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EN BANC G.R. No. L-4340 and two houses erected thereon and damages brought by Rebecca Levin against Joaquin V. Bass, Emiliano R. Eustaquio, Co Chin Leng and Eugenio Mintu where the last named defendant is the appellant; G. R. No. L-4343 is the same case where Joaquin V. Bass is the appellant; G.R. No. L-4341 is an action (case No. 71549 of the same court) for detainer brought by Joaquin V. Bass against Jose C. Robles and Aminta T. de Robles, in which Rebecca Levin and Eugenio Mintu intervened, and where the last named intervenor is the appellant; G.R. No. L-4345 is the same case for detainer where Joaquin V. Bass is the appellant; G. R. No. L-4342 is an action (case No. 516 of the same court) for annulment of sale brought by Joaquin V. Bass against Eugenio Mintu where the latter is the appellant; G. R. No. L-4344 is an action (case No. 71159 of the same court) for detainer of a building located at No. 328 San Rafael street brought by Joaquin V. Bass against Rebecca Levin where the former is the appellant; and G. R. No. L-4346 is an action (case No. 2371 of the same court) for detainer brought by Joaquin V. Bass against Aminta T. de Robles where the former is the appellant. The two main cases (G. R. No. L-4340 and No. L-4342) around which others revolve all under the appellate jurisdiction of this court.chanroblesvirtualawlibrary chanrobles virtual law library After a joint hearing the trial court rendered judgment annulling Exhibit A dated 5 January 1944, where it appears that, for and in consideration of P30,000, Rebecca Levin and conveyed to Emiliano Eustaquio a lot containing an area of 317.70 square meters and the house erected thereon bearing No. 326 San Rafael street Manila; Exhibit B dated 30 March 1944, where it appears that, for and in consideration of P38,000, Emiliano R. Eustaquio sold and conveyed to Joaquin V. Bass the same lot and house; and Exhibit C dated 18 February 1944, where it appears that, for and consideration of P65,000, Rebecca Levin sold and conveyed to Joaquin V. Bass a lot containing an area of 1,006.80 square meters and the house erected thereon bearing No 328 San Rafael Street Manila; to cancel transfer of certificates of title Nos. 73450 and 73451 issued in the name of Joaquin V. Bass and in lieu thereof to issue new Torrens certificates of title in the names of Rebecca Levin, widow, of legal age and resident of the City of Manila at No. 328 San Rafael Street, said new certificates to bear a

May 28, 1952

REBECCA LEVIN, Plaintiff-Appellee, vs. JOAQUIN V. BASS, ET AL., defendants. EUGENIO MINTU, Defendant-Appellant. x---------------------------------------------------------x G.R. No. L-4341 May 28, 1952 JOAQUIN V. BASS, Plaintiff-Appellee, vs. JOSE C. ROBLES, ET AL., defendants. REBECCA LEVIN, ET EL., intervenors. EUGENIO MINTU, intervenor-appellant. x---------------------------------------------------------x G.R. No. L-4342 May 1952 JOAQUIN V. BASS, Plaintiff-Appellee, vs. EUGENIO MINTU, Defendant-Appellant. x---------------------------------------------------------x G.R. No. L-4343 May 28, 1952 REBECCA LEVIN, Plaintiff-Appellee, vs. JOAQUIN V. BASS, Defendant-Appellant. x---------------------------------------------------------x G.R. No. L-4344 May 28, 1952 JOAQUIN V. BASS, Plaintiff-Appellant, vs. REBECCA LEVIN, Defendant-Appellee. x---------------------------------------------------------x G.R. No. L-4345 May 28, 1952 JOAQUIN V. BASS, Plaintiff-Appellant, vs. JOSE C. ROBLES and AMINTA T. DE ROBLES, Defendants-Appellees. x---------------------------------------------------------x G.R. No. L-4346 May 28, 1952 JOAQUIN V. BASS, Plaintiff-Appellant, vs. AMINTA T. DE ROBLES, Defendant-Appellee. PADILLA, J.: chanrobles virtual law library G. R. No. L-4340 is an action (case No. 70054 of the Court of First Instance of Manila) for annulment of sales of, and mortgage on, a lot

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memorandum of mortgage in favor of Co Chin Leng, entry No. 1616, as said mortgage appears on both transfer certificate of titles Nos. 73450 and 73451 to be cancelled, and the certificate of title to be issued in the name of Rebecca Levin, in lieu of transfer certificate of title No. 73450, to bear a memorandum of a notice of lis pendens noted on said transfer certificate of title in connection with civil case No. 2562 of the Court of First Instance of Manila entitled "Isabelo Martinez vs. Joaquin V. Bass," entry No. 20955; holding that Rebecca Levin is entitled to recover from Joaquin V. Bass," damages for losses which she may suffer by reason of said mortgage annotation and notice of lis pendens; dismissing the complaint of Joaquin V. Bassin civil case No. 516, holding that the deed of sale under certain conditions executed by Joaquin V. Bass in favor of Eugenio Munti is without force and effect as against Rebecca Levin and ordering Joaquin V. Bass to pay Eugenio Mintu the sum of P4,173.16, together with lawful interests thereon from 23 October 1946, the date of the filing of the said answer in said civil case, until paid; dismissing the complaint of Joaquin V. Bass in civil cases Nos. 71159, 71549 and 2371 and declaring Rebecca Levin to be entitled to the payment of rentals by Jose C. Robles and/or Aminta T. de Robles for the use and occupation of the premises at No. 326 San Rafael street, Manila, from 11 March 1945 until the tenants move out of the premises and to receive from the clerk of court the sums of money deposited by Aminta T. de Robles and/or Jose C. Robles by way of rentals for the said property at No. 326 San Rafael street, still remaining in his possession, the said amounts to be applied to the rentals to be granted upon by and between them or those which may be declared by final judgment to be the reasonable compensation for the use of occupation of the premises; and ordering Joaquin V. Bass to render an accounting of the sums of money he had received from the court, or otherwise, as rentals of the house at No. 326 San Rafael street from and after 11 March 1945, and to pay to Rebecca Levin the balance that may result from said accounting. Costs are taxed against Joaquin V. Bass.chanroblesvirtualawlibrary chanrobles virtual law library In 1943 Rebecca Levin was a widow, 65 years old and the registered owner of a lot on which two houses stood-one bearing No. 326 and the other No. 328 San Rafael Street, Manila-as evidenced by transfer certificate of title No. 62680. She was illiterate and knew only how to sign her name. At about the end of December 1943 Joaquin V. Bass called on Rebecca Levin at her house on No. 328 San Rafael street, Manila, and representing himself to be a real estate broker asked her whether she would sell her lot and house at No. 326 adjoining her residence. At that time there lived in the house of Rebecca Levin some Japanese civilians, officers or employees of the Pacific Mining Co., occupying or renting two rooms, Angelita Martinez a brother, and Meliton Villasenor, a houseboy. In addition to P50 collected by her as monthly rental for the house at No 326, the Japanese renting the two rooms paid her P200 monthly and supplied her with rice and other foodstuffs without charge. Rebecca Levin told Joaquin V. Bass that she was not selling her house at No. 326 San Rafael street. On subsequent calls Joaquin V. Bass told Rebecca Levin that it would be to her advantage and benefit to sell the lot and house at No. 326 San Rafael street and with the proceeds of the sale to purchase another house. He told her that if she would not sell the lot and house the Japanese who had been looking for houses to occupy might deprive her thereof without getting anything in exchange therefor. He told her further that by selling her house, which she rented for P50 a month only, and buying for P26,000 one on Antonio Rivera street she would gain because the monthly rental of the latter was P140. She consented to see the house at Antonio Rivera street and went there accompanied by Joaquin V. Bass and Meliton Villasenor, her houseboy. Joaquin V. Bass pointed to a building (Exhibit G) of for apartments (accessorias) not far from the Tutuban railroad station. They were not able to see the second story of the building because, according to Joaquin V. Bass, the owner had gone to Pampanga. For the second time, they went to see the building on Antonio Rivera street but they again failed to see the second story of the building for the same reason given by Joaquin V. Bass when they went to see it the first time. Relying upon the representations made by Joaquin V. Bass, Rebecca Levin finally consented to sell her house. One of the last days of December 1943 or of the first days of January 1944, while Rebecca Levin was engaged in conversation with Dr. Pastor L. Manlapaz and Angelita Martinez,

