, and
to prevent the defeat of the judgment or decree by subsequent
alienation. Its notice is an announcement to the whole world that a
particular property is in litigation and serves as a warning that one
who acquires an interest over said property does so at his own risk,
or that he gambles on the result of the litigation over said property.
A notice of lis pendens, once duly registered, may be
cancelled by the trial court before which the action involving
the property is pending. This power is said to be inherent in the
trial court and is exercised only under express provisions of law.
Accordingly, Section 14, Rule 13 of the 1997 Rules of Civil
Procedure authorizes the trial court to cancel a notice of lis pendens
where it is properly shown that the purpose of its annotation is for
molesting the adverse party, or that it is not necessary to protect the
rights of the party who caused it to be annotated. Be that as it may,
the power to cancel a notice of lis pendens is exercised only under
exceptional circumstances, such as: where such circumstances are
imputable to the party who caused the annotation; where the
litigation was unduly prolonged to the prejudice of the other party
because of several continuances procured by petitioner; where the
case which is the basis for the lis pendens notation was dismissed
for non prosequitur on the part of the plaintiff; or where judgment
was rendered against the party who caused such a notation. In such
instances, said notice is deemed ipso facto cancelled.
e. Levies on Execution
i. Pineda vs Arcalas
The subject property consists of three parcels of land.
Registered in the name of Spouses
Mauro Lateo and Encarnacion Evangelista (spouses Lateo). . A certain
Victoria Tolentino bought the said property from the
Spouses Lateo. Sometime later, a Civil Case for Sum of Money, was
instituted by Arcalas against Victoria Tolentino. This case stemmed
from an indebtedness evidenced by a promissory note and four post-
dated checks later dishonored, which Victoria Tolentino owed Arcalas.
RTC, rendered judgment in favor of Arcalas and against
Victoria Tolentino. Pineda bought the subject property from Victoria
L. Tolentino. Pineda alleged that upon payment of the purchase price,
she took possession of the subject property by allowing a tenant,
Rodrigo Bautista to cultivate the same. However, Pineda failed to
register the subject property under her name. To execute the
judgment, the Quezon City RTC levied upon the subject property and
the Notice of Levy on Alias Writ of Execution dated 12 January
1999 was annotated .
Asserting ownership of the subject property, Pineda filed with the
Deputy Sheriff of the Quezon City RTC an Affidavit of Title and Third
Party Claim. Arcalas filed a motion to set aside Pinedas Affidavit of
Title and Third Party Claim, which on 3 November 1999,
the Quezon City RTC granted, to wit:
[Arcalas] showed that her levies on the
properties were duly registered while the alleged
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Deed of Absolute Sale between the defendant
Victoria L. Tolentino and Analyn G. Pineda was
not. The levies being superior to the sale claimed by
Ms. Pineda, the court rules to quash and set aside
her Affidavit of Title and Third Party Claim.
Arcalas and Leonardo Byron P. Perez, Jr. purchased Lot No.
3762 at an auction sale conducted by the Deputy Sheriff.
Arcalas then filed an action for the cancellation of the entry of
Pinedas adverse claim which was granted by the court.
I.
WHETHER THE LEVY ON ALIAS WRIT OF
EXECUTION ISSUED BY THE REGIONAL
TRIAL COURT OF QUEZON CITY IN CIVIL
CASE NO. Q-96-27884 MAY EXEMPT THE
PORTION BOUGHT BY [PINEDA] FROM
VICTORIA TOLENTINO; [and]
II.
 
WHETHER THE POSSESSION OF [PINEDA] OF
THE 5 HECTARES PORTION OF LOT 3762 IS
ALREADY EQUIVALENT TO A TITLE
DESPITE THE ABSENCE OF REGISTRATION.
 
Ruling:
Sections 51 and 52 of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree, provide that:
 
Section 51. Conveyance and other dealings by registered
owner.An owner of registered land may convey, mortgage, lease, charge
or otherwise deal with the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But 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, but shall operate only as a contract between the parties and as
evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect
the land insofar as third persons are concerned, and in all cases under
this Decree, the registration shall be made in the office of the Register of
Deeds for the province or the city where the land lies.
Section 52. Constructive notice upon registration.Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed or entered in the office
of the Register of Deeds for 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.
It is clear from these provisions that before a purchaser of land
causes the registration of the transfer of the subject property in her favor,
third persons, such as Arcalas, cannot be bound thereby. Insofar as third
persons are concerned, what validly transfers or conveys a person in
interest in real property is the registration of the deed. As the deed of
sale was unrecorded, it operates merely as a contract between the
parties, namely Victoria Tolentino as seller and Pineda as buyer, which
may be enforceable against Victoria Tolentino through a separate and
independent action. On the other hand, Arcalass lien was registered and
annotated at the back of the title of the subject property and accordingly
amounted to a constructive notice thereof to all persons, whether or not
party to the original case filed before the Quezon City RTC.
Pineda did not even allege, much less prove, that Arcalas had
actual knowledge of her claim of ownership and possession of the
property at the time the levy was registered. The records fail to show
that Arcalas knew of Pinedas claim of ownership and possession prior to
Pinedas filing of her third party claim before the Quezon City
RTC. Hence, the mere possession of the subject property by Pineda,
absent any proof that Arcalas had knowledge of her possession and
adverse claim of ownership of the subject property, cannot be
considered as equivalent to registration.
ii. Valdevieso vs Damalerio
Valdevieso (petitioner) bought from spouses Lorenzo and
Elenita Uy a parcel of land. The deed of sale was not registered, nor
was the title of the land transferred to petitioner. The said property was
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immediately declared by petitioner for taxation purposes as Tax
Declaration No. l6205 with the City Assessors Office. Spouses
Candelario and Aurea Damalerio (respondents) filed with the
Regional Trial Court (RTC) of General Santos City, a complaint for a
sum of money against spouses Lorenzo and Elenita Uy with
application for the issuance of a Writ of Preliminary Attachment. Trial
court issued a Writ of Preliminary Attachment by virtue of which the
property, then still in the name of Lorenzo Uy but which had already
been sold to petitioner, was levied. TCT in the name of Lorenzo Uy was
cancelled and, in lieu thereof, TCT was issued in the name of petitioner.
This new TCT carried with it the attachment in favor of respondents.
Petitioner filed a third-party claim to discharge or annul the attachment
levied on the property on the ground that the said property belongs to
him and no longer to Lorenzo and Elenita Uy.
Hot Issue:
Whether or not a registered writ of attachment on the land is a
superior lien over that of an earlier unregistered deed of sale.
Ruling on the river:
The law applicable to the facts of this case is Section 51 of P.D.
No. 1529. Said Section provides:
Sec. 51. Conveyance and other dealings by registered owner. - An
owner of registered land may convey, mortgage, lease, charge, or
otherwise deal with the same in accordance with existing laws. He may
use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But 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, but
shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies.
It is to be noted that though the subject land was deeded to
petitioner as early as 05 December 1995, it was not until 06 June 1996
that the conveyance was registered, and, during that interregnum, the
land was subjected to a levy on attachment. It should also be observed
that, at the time of the attachment of the property on 23 April 1996, the
spouses Uy were still the registered owners of said property. Under the
cited law, the execution of the deed of sale in favor of petitioner was not
enough as a succeeding step had to be taken, which was the registration
of the sale from the spouses Uy to him. Insofar as third persons are
concerned, what validly transfers or conveys a persons interest in real
property is the registration of the deed. Thus, when petitioner bought the
property on 05 December 1995, it was, at that point, no more than a
private transaction between him and the spouses Uy. It needed to be
registered before it could bind third parties, including respondents.
When the registration finally took place on 06 June 1996, it was already
too late because, by then, the levy in favor of respondents, pursuant to
the preliminary attachment ordered by the General Santos City RTC,
had already been annotated on the title.
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale. This result is a necessary
consequence of the fact that the property involved was duly covered by
the Torrens system which works under the fundamental principle that
registration is the operative act which gives validity to the transfer or
creates a lien upon the land.
The preference created by the levy on attachment is not
diminished even by the subsequent registration of the prior sale. This is
so because an attachment is a proceeding in rem It is against the
particular property, enforceable against the whole world. The attaching
creditor acquires a specific lien on the attached property which nothing
can subsequently destroy except the very dissolution of the attachment
or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the
owners debt. The lien continues until the debt is paid, or sale is had
under execution issued on the judgment, or until the judgment is
satisfied, or the attachment discharged or vacated in some manner
provided by law.
Thus, in the registry, the attachment in favor of respondents
appeared in the nature of a real lien when petitioner had his purchase
recorded. The effect of the notation of said lien was to subject and
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subordinate the right of petitioner, as purchaser, to the lien. Petitioner
acquired ownership of the land only from the date of the recording of his
title in the register, and the right of ownership which he inscribed was
not absolute but a limited right, subject to a prior registered lien of
respondents, a right which is preferred and superior to that of petitioner
VII. REGISTRATION OF JUDGMENT, ORDERS; PARTITIONS
Sections 76-92
1. Surrender of Owner’s Duplicate (sec 107, PD 1529)
a. Tan vs Damalerio
In an action for redemption filed by petitioner Banaga, the trial court
declared that she had lost her right to redeem her property earlier
foreclosed and which was subsequently sold at public auction to
DAMALERIO (private respondent) . Certificates of Title covering the
said property were issued to private respondent over which petitioner
Banaga annotated on a notice of lis pendens. On appeal by petitioner
Banaga, the CA reversed the decision of the trial court and allowed the
former to redeem the property within a certain period. Private
respondents petition to this Court was dismissed and the decision
became final. Banaga tried to redeem the property by depositing with
the trial court the amount of redemption which was financed by her co-
petitioner Tan. Lower court issued an order upholding the redemption
and ordered the Register of Deeds to cancel private respondents
Certificates of Title and issue new titles in the name of petitioner
Banaga. Private respondent filed a petition for certiorari with the CA.
CA issued a temporary restraining order to enjoin the execution of the
orders of the lower court and declared the Private Respondents. Decision
became final and executory.
Although there is no specific pronouncement in the decision of the Court
of Appeals that reverts the titles to the land subjects of redemption to the
defendant, the fact that it declared the petitioner (Damalerio) as the
absolute owner of the lands entitles him to writ of execution issuing
from this court directing the Register of Deeds to reinstate his titles to
his name. As it is implied from the decision declaring him the absolute
owner of the lands that the titles to the land be reverted to him.
But the Register of Deeds refused to comply with the writ of
execution alleging that the Certificates of Title issued to petitioner
Tan must first be surrendered.
Issue:
1. Whether or not Tan is in bad faith in redeeming the property
2. Whether or not TCT of Tan must be first surrendered to the
ROD before the latter can proceed with the writ of execution
Ruling on the deep
The time petitioner Banaga sold the property to petitioner Tan, the
latter was well aware of the interest of private respondent over the lot.
By looking at the title, however, petitioner Tan cannot feigned ignorance
that the property is registered in private respondents name and not in the
name of the person selling to her. Such fact alone should have at least
prompted, if not impelled her to investigate deeper into the title of her
seller - petitioner Banaga. One who buys property with full knowledge
of the flaws and defects in the title of his vendor is enough proof of his
bad faith and cannot claim that he acquired title in good faith as against
the owner or of an interest therein. Being a buyer in bad faith, petitioner
Tan cannot acquire a better rights than her predecessor in interest, for
she merely stepped into the shoes of the latter. Such finding of bad faith
is final and may not be re-opened for the law cannot allow the parties to
trifle with the courts.
With respect to the issue of possession, such right is a necessary
incident of ownership. The adjudication of ownership to private
respondent includes the delivery of possession since the defeated parties
in this case has not shown by what right to retain possession of the land
independently of their claim of ownership which was rejected.
Otherwise, it would be unjust if petitioners who has no valid right over
the property will retain the same. Thus, the CA correctly disagreed with
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the trial courts order denying private respondents motion for writ of
possession
The argument that the winning party must wait execution until the
losing party has complied with the formality of surrender of the
duplicate title is preposterous and absurd and has no place in our legal
system. Supreme Court had already affirmed the CAs judgment that
Certificates of Title be issued in private respondents name. To file
another action just to compel the registered owner, herein petitioner Tan,
to surrender her titles constitute violation of, if not disrespect to, the
orders of the highest tribunal. Otherwise, if execution cannot be had just
because the losing party will not surrender her titles, the entire
proceeding in the courts, not to say the efforts, expenses and time of the
parties, would be rendered nugatory. It is revolting to conscience to
allow petitioners to further avert the satisfaction of their obligation
because of sheer literal adherence to technicality, or formality of
surrender of the duplicate titles. The surrender of the duplicate is
implied from the executory decision since petitioners themselves were
parties thereto. Besides, as part of the execution process, it is a
ministerial function of the Register of Deeds to comply with the decision
of the court to issue a title and register a property in the name of a
certain person, especially when the decision had attained finality, as in
this case.
In addition, the enforcement of a final and executory
judgment is likewise a ministerial function of the courts and does
not call for the exercise of discretion. Being a ministerial duty, a
writ of mandamus lies to compel its performance.
. If petitioners desire to stop the enforcement of a final and
executory decision, they should have secured the issuance of a writ of
preliminary injunction, but which they did not avail knowing that there
exists no legal or even equitable justifications to support it.
b. Abad vs Filhomes Realty
Fil-Homes Realty and Development Corporation and Magdiwang Realty
Corporation (respondents), co-owners of two lots filed a complaint for
unlawful detainer against Abad et al before the MeTC.
Respondents alleged that petitioners, through tolerance, had occupied
the subject lots since 1980 but ignored their repeated demands to vacate
them.
 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 respondents predecessor-in-interest,
Pilipinas Development Corporation, had no title to the lots. In any event,
they contend that the question of ownership must first be settled before
the issue of possession may be resolved. During the pendency of the
case, 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. Subsequently,
MeTC rendered judgment against Abad et al and in favor of Filhomes
ordering the former to vacate and surrender possession of the subject.
Issue:
1.WON Abad et al could be benefited by the socialized
housing project despite judgement (effect of the expropriation
proceedings) which declares Filhomes as the real owner
2.WON possession of Abad was merely by tolerance
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
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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(Abad et al) did not comply with any of the acts mentioned in
the law to avail of the benefits of the suspension. They nevertheless
posit that since the lots are the subject of expropriation proceedings,
respondents can no longer assert a better right of possession; and that the
City Ordinance authorizing the initiation of expropriation proceedings
designated them as beneficiaries of the lots, hence, they are entitled to
continue staying there.
 Petitioners position does not lie.
Sec. 19 of the Local Government Code
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."
The process of Expropriation is not complete until payment of just
compensation. Accordingly, the issuance of the writ of possession in this
case does not write finis to the expropriation proceedings. To effectuate
the transfer of ownership, it is necessary for the NPC to pay the property
owners the final just compensation. 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 respondents prior to the City’s possession of the lots
contrary to Section 19 of the LGC.
Respecting petitioners claim that they have been named
beneficiaries of the lots, the city ordinance authorizing the initiation of
expropriation proceedings does not state so. Petitioners cannot thus
claim any right over the lots on the basis of the ordinance.
 
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.
 
(As to possession by tolerance)
It has been held that a person who occupies the land of another at
the latters tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that he will vacate
upon demand, failing which a summary action for ejectment is the
proper remedy against them. Respondents bought the lots from Pilipinas
Development Corporation in 1983. They stepped into the shoes of the
seller with respect to its relationship with petitioners. Even if early on
respondents made no demand or filed no action against petitioners to
eject them from the lots, they thereby merely maintained the status
quo allowed petitioners possession by tolerance.
IX. ASSURANCE FUND
Chapter VII (Sec 93-102)
1. Claims against the Assurance Fund (Sec. 95)
a. DEVELOPMENT BANK OF THE PHILIPPINES, 
vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE
LANDS and THE NATIONAL TREASURER OF THE
PHILIPPINES, 
PRINCIPLE: It is necessary 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 to be able to claim from the assurance fund.
21

FACTS:Lourdes Gaspar Bautista, applied to the Government for the
sale favor of a parcel of land.
Bautista then applied for a loan with the Rehabilitation Finance
Corporation (RFC), predecessor in interest of petitioner Development
Bank of the Philippines (DBP), offering as security the parcel of land
she bought. The RFC approved the loan of P4,000.00 in favor of
Bautista. Thus, a mortgage contract was executed.
Bautista failed to pay the amortization on the loan so the RFC took steps
to foreclose the mortgage. the RFC acquired the mortgaged property as
the highest bidder. Bautista failed to redeem the property within the one
(1) year period as provided bylaw.
On or about this time, however, an action was filed by Rufino Ramos
and Juan Ramos 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 and seeking the annulment of the
TCT. A decision then was rendered and the certificates of title were
declared null and void. But in this court action, Lourdes Bautista wasn’t
brought in as a party.
As creditor, DBP filed a complaint against one of its debtors, Lourdes
Gaspar Bautista, for the recovery of a sum of money representing the
unpaid mortgage indebtedness, as the titles were declared void.
DBP also made the Director of Lands and the National Treasurer of the
Philippines defendants in a suit because of its belief that if no right
existed as against Bautista, recovery could be had from the Assurance
Fund.
ISSUES:
1. Whether or not DBP has a claim for damages against Bautista
even if the latter wasn’t brought in as a party during the
nullification proceedings.
2. Whether or not DBP, if it cannot claim damages against
Bautista, can recover from the Assurance fund.
RULING:
1. 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.
Having an interest therein, they should have been made parties to the
proceedings to give them a chance to protect their rights: and not having
been made parties thereto, they are not bound and cannot be affected by
the judgment rendered.
2. No.
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, DBP being solely responsible for the light
in which it now finds itself, the Director of Lands and the National
Treasurer of the Philippines are likewise exempt from any liability.
b. MARIANO TORRES Y CHAVARRIA, petitioner,  prompted them to investigate the property being mortgaged to them.
vs.
THE HONORABLE COURT OF APPEALS, FRANCISCO E.
FERNANDEZ and FE FERNANDEZ, ROSARIO MOTA CUE,
ERNESTO MEDINA CUE and the NATIONAL TREASURER, as
Custodian of the Assurance Fund, respondents.
PRINCIPLE: A person dealing with registered lands need not go
beyond the certificate of title but it should be pointed out that there are
circumstances that should be considered like the value and the potential
value of the property.
FACTS: A parcel of land and a building erected thereon known as "M.
Torres Building" is owned by Mariano Torres, the petitioner, and he
collected rentals from the tenants staying on his building.
Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a
petition with the Court where he, misrepresenting to be the attorney-in-
fact of Torres and falsely alleging that the duplicate copy of the land 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. The name of Torres
was canceled and TCT No. 86018 was issued in Fernandez' name.
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. Torres, upon learning of the fraud committed by Fernandez,
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caused, the annotation on the latter's TCT a notice of adverse claim.
Torres filed Civil Case No. 72494 against Fernandez to annul the TCT.
In the meantime, Fernandez failed to pay his various loans which
prompted the Cues to institute an extrajudicial foreclosure of the
mortgage.
Subsequently, Fernandez filed Civil Case No. 75643 against the spouses
Cue for the annulment of the mortgage with preliminary injunction.
After the foreclosure was enjoined, the parties entered into an amicable
settlement, and 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 TCT, issued in the name of Fernandez, is without
force and effect, and declared Torres as the true owner thereof.
But prior to the finality of Civil Case 72494, 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.The redemption period for
the subject immovables lapsed without Fernandez nor Torres redeeming
the properties, Rosario Mota was issued the Sheriffs Deed of Sale.
Thereafter, TCT declaring Torres as the owner was canceled and a TCT
was issued in Mota’s name. Later on, Torres filed a complaint, which
later gave rise to this petition, 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.
Issues:
1. Whether or not Torres has a better right compared to Mota
2. Whether or not the Cues’ complaint against the National
treasurer as custodian of the assurance fund will prosper
Held:
1. Yes.
There is nothing on the records which shows that Torres performed any
act or omission which could have jeopardized his peaceful dominion
over his realties. The decision under review, however, in considering
Mota an innocent mortgagee protected under Section 55 of the Land
Registration Law, held that Torres was bound by the mortgage.
Inevitably, it pronounced that the foreclosure sale, where Mota was the
highest bidder, also bound Torres and concluded that the certificate of
title issued in the name of Mota prevails over that of Torres'. As
correctly pointed out by Torres, however, his properties were sold on
execution, and not on foreclosure sale, and hence, the purchaser thereof
was bound by his notice of adverse claim and lis pendens annotated at
the back of Fernandez' TCT.
2. No.
The Cues' third-party complaint against the Treasurer of the Philippines
as custodian of the Assurance Fund should be dismissed 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
In the instant caseThe property in question is a very valuable property,
in fact accepted by defendants Mota and Medina Cue as collateral for
more than half a million pesos in loans granted by them to Fernandez.
Its value lies principally in its income potential, in the form of
substantial monthly rentals. Any prospective buyer or mortgagee of such
a property, if prudent and in good faith, is normally expected to inquire
into all these and related facts and circumstances.
X. REGISTRATION OF PATENTS
Chapter VIII (Sec 103)
1. Certificate of Titles pursuant to patent (Sec 103)
a. BEVERLY ANNE C. YAP v. REPUBLIC, GR No. 199810, 2017-
03-15
FACTS: Consuelo de dela Cruz applied for free patent over a parcel of
land located in Daliao, Toril, Davao City. As she could not wait for the
approval of her application, she executed a Deed of Waiver/Quitclaim in
favor of Rollie Pagarigan
Pagarigan filed his own Free Patent Application and subsequently, a
Free Patent was issued to him over said lot. Original Certificate of Title
(OCT) No. P-11182 was thereby issued in his name. Pangarigan
22
mortgaged the lot to the Davao City Development Bank. Failing to pay
his loan, the property was foreclosed and was eventually sold by the
Bank through public auction. The proceeding was duly annotated in the
title.
However, the said OCT was allegedly occupied by Teodoro Valparaiso
and Pedro Malalis (Protestants). Protestants filed a formal protests with
the bureau of lands. They prayed for recall of the patent and for the
institution of an action for reversion considering that they are in adverse,
exclusive and continuous occupation for the subject property since 1945
and that they have cultivated the said property.
January 27, 1992 protestants caused the annotation of a notice of lis
pendens. Protestants reached the Office of the Secretary of the DENR.
Secretary Angel C. Alcala rendered a Decision against Pagarigan in the
DENR decision states that that an actual fraud and bad faith have been
committed by Pagarigan in his subject public land application which led
to the issuance of the title. And that 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 he misrepresented in his application that he was the actual occupant
and that there were no others who occupied the lot in dispute.
That he did not post a copy of his Notice for FPA on both the Bulletin
Boards of Daliao and Lizardo as required by law.
November 5, 1992... the Bank sold the subject property to herein
petitioner Beverly Anne C. Yap and Rosanna F. Villamor
Upon the execution of the deed of sale, OCT No. P-11182 was delivered
to them and Transfer Certificate of Title and was eventually issued in
the name of Yap and Villamor on December 16, 2003.
DOTC filed a complaint for expropriation of a portion of the subject lot
before the RTC of Davao City, Branch 13.
RTC 13 rendered its decision that: The plaintiff is entitled to expropriate
the land subject of this case for the purpose of road right of way to the
Davao Fish Port, which is for public use and that Villamor and Yap are
the ones entitled to the payment of just compensation for the property
and plaintiff is directed to pay the said amount to the said
defendants.Respondent, through the OSG, filed the Complaint for
Cancellation of Patent, Nullification of Title and Reversion with the
RTC of Davao City.
RTC Branch 16 dismissed the respondent's complaint. It 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.RTC Branch 16
maintained that, as a court of co-equal jurisdiction with RTC 13, it is
bound by the said finding under the principle of conclusiveness of
judgment.
Respondent elevated its case to the CA
CA rendered the assailed Decision reversing that of the trial court. It
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.
Yap asserts that she and Villamor purchased the subject property in
good faith and for value. That in the OCT of the subject lot, on its face,
nothing appears indicating that some other person has a right to, or
interest over the property covered thereby. And granting that a notice of
lis pendens was annotated in OCT, the same, however, was not offered
in evidence and should not have been considered. In the case for
expropriation heard before the RTC 13, they were already adjudged as
innocent purchasers for value. Further Yap asserts that the respondent
failed to discharge the burden of proving the alleged fraud and
misrepresentation which attended Pagarigan's FPA.
ISSUES:
1. WON the Bank, and thereafter, Yap and Villamor are innocent
purchasers for value
2. WON Government the Republic was estopped.
RULING:
1.
NO. 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.
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, Consuela de1a
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 Board s of Daliao and Lizardo as required by law. Thus DENR
ordered for the institution of the present action seeking the cancellation
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of the certificate of title issued in the name of Pagarigan, and for the
reversion of the land covered thereby to the government.
However, 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.
Court is in full accord with the following disquisitions of the CA on the
matter that 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
Yap and Villamor are not innocent purchasers for value.
The Court has ruled that the burden of proof to establish the status of a
purchaser and registrant in good faith lies upon the one who asserts it.
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.
A buyer for value in good Faith is one who buys property of another,
without notice that some other person has a right to, or interest in, such
property and pays full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other
persons in the property. He buys the property with the well-founded
belief that the person from whom he receives the thing had title to the
property and capacity to convey it
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.
Corollarily, it requires a higher degree of prudence from one who buys
from a person who is not the registered owner, although the land object
of the transaction is registered.
While one who buys from the registered owner does not need to look
behind the certificate of title, one who buys from one 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.
2. No.
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. There was no prolonged inaction on the part of the respondent in
23
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 instant action does not undermine the indefeasibility of Torrens
title. Once a patent is registered and the corresponding certificate of title
is issued, the land covered thereby ceases to be part of public domain
and becomes private... property, and the Torrens Title issued pursuant to
the patent becomes indefeasible upon the expiration of one year from the
date of such issuance
However, a title emanating from a free patent which was secured
through fraud does not become indefeasible, precisely because the
patent from whence the title sprung is itself void and of no effect
whatsoever. A fraudulently acquired free patent may only be assailed by
the government in an action for reversion.
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.
b. FRANCISCO M. ALONSO, substituted by his heirs, vs. CEBU
COUNTRY CLUB,
FACTS: Petitioner Francisco M. Alonso was the only son and sole
heir of the late spouses Tomas N. Alonso and Asuncion Medalle.
Francisco died during the pendency of this case, and was substituted by
his legal heirs, namely: his surviving spouse, Mercedes V. Alonso, his
son Tomas V. Alonso (Tomas) and his daughter Asuncion V. Alonso.
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 the
subject lot of the Banilad Friar Lands Estate had been "administratively
reconstituted from the owner's duplicate" of TCT No. RT-1310 in the
name of United Service Country Club, Inc., the predecessor of
respondent 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 the
subject lot 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.
Francisco formally demanded upon Cebu Country Club to restore the
ownership and possession of the subject lot to him. However, Cebu
Country Club denied his demand and claim of ownership, and refused to
deliver the possession to him
On September 25, 1992, Francisco commenced against Cebu Country
Club in the RTC in Cebu City an action for the declaration of nullity and
non-existence of deed/title, the cancellation of certificates of title, and
the recovery of property. On November 5, 1992.
On May 7, 1993, the RTC decided in favor of Cebu Country Club.
Both parties appealed to the CA, which affirmed the RTC on March 31,
1997. Thus, Francisco filed a motion for reconsideration, which was
denied on October 2, 1997. Petitioners sought a reconsideration. On
December 5, 2003, however, the Court denied their motion for
reconsideration making the decision in G.R. No. 130876 became final
and executory.
In late 2004, the Government, through the OSG, filed in the RTC a
motion for the issuance of a writ of execution. 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.
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The RTC denied the OSG's motion for the issuance of a writ of
execution through the first appealed order.
The petitioners filed a motion for reconsideration dated February 1,
2008, questioning the denial of the OSG's motion for the issuance of a
writ of execution.
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.
The RTC issued the second appealed order, denying the petitioners'
motion for reconsideration for the following reasons:
The party who had a direct interest in the execution of the decision and
the reconsideration of the denial of the motion for execution was the
Government, represented only by the OSG; hence, the petitioners had no
legal standing to file the motion for reconsideration, especially that they
were not authorized by the OSG for that purpose;
R.A. No. 9443 "confirms and declares as valid" all "existing" TCTs and
reconstituted titles; in effect the state waived and divested itself of
whatever title or ownership over the Banilad Friar Lands Estate in favor
of the registered owners thereof, including the subject lot and 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.
Petitioners appeal by petition for review on certiorari. Challenging the
orders of the RTC dated December 28, 2007 and April 29, 2009,
because:
R.A. No. 9443 did not improve Cebu Country Club's plight, inasmuch as
R.A. No. 9443 presupposed first a sales certificate that lacked the
required signature, but Cebu Country Club did not have such sales
certificate. Moreover, the titleholders were in fact the owners of the
lands covered by their respective titles, which was not true with Cebu
Country Club due to its being already adjudged with finality to be not
the owner of Lot 727-D-2. Lastly, Cebu Country Club's title was
hopelessly defective, as found by the Supreme Court itself. That the
doctrine of law of the case barred the application of R.A. No. 9443 to
Cebu Country Club and that the RTC's declaration that R.A. No. 9443
confirmed Cebu Country Club as the absolute owner of Lot 727-D-2
despite the prior and final judgment of the Supreme Court that Cebu
Country Club was not the owner was unconstitutional, because it
virtually allowed the legislative.
They further argued that the use of R.A. No. 9443 as a waiver on the
part of the Government vis-à-vis Cebu Country Club was not only
misplaced but downrightly repugnant to Act 1120, the law governing the
legal disposition and alienation of Friar Lands; and The petitioners had
the requisite standing to question the patent errors of the RTC,
especially in the face of the unholy conspiracy between the OSG and
Cebu Country Club, on the one hand, and, on the other hand, the passage
of R.A. No. 9443 and DENR Memorandum No. 16, both... of which in
fact made their predecessor Tomas N. Alonso's sales certificate and
patent valid.
ISSUES:
1. WON 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;
2. WON R.A. No. 9443 gave the petitioners a legal interest to
assail the RTC's orders; and
RULING:
1. No
Petitioners are not proper parties to appeal and assail the order of the
RTC
The petitioners are relentless in insisting that their claim to Lot No. 727-
D-2 of the Banilad Friar Lands Estate should be preferred to that of
Cebu Country Club, despite the final judgment in G.R. No. 130876
being adverse to their claim. Their insistence raises the need to resolve
once and for all whether or not the petitioners retained any legal right to
assert over Lot No. 727-D-2 following the Government's manifest
desistance from the execution of the judgment in G.R. No. 130876
against Cebu Country Club.
The Court finds that the cause of the petitioners instantly fails.
In G.R. No. 130876, the Court found that the petitioners did not validly
acquire ownership of Lot No. 727-D-2, and declared that Lot No. 727 D-
2 legally belonged to the Government.
The second issue is whether the Court of Appeals erred in ruling
that the Cebu Country Club, Inc. is owner of Lot No. 727.
24
Neither petitioners nor their predecessor had any title to the land in
question. The most that petitioners could claim was that the Director of
Lands issued a sales patent in the name of Tomas N. Alonso. The sales
patent, however, and even the corresponding deed of sale were not
registered with the Register of Deeds and no title was ever issued in the
name of the latter. This is because there were basic requirements not
complied with, the most important of which was that the deed of sale
executed by the Director of Lands was not approved by the Secretary of
Agriculture and Natural Resources.
Hence, the deed of sale was void. "Approval by the Secretary of
Agriculture and Commerce is indispensable for the validity of the sale."
Moreover, Cebu Country Club, Inc. was in possession of the land since
1931, and had been paying the real estate taxes thereon based on tax
declarations in its name with the title number indicated thereon. Tax
receipts and declarations of ownership for taxation purposes are strong
evidence of ownership.
This Court has ruled that although tax declarations or realty tax
payments are not conclusive evidence of ownership, nevertheless, they
are good indicia of possession in the concept of owner.
Notwithstanding this fatal defect, the Court of Appeals ruled that
"there was substantial compliance with the requirement of Act No.
1120 to validly convey title to said lot to Tomas N. Alonso." On this
point, the Court of Appeals erred.
Act No. 1120, which governs the administration and disposition of friar
lands, the purchase by an actual and bona fide settler or occupant of any
portion of friar land shall be "agreed upon between the purchaser and the
Director of Lands, subject to the approval of the Secretary of
Agriculture and Natural Resources
Solicitor General submitted to this Court certified copies of Sale
Certificate No. 734, in favor of Leoncio Alburo, and Assignment of Sale
Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both
instruments do not bear... the signature of the Director of Lands and the
Secretary of the Interior. They also do not bear the approval of the
Secretary of Agriculture and Natural Resources.
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.
In a vain attempt at showing that he had succeeded to the estate of his
father, on May 4, 1991, petitioner Francisco Alonso executed an
affidavit adjudicating the entire estate to himself duly published in a
newspaper of general circulation in the province and city of Cebu. Such
affidavit of self-adjudication is inoperative, if not void, not only because
there was nothing to adjudicate, but equally important because petitioner
Francisco did not show proof of payment of the estate tax and submit a
certificate of clearance from the Commissioner of Internal Revenue.
Obviously, petitioner Francisco has not paid the estate taxes.
Consequently, we rule that neither Tomas N. Alonso nor his son
Francisco M. Alonso or the latter's heirs are the lawful owners of Lot.
The pronouncement in G.R. No. 130876 renders beyond dispute that the
non-execution of the judgment would not adversely affect the
petitioners, who now hold no right whatsoever in Lot No. 727-D-2.
Otherwise put, they are not the proper parties to assail the questioned
orders of... the RTC, because they stand to derive nothing from the
execution of the judgment against Cebu Country Club. Every action
must be prosecuted or defended in the name of the real party in interest,
unless otherwise authorized by law or the rules.
A real party in interest is one who stands to be benefited or injured by
the judgment in the suit, or the party entitled to the avails of the suit.
"Interest" within the meaning of the rule means material interest, an
interest in issue and to be affected by the decree, as distinguished from
mere interest in the question involved, or a mere incidental interest. The
rule refers to a real or present substantial interest, as distinguished from
a mere expectancy; or from a future, contingent, subordinate, or
consequential interest. One having no right or interest to protect cannot
invoke the jurisdiction of the court as a party-plaintiff in an action.
In order for the appeal to prosper, the litigant must of necessity continue
to hold a real or present substantial interest that entitles him to the...
avails of the suit on appeal. If he does not, the appeal, as to him, is an
exercise in futility. So it is with the petitioners.
In contrast, the Government, being the legal owner of Lot No. 727-D-2,
is the only party adversely affected by the denial, and is the proper party
entitled to assail the denial. 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.
2. No
R.A. No. 9443 gives petitioners no legal interest to assail the denial
of the motion for execution
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Section 1. All existing Transfer Certificates of Title and Reconstituted
Certificates of Title duly issued by the Register of Deeds of Cebu
Province and/or Cebu City covering any portion of the Banilad Friar
Lands Estate, notwithstanding the lack of... signatures and/or approval
of the then Secretary of Interior (later Secretary of Agriculture and
Natural Resources) and/or the then Chief of the Bureau of Public Lands
(later Director of Public Lands) in the copies of the duly executed Sale
Certificates and Assignments of Sale.
Certificates, as the case may be, now on file with the Community
Environment and Natural Resources Office (CENRO), Cebu City, are
hereby declared as valid titles and the registered owners recognized as
absolute owners thereof.
The law expressly declares as valid "all existing Transfer Certificates of
Title and Reconstituted Certificates of Title duly issued by the Register
of Deeds of Cebu Province and/or Cebu City covering any portion of the
Banilad Friar Lands Estate," 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.
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. Hopwever, 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. there is
nothing fraudulent with the fact that Cebu Country Club, Inc.'s
reconstituted title bears the same number as the title of... another parcel
of land.
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 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.
Admittedly petitioner could not show any Torrens 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."
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.
The court ruled that 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. 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
c. Egao vs CA & Dignos & Bontilao GR No. L-79787, 29 June 1989
Facts: Dignos and Bontilao filed for Quieting of Title and Recovery of
Possession and Ownership against petitioners Egao. They alleged that
25
they are the legitimate owners and possessors of 2 parcels of land (Lot
662 & Lot 661) in Lonocan, Bukidnon per deed of absolute sale. It was
stated in the said deed that:
(1) both lots were covered by OCT Free Patents;
(2) the ownership of both lots were transferred in favor of
Roberto Marfori; and
(3) respondents know that the Certificate of Title over the lots
were not yet transferred to Marfori but the latter is in possession of
the lots.