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Joaquin V. Bass called on her bringing along with him certain papers. Upon Joaquin V. Bass" suggestion Rebecca Levin followed by him entered a room adjoining that where she, Dr. Manlapaz and Angelita Martinez were conversing, and upon repeated representations and assurances made by Joaquin V. Bass that the papers he brought were just an authority to sell the house at No. 326 San Rafael street, Rebecca Levin signed five documents and Bass took from her bag which she placed on a small table in the room her residence certificate and the receipt showing payment of realty tax on her property. None of the documents Rebecca Levin signed was left to her. The following day (6 January 1944), Joaquin V. Bass called on Rebecca Levin at her house and handed to her P10,000 saying that it was a partial payment of the purchase price of the lot and house at No. 326 San Rafael street which he represented had been sold to a Japanese and asked her to give him the Torrens title of the house and lot. Upon being informed by her that the Torrens title of the houses and lot was in the possession of the Agricultural and Industrial Bank, to which they were mortgage for P2,000, Joaquin V. Bass took from her P2,000 and requested her to go with him to the Agricultural and Industrial Bank where they paid the mortgage debt of Isidore Reich (presumably the predecessor of the late husband of Rebecca [Exhibit M]) and received a mortgage release and the Torrens certificate of title No. 62680 (Exhibit K and K-1); and on February 1944, she signed a receipt for P2,000 (Exhibits L and L-1). Joaquin V. Bass not only took P2,000 to pay the mortgage debt to the Agricultural and Industrial Bank (Exhibit M) but also the balance of P8,000 telling her that he would pay it to the owner of the building on Antonio Rivera street; that the balance of the repurchase price of her house At No. 326 San Rafael street would be paid to her as soon as the lot and house sold be segragated or separated from the larger lot on which her house at No 328 San Rafael street stood; and that it was necessary to make such subdivision to be approved by the court in order that the sale of her house and lot not to arose any suspicion on her part Joaquin V. Bass gave her a receipt from that partial amount paid for the building on Antonio Rivera street signed by one Mariano Irurin y Reyes but the amount written therein was just P6,000. The signer of the receipt promised to deliver the deed of sale of the building of Antonio Rivera street within 5 days from the date of payment of P20,000, the balance of the purchase price (Exhibit H). Being illiterate Rebecca Levin did not notice that the amount appearing in the receipt was P6,000 instead of P8,000 which was the sum taken from her by Joaquin V. Bass. To make her believe that she was the owner of the building on Antonio Rivera street, Joaquin V. Bass turned over to her the monthly rentals of the building for five months which he claimed he had collected from the tenants of the building. Not long after the signing by Rebecca Levin of the documents giving Joaquin V. Bass authority to sell the house at No. 326 San Rafael street and the pretended purchase by her through him of the building on Antonio Rivera street, the latter called on the former at her house. He found her sick. He told her that he had tested medicine or drug for ailments such as the one she was suffering from and that if she would take it she would feel immediately and completely relieved. He went down. Immediately after his return to the house he called and told the houseboy Meliton Villasenor to bring a glass of water where he diluted the drug and asked Rebecca Levin to take it. The latter did not hesitate to take it as until then she did not have the least suspicion of him who succeeded in winning and enjoyed her trust and confidence. After taking the medicine she become to vomit and suffer stomach pains and her face and lips became swollen. She went for Dr. Pastor L. Manlapaz who found that she was poisoned. After application of antidotes she recovered from the poisoning. This incident coupled with the failure of Joaquin V. Bass to return to her the documents she had been asking made Rebecca Levin suspicious of him and consulted with Dr. Pastor L. Manlapaz and Filemon Poblador, the latter when working in the office of the President of the Republic. As Poblador was not a lawyer he talked to attorney Esteban Nedruda who being also an employee in the office of the President of the Republic at Malacaang refused to handle the case but promised to investigate it. After investigation Nedruda found that the lots were transferred and registered in the name of Joaquin V. Bass and mortgaged him. Finally, the services of attorney Cesar de Larrazabal on the property of Rebecca Levin which were registered in the office of Register of Deeds of Manila. It was found out that the papers signed by her on 5 January