Petitioners asserted that Apolonio Egao is the registered owner of Lot
662; that he 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 instant case is part of respondents' scheme to
grab said parcel of land from the petitioners.
RTC: Granting arguendo that defendants executed the 2 documents in
favor of Marfori (Exhs. A & B) after the filing of the application for free
patent but before the issuance of the latter, without the approval of the
Director of Lands, upon issuance of the Free Patent on August 12, 1965,
the said deeds of sale (Exhs. A & B) were ipso facto cancelled or
superseded by said free patent.
CA: Set aside RTC decision. Marfori and Egao are in pari delicto for
violating the five (5) year restriction under CA 141 against encumbrance
or alienation of lands acquired under a free patent or homestead; hence,
they cannot 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 physical possession of the property.
Issue: W/N the sale of Lot 662 by the Egaos in favor of Marfori was
valid (NO)
Held: The Free Patent was issued to Egao on 12 August 1965. Sec. 118
of CA 141 prohibits the alienation or encumbrance, within 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
dated 7 May 1964, 14 January and 6 October 1965, it clearly appears
that all deeds were executed within the prohibited period.
Deeds of sale of patented lands, perfected within the prohibited 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. Nemo dat quod non habet.
The OCT over Lot 662 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,
and is registered in the name of the Egaos. 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.
2. An Act Authorizing the issuance of Free patents to
Residential Lands (RA 10023)
XI. CERTIFICATION OF LAND TRANSFER, EMANCIPATION
PATENT
Chapter IX ( Sec 104-105)
1. Certificate of Land Transfer
2. Comprehensive Agrarian Reform Law of 1998, RA 6657
XII. PETITIONS AND ACTIONS AFTER ORIGINAL
REGISTRATION
Chapter X (Sec 107-110)
1. Surrender of Withheld Duplicate Certificate (Sec 107)
a. Ligon vs CA et.al.
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GR 107751, 1 June 1995
Facts: Respondent Iglesia ni Cristo (INC) filed for specific performance
with damages against Islamic Directorate of the Philippines (IDP). It
alleged by virtue of an Absolute Deed of Sale, IDP sold to it 2 parcels of
land located at Tandang Sora, Quezon City. They stipulated in the deed
that IDP shall evict all squatters and illegal occupants in the property
within 45 days from its execution but IDP failed to fulfill its obligation.
Only the prayer for damages was not granted by the trial court.
INC then filed a motion for partial summary judgment on the ground
that there was actually no genuine issue as to any material fact, which
the trial court did granting the reliefs prayed for by INC.
INC filed a motion in the same case praying that petitioner Leticia
Ligon, who was in possession of the certificates of title over the
properties as mortgagee of IDP, be directed to surrender the certificates
to the Register of Deeds of QC for the registration of the Absolute Deed
of Sale in its name. INC alleged that the document could not be
registered because of the refusal and/or failure of petitioner to deliver
the certificates of title despite repeated requests.
Petitioner Ligon opposed this on the ground that the IDP was not served
copy of the motion, and the ownership of the INC over the property was
still in issue since IDP sought for rescission. She prayed that the motion
be denied, but should it be granted, the Register of Deeds be directed
after registration to deliver the owner's duplicate copies of the new
certificates of title to her.
RTC granted INC’s motion and ordered Ligon to surrender to INC the
owner's copy of the registered titles in open court for the registration of
the Absolute Deed of Sale in the INC’s name and the annotation of the
mortgage executed in favor of petitioner on the new transfer certificates
of title to be issued to INC. The court also ordered Ligon to deliver the
certificates of title to RD of QC.
IDP intervened alleging that before the RTC’s 2 March 1992 Order, its
legal Board of Trustees filed a motion for intervention informing said
court that the sale of the properties was not executed by it but was made
possible by a fake Board of Trustees, hence, the sale is void. RTC
denied the motion since jurisdiction over the incident properly belonged
SEC. So IDP brought the matter before the SEC which later declared
that the sale of the properties was void. (IDP’s basis to nullify the RTC
orders)
CA: Dismissed Ligon’s petition for certiorari; affirmed the RTC.
Issue: W/N the orders of the RTC violated the rule prohibiting splitting
of a single cause of action and forum-shopping (NO)
Held: Under our land registration law, no voluntary instrument shall be
registered by the Register of Deeds unless the owner's duplicate
certificate is presented together with such instrument, except in some
cases or upon order of the court for cause shown. In case the person in
possession of the duplicate certificates refuses or fails to surrender the
same to the Register of Deeds so that a voluntary document may be
registered and a new certificate issued, Sec. 107, Chapter 10, of P.D. No.
1529 clearly states:
Sec. 107. Surrender of withheld duplicate certificates. —
Where it is necessary to issue a new certificate of title pursuant to any
involuntary instrument which divests the title of the registered owner
against his consent or where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to
surrender the owner's duplicate certificate of title, the party in interest
may file a petition in court to compel surrender of the same to the
Register of Deeds. The court, after hearing, may order the registered
owner or any person withholding the duplicate certificate to
surrender the same and direct the entry of a new certificate or
memorandum upon such surrender. If the person withholding the
duplicate certificate is not amenable to the process of the court,
or if for any reason the outstanding owner's duplicate certificate
cannot be delivered, the court may order the annulment of the
same as well as the issuance of a new certificate of title in lieu thereof.
Such new, certificate and all duplicates thereof shall contain a
memorandum of the annulment of the outstanding duplicate.
Even before PD 1529, jurisprudence interpreting CA 141 has established
that summary reliefs such as an action to compel the surrender of
owner's duplicate certificate of title to the Register of Deeds could only
be filed with and granted by the Regional Trial Court sitting as a land
registration court if there was unanimity among the parties or there was
no adverse claim or serious objection on the part of any party in interest,
26
otherwise, if the case became contentious and controversial it should be
threshed out in an ordinary action or in the case where the incident
properly belonged.
Sec. 2 of P.D. No. 1529 now provides that "RTCs shall have exclusive
jurisdiction over all applications for original registration of titles to
lands, including improvements and interest therein and over all petitions
filed after original registration of title, with power to hear and determine
all questions arising upon such applications or petitions." This provision
has eliminated the distinction between the general jurisdiction vested in
the regional trial court and the limited jurisdiction conferred upon it by
the former law when acting merely as a cadastral court. Aimed at
avoiding multiplicity of suits the change has simplified registration
proceedings by conferring upon the regional trial courts the authority to
act not only on applications for original registration but also over all
petitions filed after original registration of title, with power to hear and
determine all questions arising upon such applications or petitions.
Hence, when INC filed a motion from the same court to compel the
holder of the duplicate certificates of title to surrender the same to the
RD for the registration of the deed of sale, the motion was a necessary
incident to the main case. When the sale of the property was upheld by
the court and the defendant was directed to comply with its terms and
conditions, the right of INC to have the same registered with the RD
could not be disregarded. To assert and enjoy its right, INC should be
allowed to seek the aid of the court to direct the surrender of the
certificates of title. Since RTCs are courts of general jurisdiction, they
may therefore take cognizance of this case pursuant to such jurisdiction.
Even while Sec. 107 of P.D. 1529 speaks of a petition which can be filed
by one who wants to compel another to surrender the certificates of title
to the RD, this does not preclude a party to a pending case to include as
incident therein the relief stated under Sec. 107, especially if the subject
certificates of title to be surrendered are intimately connected with the
subject matter of the principal action. This principle is based on
expediency and in accordance with the policy against multiplicity of
suits.
b. Banaga & Tan vs CA & Damalerio
GR 127491, 28 January 1999
Facts: (Sometime in 1983) In an action for redemption by petitioner,
RTC declared that she lost her right to redeem her property earlier
foreclosed and which was subsequently sold at public auction to
Damalerio. Certificates of Title were issued to Damalerio over which
Banaga annotated a notice of lis pendens. CA reversed RTC; allowed
Banaga to redeem the property within a certain period; decision
eventually became final.
(Sometime in 1992) Banaga tried to redeem the property by depositing
w/RTC the amount of redemption which was financed by co-petitioner
Tan. Damalerio opposed this arguing that it was made beyond the time
given to her by the court in the earlier case. But the court upheld the
redemption and ordered the Register of Deeds to cancel Damalerio’s
Certificates of Title and issue new titles in the name of Banaga.
Damalerio filed a petition for certiorari with CA; caused the annotation
of a notice of lis pendens on the certificates of title
On 7 January 1993, Banaga sold the property to co-petitioner Tan w/a
deed of absolute sale mentioning Damalerio’s certificate of title which
was not yet cancelled. Despite this, Tan subdivided the property under a
subdivision plan but in the name of Damalerio. RD issued new titles in
Tan's name but still carried the annotations of the two notices of lis
pendens.
CA: Set aside RTC orders; declared Damalerio as absolute owner of the
property. CA’s decision became final and executory.
Damalerio filed a writ of exection ordering RD to reinstate the
Certificates of Title in his name; granted by RTC. However, RD refused
to comply with the writ of execution alleging that the Certificates of
Title issued to petitioner Tan must first be surrendered.
Damalero moved to cite RD in contempt of court; RTC denied ruling
that remedy is by consulta to the Commissioner of Land Registration.
Dalmerio also moved for the issuance of a writ of possession; also
denied. However, CA granted his petition for certiorari and mandamus.
Issue: W/N the remedy of private respondent Dalmerio to secure the
titles in his name is by consulta to the Land Registration Commissioner
and not through contempt (NO)
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Held: Petitioners other contention that the execution of the final and
executory decision — which is to issue titles in the name of private
respondent — cannot be compelled by mandamus because of the
"formality" that the registered owner first surrenders her duplicate
Certificates of Title for cancellation per Section 80 of PD 1529 cited by
the Register of Deeds, bears no merit. They argue that the winning party
must wait execution until the losing party has complied with the
formality of surrender of the duplicate title. Such preposterous
contention borders on the absurd and has no place in our legal system.
Precisely, the Supreme Court had already affirmed the CA's judgment
that Certificates of Title be issued in private respondent's name. To file
another action just to compel the registered owner, herein petitioner Tan,
to surrender her titles constitute violation of, if not disrespect to, the
orders of the highest tribunal. Otherwise, if execution cannot be had just
because the losing party will not surrender her titles, the entire
proceeding in the courts, not to say the efforts, expenses and time of the
parties, would be rendered nugatory. It is revolting to conscience to
allow petitioners to further avert the satisfaction of their obligation
because of sheer literal adherence to technicality, or formality of
surrender of the duplicate titles. The surrender of the duplicate is
implied from the executory decision since petitioners themselves were
parties thereto. Besides, as part of the execution process, it is a
ministerial function of the Register of Deeds to comply with the decision
of the court to issue a title and register a property in the name of a
certain person, especially when the decision had attained finality, as in
this case.
In addition, the enforcement of final and executory judgment is likewise
a ministerial function of the courts and does not call for the exercise of
discretion. Being a ministerial duty, a writ of mandamus lies to compel
its performance. Moreover, it is axiomatic that where a decision on the
merits is rendered and the same has become final and executory, as in
this case, the action on procedural matters or issues becomes moot and
academic. Thus, the so-called consulta to the Commissioner of Land
Registration, which is not applicable herein, was only a naive and
belated effort resorted to by petitioners in order to delay execution.
*Res judicata was also applied
*Petitioner Tan was a buyer in bad faith
2. Amendment and Alteration of Certificates (Sec. 108)
a. Oliva vs Republic
GR 163118, 27 April 2007
Facts: Doris Chongbian-Oliva is the registered owner of a parcel of land
in Talamban, Cebu City, as evidenced by a TCT. Her title originated
from an OCT Free Patent which was granted in 1969. Both titles
contained the condition that a forty-meter legal easement from the bank
of any river or stream shall be preserved as permanent timberland.
Oliva filed for reduction of legal easement alleging that her property is
residential as shown by a Tax Declaration and Certification of the City
Assessor, thus the applicable legal easement is only 3 meters pursuant to
DENR A.O. 99-21, and not 40 meters which applies only to timberlands
and forest lands. However, DENR countered that the property is
inalienable. It also claimed that the applicant agreed on the 40-meter
legal easement when the free patent was applied for.
RTC ruled in favor of Oliva saying that there is no longer any reason for
the 40-meter legal easement because the property had been transformed
into residential land and the area where it is located has been reclassified
as urban. Applying DENR A.O. 99-21, the applicable legal easement is
only 3 meters.
CA reversed RTC, upholding DENR’s claim that the property was
inalienable. Accordingly, a positive act of the government was necessary
to declassify it from forest land to alienable land. Declaration of the
property as residential in the tax declaration and reclassification of the
area where it is located as urban were insufficient bases to reclassify the
property.
Issues: 1. W/N the property is public or private land (Private land)
2. W/N the applicable legal easement 40 or 3 meters (3
meters)
Held:
1. C.A. No. 141 provides that lands of the public domain may be
classified by the President, upon the recommendation of the DENR
27
Secretary, into: (1) alienable or disposable; (2) timber; and (3) mineral
lands. However, only alienable or disposable lands may be disposed of
through any of the forms of concession enumerated in the law. A free
patent is one of such concessions and once it is registered and the
corresponding certificate of title issued, the land covered by them ceases
to be part of the public domain and becomes private property.
Verily, by the issuance of a free patent in 1969, and the subsequent
issuance of the OCT and TCT, the property had become private land.
It is inconsistent for an alienable land of the public domain to be covered
by a free patent and at the same time retain its character as public land.
2. Section 90(i) of C.A. No. 141: That the applicant agrees that a strip
forty meters wide x x x shall be demarcated and preserved as permanent
timberland x x x and that he shall not make any clearing thereon or
utilize the same for ordinary farming purposes even after patent shall
have been issued to him x x x.
Sec. 2.1.a on Original Surveys of Public Lands, DENR A.O. 99-21: All
alienable and disposable lands of the public domain shall be surveyed x
x x whereby a strip of forty (40) meters wide x x x shall be demarcated
and preserved as permanent timberland.
Likewise, to be demarcated are public lands along the banks of rivers
and streams and the shores of the seas and lakes throughout their entire
length and within a zone of three (3) meters in urban areas, twenty
(20) meters in agricultural areas and forty (40) meters in forest area,
along their margins which are subject to the easement for public use in
the interest of recreation, navigation, floatage, fishing and salvage.
Sec 2.3.1 on Survey of Administratively Titled Lands, DENR A.O.99-
21: However, when these lands are to be subdivided, consolidated or
consolidated-subdivided, the strip of three (3) meters which falls
within urban areas shall be demarcated and marked on the plan for
easement and bank protection.
All of these pertinent provisions run in parallel vein with the Water
Code of the Philippines.
Since the property in this case was originally alienable land of the public
domain, the application for free patent contained the condition that a 40-
meter legal easement from the banks on each side of any river or stream
found on the land shall be demarcated and preserved as permanent
timberland. However, after the property was administratively titled, it
underwent several surveys for purposes of subdivision, consolidation, or
consolidation-subdivision as evidenced by the TCT. This title provides
that it is a transfer from two other TCTs and describes the property as
Lot 2 of the consolidation-subdivision plan, being a portion of Lot 6 and
7 of another subdivision plan. Thus, presently only 3 meters is
required to be demarcated and preserved as permanent timberland.
b. REPUBLIC vs. CARMEN SANTORIO GALENO
Facts: Respondent alleged that when she and her co-owners had the
subject property resurveyed for the purpose of partition, they discovered
a discrepancy in the land area of the subject property as appearing in
OCT No. 46417, in that the title reflects an area of 20,948 square meters,
while the Certification issued by the DENR Office of the Regional
Technical Director, Lands Management Services, shows an area of
21,298 square meters. Hence, she filed a petition for correction seeking
to correct the area of the subject property in order to avoid further
confusion, and claimed to have notified the adjoining owners.
RTC: Granted the petition.
CA: Petitioner appealed to the CA. CA affirmed the RTC.
Issue: Whetheror not there was sufficient basis to allow the correction of
the are of the subject property
Ruling: No.
Records reveal that respondent offered in evidence the following
documents: (a) the Certification issued by the Office of the Regional
Technical Director, Land Management Services of the DENR in Iloilo
City, which states that "the true and correct area of [L]ot 2285, Cad. 246
Dingle Cadastre is 21,928 square meters;" (b) the technical description
of Lot No. 2285; and (c) the approved subdivision plan of Lot No. 2258.
Section 23, Rule 132 of the Revised Rules on Evidence provides:
“Documents consisting of entries in public records made in the
performance of a duty by a public officer are prima facie evidence of the
facts stated therein. All other public documents are evidence, even
against a third person, of the fact which gave rise to their execution and
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of the date of the latter."
The CENRO and Regional Technical Director, FMS-DENR,
certifications [do] not fall within the class of public documents
contemplated in the first sentence of Section 23 of Rule 132. The
certifications do not reflect "entries in public records made in the
performance of a duty by a public officer," such as entries made by the
Civil Registrar in the books of registries, or by a ship captain in the
ship's logbook. The certifications are not the certified copies or
authenticated reproductions of original official records in the legal
custody of a government office. The certifications are not even records
of public documents. x x x
As such, sans the testimonies of the other public officers who issued
respondent's documentary evidence to confirm the veracity of its
contents, the same are bereft of probative value and cannot, by their
mere issuance, prove the facts stated therein. 29 At best, they may be
considered only as prima facie evidence of their due execution and date
of issuance but do not constitute prima facie evidence of the facts stated
therein.
c. LUCIANO PAZ vs. REPUBLIC
Facts: Petitioner brought a petition for the cancellation of Original
Certificate of Title. The petition, ostensibly made under Section 108 of
P.D. No. 1529, impleaded the Republic of the Philippines, Filinvest
Development Corporation, and Filinvest Alabang, Inc. as respondents.
The petition averred that the petitioner was the owner of two parcels of
land under OCT No. 684 and TCT No. 185552 which were registered in
the name of the Republic; that FDC and FAI developed Lot 392 into a
subdivision based on their joint venture agreement with the
Government; that pursuant to the joint venture agreement, Lot 392 was
further subdivided, causing the cancellation of TCT No. 185552, and the
issuance of TCTs for the resulting individual subdivision lots in the
names of the Republic and FAI; and that the subdivision lots were then
sold to third parties.