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1944 were a deed of sale of her house and lot at No. 326 San Rafael street for P30,000 in favor of Emiliano R. Eustaquio acknowledge on the same day before notary public Eliezar A. Manikan (Exhibit A) and another deed of sale of her house and a lot No. 328 San Rafael street for P65,000 in favor of Joaquin V. Bass dated 18 February 1944 and acknowledge on that date before the same notary public Elizer A. Manikan (Exhibit C); and that on 30 March 1944, for and in consideration of P38,000, Emiliano R. Eustaquio sold to Joaquin V. Bass the lot and the house at No. 326 San Rafael street (Exhibit B.). Prior to the registration of these three deeds of sale, or on 24 February 1944, a petition was filed by attorney Eliezer A. Manikan in the name of Rebecca Levin praying for the subdivision of parcels of land into two lots-the certificate of title to lot No. 1 containing an area of 317.7 square meters to be issued in the name of Emiliano R. Eustaquio and the certificate of title to lot No. 2 containing an area of 1,006.80 square meters to be issued in the name of Rebecca Levin (Exhibit I). On February 1944, the petition was granted by the Court of First Instance of Manila, Fourth Branch, presided over by Judge Gervasio Diaz, (Exhibit J.) Transfer certificate of title No. 62680 in the name of Rebecca Levin describing a parcel of land located on San Rafael street containing an area of 1,3228.40 square meters entered on September 1941, together with a memorandum of mortgage executed in favor of the Agricultural and Industrial Bank entered on 26 September 1939-a memorandum noted on the previous certificate of title No. 9220-was cancelled, and in lieu thereof Transfer certificate of title No. 71907 in the name of Emiliano R. Eustaquio for a parcel of land containing an area of 317.70 square meters more or less, and the house erected thereon, and transfer certificate of title No. 71908 in the name of Rebecca Levin for the remaining area of 1,006.80 square meters and the house erected thereon, were issued by the Registrar of Deeds of Manila on 27 February 1944, pursuant to the order of the court dated 22 February referred to (Exhibit J). On 11 May 1944, transfer certificate of title No. 71908 in the name of Rebecca Levin was cancelled and in the lieu thereof transfer certificate of title No. 73451 was issued in the name of Joaquin V. Bass by the Registrar of Deeds of Manila; and on 10 April 1944, transfer of certificate of title No. 71907 in the name of Emiliano R. Eustaquio was cancelled and in lieu thereof transfer certificate of title No. 73450 was issued in the name of Joaquin V. Bass by the Registrar of Deeds. On 8 April 1944, to secure the payment of P70,000, together with interests thereon at 5 per cent per annum, payable in five years, Joaquin V. Bass mortgaged to Co Chin Leng the two lots and house selected thereon and the instrument of mortgage was registered on 10 April 1944 on both certificates of title Nos. 73450 and 73451. On 6 July 1944, a notice of lis pendens was noted in the back of transfer certificate of title No. 73450 in connection with civil case No. 2562 of the Court of First Instance of Manila entitled "Isabelo Martinez vs. Joaquin V. Bass." On October 1944, for and in consideration of P200,000 "presenting circulating currency," Joaquin V. Bass sold to Eugenio Mintu the lot and house at No. 328 San Rafael street desrcibed in transfer certificate of title No. 73450, P90,000 of which was paid on the date of the execution of the deed of sale; P10,000, to be retained by the vendee (Eugenio Mintu) and to be paid to the vendor (Joaquin V. Bass) after the notice of lis pendens in connection with civil case No. 2652 of the Court First Instance of Manila entitled "Isabelo Martinez vs. Joaquin V. Bass" shall have been removed or cancelled; and P100,00, the balance, to be deposited by the vendee (Eugenio Mintu) upon instructions of the vendor (Joaquin V. Bass) with the clerk of court of Manila after return of the former from a trip to Ilocos Norte, the deposit to be made within 30 days from the date of the deed of sale and for the purpose of securing there release of the mortgage in favor of Co Chin Leng, the vendor (Joaquin V. Bass) undertaking to obtain the release of the mortgage on the property sold and to deliver it (the mortgage release) to the vendee (Eugenio Mintu) and the cancellation of the notice of lis pendens on or before 8 April 1945 (Exhibit 3-Mintu). To secure the fulfillment of the undertaking-the mortgage release and cancellation of the notice oflis pendens-the vendor (Joaquin V. Bass) assigned, transferred and conveyed by way of liquidated damages to the vendee (Eugenio Mintu) his title, rights, interest, participation or share in and to lot No. 2, the larger lot on which house No. 328 San Rafael street is errected, and both parties agreed that if the condition provided for in paragraph (d) of the deed of sale be fulfilled, the condition in paragraph (e) thereof relative to the

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assignment, transfer and conveyance of lot No. 2 to the vendee would be null and void without legal effect, otherwise it would remain in full force and effect. The following clause was inserted with initials of both parties: "force majeure and fortuitous events exempts the vendor from compliance thereto" (Exhibit 3-Mintu.) On 1 November 1944, Eugenio Mintu and Jose C. Robles entered into a lease contract on the house and lot No. 326 San Rafael street, Manila (Exhibit 1-Mintu). From November 1944 to January 1945 Jose C. Robles paid to Eugenio Mintu the rental of P45 a month as agreed upon (Exhibit 2-Mintu), but beginning February the rental of the house were not paid to Mintu because there was a dispute as to who was the owner of the house. On 3 November 1944, Eugenio Mintu deposited with the sheriff of Manila for the account of Joaquin V. Bass the sum of P100,416.67 as full payment of the purchase price of the property sold to him on 14 October 1944. The sum of P100,000 is the total of Bass" indebtedness to Co Chin Leng-P70,000 secured by mortgaged and P30,000 unsecured, the sum of P416,67 represents the interest on the amount owned to Co Chin Leng up to the time of the deposit (Exhibit 4-Mintu) and the sum of P158.92 represents the sheriff's fees on the amount deposited (Exhibit 5-Mintu). On November 1944, Eugenio Mintu presented and filed with the office of Registrar of Deeds of Manila the original of the deed of sale (Exhibit E) duly notarized and paid the sum of P224.50: P.50 for entry in the day book; P220 for registration fees; and P4 for the issuance of two titles (Exhibit 6-Mintu). On the same date, together with the original deed of sale (Exhibit E) the owner's duplicates of transfer of certificate of title Nos. 73450 and 73451 were presented and filed with the office of Registrar of Deeds of Manila but said documents were not among those salvaged and were presumed to have been lost or burned according to the certification of the Registrar of Deeds in and for the City of Manila (Exhibit 8-Mintu). On 19 January 1945, Eugenio Mintu paid to Joaquin V. Bass the sum of P10,000 in full settlement of the purchase price of the property acquired by him on 14 October 1944 (Exhibit 7-Mintu). On 29 October 1945, a notice of lis pendens was noted at the back of transfer certificate of title No. 70054 of the Court of First Instance of Manila entitled "Rebecca Levin vs. Joaquin V. Bass".chanroblesvirtualawlibrary chanrobles virtual law library Joaquin V. Bass testifies that he acquired the lot and house at No. 328 San Rafael street from Emiliano R. Eustaquio for P38,000 and the lot and house at No. 328 San Rafael street from Rebecca Levin for P65,000, the first on 30 March 1944 and the second on 18 February 1944; that Rebecca Levin paid him the monthly rental of P150 for the lot and house at No. 328 San Rafael street from March 1944 to January 1945, as shown by the stubs of the receipts issued to her (Exhibits 20Bass to 20-K-Bass); that Rebecca Levin refused to pay the rental for February unless it was reduced to P100; that on 19 May 1945 he brought against her an action for detainer which on appeal to the Court of First Instance of Manila bears No. 71159; that after he acquired the property at No. 326 San Rafael street from Emiliano R. Eustaquio the latter brought him to the tenant, Rosario Vda. de Altonaga, who left the premises to go to the Cagayan to look for her daughter; that Vicente Tagle rented the premises signing a contract for one year but after 2 or 4 months he left the premises and his daughter Aminta T. de Robles married to Jose C. Robles became the tenant; that in February 1945 Jose C. Robles left the premise after a quarrel he had with his wife Aminta T. de Robles; that in April 1945 he brought against Jose C. Robles and Aminta T. de Robles an action for detainer on which on appeal to the Court of First Instance of Manila bears No. 71549; that on May 1946 Aminta T. de Robles and he signed a lease contract (Exhibit 1-Bass); that he did not make Rebecca Levin sign documents authorizing him to sell her house at No. 326 San Rafael street as testified to by Dr. Manlapaz; that he did not show to Rebecca Levin any house on Calle Antonio Rivera to be exchanged with or for her property at No. 326 San Rafael street, as testified to by Dr. Manlapaz, Meliton Villaseor and Angelita Martinez; that it is not true that Rebecca Levin did not receive the consideration for the sale of her house at No. 328 San Rafael street; that on October 1944 he sold for P200,000 the house and lot at No. 326 San Rafael street to Eugenio Mintu, who handed to him P65,000 and a check for P25,000 which the bank refused to cash, but later on Mintu told him that he had deposited funds in the bank and so the check was honored and cashed at the bank of the Philippine

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Islands; that all in all he was paid P90,000 and P10,000 for 16 gantas of rice given him to Mintu; that the balance of P100,000 was never and has not been paid to him; that he has not given possession of the property to Eugenio Mintu the transaction not having been consummated because of force majeure; and that he was bound to return to Eugenio Mintu the P100,000 received by him.chanroblesvirtualawlibrary chanrobles virtual law library Eliezer A. Manikan, the notary public before whom the deeds of sale sought to be annulled were acknowledged, testifies that Rebecca Levin appeared before him and acknowledged the execution of the documents in favor of Emiliano R. Eustaquio on 5 January 1944 and in favor of Joaquin V. Bass on 18 February 1944.chanroblesvirtualawlibrary chanrobles virtual law library The testimony of Rebecca Levin as to how she consented to sell her house and lot No. 326 San Rafael street and the manner she was induced by Joaquin V. Bass to sign papers which he represented were mere authorization to sell is corroborated by Dr. Pastor L. Manlapuz, Angelita Martinez and Meliton Villasenor.chanroblesvirtualawlibrary chanrobles virtual law library These witnesses had no interest to pervert the truth. Rebecca Levin was not in need of money of fact she led quite a comfortable life. Only because of the misrepresentation that she would gain by selling her house at No. 326 San Rafael street and of the threat made by Joaquin V. Bass that she might lose it did she finally consent to sell it.chanroblesvirtualawlibrary chanrobles virtual law library On the other hand, Joaquin V. Bass has a criminal record - was convicted of estafa (Exhibit O) - and was involved ina shady deal (Exhibit R) and found to have presented a promisory note for P5,000 and a chattel mortgage which he claimed Rebecca Levin had signed and upon which he brought an action against her for foreclosure (civil case No. 71481, the Court of First Instance of Manila), when in truth and in fact, as pronounced by the trial court, they were not signed and acknowledged by her before a notary public (Exhibit P). He succeeded in winning the trust and confidence of Rebecca Levin, a widow, 65 years old, a foreigner in this country and without relatives. Joaquin V. Bass claims he was employed at that time by the Manila Electric Co. as mechanical engineer but on cross examination he had to admit that he did not have any degree nor was he licensed by the Government of the Philippines to practice the profession of mechanical engineer. When he was pressed to answer the question whether he was actually employed by the Manila Electric Co. he evaded it by saying that he was employed by White and Co. which owned 60 per cent of the shares of the Manila Electric Co. During the occupation of the country by the enemy he was engaged in the buy and sell business and had no known income. It is unbelieavable that he could acquire the house and lot of Rebecca Levin at No. 328 San Rafael street for P65,000 and the one allegedly sold to Emiliano R. Eustaquio at No. 326, same street, through his machinations, for P38,000. He claims he deposited his money in the Bank of Taiwan but in the same way that he presented his pass book (Exhibit 7) showing his deposits in the Bank of the Philippine Islands, he could have presented the pass book of certificate of deposit of money he had in the Bank of Taiwan, Ltd. In fact, during the occupation of the country by the enemy and before he mortgaged the two houses and lots to Co Chin Leng Joaquin V. Bass had no money. According to Exhibit 7, on 10 April 1944 only he made the first or initial deposit of P50,000 with the Bank of the Philippine Islands. That money must be of the P70,000 loaned to him by Co Chin Leng on April 8 1944 secured by mortgage on the houses and lots he had acquired fraudulently from Rebecca Levin.chanroblesvirtualawlibrary chanrobles virtual law library Eliezer A. Manikan perverted the truth when he testified that P10,000 was paid to or received by Rebecca Levin in his office, whereas Joaquin V. Bass testified that she received it in her house; when he testified that on the date of the excecution of the deed of sale (Exhibit A) by Rebecca Levin, or on 5 January 1944, the Torrens title to the property was brought by her to his office, when in truth and in fact the title was on that date kept by the Agricultural and Industrial Bank and taken from it the following day when the motrgage debt was paid. Eliezer A. Manikan did not tell the truth when he testified that on the date of the execution of the deed of sale by Rebecca Levin the sum of P35,000 in Japanese war notes, consisting of six packages of P10,000 each P10 bills and the rest of P5 bills, was counted by her, because, according to