On January 19, 2001, FDC and FAI moved to dismiss the petition for
cancellation on the ground that it is not within the ambit of Sec. 108 of
the Property Registration Decree which authorizes only amendment and
alteration of certificates of title, not cancellation thereof.
ISSUE: Whether or not Section 108 of P.D. 1529 is applicable to the
present case
Ruling: No.
The proceeding for the amendment and alteration of a certificate of title
under Section 108 of P.D. No. 1529 is applicable in seven instances or
situations, namely: (a) when registered interests of any description,
whether vested, contingent, expectant, or inchoate, have terminated and
ceased; (b) when new interests have arisen or been created which do not
appear upon the certificate; (c) when any error, omission or mistake was
made in entering a certificate or any memorandum thereon or on any
duplicate certificate; (d) when the name of any person on the certificate
has been changed; (e) when the registered owner has been married, or,
registered as married, the marriage has been terminated and no right or
interest of heirs or creditors will thereby be affected; (f) when a
corporation, which owned registered land and has been dissolved, has
not conveyed the same within three years after its dissolution; and (g)
when there is reasonable ground for the amendment or alteration of title.
Here, the petitioner was in reality seeking the reconveyance of the
property covered by OCT No. 684, not the cancellation of a certificate of
title as contemplated by Section 108 of P.D. No. 1529. Thus, his petition
did not fall under any of the situations covered by Section 108, and was
for that reason rightly dismissed by the lower courts.
d. BENJAMIN CABANEZ vs. MARIE JOSEPHINE SOLANO
Facts: Respondent is the owner of two parcels of land. In the titles of
said lands it appears that she is married to the Petitioner. She then filed a
Petition for Correction of the Name and Marital Status. She alleges that
she is single and that petitioner is actually married to one Leandra
Cabanez and that in a previous case filed against her where a
compromise agreement was arrived at, petitioner has already declared
that he is not married to respondent and he has no share in the subject
properties.
RTC: Granted petition.
CA: Petitioner filed a Petition for Annulment of Judgment which was
granted by the CA on the ground that there was lack of publication
28
pursuant to Rule 108 of the Rules of Court and service of summons.
Respondent filed an MR. CA reversed agreeing with respondent that the
governing law is PD 1529 and not the Rules of Court.
Issue: Whether or not the action for correction of name and marital
status which is summary in nature is the correct proceeding for this case
Ruling: No.
Under settled jurisprudence, the enumerated instances for amendment or
alteration of a certificate of title under Section 108 of PD 1529 are non-
controversial in nature. They are limited to issues so patently
insubstantial as not to be genuine issues. The proceedings thereunder are
summary in nature, contemplating insertions of mistakes which are only
clerical, but certainly not controversial issues.
In the present case, however, the Court notes that in a separate action for
annulment of title and recovery of ownership filed by petitioner's wife
against respondent, the RTC of Makati City made a categorical finding
that petitioner and his wife are the lawful owners of the subject
properties and ordering respondent to surrender possession thereof to the
said spouses. Respondent, on the other hand, claims that she together
with petitioner and his wife subsequently executed an amicable
settlement which was approved by the RTC, wherein petitioner's wife
waived her rights and interests over the said properties. She also alleged
that petitioner executed an Affidavit indicating that he has no right or
interest over the subject properties.
From the foregoing, there is no question that there is a serious objection
and an adverse claim on the part of an interested party. These objections
and claims necessarily entail litigious and controversial matters making
it imperative to conduct an exhaustive examination of the factual and
legal bases of the parties' respective positions. A complete determination
of the issues in the present case can only be achieved if petitioner and
his wife are impleaded in an adversarial proceeding and not in an
abbreviated action under Section 108 of PD 1529
3. Notice and Replacement of Lost Duplicate Certificate (Sec.
109)
a. MERCEDITA COOMBS vs. VICTORIA CASTANEDA ET AL
Facts: Petitioner is the owner of a land. On March 2005, when she tried
to pay for the real property tax for the said land she was told that it was
no longer her name. Upon verification, she found out that her property
was registered under the name of respondent Santos pursuant to a court
decision for the issuance of a second owner’s duplicate copy where she
was represented by respondent Castaneda. She alleges that she never
authorized Castaneda to file such petition nor to sell the property to
Santos. Santos has already sold the property to respondents Spouses
Leviste who in turn mortgaged the property to BPI. Petitioner anchors
her petition for the annulment of the court decision on the fact that she
never lost her owner’s duplicate as it has always been in her custody
therefor RTC did not acquire jurisdiction over the subject matter of the
case.
CA: Dismissed petition. Grounds for annulment of judgment are: 1) lack
of jurisdiction; and 2) extrinsic fraud. Petitioner’s case falls within
extrinsic fraud but failed to state the facts constituting the fraud.
Issue: Whether or not CA erred in dismissing petitioner’s petition for
annulment of judgment
Ruling: Yes.
Contrary to the findings of the Court of Appeals, the Petition for
Annulment of Judgment filed by petitioner Coombs was clearly
grounded on lack of jurisdiction of the RTC over the subject matter of
the case, and not extrinsic fraud.
Petitioner Coombs sought to annul the RTC Decision for being rendered
without jurisdiction. According to her, the RTC did not acquire
jurisdiction over the subject matter of LRC Case No. 04-035-one for the
reconstitution of a lost certificate of title-because the owner's duplicate
copy of TCT No. 6715 was never lost in the first place.
In a long line of cases, the Court has held that the RTC has no
jurisdiction when the certificate sought to be reconstituted was never
lost or destroyed but is in fact in the possession of another person. In
other words, the fact of loss of the duplicate certificate is jurisdictional.
b. Tan Po Chu vs. CA (G.R. 184348)
FACTS:
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Fiber Technology Corporation (FiberTech) was a Philippine
corporation with Securities and Exchange Commission (SEC)
Registration No. 0000142818. It was also the registered owner of a
parcel of land in Marikina (subject lot) covered by Transfer Certificate
of Title (TCT) No. 157923 entered on November 28, 1988. The SEC
allegedly revoked FiberTech's registration on September 29, 2003.
On April 4, 2005, respondent Felix Chingkoe executed an
affidavit of loss of TCT No. 157923 allegedly on behalf of
FiberTech. 
On June 2, 2005, FiberTech — supposedly represented
by respondent Rodrigo Garcia pursuant to a December 2, 2004
Board Resolution — filed a petition for the
reissuance/replacement of its owner's duplicate of TCT No.
157923. The petition was based on the affidavit of loss that Felix
executed. The petition alleged:
(1) that Felix and his wife Rosita acquired 100% ownership
of FiberTech in 2004 pursuant to an award by the
National Labor Relations Commission (NLRC);
(2) that Felix was elected Corporate Secretary soon after;
(3) that Felix asked the former directors and officers of
FiberTech to turn over the owner's duplicate of TCT No.
157923, but the latter denied knowledge or possession
thereof; and
(4) that after conducting an exhaustive search, the subject
title was nowhere, to be found.
On July 23, 2006, the RTC granted the petition. It
declared the owner's duplicate copy of TCT No. 157923 as lost and
ordered its reissuance. 
On December 21, 2007, Tan Po Chu — mother of
Fibertech's incorporators Faustino and respondent Felix Chingkoe
— filed a petition before the CA for annulment of judgment against
the RTC's decision. 8 The petition was docketed as CA-G.R. SP
No. 101727 with Tan Po Chu and FiberTech as petitioners.
Tan alleged:
(1) that the missing owner's duplicate of TCT was in her
custody as the responsible officer of FiberTech;
(2) that Felix was aware of this fact;
(3) that Felix committed perjury when he executed the
Affidavit of Loss;
(4) that Felix and Rosita had not acquired 100% ownership
of FiberTech;
(5) that Rosita and Rodrigo Garcia were not even
stockholders of record in Fibertech; and
(6) that the respondents had no authority to file the petition
for reissuance of the owner's duplicate copy on behalf of
FiberTech.
CA: dismissed Tan's petition on the grounds that the petition suffered
from procedural infirmities and lacked substantial merit.
The CA observed that: (1) the verification and certification of non-
forum shopping were executed alone by Tan Po Chu without showing
that she had the authority to sign for and on behalf of the corporation;
(2) Tan's actual address was not indicated in the petition as required by
Rule 46, Section 3; and (3) the attached copy of the owner's duplicate
TCT No. 157923 was not a certified true copy.
ISSUE:
1. WON petition for the reissuance/replacement of its owner's
duplicate of TCT No. 157923 is the correct remedy in this
case.
2. WON the CA gravely abused its dicretion in dismissing the
case. (Side-topic)
RULING:
1. No. Proper remedy is replevin.
We have consistently held that when the owner's
duplicate certificate of title has not been lost, but is in fact in the
possession of another person, then the reconstituted certificate is
void because the court failed to acquire jurisdiction over the subject
matter — the allegedly lost owner's duplicate. 24 The correct
remedy for the registered owner against an uncooperative possessor
is to compel the surrender of the owner's duplicate title through an
action for replevin.
29
 WHEREFORE, we hereby GRANT the petition. The
January 16, 2008 and the July 16, 2008 resolutions of the Court of
Appeals in CA-G.R. SP No. 101727 are ANNULLED and SET
ASIDE. The Court of Appeals is
further DIRECTED to PROCEED hearing the case.
2. Yes. At the outset, we observe that Tan resorted to the wrong
remedy by filing a petition for certiorari under Rule 65.
GR: Certiorari will not lie as a substitute for an appeal.
EXC: Where public welfare and the advancement of public policy so
dictates.
This Court cannot ignore the implications if the petitioner's
allegations — that she has the original owner's duplicate TCT
of the subject lot and that the SEC revoked FiberTech's
registration in 2003 — are true. There will currently exist two
owner's duplicate TCTs over the same property possessed by
two contending factions in an intra-corporate dispute of a
defunct corporation. This anomalous situation can potentially
bring considerable harm to the general public and to the
integrity of our Torrens system. This Court, therefore, cannot
simply leave the parties as they were.
Courts are routinely expected to balance competing state
values and interests. When the interest of strictly enforcing
rules of procedure comes in conflict with the interests of
rendering substantial justice and protecting the general
welfare, the scales of justice tilt substantially in favor of the
latter. The rules of procedure should not be applied in a very
rigid technical sense so as to override substantial justice.
c. Gocheco vs. Estacio (G.R. L-15183)
Notice of the hearing of a petition for the issuance of an owner's
duplicate copy of a certificate of title need not be published if the
complete record of the original of the certificate of title is intact in the
Register of Deeds. Likewise, there is no need to first secure the
appointment of a legal representative of the estate and the declaration of
the lawful heirs of the decedent if the petition, which does not seek the
distribution of the estate comes under the provisions of Section 109
of Act No. 496.
FACTS:
Cesario Gocheco is a legitimate son of Paulino P. Gocheco, registered
owner of a parcel of land, with improvements, in Margosatubig,
Zamboanga del Sur, as evidenced by Original Certificate of Title No. O-
1385 of the Register of Deeds for the said province.
The owner's duplicate copy of the said original certificate of title was
lost, and notwithstanding diligent search to ascertain its whereabouts,
the said owner's duplicate copy has not been found. However, in the
records of the Register of Deeds of Zamboanga del Sur, the original
of the above number certificate No. O-1385 of title is found intact
and complete in Sp. No. 695 Book No. I-5 — patentee Paulino P.
Gocheco.
On January 18, 1957, Cesario Gocheco, in his capacity as heir of the
registered owner, filed a petition before the trial court to require the
Register of Deeds for Zamboanga del Sur to issue another owner's
duplicate copy of the O.C.T. No. O-1385, in lieu of the owner's copy
which was lost.
Francisco T. Estacio and others opposed the petition, claiming that they
have been in continuous, peaceful, lawful, public and adverse possession
of the property covered by O.C.T. No. O-1385.
RTC: entered an order suspending the hearing of the petition and
required the petitioner to publish within 30 days his petition or to file a
testate or intestate proceeding, and to secure the appointment of a legal
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representative to the estate of registered owner and the ultimate
declaration of heirs.
ISSUE:
1) WON the trial court erred in requiring him to publish the
petition for the issuance of a new owner's duplicate copy of
O.C.T. No. O-1385.
2) WON the trial court erred in requiring him to secure the
appointment of a legal representative to the estate of the
original registered owner.
3) WON the oppositors has legal standing to intervine the
petition filed by petitioner.
RULING:
The petition is only for the issuance of an owner's duplicate copy of
O.C.T. No. O-1385, in lieu of the one that was lost. Section 109 of Act
No. 496, as amended, provides:
"SEC. 109. If a duplicate certificate is lost or
destroyed, or cannot be produced by a grantee,
heir, devisee, assignee, or other person applying
for the entry of a new certificate to him or for the
registration of any instrument, a suggestion of the
fact of such loss or destruction may be filed by
the registered owner or other person in interest
and registered. The court may thereupon, upon the
petition of the registered owner or other person in
interest, after notice and hearing direct the issue
of a new duplicate certificate, which shall contain
a memorandum of the fact that it is issued in place
of the lost duplicate certificate, but shall in all
respects be entitled to like faith and credit as the
original duplicate for all the purposes of this act."
In view of the existence of the complete record in the register of Deeds
of Zamboanga del Sur, of the original of the certificate of title in
question, which appears in Book No. 1-5 of the said Register of Deeds'
Office (Exh. A) and of the fact that the present petition is not one for
reconstitution as provided by Republic Act No. 26, there is no necessity
for publishing notice of the hearing thereof. And the petition, coming as
it does, under the provisions of Section 109, aforequoted, there is
likewise no need to first secure the appointment of a legal representative
of the estate and the declaration of the lawful heirs of the deceased
Paulino P. Gocheco. The petition does not at all seek the distribution of
the decedent's estate. The owner's duplicate copy to be issued will be
only an owner's duplicate copy of O.C.T. No. O-1385 and the petitioner
is a person in interest as he is a legal heir, according to his
uncontroverted verified petition.
The oppositors-appellees, who had not chosen to file their brief, have no
personality to intervene and their grounds of intervention, namely, that
they have been in public, continuous, peaceful, adverse and lawful
possession of the property is immaterial, impertinent and of no
consequence, in the present proceeding. Their claim of ownership or
possession of the property can be properly instituted in a separate,
independent and ordinary civil action.
4. Reconstitution of Lost or Destroyed Original Torrens Title (Sec
110)
A Saint Mary Crusade vs. Riel 176508
Facts: Petitioner claimed in its petition for reconstitution that the
original copy of OCT No. 1609 had been burnt and lost in the fire that
gutted the Quezon City Register of Deeds in the late 80's. Initially,
respondent Judge gave due course to the petition, but after the
preliminary hearing, he dismissed the petition for reconstitution.
The petitioner moved for reconsideration of the dismissal, attaching the
following documents to support its petition for reconstitution, namely:
(1) the copy of the original application for registration dated January 27,
1955; (2) the notice of initial hearing dated June 23, 1955; (3) the letter
of transmittal to the Court of First Instance in Quezon City; (4) the copy
of the Spanish Testimonial Title No. 3261054 dated March 25, 1977 in
the name of Eladio Tiburcio; (5) the copy of Tax Assessment No.
14238; and (6) the approved Plan SWD-37457. SAaTHc
30
On February 5, 2007, the RTC denied the motion for reconsideration for
lack of any cogent or justifiable ground to reconsider.
Hence, petitioner came directly to the Court alleging that respondent
Judge had "unfairly abused his discretion and unlawfully neglected the
performance of an act”. He filed for certiorari 65 and mandamus
Reasons why Judge dismissed
Petitioner did not present its purported Torrens title to be reconstituted;
Petitioner's claim was doubtful given the magnitude of 4,304,623 square
meters as the land area involved;
UP's ownership of the portion of land covered by petitioner's claim had
long been settled by the Court in a long line of cases. (this is true)
Issues: WON petitioner is correct
Ruling: No.
Subject lot sought to be reconstituted belongs to UP
The petition for certiorari and mandamus did not show how respondent
Judge could have been guilty of lacking or exceeding his jurisdiction, or
could have gravely abused his discretion amounting to lack or excess of
jurisdiction. Under Section 12 21 of Republic Act No. 26, the law on the
judicial reconstitution of a Torrens title, the Regional Trial Court (as the
successor of the Court of First Instance) had the original and exclusive
jurisdiction to act on the petition for judicial reconstitution of title.
Hence, the RTC neither lacked nor exceeded its authority in acting on
and dismissing the petition. Nor did respondent Judge gravely abuse his
discretion amounting to lack or excess of jurisdiction considering that
the petition for reconstitution involved land already registered in the
name of the UP, as confirmed by the LRA. Instead, it would have been
contrary to law had respondent Judge dealt with and granted the petition
for judicial reconstitution of title of the petitioner.
The land covered by the petition for judicial reconstitution related to the
same area that formed the UP campus. The UP's registered ownership of
the land comprising its campus has long been settled under the law.
Accordingly, the dismissal of the petition for judicial reconstitution by
respondent Judge only safeguarded the UP's registered ownership.
Petitioner did not present the duplicate or certified copy of OCT No.
1609
Section 2 and Section 3 of Republic Act No. 26, the provisions that
expressly listed the acceptable bases for judicial reconstitution of an
existing Torrens title, to wit:
Sec. 2. Original certificates of title shall be reconstituted from such of
the sources hereunder enumerated as may be available, in the following
order:
(a) The owner's duplicate of the certificate of title;
Sec. 3. Transfer certificates of title shall be reconstituted from such of
the sources hereunder enumerated as may be available, in the following
order:
(a) The owner's duplicate of the certificate of title;
. same is mandatory and jurisdictional.
b. Republic vs. Sanchez 146081
Facts: On 28 May 1996, respondents filed a petition ("LRC Case No. Q-
96-8296") in the trial court to reconstitute the original of TCT No.
252708. Respondents claimed that TCT No. 252708 was issued in the
name of respondent Marina. Respondents alleged that the original of
TCT No. 252708 was among the documents destroyed by the fire which
razed the Office of the Register of Deeds, Quezon City in June 1988.
Respondents sought reconstitution under Section 3(a) of RA 26 based on
Marina's duplicate title.