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Joaquin V. Bass, Rebecca Levin mortgaged her house to him for P35,000 and later converted it into an absolute sale for P65,000 (Exhibits S and S-1). Eliezer A. Manikan did not tell the truth when he testified that the deed of sale marked Exhibit C was executed two or three weeks after the order of the court-referring to the order approving the subdivisions of the parcels of land of Rebecca Levin into two lots presented for registration on 24 February 1944-because the deed of sale (Exhibit C) dated February 1944 was executed and acknowledged on that date, whereas the court order approving the subdivision and six days before its presentation for registration. On the cross examination Joaquin V. Bass testified that the consideration for the sale of the house and lot on No. 328 San Rafael street consisted of payment in cash of P35,000 and the transfer to or assumption by him of Rebecca Levin's debt for P30,000 to one Concepcion de la Rama. On further cross-examination he testified that the purchase price agreed upon between him and Rebecca Levin was P60,000 plus P2,800 which was not included in the price.chanroblesvirtualawlibrary chanrobles virtual law library There is overwhelming evidence to support the conclusion of the trial court that Rebecca Levin did not execute the deeds of sale Exhibit A and Exhibit C. What she was made to believe she signed was an authorization to sell the house at No. 326 San Rafael street.chanroblesvirtualawlibrary chanrobles virtual law library As to the mortgage in favor of Co Chin Leng we hold that the court below that there is no evidence to show that the mortgage was made in bad faith and without consideration. He must, therefore, be deemed to be a mortgaged in good faith and for value. As to the sum consigned by Eugenio Mintu for Joaquin V. Bass' account there is no evidence as to the outcome of the complaint for consignation filed 3 November 1944 by Joaquin V. Bass against Co Chin Leng in the Court of First Instance of Manila (case No. 2984).chanroblesvirtualawlibrary chanrobles virtual law library As regards Eugenio Mintu, the evidence shows that he paid P200,000 to Joaquin V. Bass in the manner and form above stated; that the orignal deed of sale (Exhibit E), together with the owner's duplicate certificate of title Nos. 73450 and 73451, was presented for registration on 8 November 1944 in the office of Registrar of Deeds of Manila and entered in the day book-entry No. 27161, but that, according to the certification of the registrar, the original deed of sale and the owner's duplicate certificate of titles have not been found, were not among the salvaged records and were, therefore, presumed to have been lost or burned (Exhibit 8-Mintu). It also appears that the registration free consisting of P.50, the fee for the entry in the day book; P220, the registration fees for a sale of P200,000; and P4, the fee for the issuance of two certificates of title were paid by Eugenio Mintu (Exhibit 6-Mintu). On the other hand, on October 1945, a notice of lis pendens was filed in the office of Registrar of Deeds of Manila and noted on the backof transfer certificate of title Nos. 73450 and 73451 in connection with civil case No. 70054 of Court of First Instance of Manila entitled "Rebecca Levin vs. Joaquin V. Bass et al." chanrobles virtual law library The claim of Joaquin V. Bass that the sale between him and Mintu was conditional is devoid of merit, because the conditional part of the deed of sale concerns the guarantee undertaken by him as vendor to obtain the release of the mortgage of Co Chin Leng and the cancellation of the notice of lis pendens in connection with civil case No. 2562 entitled "Isabelo Martinez vs. Joaquin V. Bass," which release and cancellation he promised and would secure on or before 8 April 1945. It is not a condition which, if not fulfilled, would avoid the sale made of the lot and house at No. 328 San Rafael street, but one which, if not performed, would cause the vesting in the vendee (Eugenio Mintu) of the title to the lot and house at No. 328, same street, which was given as security for the fulfillment of the undertaking.chanroblesvirtualawlibrary chanrobles virtual law library We now take up the question between Eugenio Mintu and Rebecca Levin. Under the Torrens system the act of registration is the operative act to convey and affect the land.1 Do the entry in the day book of a deed of sale which was presented and filed together with the owner's duplicate certificate of title with the office of Register of Deeds and full payment of registration fees constituted a complete act of registration which operates to convey and affect the land? In voluntary registration such as sale, mortgage, lease and the like, if the owner's duplicate

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certificate be not surrendered and presented or 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.2 In voluntary registration, such as an attachment, levy upon, execution, lis pendens and the like entry thereof in the day book is a sufficient notice to all persons of such adversed claim.3 Eugenio Mintu fulfilled or took the steps he was expected to take in order to have the Registrar of Deeds in and for the City of Manila issue to him the corresponding transfer certificate of title on the lot and house at No. 328 San Rafael Street sold to him by Joaquin V. Bass. The evidence shows that Eugenio Mintu is an innocent purchaser for value. Nevertheless, the court below held that the sale made by Bass to Mintu is as against Rebecca Levin without force and effect because of the express provision of law which in part says: . . . Provided, however, That in all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of certificate of title; (Section 55, Act 496, as amended by Act 3322). In other words, the sale made by Joaquin V. Bass to Eugenio Mintu is valid as between them but not as against Rebecca Levin who could avail herself of all her legal and equitable remedies against Joaquin V. Bass and reach the property acquired fraudulently by the latter and subsequently sold to Eugenio Mintu who admittedly is an innocent purchaser for value, for the reason that the later though an innocent purchaser for value is not a holder of a certificate of title. The pronouncement of the court below is to the effect that an innocent purchaser for value has no right to the property because he is not a holder of a certificate of title to such property acquired by him for value in good faith. It amounts to holding that for failure of the Registrar of Deeds to amply and perform his duty an innocent purchaser for value loses that character-he is not an "innocent holder for value of a certificate of title." The court below has strictly and literally construed the provision of law applicable to the case. If the strict and literal construction of the law made by the court below be the true and correct meaning and intent of the lawmaking body, the act of registration-the operative act to convey and effect registered property-would be left to the Registrar of Deeds. True, there is a remedy available to the registrant to compel the Registrar of Deeds to issue him the certificate of title but the step would entail expense and cause unpleasantness. Neither violence to, nor stretching of the meaning of, the law would be done, if we should hold that an innocent purchaser for value of registered land becomes the registered owner and in the contemplation of law the holders of a certificate thereof the moment he presents and files a duly notarized and lawfull deed of sale and the same is entered on the day book and at the same he surrenders or presents the owner's duplicate certificate of title to the property sold and pays the full amount of registration fees, because what remains to be done lies within his power to perform. The Registrar of Deeds is in duty bound to perform it. We believe that is a reasonable and practical interpretation of the law under considerationa construction which would lead to no inconsistency and injustice.chanroblesvirtualawlibrary chanrobles virtual law library Taking into consideration all the circumstances of the case and bearing in mind that the only objective courts must strive to attain is to do justice, we believe that our interpretation of the law applicable to the case at bar subserves the interests of justice. True, Rebecca Levin loses he house and lot No. 326 San Rafael street, but "as between not innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss."4 chanrobles virtual law library We hold, therefore, that Eugenio Mintu is the rightful owner of the lot and house at No. 326 San Rafael street since 8 November 1944 and entitled to collect the rentals due and unpaid from that date until possession of the premises shall have been restored to him and the balance by Joaquin V. Bass of rentals and moneys received by him imputable to such rentals as ordered by the trial court, subject to the registered mortgage in favor of Co Chin Leng. What has been awarded to Rebecca Levin in the judgment appealed from, in so far as the lot and house at No. 326 San Rafael street are concerned, is deemed awarded to Eugenio Mintu.chanroblesvirtualawlibrary chanrobles virtual law library