The Solicitor General filed his Comment to the petition, noting that
since the petition is based on Section 3(a) of RA 26, the trial court
should defer acting on the petition until the Land Registration Authority
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(LRA) has submitted its Report on the petition as required under LRA
Circular No. 35.
In response to the Solicitor General's Comment, respondents submitted a
First Report signed by Bustos, Chief, Reconstitution Division, LRA and
endorsed to the trial court in a letter signed by Oriel, Chief, Docket
Division, LRA. Apart from the First Report.
Ruling of the RTC
[October 1996 Order] The trial court granted reconstitution and
ordered TCT No. 252708 reconstituted finding that TCT No. 252708
"do[es] not appear to overlap previously plotted/decreed properties in
the area (later, it turns out that it overlapped).
In a letter, Oriel submitted to the trial court Second Report, informing
the trial court that the First Report was fake and recommended that the
trial court set aside its October 1996 decision granting the reconstitution
of TCT 252708.
Petitioner, however, filed a Manifestation and Motion to set aside the 28
October 1996 Order. Petitioner contended that respondents' petition
should be considered as having been filed under Section 3(f) of RA 26,
that is, based on "any other document." Petitioner pointed out that a
petition for reconstitution of lost or destroyed titles based on Section 3(f)
should not only be published and posted but also served on, among
others, the owners of the adjoining properties . For non-compliance with
this requirement, the trial court did not acquire jurisdiction over LRC
Case No. Q-96-8296.
[July 1998 Resolution] The trial court set aside the 28 October 1996
Order and dismissed LRC Case No. Q-96-8296 and held:
“Records reveal that TCT No. 252708, the title to be reconstituted,
overlaps TCT Nos. 187040 and 187042 of Uy and Zalamea. Petitioners'
design of having their title reconstituted, notwithstanding the fact that
the same is covered in two other titles, eludes the comprehension of this
Court.
This Court is of the view that the failure to notify the registered owners
of TCT Nos. 187040 and 187042 of the Reconstitution proceeding
proved to be a mistake.
Section 13, RA 26 provides that “The Court shall likewise cause a
copy of the notice to be sent, by registered mail or otherwise, at the
expense of the petitioner, to every person named therein whose
address is known, at least thirty days prior to the date of the
hearing. Said notice shall state among other things, the number of
the lost or destroyed certificate of title, if known, the name of the
registered owner, the name[s] of the occupants or persons in
possession of the property, the owner[s] of the adjoining properties
and all other interested parties, the location, area and boundaries of
the property, and the date on which all persons having any interest
therein, must appear and file their claim o[r] objection to the
petition. The petitioner shall, at the hearing, submit proof of the
publication, posting and service of the notice as directed by the
court.
Petitioners' failure to comply with this provision is a fatal defect for the
Respondents filed a petition for certiorari in the Court of Appeals.
The Ruling of the CA
The Court of Appeals granted respondents' petition, set aside the trial
court's 17 July 1998 and 4 January 1999 Resolutions, and reinstated the
28 October 1996 Order ruling “until the trial court declares TCT No.
252708 to be void and orders its cancellation, we cannot but recognize
the validity of the same.”
Petitioner reiterates its claim that the trial court did not acquire
jurisdiction over LRC Case No. Q-96-8296 for lack of actual notice to
all interested parties as required under Section 13 in relation to Section
12 of RA 26. Respondents countered that the actual notice requirement
31
in Section 13 does not apply to LRC Case No. Q-96-8296 because that
case was based on Marina's duplicate copy of TCT No. 252708.
Issues: WON the trial court acquired jurisdiction over LRC Case No. Q-
96-8296.
Ruling: No.
Respondents are correct in saying that the service of notice of the
petition for reconstitution filed under RA 26 to the occupants of the
property, owners of the adjoining properties, and all persons who may
have any interest in the property is not required if the petition is based
on the owner's duplicate certificate of title or on that of the co-owner's,
mortgagee's, or lessee's. This was our ruling in Puzon v. Sta Lucia
Realty and Development, Inc., involving a petition filed for the
reconstitution of the original of two Torrens certificates of title based on
Puzon's duplicate certificates of title.
SEC. 12. Petition for reconstitution from sources enumerated in
Section 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f) of this Act,
shall be filed with the proper Court of First Instance, by the
registered owner, his assigns, or any person having an interest in
the property. The petition shall state or contain, among other things,
the following: (e) the name and addresses of the occupants or
persons in possession of the property, of the owners of the
adjoining properties and of all persons who may have interest in the
property; All the documents, or authenticated copies thereof, to be
introduced in evidence in support to the petition for reconstitution
shall be attached thereto and filed with the same: Provided, That in
case the reconstitution is to be made exclusively from sources
enumerated in Section 2(f) or 3(f) of this Act, the petition shall be
further accompanied with a plan and technical description of the
property duly approved by the Commissioner of Land Registration,
or with a certified copy of the description taken from a prior
certificate of title covering the same property
The requirements under Sections 12 and 13 do not apply to all petitions
for judicial reconstitution, but only to those based on any of the sources
specified in Section 12, that is, "sources enumerated in Section 2(c),
2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f) of this Act.
SEC. 2. Original certificates of title shall be reconstituted from
such of the sources hereunder enumerated as may be available, in
the following order:
(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's, or lessee's duplicate of the
certificate of title;
(c) A certified copy of the certificate of title, previously issued by
the register of deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as
the case may be, pursuant to which the original certificate of title
was issued;
(e) A document, on file in the registry of deeds, by which the
property, the description of which is given in said document, is
mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and
(f) Any other document which, in the judgment of the court, is
sufficient and proper basis for reconstituting the lost or destroyed
certificate of title.
SEC. 3. Transfer certificates of title shall be reconstituted from
such of the sources hereunder enumerated as may be available, in
the following order:
(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's or lessee's duplicate of the
certificate of title;
(c) A certified copy of the certificate of title, previously issued by
the register of deeds or by a legal custodian thereof;
(d) The deed of transfer or other document on file in the registry of
deeds, containing the description of the property, or an
authenticated copy thereof, showing that its original had been
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registered, and pursuant to which the lost or destroyed transfer
certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the
property the description of which is given in said documents, is
mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and
(f) Any other document which, in the judgment of the court, is
sufficient and proper basis for reconstituting the lost or destroyed
certificate of title.
In the present case, the source of the Petition for the reconstitution of
title was petitioner's duplicate copies of the two TCTs mentioned in
Section 3(a). Clearly, the Petition is governed, not by Sections 12 and
13, but by Section 10 of RA 26. We quote said Section 10 in full:
SEC. 10. Nothing hereinabove provided shall prevent any
registered owner or person in interest from filing the petition
mentioned in Section Five of this Act directly with the proper Court
of First Instance, based on sources enumerated in Section 2(a),
2(b), 3(a), 3(b), and/or 4(a) of this Act. Provided, however, That
the Court shall cause a notice of the petition, before hearing and
granting the same, to be published in the manner stated in Section
Nine hereof: And provided, further, That certificates of title
reconstituted pursuant to this section shall not be subject to the
encumbrance referred to in Section Seven of this Act.
Nothing in this provision requires that notices be sent to owners of
adjoining lots Verily, that requirement is found in Section 13, which
does not apply to petitions based on an existing owner's duplicate TCT.
However, contrary to respondents' claim, Puzon finds no application
here. No report from a pertinent government agency challenging the
authenticity of Puzon's duplicate certificates of title was presented in
Puzon. Thus, when Branch 80 granted reconstitution, Puzon's duplicate
transfer certificates of title remained unchallenged.
The reconstitution from a fake and fictitious duplicate title, as in this
case, falls squarely under Section 3(f) and NOT 3(a) and therefore needs
the add’tl requirement of notice to be mailed.
In Director of Lands vs CA, we ruled that “the instant petition for
judicial reconstitution falls squarely under Section 3(f), Republic Act
No. 26, because the Director of Lands claims that the respondent's
duplicate of the Certificate of Title No. T-12/79 or TCT No. 42449 are
fake and fictitious.”
Consequently, we applied Sections 12 and 13 of RA 26 and held that for
non-compliance with these provisions, the trial court did not acquire
jurisdiction over the petition for reconstitution.
For petitions based on sources enumerated in Sections 2(c), 2(d), 2(e),
2(f), 3(c), 3(d), 3(e) and 3(f), Section 13 adds another requirement: that
the notice be mailed to occupants, owners of adjoining lots, and all other
persons who may have an interest in the property. To repeat, mailing the
notice is not required for a petition based on Sections 2(a), 2(b), 3(a),
3(b) and 4(a), as in the present case.
It is Section 13 in relation to Section 12 of RA 26 which applies to LRC
Case No. Q-96-8296. Hence, in addition to its posting and publication,
the notice of hearing of LRC Case No. Q-96-8296 should also have been
served through mail on the owners of the adjoining properties and all
persons who may have any interest in the property. The records show
that neither the adjoining owners nor the other interested parties, Uy and
Zalamea, were issued, were notified of respondents' petition in LRC
Case No. Q-96-8296.
The Actual Notice Requirement in Section 13 in Relation to Section 12,
RA 26 is Jurisdictional
In Director of Lands vs. CA, we ruled that “These requirements and
procedure are mandatory. The petition for reconstitution must allege the
jurisdictional facts; the notice of hearing must also be published and
posted in particular places and the same sent to specified persons.”
32
For non-compliance with the actual notice requirement in Section 13 in
relation to Section 12 of RA 26, the trial court did not acquire
jurisdiction over LRC Case No. Q-96-8296. The proceedings in that
case were thus a nullity and the 28 October 1996 Order was void.
c. Heirs of Venturanza vs Republic GR No. 149122
Facts: The title in question TCT No. 2574 was issued in the name of
Gregorio Venturanza, married to Mary Edwards-Venturanza. It was
derived from TCT No. RT-40 (140), which is a reconstituted title issued
to one Florencio Mora who sold the property therein described to
Venturanza, containing an area of 23,944,635 square meters or 2,394
hectares, situated in the municipality of Buhi, Camarines Sur. However,
it does not show when the land covered by TCT No. 2574 was originally
registered and the other data were merely noted as (NA). In turn, TCT
No. RT-40 (140) appears to have been reconstituted from TCT No. 140
which was issued to one Sebastian Moll. TCT No. 140, on the other
hand, appears to be a transfer from Land Registration Case (LRC) No.
3480 issued to one Casimiro Natividad. (LRC - TCT 140 - TCT
RT40(140) - TCT 2574; or Natividad - Moll - Mora - Venturanza). Upon
further investigation, it was discovered that the land subject of LRC No.
3480 covered a parcel of land consisting of only 451 square meters and
situated in Tigaon, Camarines Sur. The 23,944,635 square meters or
2,394 hectares practically comprise the entire Municipality of Buhi.
Republic of the Philippines, through the OSG, filed a complaint for the
Cancellation of Transfer Certificate of Title No. 2574 and the Reversion
of the Land Described Therein to the Republic of the Philippines. The
trial court came out with its decision ordering the annulment and
cancellation and the reversion of the land. Trial court principally
anchored its judgment on the ground that the reconstituted title issued in
the name of Florencio Mora could have been fraudulently secured,
hence, does not legally exist. Since the reconstituted title issued to
Florencio Mora is a nullity, then the order for its reconstitution did not
attain finality and therefore may be attacked anytime. CA affirmed the
lower court.
Issues:
(a) WON TCT No. 2574 is already indefeasible after the lapse of
one year.
(b) WON the action of the Republic is barred by res judicata.
(c) WON Venturanzas are buyers in good faith.
Ruling: (a) NO. Petitioners maintain that under Section 112 of Act No.
496 (Land Registration Act), Mora’s reconstituted TCT No. RT-40
(140) is already indefeasible the same having attained finality one (1)
year after the CA granted its reconstitution in CA-G.R. No. 20681-R.
Petitioners are wrong. Clearly, the provisions relied upon refer to
original decrees of registration and not to orders of reconstitution. As it
is, petitioners cannot even seek refuge in the Land Registration Act
because the land covered by TCT No. 2574 had never been brought
within the operation of said law. The Land Registration Act is not
applicable considering that the land covered by TCT No. 2574 had never
been within the operation of the Land Registration Act because of the
irregularities attending the issuance of the reconstituted title. The land
practically covers the Municipality of Buhi and are being claimed and
possessed by claimants, who appeared as intervenors in this case. The
Venturanzas never materially and physically occupied the property
because there are actual occupants and possessors. The Venturanzas
only asserted ownership over the property in papers but not in physical
possession. As a necessary consequence, no court could have ever
acquired jurisdiction to order the reconstitution of Mora’s TCT No. RT-
40 (140) over the land which has never been originally registered.
(b) NO. Aside from the fact that no court could have ever acquired
jurisdiction to order the reconstitution of Mora’s title over the property
which has never been originally registered, the judgment in CA-G.R.
No. 20681-R did not operate as res judicata which would bar the
Republic’s action because there was no identity of cause of action
between CA-G.R. No. 20681-R and the instant case.
(c) NO. Again, this assertion is without basis considering that
Mora’s reconstituted TCT No. RT-40 (140), from where petitioners’
TCT No. 2574 was derived, is void. The only way by which Mora could
have acquired ownership over the subject parcels of land and validly
transfer that ownership to the petitioners was for Mora to apply for their
registration in his own name.
What makes petitioners’ cause doubly undeserving of merit is the
finding of the two courts below that the land subject matter of this case
is part timberland, a finding not even once disputed by petitioners. It is,
thus, safe to conclude that the land subject of TCT No. 2574 could not
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have been registered in the name of petitioners or their predecessors-in-
interest for the simple reason that under the Constitution, timberlands,
which are part of the public domain, cannot be alienated. A certificate of
title covering inalienable lands of the public domain is void and can be
cancelled in whosever hand said title may be found.
d. Republic vs Lorenzo et al GR No. 172338
Facts: A petition for reconstitution of OCT No. 3980 by the respondents
herein was filed before the trial court. They alleged that Pedro Fontanilla
and Concepcion Lorenzo who, during their marriage, acquired a parcel
of land covered and embraced by OCT No. 3890 from Pedro’s mother,
Antonia Pascua, as evidenced by a Deed of Sale. They also averred that
the owner’s duplicate of the said Torrens certificate of title was later
discovered to have been eaten by termites and that the original copy of
the said Torrens certificate of title on file with the Register of Deeds of
Isabela was certified to be burned and lost beyond recovery when the
office was razed by fire of unknown origin on December 4, 1976 as
certified to by the Register of Deeds. Since both the original copy on file
and the owner’s duplicate copy are non-existent, the respondents in this
case instituted the petition for reconstitution of lost or destroyed Torrens
certificate of title. The trial court granted the petition. On appeal by the
Republic, CA affirmed such decision. Hence, the present petition.
Issue: WON the reconstitution of OCT No. 3980 was in accordance
with the pertinent law and jurisprudence on the matter.
Ruling: NO. The relevant law that governs the reconstitution of a lost or
destroyed Torrens certificate of title is RA No. 26. Section 2 of said
statute enumerates the following as valid sources for judicial
reconstitution of title:
SECTION 2. Original certificates of title shall be
reconstituted from such of the sources hereunder enumerated as
may be available, in the following order:
(a) The owner’s duplicate of the certificate of title;
(b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the
certificate of title;
(c) A certified copy of the certificate of title, previously
issued by the register of deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or
patent, as the case may be, pursuant to which the original
certificate of title was issued;
(e) A document, on file in the Registry of Deeds, by which
the property, the description of which is given in said
document, is mortgaged, leased or encumbered, or an
authenticated copy of said document showing that its
original had been registered; and
(f) Any other document which, in the judgment of the court,
is sufficient and proper basis for reconstituting the lost or
destroyed certificate of title.
As borne out by the records of this case, respondents were unable
to present any of the documents mentioned in paragraphs (a) to (e)
above. Thus, the only documentary evidence the respondents were able
to present as possible sources for the reconstitution of OCT No. 3980 are
those that they believed to fall under the class of "any other document"
described in paragraph (f). The term "any other document" in paragraph
(f) refers to reliable documents of the kind described in the preceding
enumerations and that the documents referred to in Section 2(f) may be
resorted to only in the absence of the preceding documents in the list.
Therefore, the party praying for the reconstitution of a title must show
that he had, in fact, sought to secure such documents and failed to find
them before presentation of "other documents" as evidence in
substitution is allowed. Furthermore, in a more recent case, this Court
enumerated what should be shown before an order for reconstitution can
validly issue, namely: (a) that the certificate of title had been lost or
destroyed; (b) that the documents presented by petitioner are sufficient
and proper to warrant reconstitution of the lost or destroyed certificate of
title; (c) that the petitioner is the registered owner of the property or had
an interest therein; (d) that the certificate of title was in force at the time
it was lost or destroyed; and (e) that the description, area and boundaries
of the property are substantially the same and those contained in the lost
or destroyed certificate of title.
In the case at bar, the respondents were unable to discharge the
burden of proof prescribed by law and jurisprudence for the
reconstitution of lost or destroyed Torrens certificate of title.
5. Estopel in Action for Cancellation of Title
a. Barstowe Phils. Vs Republic GR No. 133110 (Medyo taas ni nga
case)
33

Facts:
This case involves the conflicting titles to the same parcels of land
(subject lots) of petitioner Barstowe Philippines Corporation (BPC) and
the respondent Republic of the Philippines (Republic). Due to the fire
that gutted the Office of the Quezon City Register of Deeds on 11 June
1988 and destroyed many certificates of title kept therein, Antonio
sought the administrative reconstitution of the original copies and
owner’s duplicate copies of 2 TCTs. The Republic applied for
administrative reconstitution of the same with the LRA. It was then that
the Republic came to know that another party had applied for
reconstitution which also covered the same lots. The RTC rendered
judgment declaring both BPC and Republic as buyers in good faith. But
it upheld BPC’s rights over the republic since it was registered earlier.
The Ca ruled for the Republic.
Issue:
Who between BPC and the Republic has a better title over the
subject lots?
Ruling:
Ultimately, this Court is called upon to determine which party now
has superior title to the subject lots: the Republic, BPC, the intervenors
Abesamis, Nicolas-Agbulos, and spouses Santiago, or Servando’s heirs?
BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses
Santiago, and Servando’s heirs derived their title to the subject lots from
Servando’s TCTs No. 200629 and 200630. This Court then is compelled
to look into the validity, authenticity, and existence of these two TCTs.