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The rest of the judgment appealed from not inconsistent herewith, is affirmed, with costs against Joaquin V. Bass.chanroblesvirtualawlibrary chanrobles virtual law library Let a copy of this decision be furnished the City Fiscal of Manila who is directed an investigation of Joaquin V. Bass and attorney and notary public Eliezer A. Manikan in connection with the execution and acknowledgment of the documents, involved and the testimony given by them in these cases and to take such action as the result of the investigation may warrant.chanroblesvirtualawlibrary chanrobles virtual law library Paras, C.J., Feria, Pablo, Bengzon, Montemayor, Reyes, and Bautista Angelo JJ., concur. Separate Opinions chanrobles virtual law library TUASON, J., concurring: chanrobles virtual law library Crime and fraud can not serviced as the root of a valid title notwithstanding the good faith of the purchase for value. This rule is qualified by the condition that the rightfull owner was not guilty for any negligence contributing to or facilitating the commission of the crime or fraud. Subject to this qualification, the doctrine that, as between two innocent parties, the one who made the crime or fraud possible must bear the loss, should be applied. From the facts of this case, it appears that Rebecca Levin was not free from blame for the issuance of a certificate of title in the names of Bass. With these circumstances in mind, I concur in the foregoing decision. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 107967 March 1, 1994 CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and MANUEL, REGINA, TUNAY and MELITON, all surnamed OBSEQUIO, Petitioners, vs. COURT OF APPEALS, EUFRONIO ALIMPOOS, and PONCIANA ALIMPOOSRespondents. REGALADO, J.: chanrobles virtual law library This petition for review on certiorari seeks to annul and set aside the decision of the Court of Appeals in CA-G.R. CV No. 22990, dated July 9, 1992, which reversed the judgment of the trial court, as well as its resolution of November 6, 1992 denying the motion for reconsideration of its aforesaid decision.chanroblesvirtualawlibrary chanrobles virtual law library The subject matter of the present petition is a parcel of land, designated as Lot No. 846, Pls-225 located at Andanan, Baguyan, Agusan del Sur. This lot was previously covered by Original Certificate of Title No. P-1181 registered in the name of herein respondent Eufronio Alimpoos and which he acquired through a homestead application. 1The said land is now registered in the name of herein petitioner, Consorcia Tenio-Obsequio, as evidence by Transfer Certificate of Title No. T-1421. 2 On September 10, 1986, private respondents filed a complaint in the court a quo against herein petitioners Consorcia Tenio and her husband, Orlando Obsequio, and the heirs of Eduardo Deguro for recovery of possession and ownership, alleging that sometime in 1964, they mortgaged the land to Eduardo Deguro for P10,000.00; that to guaranty the loan they delivered to the latter the original certificate of title to the land; that in the meantime, they continued to cultivate the same and, at the end of the harvest season, they gave two-thirds (2/3) of the harvest to Eduardo Deguro; that on June 25, 1965, Eduardo Deguro and his wife, without the knowledge and consent of herein private respondents, prepared a document of sale and through misrepresentation and other manipulations made it appear that private

Endnotes: 1 Section 50, Act 496.chanroblesvirtualawlibrary chanrobles virtual law library 2 Sections 55 and 56, Act 496.chanroblesvirtualawlibrary chanrobles virtual law library 3 Villasor vs. Camon et al., 89 Phil., 404.chanroblesvirtualawlibrary chanrobles virtual law library 4 Eliason vs. Wilborn (1930), 281 U.S 457, 461; Blondeau et al. vs. Nano et al., (1935), 61, Phil. 625, 530.