However, there is an absolute dearth of information and proof as to how
Servando acquired ownership and came into possession of the subject
lots.
Relying on the findings of the LRA, it was established that TCTs
No. 200629 and 200630 were forged and spurious, their reconstitution
was also attended with grave irregularities. BPC was unable to attack the
authenticity and validity of the titles of the Republic to the subject lots,
and could only interpose the defense that it was a buyer in good faith. It
points out that it purchased the subject lots from Servando and registered
the same, way before the titles of Servando were declared null by the
RTC. Under Section 55 of the Land Registration Act, as amended by
Section 53 of Presidential Decree No. 1529, an original owner of
registered land may seek the annulment of a transfer thereof on the
ground of fraud. However, such a remedy is without prejudice to the
rights of any innocent holder for value with a certificate of title. A
purchaser in good faith and for value is one who buys the property of
another, without notice that some other person has a right to or interest
in such property, and pays a full and fair price for the same at the time of
such purchase or before he has notice of the claim or interest of some
other person in the property.
It has been consistently ruled that a forged deed can legally be the
root of a valid title when an innocent purchaser for value intervenes. A
deed of sale executed by an impostor without the authority of the owner
of the land sold is a nullity, and registration will not validate what
otherwise is an invalid document. However, where the certificate of title
was already transferred from the name of the true owner to the forger
and, while it remained that way, the land was subsequently sold to an
innocent purchaser, the vendee had the right to rely upon what appeared
in the certificate and, in the absence of anything to excite suspicion, was
under no obligation to look beyond the certificate and investigate the
title of the vendor appearing on the face of said certificate.
Now the question is whether BPC qualifies as an innocent
purchaser for value which acquired valid titles to the subject lots, despite
the fact that the titles of its predecessor-in-interest were found to be
forged and spurious.
This Court finds in the negative.
BPC cannot really claim that it was a purchaser in good faith
which relied upon the face of Servando’s titles. It should be recalled that
the Quezon City Register of Deeds caught fire on 11 June 1988.
Presumably, the original copies of TCTs were burnt in the said fire.
Servando’s heirs sought the administrative reconstitution of the TCTs. If
BPC bought the subject lots after TCTs were destroyed when the
Quezon City Register of Deeds burned down, but before the said
certificates were reconstituted, then on the face of what titles did BPC
rely on before deciding to proceed with the purchase of the subject lots?
There was no showing that there were surviving owner’s duplicate
copies of TCTs. Without the original copies and owner’s duplicate
copies of TCTs, BPC had to rely on the reconstituted certificates. Under
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section 7 of Republic Act No. 26, "Reconstituted titles shall have the
same validity and legal effect as the originals thereof" unless the
reconstitution was made extrajudicially.
In this case, TCTs were reconstituted administratively, hence,
extrajudicially. In contrast to the judicial reconstitution of a lost
certificate of title which is in rem, the administrative reconstitution is
essentially ex-parte and without notice. The reconstituted certificates of
title do not share the same indefeasible character of the original
certificates of title for the reason that the nature of a reconstituted
Transfer Certificate Of Title of registered land is similar to that of a
second Owner's Duplicate Transfer Certificate Of Title. Both are issued,
after the proper proceedings, on the representation of the registered
owner that the original of the said TCT or the original of the Owner's
Duplicate TCT, respectively, was lost and could not be located or found
despite diligent efforts exerted for that purpose. Both, therefore, are
subsequent copies of the originals thereof. A cursory examination of
these subsequent copies would show that they are not the originals.
Anyone dealing with such copies are put on notice of such fact and thus
warned to be extra-careful. The fact that the TCTs were reconstituted
should have alerted BPC and its officers to conduct an inquiry or
investigation as might be necessary to acquaint themselves with the
defects in the titles of Servando. This Court cannot declare BPC an
innocent purchaser for value, and it acquired no better titles to the
subject lots than its predecessors-in-interest, Servando and Antonio.
At this point, it would seem that the Republic does hold better
titles to the subject lots. Nonetheless, another level of transactions
involving the subject lots was brought by intervenors to the attention of
this Court. The Republic is held to be barred by estoppel as to the lots
sold to the intervenors considering that the latter were innocent
purchaser for value from BPC. The general rule is that the State cannot
be put in estoppel by the mistakes or errors of its officials or agents.
However, like all general rules, this is also subject to exceptions, viz:
"Estoppels against the public are little favored. They should not be
invoked except in rare and unusual circumstances, and may not be
invoked where they would operate to defeat the effective operation of a
policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases where
the interests of justice clearly require it. Nevertheless, the government
must not be allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a shabby thing; and
subject to limitations x x x the doctrine of equitable estoppel may be
invoked against public authorities as well as against private individuals."
b. Republic vs CA and Santos GR No. 116111
Facts:
Defendant St. Jude’s Enterprise (SJE) was the owner of the land in
question. It was later on subdivided so that new certificate of titles were
issued under its name. However, it was later on found out that the
subdivision plan have been expanded and enlarged from its original
area. Subsequently, SJE sold the subdivided lands to its co-defendants
herein and was later on issued their own certificate of titles. The
Republic, through the OSG filed an action seeking for the annulment
and cancellation of said certificates of title. The trial court dismissed the
complaint ruling that the Republic is now barred by estoppel and also
taking into consideration that there are no complaints from the adjoining
owners and that the defendant-buyers were buyers in good faith. The CA
affirmed such decision. Undaunted, Republic filed the present petition.
Issue:
WON Republic is barred by estoppel.
Ruling:
YES. The general rule is that the State cannot be put in estoppel by
the mistakes or errors of its officials or agents. However, like all general
rules, this is also subject to exception. Estoppels against the public are
little favored. They should not be invoked except in a rare and unusual
circumstances, and may not be invoked where they would operate to
defeat the effective operation of a policy adopted to protect the public.
They must be applied with circumspection and should be applied only in
those special cases where the interests of justice clearly require it.
Nevertheless, the government must not be allowed to deal dishonorably
or capriciously with its citizens, and must not play an ignoble part or do
a shabby thing; and subject to limitations, the doctrine of equitable
estoppel may be invoked against public authorities as well as against
private individuals.
In the case at bar, for nearly twenty years (starting from the
issuance of St. Jude's titles in 1996 up to the filing of the Complaint in
1985), petitioner failed to correct and recover the alleged increase in the
34
land area of St. Jude. Its prolonged inaction strongly militates against its
cause, as it is tantamount to laches, which means "the failure or neglect,
for an unreasonable and unexplained length of time, to do what which
by exercising due diligence could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it." The Court notes private
repondents' argument that, prior to the subdivision, the surveyors erred
in the original survey of the whole tract of land covered by TCT No.
22660, so that less than the actual land area was indicated on the title.
Otherwise, the adjoining owners would have complained upon the
partition of the land in accordance with the LRC-approved subdivision
plan. As it is, Florenci Quintos, the owner of the 9,146 square-meter
Quintos Village adjoining the northern potion of St. Jude's property (the
portion allegedly "expanded"), even attested on August 16, 1973 that
"there [was] no everlapping of boundaries as per my approved plan
(LRC) PSD 147766 dated September 8, 1971." 20 None of the other
neighboring owners ever complained against St. Jude or the purchaser of
its property. It is clear, therefore, that there was no actual damage to
third persons caused by the resurvey and the subdivision.
Significantly, the other private respondents — Spouses Santos,
Spouses Calaguian, Dela Fuente and Madaya — bought such
"expanded" lots in good faith, relying on the clean certificates of St.
Jude, which had no notice of any flaw in them either. It is only fair and
reasonable to apply the equitable principle of estoppel by laches against
the government to avoid an injustice 21 to the innocent purchasers for
value.
XIII. SCHEDULE OF FEES, SPECIAL FUND
Chapter XI (Sec 111)
XIV. FORMS USED IN LAND REGISTRATION AND
CONVEYANCE
Chapter XII (Sec 112)
XV. DEALINGS WITH UNREGISTERD LAND
Chapter XII (Sec 113)
1. RADIOWEALTH FINANCE COMPANY vs. MANUELITO S.
PALILEO [G.R. No. 83432 May 20, 1991]
Facts: In 1970, defendant spouses Castro sold to Private Respondent
Palileo a parcel of unregistered coconut land. The sale is evidenced by a
notarized Deed of Absolute Sale but said deed was not registered in the
Registry of Property for unregistered lands. Since the execution of the
deed of sale, Private respondent exercised acts of ownership over the
land through his mother Rafaela, as overseer. Appellee has continuously
paid the real estate taxes on said land since 1971. Meanwhile in 1976, a
judgment was rendered against defendant Castro to pay Petitioner
Radiowealth Finance Company the sum of P22,350.35 with interest
from 1975 until fully paid. Upon the finality of the judgment, a writ of
execution was issued. Pursuant to said writ, defendant provincial Sheriff
levied upon and finally sold at public auction the subject land that
defendant Castro had sold to Private respondnet Palileo. A certificate of
sale was executed by the Provincial Sheriff in favor of Petitioner
Radiowealth Finance Company, being the only bidder. After the period
of redemption has expired, a deed of final sale was also executed. Both
the certificate of sale and the deed of final sale were registered with the
Registry of Deeds. Private respondent Palileo filed an action for quieting
of title over the same.
Issue: Who, as between two buyers of unregistered land, is the rightful
owner—the first buyer in a prior sale that was unrecorded, or the second
buyer who purchased the land in an execution sale whose transfer was
registered in the Register of Deeds?
Ruling: The pravate respondent is the rightful owner. The execution
sale of the unregistered land in favor of petitioner is of no effect because
the land no longer belonged to the judgment debtor as of the time of the
said execution sale.Had the property been a registered land, this case
would have been decided in favor of petitioner since it was petitioner
that had its claim first recorded in the Registry of Deeds. A bona
fide purchaser of a registered land at an execution sale acquires a good
title as against a prior transferee, if such transfer was unrecorded
applying Article 1544 of the civil code. However, this case deals with a
parcel of unregistered land and a different set of rules applies. Under Act
No. 3344, registration of instruments affecting unregistered lands is
"without prejudice to a third party with a better right". The mere
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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. Article 1544 cannot be invoked to benefit the purchaser at
the execution sale though the latter was a buyer in good faith and even if
this second sale was registered. It was explained that this is because the
purchaser of unregistered land at a sheriffs execution sale only steps into
the shoes of the judgment debtor, and merely acquires the latter's interest
in the property sold as of the time the property was levied upon.
XVI. REGISTRATION OF CHATTEL MORTGAGES
Chapter XIV, (Sec 114-116)
1. SABITSANA  vs. MUERTEGUI [G.R. No. 181359 August 5,
2013]
Facts: Garcia executed an unnotarized Deed of Sale in favor of
respondent Juanito over a a parcel of unregistered land covered by Tax
Declaration issued in Garcia’s name. Juanito’s father Domingo and
brother took actual possession of the lot and planted thereon coconut and
ipil-ipil trees. They also paid the real property taxes on the lot . Garcia
sold the same lot to the Muertegui family lawyer, petitioner Atty.
Sabitsana through a notarized deed of absolute sale. The sale was
registered with the Register of Deeds. A new one, TD No. 5327  was
issued in Atty. Sabitsana’s name. He also paid real property taxes. He
introduced concrete improvements on the property, which shortly
thereafter were destroyed by a typhoon. When Juanito’s father passed
away, his heirs applied for registration and coverage of the lot under the
Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana
addressed to the DENR’ CENRO/PENRO office his letter opposing the
application, claiming that he was the true owner of the lot. Juanito filed
an action for quieting of title and preliminary injunction against
Petitioners claiming that they bought the lot in bad faith and are
exercising acts of possession and ownership over the same, which acts
thus constitute a cloud over his title.
Issue: Who between petitioners and respondent has a better right to the
disputed lot?
Ruling: Respondent has a better right to the lot. What applies in this
case is Act No. 3344 which provides for the system of recording of
transactions over unregistered real estate. Act No. 3344 expressly
declares that any registration made shall be without prejudice to a third
party with a better right. The sale to respondent Juanito was executed in
1981 via an unnotarized deed of sale, while the sale to petitioners was
made via a notarized document only in 1991, or ten years thereafter.
Thus, Juanito who was the first buyer has a better right to the lot, while
the subsequent sale to petitioners is null and void, because when it was
made, the seller Garcia was no longer the owner of the lot. The fact that
the sale to Juanito was not notarized does not alter anything, since the
sale between him and Garcia remains valid nonetheless. Notarization, or
the requirement of a public document under the Civil Code is only for
convenience, and not for validity or enforceability. And because it
remained valid as between Juanito and Garcia, the latter no longer had
the right to sell the lot to petitioners, for his ownership thereof had
ceased. Nor can petitioners’ registration of their purchase have any
effect on Juanito’s rights. The mere registration of a sale in one’s favor
does not give him any right over the land if the vendor was no longer the
owner of the land, having previously sold the same to another even if the
earlier sale was unrecorded. Neither could it validate the purchase
thereof by petitioners, which is null and void. Registration does not vest
title; it is merely the evidence of such title. Moreover, Petitioners’ actual
and prior knowledge of the first sale to Juanito makes them purchasers
in bad faith.
XVII. CONSULTAS (Sec 117)
1. TEODORO ALMIROL vs. THE REGISTER OF DEEDS OF
AGUSAN [G.R. No. L-22486 March 20, 1968]
Facts: Almirol purchased from Abalo a parcel of land and covered by
original certificate of title in the name of "Arcenio Abalo, married to
Nicolasa M. Abalo." Almirol went to the office of the Register of Deeds
to register the deed of sale and to secure in his name a transfer certificate
of title. Registration was refused by the Register of Deeds upon the
grounds that the property is by legal presumption considered conjugal
property; and it is necessary that both spouses sign the document; but
then the wife has already died when the sale was made; and to effect the
registration of the aforesaid deed of absolute Sale, it is necessary that the
property be first liquidated and transferred in the name of the surviving
35
spouse and the heirs of the deceased wife by means of extrajudicial
settlement or partition and that the consent of such other heir or heirs
must be procured by means of another document ratifying this sale
executed by their father. In view of such refusal, Almirol filed a a
petition for mandamus to compel the Register of Deeds to register the
deed of sale and to issue to him the corresponding transfer certificate of
title. It is Almirol's assertion that it is but a ministerial duty of the
respondent to perform the acts required of him, and that he has no other
plain, speedy and adequate remedy in the ordinary course of law. In his
answer, the respondent reiterated the grounds stated in his letter and
averred that the petitioner has other legal, plain, speedy and adequate
remedy at law by appealing the decision of the respondent to the
Honorable Commissioner of Land Registration.
Issue: Whether mandamus will lie to compel the respondent to register
the deed of sale in question.
Ruling: No. Where any party in interest does not agree with the Register
of Deeds, the question shall be submitted to the Commissioner of Land
Registration. This administrative remedy must be resorted to by the
petitioner before he can have recourse to the courts. Although the
reasons relied upon by the respondent evince a sincere desire on his part
to maintain inviolate the law on succession and transmission of rights
over real properties, these do not constitute legal grounds for his refusal
to register the deed. Whether a document is valid or not, is not for the
register of deeds to determine; this function belongs properly to a court
of competent jurisdiction. A register of deeds is entirely precluded by
section 4 of Republic Act 1151 from exercising his personal judgment
and discretion when confronted with the problem of whether to register
a deed or instrument on the ground that it is invalid. For under the said
section, when he is in doubt as to the proper step to be taken with
respect to any deed or other instrument presented to him for registration,
all that he is supposed to do is to submit and certify the question to the
Commissioner of Land Registration who shall, after notice and hearing,
enter an order prescribing the step to be taken on the doubtful questions.
His decision in such cases shall be conclusive and binding upon all
Registers of Deeds. And when a party in interest disagrees with the
ruling or resolution of the Commissioner and the issue involves a
question of law, said decision may be appealed to the Supreme Court
within thirty days from and after receipt of the notice thereof.
Smith Bells & Co. vs. RD of Leyte
Principle:
1. It is the duty of the registrar to register the sheriff’s deed,
notwithstanding the fact that the record title is in the name of a
person who was not a party to the action.
2. The registration of sheriff’s deed does not give title to the
registrant, it is to preserve and protect any legal rights it may
have acquired at the time attachment was levied.
Facts:
 On April 26, 1921, for a purported consideration of P78,000
Meija and his wife made a deed to Cristina Martinez for four
parcels of land, which deed on August 12, 1921, was duly
registered as inscription No. 67 in the register of lands not
registered under Act No. 496
 S.B. & Co. commenced an action against Meija and his wife,
the grantors in the deed and defendants
 A writ of attachment was issued, and on April 18, 1923, it was
levied upon the four parcels of land described in the deed to
Cristina Martinez.
 Judgment was later obtained in the action in favor of S. B. &
Co. and an execution was issued under which the fourth parcel
of land described in the deed was advertised for sale to satisfy
the judgment
 Cristina Martinez, the vendee in the deed, entered
a terceria with the sheriff, claiming the land as her sole
property
 The sheriff required S. B. & Co. to give an indemnity bond as
a condition precedent to the making of the sale, which bond
was furnished, and the property sold to S. B. & Co. for
P20,000.
 The sheriff executed and presented a certificate of sale to the
registrar for inscription, which the registrar refused to do, and
later he executed a deed to S. B. & Co
 S. B. & Co wrote a letter to the Chief of the General Land
Registration office for the refusal of registration of sheriff’s
deed of sale. It was submitted to CFI of Manila who held that
the registrar had the legal right to refuse to inscribe the
sheriff’s certificate of sale for the property sold at public
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auction because it was not registered in the name of the
judgment debtor, but in the name of a third party.
Issue:
1. Whether or not the RD has legal right to refuse to register
the sheriff’s deed of sale?
Ruling:
No, because it has become a duty of the registrar to register
the sheriff’s deed. S. B. & Co executed a good and sufficient bond to
indemnify the sheriff in the making of the sale, and having purchased
the property at the sale, and having received the sheriff’s deed, is
entitled to have the result of such proceedings registered, as to protect
any legal rights it may have acquired in the land as a result of such
proceeding, and under Sec. 1 of Act 2837, those rights if any, cannot be
protected without the registration of the sheriffs deed.
The registration would not legally mean that Smith, Bell &
Co. was the owner of the property described in the sheriff's deed, or any
interest therein. It would simply mean that by the sheriff's deed,
Smith, Bell & Co. had acquired any right, title or interest which the
grantors had in the fourth parcel of land described in the deed at
the time the attachment was levied. Smith, Bell & Co. did not acquire
any title, and Cristina Martinez would be and remain the owner of the
property, the same as if it had never been sold at the sheriff's sale. It
might be a cloud on the title of Cristina Martinez, and it might be
necessary for her to bring a suit to remove the cloud and to quiet her
title. Be that as it may, she would be fully protected from all loss or
damage by the indemnity bond which Smith, Bell & Co. gave the sheriff
( Cristina has an adequate remedy on the bond for any loss or damage
which she may have sustained by reason of the wrong attachment or sale
of property), or after the deed is registered, Smith, Bell & Co. could then
maintain a suit to ascertain what rights, if any, it had acquired by the
sheriff's deed in and to the fourth parcel of land. Although in some
matters, the registrar may have some quasi-judicial power, yet a suit to
quiet a title or to ascertain and determine an interest in real property is a
matter exclusively within the jurisdiction of the courts.
2. BPI vs ALS Management Corp.
Principle:
1. HLURB has exclusive jurisdiction on cases enumerated in sec
1 PD 1344
2. General disclaimer which are intended to give a general idea
of the are not to be relied as statements or representation of
facts therefore not part of warranties.
Facts:
1."On July 29, 1985, [petitioner] BPI Investment Corporation filed a
complaint for a Sum of Money against ALS Management and
Development Corporation, alleging inter alia that on July 22, 1983,
[petitioner] and [respondent] executed at Makati, Metro Manila a Deed
of Sale for one (1) unfurnished condominium unit of the Twin Towers
Condominium located at Ayala Avenue, corner Apartment Ridge Street,
Makati, Metro Manila designated as Unit E-4A comprising of 271
squares [sic] meters more or less, together with parking stalls identified
as G022 and G-63.
2.The Condominium Certificate of Title No. 4800 of the
Registry of Deeds for Makati, Metro Manila was issued after the
execution of the said Deed of Sale.
3.[Petitioner] advanced the amount of P26,300.45 for the expenses in
causing the issuance and registration of the Condominium Certificate of
Title.
4.Under the Deed of Sale, it is stipulated that the VENDEE
[respondent] shall pay all the expenses for the preparation and
registration of this Deed of Sale and such other documents as may be
necessary for the issuance of the corresponding Condominium
Certificate of Title.
5.After the [petitioner] complied with its obligations under
the said Deed of Sale, [respondent], notwithstanding demands
made by [petitioner],failed and refused to pay [petitioner] its legitimate
advances for the expenses mentioned above.
6. In its Answer with Compulsory Counterclaim, [Respondent]
averred among others that it has just and valid reasons for refusing to
pay [petitioner’s] legal claims.
a.In clear and direct contravention of Section 25 of
Presidential Decree No. 957 which provides that ‘No fee except
36
those required for the registration of the deed of sale in the Registry
of Deeds shall be collected for the issuance of such title’,
the[petitioner] has jacked-up or increased the amount of its alleged
advances for the issuance and registration of the Condominium
Certificate of Title in the name of the[respondent], by including therein
charges which should not be collected from buyers of condominium
units.
b."[Respondent] further averred that [petitioner] represented to the
[respondent] that the condominium unit will be delivered completed and
ready for occupancy not later than December31, 1981. [Respondent]
relied solely upon the descriptions and warranties contained in the
aforementioned brochures which has a general disclaimer of “ …
Destined to reflect condominium living at its very best and it’s
design … will make the project the only one of its kind in the
Philippines.” and other sales propaganda materials when [respondent ]
agreed to buy Unit E-4A of the Twin Tower(s) for the hefty sum of
P2,048,900.00 considering that the Twin Towers was then yet to be
built. In contravention of [petitioner’s] warranties and of good
engineering practices, the condominium unit purchased by [respondent]
suffered from defects and/or deficiencies. Respondent
7. Trial court ruled:
1.Ordering the [respondent] to pay [petitioner] the sum of P26,300.45,
with legal interest from the filing of the complaint up to full payment
thereof, representing the amount spent for the registration of the title to
the condominium unit in [respondent’s]name;
2.Ordering [petitioner] to deliver, replace or correct at
[petitioner’s]exclusive expense/cost or appoint a licensed qualified
contractor to do the same on its behalf, the following
defects/deficiencies in the condominium unit owned by the [respondent.
3.Ordering [petitioner] to pay [respondent] the following:
a.The sum of P40,000.00 representing reimbursement for expenses
incurred for the materials/labor in installing walls/floor titles in 2
bathrooms and bar counter cabinet.
b.The sum of P136,608.75, representing unearned income
c.The sum of P27,321.75 per month for a period of twenty-one (21)
months (from May 1985 to January 1987),representing unearned income
8.Court of Appeals sustained the trial court’s finding that
"while[petitioner] succeeded in proving its claim against the
[respondent]for expenses incurred in the registration of [the latter’s] title
to the condominium unit purchased, x x x for its part [respondent] in
turn succeeded in establishing an even bigger claim under its
counterclaim."
Issue:
1. Whether or not the trial court had jurisdiction over the
respondent’s counterclaims
2. Whether or not the decision of the CA is based on
misapprehension of facts warranting a review of the factual
findings.
3. Whether or not the award of damages is conjectural warranting a
review of the factual findings.
Ruling:
First Issue: JURISDICTION
Trial court has no jurisdiction on cases involving specific
performance and damages as provided by Sec. 1 of PD 1344, it fall
under the exclusive jurisdiction of HLURB.
Sec. 1 of PD 1344 expanded the jurisdiction the jurisdiction of NHA and
it granted exclusive jurisdiction to hear and decide cases involving
specific performance and damages, in this case the correction of defects
and deficiencies in the condo unit. The regulatory function of NHA were
transferred to the HSRC pursuant to EO 648 and the functions of HSRC
were transferred to the HLURB pursuant to EO 90. Therefore HLURB
has sole jurisdiction on the respondent’s counterclaim.
However, the petitioner is guilty of estoppel by laches and is barred
from questioning the jurisdiction of the court because BPI only raised
the question only after an adverse decision had been rendered. BPI is
considered to have voluntarily submitted to the trial court’s jurisdiction.
The doctrine of laches is based on equity and fairness, if the petitioner’s
prayer is granted then it would in effect be declaring as useless all the
proceedings had in the present case and compel the judgment creditors
to go up their Cavalry once more.
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Second and Third Issues: APPRECIATION OF FACTS
Factual findings of the lower courts are entitled to great respect, but may
be reviewed if they do not conform to law and to the evidence on record.
In this case the court modify the award granted by the CA.
Warranties and Representations in the Brochure
The brochure that was disseminated indicated features that would
provide each condo unit and therefore would form part of the sales
warranties of BPI. ALS management relied on the brochure in its
decision to purchase a unit.
However, general disclaimer which are intended to give a general
idea of the project to be undertaken are not to be relied as
statements or representation of facts.
“ … Destined to reflect condominium living at its very best
and it’s design … will make the project the only one of
its kind in the Philippines.”
This disclaimer should not apply to the feature and amenities that the
brochure promised to provide each condo unit.
Storage Facilities – cancelled by the court bec. It was not alleged.
The non-delivery had not been alleged in respondent’s Answer with
Counterclaim. As a general rule issues in each cases are limited to those
presented in the pleadings. The exception to the rule which is that
evidence has been presented properly, with full opportunity on the part
of the opposing parties to support their respective contention and to
refute each other’s evidence is not present in the case at bar.
Damages for Delay in Delivery – cancelled by the court bec. of
insufficiency of evidence
The only evidence the respondent have is the testimony of its witness
that a lease contract had indeed been intended to commence in January
1982, instead of the actual implementation on June 18, 1982.
Condominium Defects (balcony passageway) – cancelled by the court
bec. it was not intended to be a walkway
Respondent was able to establish through its witness testimony
confirmed by an inspection report that the condominium unit suffered
from defects. BPI’s contention that the claim has already prescribed
must fail for being raised for the first time on appeal.
However, BPI are not required to correct the balcony bec. The portion in
controversy was not intended to be a walkway as testified by the
architect. The building plain had not specified the with. It was not
shown that the balcony was insufficient to serve its purpose for which it
was intended.
Reimbursement for Completion of Work – cancelled by the court bec.
ALS failed to proved the actual amount spent.
Respondent failed to establish with reasonable certainty the actual
amount spent. ALS failed to present document such as receipt to support
the expenses. In determining actual damages it must depend on
competent proof not on mere assertion or guesswork.
Unearned Lease Income – cancelled by the court bec. ALS failed to
proved gihapon
ALS failed to adduce evidence that unit had been offered for lease to
others, but that there were no takers because of the defects. However,
ALS is entitled to temperate damage because it suffered damages when
its lessee vacated the condominium.
XVIII. FINAL PROVISIONS
XIX. THE CONDOMINIUM ACT (RA 4726)
1. Definition (Sec 2)
2. Warranties and Representations
a. San Miguel Properties, Inc. vs BF Homes, Inc.
Principle:
37
 1. HLURB has exclusive jurisdiction on cases enumerated in
sec 1 PD 1344, it does not have to rely on the findings of
others to discharge its adjudicatory functions.
2. Condominium Act is under the exception of doctrine of
primary jurisdiction because it involves public interest.
3. Upon full payment the owner or developer is mandated by
law to deliver the title to the buyer.
FACTS:
 BF Homes is the owner of several parcels of land, particularly
identified as Italia II lots. BF Homes represented by Orendain
as rehabilitation receiver appointed by the SEC entered into
three successive Deed of Absolute Sale with SMPI.
 SMPI completed the payments for the 130 Italia II lots. BF
Homes delivered the TCTs to SMPI but only for 110 of the
130 Italia II lots purchased by SMPI. SMPI filed a Complaint
for specific performance with damages before the HLURB to
compel BF Homes to deliver the remaining 20 TCTs to SMPI.
 In its Answer (with Counterclaim), BF Homes alleged that the
Deed of Absolute Sale were entered by Orendain without
authority, as his appointment as receiver was revoked by the
SEC. BF Homes also averred that the consideration paid by
SMPI was inadequate and the Deed of Absolute Sale were
undated and not notarized.
 SMPI in its Reply (Answer with Counterclaim) countered that
the validity of the 3 Deed of Absolute Sale was already upheld
by SEC and were deemed final, executory, and unappealable.
As a result the sale were binding on BF Homes. SMPI further
maintained that Orendain was authorized bec. He was acting
in behalf of FBO Networks(the receiver who replaced
Orendain) being the Chairman of FBO Networks. SMPI
additionally asserted that absent substantiation, the allegation
of BF Homes of inadequate consideration was self-serving;
and that despite being undated and not notarized, the Deed of
Absolute Sale were valid since they contained the essential
elements of a contract.
 HLURB ruled that the issue on whether or not Mr. Orendain
has no authority must first be resolved by the SEC and
suspended the proceeding of the instant complaint until final
resolution pending before the SEC.
 SMPI filed a Petition for Review with the HLURB Board of
Commissioner contending that the principle of suspending a
case due to a prejudicial question only applies to criminal
cases and that BF homes was mandated by law under PD957
to deliver the TCTs of the remaining 20 Italia II lots, which
had already been paid in full.
 The HLURB Board of Commissioners denied that petition for
review applying the doctrine of primary jurisdiction.
 SMPI appealed the decision before the Office of the President
which ruled that HLURB does not have to rely on the
findings of others to discharge its adjudicatory functions.
The OP then proceeded to resolve the case and reversed and
set aside the decision of HLURB ordering BF to deliver to
SMPI the titles to the lots subject of the instant case.
 BF Homes filed a Petition for Review with the CA which
affirmed that the proceedings before the HLURB should not
be suspended, however, CA ordered the remand of the case
to HLURB in recognition of the doctrine of primary
jurisdiction.
ISSUE:
1. Whether or not the HLURB did not have to suspend the
proceedings? Yes
2. Whether or not there is a need to remand the case to
HLURB? No
3. Whether or not SMPI is entitled to the delivery of the
remaining 20 TCTs for the lots it purchased? Yes
RULING:
First Issue: Suspension of proceedings by the HLURB
HULRB has exclusive jurisdiction in a complaint for specific
performance for the delivery of a certificate of title to a buyer of a
subdivision lot [BPI vs ALS]. In the exercise of its exclusive
jurisdiction, HULRB did not have to suspend the proceedings and
should have went ahead to resolve the complaint for specific
performance filed by SMPI given its statutory mandate under Sec.1 of
PD 1344. A ruling by the SEC that Orendain did not have authority as a
receiver is not absolutely determinative of the fate of the complaint for
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specific performance of SMPI before the HLURB. The HLURB could
already make a preliminary finding on the validity of the Deed of
Absolute Sale executed by Orendain for the purpose of ascertaining the
right of SMPI to the delivery of the 20 TCTs. Under PD 957 HULRB is
empowered to interpret and apply contracts, and determine the rights of
private parties under these contracts. This ancillary power, generally
judicial, is now no longer with the regular courts to the extent that the
pertinent HLURB laws provide.
Second Issue: Remanding of the case to HLURB
Returning the instant case to the HLURB for further
proceedings will simply be circuitous and inconsistent with the
summary nature of HLURB proceedings. The objective of the
Revised Rules of Court is to promote a just, speed, and inexpensive
disposition/determination of every action.
Pursuant to the doctrine of primary jurisdiction, generally “
the courts cannot determine a controversy involving a question which is
within the jurisdiction of an administrative tribunal, where it requires
special knowledge to determine technical and intricate matters of fact,
and a uniformity of ruling is essential to comply with the purposes of the
regulatory statute administered”. However, there is an exception where
judicial intervention is urgent and when strong public interest is
involved, which are present in this case. Under PD 957 subdivision and
condominium development involves public interest and welfare because
shelter is a basic human need whose fulfillment cannot afford any kind
of delay.
If the case is no longer remanded, BF Homes cannot claim
denial of due process because in the instant case SMPI and BF Homes
were afforded the opportunity to present and address each other’s
arguments through exchange of pleadings, as well as to submit their
respective evidence before the HLURB Arbiter. To remand the case and
repeat the entire process once again before the HLURB Arbiter is
impractical, unreasonable and oppressive for SMPI.
Third Issue: Delivery of the remaining 20 TCTs
Sec. 25 of PD 957 explicitly mandate that the owner or
developer shall deliver the title to the buyer upon full payment. SMPI
submitted adequate proof showing full payment to and receipt by BF
Homes of the purchase price for the 130 Italia II lots as fixed in the
Deed of Absolute Sale. Upon full payment by SMPI, it became
mandatory upon BF Homes to deliver the TCTs, the seller loses all its
rights and interest to the unit in favor of the buyer. [G.O.A.L. vs CA].
The following are the grounds of BF Homes of its refusal to deliver the
remaining 20 TCTs:
(1) The Deeds of Absolute Sale were not notarized
The requirement of a public document in Art 1358 is not for
validity of the instrument but for its efficacy. Although a conveyance of
land is not made in a public document, it does not affect the validity of
such conveyance. The effect of non-compliance with the requirements
of Statutes of Fraud is simply that no action can be enforced, the form is
required for evidentiary purposes only. As private documents, the Deeds
are still binding and valid. SMPI could compel BF Homes to comply
with the formality requirement under Art. 1358.
Statute of Frauds is only applicable to executory contracts and
not those which has been fully paid like in this case. Under Art 1405
acceptance of benefits ratifies unenforceable contracts. The Deeds were
already ratified as BF homes had accepted the benefits from said
contracts when it received full payment from SMPI the purchase price of
130 Italia II lots. The Deeds were also substantially performed
considering that BF Homes had previously delivered 110 out of 130
TCTs.
(2) Orendain did not have authority entering into the
contracts of sale with SMPI
When Orendain signed the Deeds of Absolute Sale, he did so
as a Chairman of FBO Networks Management Inc., the appointed
receiver of BF Homes. Under SEC Reorganization Act, the receiver is
empowered to take custody and control of all existing assets and
properties of such corporations under its management. The acts of the
receiver, being appointed officer of the SEC, enjoy the presumption of
regularity. While BF Homes questioned the acts of Orendain/FBO as
receiver before the SEC, the SEC terminated the rehabilitation
proceedings without definitely ruling on the same and recognized the
transfer of jurisdiction over such subject matter to RTC with the passage
of RA 8799. There is no showing whether BF Homes pursued before the
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RTC any case to nullify or invalidate the alleged unauthorized or
irregular acts of Orendain/FBO as receiver.
Moreover, even assuming Orendain is without authority the
said contracts were merely unenforceable and could be ratified. BF
Homes ratified the Deeds with SMPI by accepting full payment from
SMPI of the purchase price for the 130 Italia II lots, and fully
implementing the transaction covered by the 2 Deeds and partially
implementing the 3rd by delivering the TCTs for 110 out of 130 lots.
Also BF Homes is estopped from denying the authority of Orendain
after accepted the benefits.
(3) the consideration for the said Italia II lots were grossly
inadequate and disadvantageous for BF Homes
The Revised Rules of Court presumes private transactions
have been fair and regular. The only evidence submitted by BF Homes
is the appraisal report which valued at P3,500 and P3,000 per sqm. The
appraisal report, does not necessarily prove that the purchase price
averaged at P2,500 as grossly inadequate. SMPI explained that it was
granted a lower price because it bought the Italia II lots in volume,
and BF Homes was unable to repudiate said explanation.
SEC vs HLURB Jurisdiction
In the ARRANZA case, the Supreme Court said that:
For the SEC to acquire jurisdiction over any controversy
under these provisions, two elements must be considered: (1) the
status or relationship of the parties; and (2) the nature of the question
that is the subject of their controversy.
The first element requires that the controversy must arise
"out of intra-corporate or partnership relations between and among
stockholders, members or associates; between any or all of them and
the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such
corporation, partnership or association and the State in so far as it
concerns their individual franchises. DHITCc
In the instant case, [SMPI] is not a stockholder, member or
associate of [BF Homes]. It is a lot buyer in the subdivision developed
by [BF Homes.]