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respondents sold the land to them.chanroblesvirtualawlibrary chanrobles virtual law library This deed of sale was annotated at the back of the said certificate of title as Entry No. 16007. By virtue thereof, Original Certificate of Title No. P-1181 in the name of Eufronio Alimpoos was cancelled and Transfer Certificate of Title No. T-1360 was correspondingly issued in favor of Eduardo Deguro. After the death of Eduardo Deguro, his heirs sold the land to Consorcia Tenio-Obsequio. On September 22, 1970, Transfer Certificate of Title No. T-1421 was issued in her name. It was allegedly only in 1982, when Eufronio Alimpoos received a Certificate of Agricultural Leasehold of his land from the Department of Agrarian Reform (DAR), that he learned that the land was already titled in the name of another.chanroblesvirtualawlibrary chanrobles virtual law library In their answer, the heirs of Eduardo Deguro claimed that respondent Alimpoos spouses sold the land to their late parents on June 25, 1965 for a consideration of P10,000.00, as evidenced by the deed of absolute sale; that as a result thereof, Transfer Certificate of Title No. T-1360 was issued in favor of their parents, that on April 23, 1970, after the death of their parents, they sold the said land to Consorcia Tenio-Obsequio; that on September 22, 1970, a new Transfer Certificate of Title No. 1421 was issued in the name of the latter. Consorcia Tenio-Obsequio, on the other hand, maintains that she purchased the land in question from the heirs of Deguro in good faith, for valuable consideration and without knowledge of any flaw or defect whatsoever.chanroblesvirtualawlibrary chanrobles virtual law library The trial court, giving credence to the evidence presented by herein petitioners, defendants therein, ruled in their favor and rendered judgment disposing as follows: 1) dismissing the herein complaint; 2) declaring defendant Consorcia Tenio Obsequio as the true and absolute owner of the land in litis; 3) ordering plaintiffs to pay P10,000.00 by way of moral damages; 4) ordering plaintiffs to pay P10,000.00 by way of exemplary damages; 5) ordering plaintiffs to pay the expenses of litigation in the amount of P5,000.00; 6) ordering plaintiffs to pay (a)ttorney's fees in the amount of P5,000.00; and 7) to pay the costs. In like manner, the money deposited in the Municipal Treasurer's Office of Bayugan in the amounts of P2,724.95 covered by Official Receipt No. 0442623 dated September 7, 1988 and P1,658.10 covered by Official Receipt No. 5497715 dated September 14, 1988, as well as the sum of P3,927.00 deposited in Court pursuant to the Court's Orders of January 16, 1987 and March 13, 1987, consisting of the proceeds from the sale of the harvest taken from the area involved, is awarded to defendant Consorcia Tenio Obsequio, is owner thereof after deducting the necessary expenses and Clerk of Court (s) commission fee. 3 chanrobles virtual law library On appeal, respondent Court of Appeals reversed the decision of the lower court and rendered judgment: 1) Declaring the plaintiff Eufronio Alimpoos as the true and legal owner of the property subject of this case; chanrobles virtual law library 2) Declaring null and void the Deed of Absolute Sale marked as Annex "C" or exhibit "D" and ordering the cancellation of TCT Nos. T-1360 and T-1421 in the names of Eduardo Deguro and Consorcia Tenio Obsequio, respectively; chanrobles virtual law library 3) Ordering the heirs of Eduardo Deguro and Laureana Rabuya, namely, Gonzalo Deguro, Manuel Deguro, Tunay Deguro and Regina Deguro to reconvey the said property to the plaintiffs: chanrobles virtual law library 4) Ordering the Register of Deeds to cancel the annotation of the Deed of Absolute Sale at the back of TCT P-1181 in favor of Consorcia Tenio Obsequio and to clear said TCT of all encumbrances executed by Eduardo Deguro and/or his heirs.chanroblesvirtualawlibrary chanrobles virtual law library In addition, the defendants are ordered to pay the plaintiffs, jointly and severally, the sum of P50,000.00 bay way of moral damages; P30,000.00 by way of compensatory damages and P5,000.00 by way of attorney's fees and costs of litigation. 4 chanrobles virtual law library

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Petitioners then filed a motion for reconsideration of the said decision which was denied by the Court of Appeals in its resolution dated November 6, 1992, 5 hence the instant recourse by petitioners.chanroblesvirtualawlibrary chanrobles virtual law library After a careful review of the records of this case and the legal consideration applicable to the proven facts thereof, we find the petition at bar to be meritorious. Reconveyance of the land in question to the original owner is not in order.chanroblesvirtualawlibrary chanrobles virtual law library Herein respondent Alimpoos, as the original owner of the said land, is assailing the title of petitioner on the ground that their original certificate of title over the said land was cancelled by virtue of a forged deed of absolute sale.chanroblesvirtualawlibrarychanrobles virtual law library Under Section 55 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.- chanrobles virtual law library 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 6 In consonance with this accepted legal definition, petitioner Consorcia Tenio-Obsequio is a purchaser in good faith. There is no showing whatsoever nor even an allegation that herein petitioner had any participation, voluntarily or otherwise, in the alleged forgery.chanroblesvirtualawlibrary chanrobles virtual law library Nor can we charge said petitioner with negligence since, at the time of the sale to her, the land was already registered in the name of Eduardo Deguro 7and the tax declaration was also issued in the latter's name. 8It was also clearly indicated at the back of the original certificate of title that Eduardo Deguro acquired ownership over the said land by virtue of the deed of sale executed in his favor. 9In fact, it is not disputed that one of his heirs was actually residing therein. 10There is no annotation, defect or flaw in the title that would have aroused any suspicion as to its authenticity. Such being the case, petitioner has the right to rely on what appears on the face of the certificate of title.chanroblesvirtualawlibrary chanrobles virtual law library The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that should impel a reasonably cautious man to make such further inquiry. 11Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire, rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of property. 12 The Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all. This would not only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership. The further consequence would be that land conflicts could be even more numerous and complex than they are now and possibly also more abrasive, if not even violent. The Government, recognizing

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the worthy purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder once the conditions laid down by the law are satisfied. 13 Moreover, there is no reason to doubt the authenticity of the deed of sale which constituted the basis for the issuance of the transfer certificate of title in the name of Eduardo Deguro, considering that not only was the contract notarized but that it was also approved by the Secretary of Agriculture and Natural Resources in compliance with Section 118 of the Public Land Act. 14 There is no indubitable, legal and convincing reason for nullifying the deed of sale. Herein private respondents have not presented any cogent, complete and convincing proof to override the evidentiary value of the duly notarized deed of sale. A notarial document is evidence of the facts in the clear unequivocal manner therein expressed. It has in its favor the presumption of regularity. To contradict all these, there must be evidence that is clear, convincing and more than merely preponderant. 15 The fact alone that the signature of private respondent Eufronio Alimpoos appearing on the deed of sale of Deguro differs in certain points from his signature appearing in the "Kasabutan sa Prenda" is not enough to warrant the conclusion that the signature in said deed of sale is not genuine. The records show that the signatures of private respondent Eufronio Alimpoos in one of the cash advance receipts 16and in the notice of the trial court's order dated March 4, 1988 17are similar to the signature appearing in the deed of sale. It is, therefore, not improbable that, as claimed by herein petitioners, private respondent could have deliberately and purposely altered their signatures on the mortgage contract to thereafter make it appear that a discrepancy actually exists.chanroblesvirtualawlibrary chanrobles virtual law library Forgery cannot be presumed; it must be proved by clear, positive and convincing evidence. Those who make the allegation of forgery have the burden of providing it since a mere allegation is not evidence. 18Private respondents in this case ruefully failed to substantiate with sufficient evidence their claim that their signatures appearing on the deed of sale were forged.chanroblesvirtualawlibrary chanrobles virtual law library At any rate, there are several reasons to doubt the authenticity of the "Kasabutan sa Prenda." Firstly, it has not been sufficiently explained why, although it should normally be with the mortgagee, the original mortgage contract remained in the possession of the mortgagor and it was only after the death of the alleged mortgagee that the same was presented, which was more than twenty years from the date of its alleged execution. Secondly, the consideration of P10,000.00 for a mortgage in 1964 of a piece of rural land consisting of only 81,882 square meters, with the mortgagee paying the taxes thereon, is too high or excessive, considering that the same piece of land was coetaneously mortgaged with the Development Bank of the Philippine for only P1,900.00. 19Thirdly, the texture of the paper on which it was written and the clarity of the writing show that the document, supposedly executed on July 25, 1964, is of recent vintage and could not be more than twenty years old, even as of this late date. 20 Yet, even on the implausible assumption, ex gratia argumenti, that the deed of sale in favor of Eduardo Deguro was forged and is, therefore, null and void, such fact cannot be successfully invoked to invalidate the title subsequently issued to herein petitioner who, as earlier stated, is an innocent purchaser for value and in good faith.chanroblesvirtualawlibrary chanrobles virtual law library 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. 21A 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. 22