The second element requires that the dispute among the
parties be intrinsically connected with the regulation or the internal
affairs of the corporation, partnership or association.
the Supreme Court also said:
P.D. No. 902-A, as amended, defines the jurisdiction of the
SEC; while P.D. No. 957, as amended, delineates that of the HLURB.
These two quasi-judicial agencies exercise functions that are distinct
from each other. The SEC has authority over the operation of all kinds
of corporations, partnerships or associations with the end in view of
protecting the interests of the investing public and creditors. On the
other hand, the HLURB has jurisdiction over matters relating to
observance of laws governing corporations engaged in the specific
business of development of subdivisions and condominiums. The
HLURB and the SEC being bestowed with distinct powers and
functions, the exercise of those functions by one shall not abate the
performance by the other of its own functions. As respondent puts it,
"there is no contradiction between P.D. No. 902-A and P.D. No. 957.
3. Redemption of Mortgaged Amortization
a. De Vera vs CA
FACTS: Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel
of land located at 101 Panay Avenue, Quezon City, on which it
built Lourdes I Condominium. On 10 June 1983, to finance its
construction and development, Q.P San Diego Construction Inc.,
(QPSDCI), entered into a Syndicate Loan Agreement with respondent
banks (here collectively known as Funders) to finance the construction
and development of Lourdes Condominium I. QPSDCI mortgaged to the
creditor banks as security its Panay Avenue Property and the
condominium constructed thereon. De Vera and QPSDCI entered into a
Condominium Reservation Agreement where petitioner undertook to
buy Unit 211-2C of the condominium. Petitioner's remaining balance of
the purchase price was to be secured through his housing loan,
P160,00.00. The loan approved was only P139,00.00 and not
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160,000.00, De Vera negotiated the deficiency to which QPSDCI
agreed.
The condominium project was substantially completed in June
1984 and the unit was turned over to De Vera Jr. the following month.
Accordingly, petitioners paid QPSDCI P23,916.67 shortfall between the
balance and the granted loan.
Meanwhile, QPSDCI failed to pay its obligations to the
Funders. Asiatrust extra-judicially foreclosed the mortgage on the
condominium units, including that of petitioner.
ASIATRUST through its V-Presidebt Oerdi V. Lucero wrote
asking the unit buyers to pay in advance the cost of the transfer of titles
and registration of their PAG-IBIG loan mortgages. H
ASIATRUST also wrote a letter to petitioner informing him that his
housing loan would only be implemented upon the following conditions:
(a) Payment of the remaining equity directly to ASIATRUST
Development Bank; and (b) Signing of all Pag-IBIG documents not later
than 20 October 1984. IN SHORT WALA NA GRANT ANG
IYAHANG LOAN.
  ASIATRUST informed QPSDCI that it could no longer
extend the bridge financing loan to some of the buyers, including
petitioner, for various reasons,10 among which was that petitioner had
already exceeded the age limit, hence, he was disqualified
As petitioner failed to get the loan, he failed to pay the
purchase price. QPSDCI sent him a letter13 dated 6 August 1987
presenting him with two options: (a) to pay the remaining balance of the
purchase price, with interest, which had already ballooned to
P263,751.63, on or before 15 August 1987; or, (b) to pay rent for the use
of the unit from 28 July 1984 to June 1987.
Since petitioner had already invested a substantial amount in
remodeling and improving his unit, rescinding the sale was no longer a
viable option. QPSDCI suggested that De Vera be
QPSDCI failed to pay its obligation to the FUNDERS,
ASIATRUST extrajudicially foreclosed the mortgage on 27
condominium units, including that of De Vera. The units were sold at a
public auction with the FUNDERS as the highest bidder, such was
annotated on the CCT’s.
De Vera filed a complaint against the respondents which was
raffled and to Branch 107 of the RTC of Quezon City.
ISSUE: (1) Whether or not the court has jurisdiction over the case x
(2) Who has a better right over the condominium unit in question?
RULING:
(1) No, the HLURB has jurisdiction.
The regular courts have no jurisdiction over the case since the
proper venue is with the HLURB. Petitioner is partly to blame for filing
it with the regular courts and since the respondents also filed their
counterclaims in the lower court, then they are estopped.
(2) The petitioner De Vera has better right.
The mortgage in favor of the FUNDERS did not bind
petitioner in as much as it is not registered with the NHA contrary to the
mandate of Sec. 18 of PD 957. QPSCDI also violated its contract with
petitioner by its failure to remit the latter’s payment.
 The appellate court further found that QPSDCI breached its
warranties as seller under Art. 1547, and also violated its obligation to
deliver to petitioner a clean title as required by Sec. 4 of PD 957. It
declared that delivery of the unit to petitioner operated to transfer
ownership to him from QPSDCI.
In, Sec 25 of PD 957, it is clear that upon full payment, the
seller is duty-bound to deliver the title of the unit to the buyer. Even
with a valid mortgage over the lot, the seller is still bound to redeem said
mortgage without any cost to the buyer apart from the balance of the
purchase price and registration fees. It has been established that
respondent QPSDCI had been negligent in failing to remit petitioner's
payments to ASIATRUST. If QPSDCI had not been negligent, then
even the possibility of charges, liens or penalties would not have arisen.
Therefore, as between QPSDCI and petitioner, the former should be
held liable for any charge, lien or penalty that may arise.
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 Extrajudicial foreclosure was rendered null and void.
Respondents did not appeal. Petitioner contests the decision of
the Court of Appeals only insofar as it deleted the award of actual and
exemplary damages and attorney's fees. The only issue to be addressed
by this Court therefore is the propriety of the award of damages in favor
of petitioner.
IT IS NOT THE ISSUE BUT THE COURT DISCUSSED
WHO IS LIABLE FOR DAMAGES – ASIATRUST for
misrepresenting.
NOTE:
*The rule is when it comes to a condominium projects, it is
not supposed to mortgage the unit without the approval of the HLURB.
The moment a mortgage is constituted on a condominium, it starts first
with the lot, with the title to the land. The moment we issue the
corresponding condominium title, the mortgage constituted on the lot
will be carried over to the condominium certificate of titles. So every
time somebody buys a condominium unit, under the law, the developer
is under obligation to cause the release of the mortgage. So the title
should be issued to him, it must be clean and the developer must pay for
the mortgage constituted.
So in this case, De Vera was not bound by the mortgage constituted on
the property and even if there was a valid mortgage, assuming the
approval of the HLURB, the seller or developer is mandated under the
law to redeem the real estate mortgage and deliver the title or unit to him
as soon as it is paid in full without any additional charge in the
registration fee or outstanding balance. So this PD 957 really provided
protection both to condominium and subdivision buyers.
Respondent ASIATRUST had made several representations to petitioner
that his loan had been approved. The tenor of the letters sent by
ASIATRUST would lead a reasonable man to believe that there was
nothing left to do but await the release of the loan. ASIATRUST cannot
hide behind the pithy excuse that the grant of the bridge financing loan
was subject to the release of the Pag-IBIG loan
4. Suspension of Monthly Amortization
b. Gold Loop Properties Inc. v CA
FACTS: Respondents Bhavna Harilela and Ramesh Sadhwani
submitted through St. Martin Realty Corporation, a realtor agent of
petitioner Gold Loop Properties, Inc. a signed pro forma reservation
application addressed to GLPI for the purchase of one (1) condominium
unit at Gold Loop Towers residential complex. One of the terms of the
reservation was the exectution of a contract to sell once a the
downpayment was paid in full.
The Sadhwanis paid GLPI the amount of P819,531.25.
Subsequently, Bhavna Harilela signed a "Contract To Sell"2 with GLPI,
represented by its President Emmanuel Zapanta. Ms. Guina assured
them that they would be furnished with a copy of the contract after its
notarization, and that the amount, representing the balance of the
purchase price, would be included in a loan application with a bank.
However, the contract to sell was not notarized, as the private
respondents were not able to supply GLPI with a copy of their passports.
Under the contract, GLPI agreed to sell to Sadhwanis a 198.75
square meters condominium unit particularly Unit R-84 of Southwest
Tower. The contract price was P2,484,375.00, inclusive of a reservation
deposit of P50,000.00.
GLPI informed the Sadhwanis that the bank loan
accommodation which was to serve as payment of the balance of the
purchase price was disapproved, and thus, per the terms of the Contract
to Sell, the balance would become payable through the Co-terminus
Payment Plan schedule of payments.
Respondent Ramesh J. Sadhwani demanded a copy of the
contract to sell, noting that his wife had no official document to show
that she bought a condominium unit from GLPI and there were
conditions and/or stipulations in the contract which she could not be
expected to comply with, unless a copy of the same be given to her.
Spouses
NOTE!: Sadhwanis failed to pay any of the monthly
amortizations in the payment plan. Petitioners sent a letter demanding
payment of the balance and informed the Sadhwanis that GLPI will
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rescind the Contract to Sell and automatically forfeit their down
payment should they fail to pay.
Sadwanis - offered to resell their rights over the condominium to GLPI
but was rejected because the purchase price was unreasonable,
unfair and inequitable.
Spouses Sadhwanis failed to pay any of the monthly amortizations in the
payment plan.
petitioners sent a letter demanding payment of the balance amounting to
P1,614,814.80, and informed the Sadhwanis that GLPI will rescind the
Contract to Sell and automatically forfeit their down payment should
they fail to pay within five (5) days from receipt of the letter in
accordance with section 8 of the contract to sell.5
Spouses Sadhwanis filed with the Housing and Land Use
Regulatory Board (hereinafter referred to as HLURB), a complaint for
specific performance (give them a copy of the Contract to Sell) with an
alternative prayer for refund against GLPI.
ISSUE: Whether or not respondents may suspend payment of their
monthly amortizations due to failure of petitioners to furnish them copy
of the contract to sell.
RULING: Yes, Private respondents may suspend their payment.
Respondents were indeed justified in suspending payment of their
monthly amortizations. The failure of petitioners to give them a copy of
the Contract to Sell sued upon, despite repeated demands therefor, and
notwithstanding the private respondents payment of P878,366.35 for the
subject condominium unit was a valid ground for private respondents to
suspend their payments.
The private respondents are entitled to a copy of the contract to sell,
otherwise they would not be informed of their rights and obligations
under the contract.
NOTE!: In this case, as you have noticed, the developer Gold Loop
always refused to give a copy to the
respondents of the Contract to Sell because at the back of their minds,
they already have an intention to rescind the contract because of the
default in the payments by the spouses. DEFAULT ANG NAG-UNA
That’s why if you enter into contracts like this, you should insist for a
copy as a matter of fact you can ask that the contract to sell be annotated
in the cert of title or in the condominium cert of title. So, this is a valid
ground to suspend the payment of the monthly amortizations. The
spouses Sadhwani in this case were saved because they have in fact
defaulted in their payments and they were able to use this defense and
they were also aided by a lawyer to guide them.
5. Alteration of Plans
a. G.O.A.L Inc. v CA
Sec. 22. (PD 957) Alteration of Plans. — No owner or developer shall
change or alter the roads, open spaces, infrastructures, facilities for
public use and/or other form of subdivision development as contained in
the approved subdivision plan and/or represented in its advertisements,
without the permission of the Authority and the written conformity or
consent of the duly organized homeowners association, or in the absence
of the latter, by majority of the lot buyers in the subdivision
FACTS: GOAL and the National Housing Authority (NHA) entered
into an agreement whereby NHA extended to GOAL a loan of 4.425
million for the construction of Gemin I Condominium. A Contract
Agreement was entered into between GOAL and Matson International
Corporation for the construction of the condominium within 1 year at
the cost of 4.2 million. However, the contractor abandoned the
project with only 60% of it finished. GOAL offered the condominium
units for sale with private respondents among its buyers, NHA. To
remedy the situation brought about by the abandonment of the project by
the first contractor, GOAL subsequently pursued the construction of the
fifth floor with NHA granting additional funding on the condition that it
would hold on to the condominium certificates of title of private
respondents.
Private respondents filed with the Housing and Land Use
Regulatory Board (HLURB), Office of Appeals, Adjudication and Legal
Affairs (OAALA), a complaint against GOAL. Among the issues raised
were the illegal construction of the fifth floor of Gemin I Condominium,
the failure to deliver the title of private respondent Filomeno Teng
despite his repeated demands, and the failure to provide adequate
parking spaces for the unit owners.
40
ISSUES: 1. Whether or not the construction of the floor is illegal.
RULING:
(1) Yes, it is illegal.
The above provision is clear. We do not have to tussle with legal
hermeneutics in the interpretation of Sec. 22 of P.D. 957. The written
approval of the National Housing Authority alone is not sufficient. It
must be coupled with the written conformity or consent of the duly
organized homeowners association or the majority of the lot buyers.
Failing in this, the construction of the fifth floor is violative of the
decree (Sec. 22 of PD 957) invoked.
DILI ISSUE BUT BASIN E ASK
1.) Failure to deliver the title
GOAL’s contention that it should not have been faulted for
failing to deliver the title to private respondent Teng as the proximate
cause thereof was the abandonment of the construction project by the
first contractor, hence, due to force majeure. There is no one else to
blame but itself. Upon full payment of the agreed price, petitioner is
mandated by law to deliver the title of the lot or unit to the buyer.
Second contention, GOAL attempts to justify its failure to deliver the
certificate of title of private respondent Teng by claiming that it used the
title as part collateral for the additional loan NHA had extended for the
construction of the fifth floor.
While we empathize with petitioner in its financial dilemma we cannot
make innocent parties suffer the consequences of the former's lack of
business acumen. Upon full payment of a unit, petitioner loses all its
right and interests to the unit in favor of the buyer. Consequently, it has
no right to use the certificate of title of respondent Teng as collateral for
a new loan. The title of Teng must be released to him as provided by
law.
2.) Off-street parking vs indoor parking areas
With respect to the second issue, petitioner contends that the decision of
the Court of Appeals is contrary to law considering that under Sec. 12-
D, No. 2, Rule V of the Implementing Rules of P.D. 957, what should be
given for free are only "off-street" parking spaces and not indoor
parking areas.
Petitioner is wrong. It has for purposes of its own construed "off-street"
to mean "not including indoor." On the other hand, the law does not
exclude "indoor parking." What it specifically excludes is "street
parking." Therefore, parking may be in the basement or, in the absence
thereof, in the first floor.
Furthermore, at this point, a definition of terms may be necessary. In a
condominium, common areas and facilities are "portions of the
condominium property not included in the units," whereas, a unit is "a
part of the condominium property which is to be subject to private
ownership."5 Inversely, that which is not considered a unit should fall
under common areas and facilities.
Hence, the parking spaces not being subject to private ownership form
part of the common area over which the condominium unit owners hold
undivided interest. As such, petitioner cannot invoke Sec. I, Art. III, of
the Bill of Rights which provides that "No person shall be deprived of
life, liberty or property without due process of law." Petitioner alone
does not own the parking area. The parking space is owned in common
by the developer and the unit owners. Private respondents must be
allowed to use the parking area.
XX. SUBDIVISION AND CONDOMINIUM PROTECTIVE DECREE
(PD 957)
1. Jurisdiction of the HULRB
a. ORTIGAS & COMPANY, LIMITED PARTNERSHIP  vs.
COURT OF APPEALS
DOCTRINE: Its jurisdiction is limited to those cases filed by the buyer
or owner of a subdivision lot or condominium unit and based on any of
the causes of action enumerated in Section 1 of P.D. 1344.
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FACTS: Petitioner, a realty company, developed the Ortigas Center.
This case concerns the Pasig City side of the commercial district known
as the Ortigas Center, known in 1969 as Capitol VI Subdivision.
Respondent filed a complaint against Ortigas for specific compliance. It
alleged that Ortigas failed to comply with Mun Ordinance 5, Series of
1966 which required it to designate appropriate recreational and
playground facilities at its former Capitol VI Subdivision (regarded as a
residential site), now the Pasig City side of the Ortigas Center. Further,
it alleged that despite the fact that the plan was only approved by the
Municipal Council as to layout, petitioner proceeded to develop the
property without securing a final approval.
Ortigas alleged that its development plan for the subject land was for a
commercial subdivision, outside the scope of MO 5 that applied only to
residential subdivisions; that the City cannot assail the validity of that
development plan after its approval 25 years ago. Ortigas filed a motion
to dismiss the case on the ground that the RTC had no jurisdiction over
it, such jurisdiction being in the Housing and Land Use Regulatory
Board (HLURB) for unsound real estate business practices.
RTC denied the motion and held that HLURB's jurisdiction pertained to
disputes arising from transactions between buyers, salesmen, and
subdivision and condominium developers. In this case, the City is a lgu
seeking to enforce compliance with a mun ordinance, an action that is
not within the scope of the disputes cognizable by the HLURB.
ISSUE: Whether or not the jurisdiction over the City's action lies with
the RTC, not with the HLURB.
RULING: Yes. Executive Order 648 empowers the HLURB to hear and
decide claims of unsound real estate business practices against land
developers. Ultimately, whether or not the HLURB has the authority to
hear and decide a case is determined by the nature of the cause of action,
the subject matter or property involved, and the parties.  Section 1
of P.D. 1344  vests in the HLURB the exclusive jurisdiction to hear and
decide the following cases:
(a) unsound real estate business practices;
(b) claims involving refund and any other claims
filed by subdivision lot or condominium unit
buyer against the project owner, developer,
dealer, broker, or salesman; and
(c) cases involving specific performance of
contractual and statutory obligations filed by
buyers of subdivision lots or condominium units
against the owner, developer, dealer, broker or
salesman.
Unlike paragraphs (b) and (c) above, paragraph (a) does not state which
party can file a claim against an unsound real estate business practice.
But, in the context of the evident objective of Section 1, it is implicit
that the "unsound real estate business practice" would, like the offended
party in paragraphs (b) and (c), be the buyers of lands involved in
development. The policy of the law is to curb unscrupulous practices in
real estate trade and business that prejudice buyers.
Not every case involving buyers and sellers of subdivision lots or
condominium units can be filed with the HLURB. Its jurisdiction is
limited to those cases filed by the buyer or owner of a subdivision lot or
condominium unit and based on any of the causes of action enumerated
in Section 1 of P.D. 1344. The City had not bought a lot in the subject
area from Ortigas which would give it a right to seek HLURB
intervention in enforcing a local ordinance that regulates the use of
private land within its jurisdiction in the interest of the general welfare.
It has the right to bring such kind of action but only before a court of
general jurisdiction such as the RTC.
41