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The Torrens Act, in order to prevent a forged transfer from being registered, erects a safeguard by requiring that no transfer shall be registered unless the owner's certificate of title is produced along with the instrument of transfer. However, an executed document of transfer of registered land placed by the registered owner thereof in the hands of another operates as a representation to a third party that the holder of the document of transfer is authorized to deal with the land. 23In the case at bar, it was even private respondents who made the allegation that they further delivered their certificate of title to Eduardo Deguro, allegedly to secure the loan extended to them. Consequently, petitioner cannot be faulted and, as a matter of fact, she is vested with the right to rely on the title of Eduardo Deguro.chanroblesvirtualawlibrary chanrobles virtual law library Furthermore, it was the very act of the respondent Alimpoos spouses in entrusting their certificate of title to Eduardo Deguro that made it possible for the commission of the alleged fraud, if indeed there was such a fraudulent conduct as imputed to the latter. Hence, the rule of law and justice that should apply in this case is that as between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss. 24 The right of the innocent purchaser for value must be respected and protected, even if the seller obtained his title through fraud. The remedy of the person prejudiced is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund. 25 It is also significant and worth noting that herein respondents filed the instant complaint only after twenty-two years from the execution of the supposedly forged deed of absolute sale, and after sixteen years from the date the title was transferred in the name of herein petitioner. An action for reconveyance is a legal remedy granted to a landowner whose property has been wrongfully or erroneously registered in another's name, but then the action must be filed within ten years from the issuance of the title since such issuance operates as a constructive notice. 26 WHEREFORE, the decision and resolution of respondent court now under review are hereby REVERSED and the decision of the court a quo is accordingly REINSTATED.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED. Narvasa, C.J., Padilla, Nocon and Puno, JJ. concur. Endnotes: 1 Original Record, 5.chanrobles virtual law library 2 Ibid., 95.chanrobles virtual law library 3 Decision of the Regional Trial of Bayugan, Agusan, del Sur, in Civil Case No. 45, per Judge Zenaida P. Placer; Original Record, 265277.chanrobles virtual law library 4 Annex D; Rollo, 36-41; penned by Justice Jose C. Campos, Jr., with Justices Celso L. Magsino and Salome A. Montoya, concurring.chanrobles virtual law library 5 Rollo, 50-51.chanrobles virtual law library 6 De Santos vs. Intermediate Appellate Court, et al., G.R. No. L-69591, January 25, 1988, 157 SCRA 295; Co, et al. vs. Court of Appeals, et al., G.R. No. 93687, May 6, 1991, 196 SCRA 705; Casupit, et al. vs. Court of Appeals, et al., G.R. No. 96829, December 9, 1991, 204 SCRA 684.chanrobles virtual law library 7 Original Record, 49-50.chanrobles virtual law library 8 Ibid., 100-101.chanrobles virtual law library 9 Ibid., 6; Entry No. 16007.chanrobles virtual law library 10 TSN, March 4, 1988, 22; May 2, 1988, 13.chanrobles virtual law library 11 Gonzales vs. Intermediate Appellate Court, et al., G.R. No. L-69622, January 29, 1988, 157 SCRA 587; Rural Bank of Sariaya, Inc. vs. Yacon et al., G.R. No. 78011, July 5, 1989, 175 SCRA 62; Fernandez, et al. vs. Court of Appeals, et al., G.R. No. 83141, September 21, 1990, 189 SCRA 780.chanrobles virtual law library 12 Director of Lands vs. Abache, et al., 73 Phil., 606 (1942); Lopez, et al. vs. Court of Appeals, et al., G.R. No. L-49739, January 20, 1989, 169 SCRA 271.chanrobles virtual law library

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13 Republic, et al. vs. Umali, et al., G.R. No. 80687, April 10, 1989, 171 SCRA 647.chanrobles virtual law library 14 Original Record, 6-8; Entry No. 16008, Memorandum of Encumbrances, OCT No. P-1181.chanrobles virtual law library 15 Yturralde vs. Azurin, et al., G.R. No. L-22158, May 30, 1969, 28 SCRA 407; Cabrera vs. Villanueva, et al., G.R. No. 75069, April 15, 1988, 160 SCRA 672; Almendra, et al. vs. Intermediate Appellate Court, et al., G.R. No. 75111, November 21, 1991, 204 SCRA 142.chanrobles virtual law library 16 Exhibit 9; Original Record, 124.chanrobles virtual law library 17 Original Record, 83.chanrobles virtual law library 18 Melleza vs. Philippine National Bank, G.R. No. 83103, October 19, 1988, Third Division, Minute Resolution; et al., G.R. No. 77029, August 30, 1990, 189 SCRA 201.chanrobles virtual law library 19 Original Record, 5-A; Entry No. 4445, Memorandum of Encumbrances, OTC No. P-1181.chanrobles virtual law library 20 Original Record, 46.chanrobles virtual law library 21 Mallorca, et al. vs. De Ocampo, et al., G.R. No. L-26852, March 25, 1970, 32 SCRA 48; Torres vs. Court of Appeals et al., G.R. No. 63046, June 21, 1990, 186 SCRA 672; Philippine National Bank vs. Court of Appeals, et al., G.R. No. 43972, July 24, 1990, 187 SCRA 735.chanrobles virtual law library 22 De Lara, et al. vs. Ayroso, 95 Phil. 185 (1954); Duran, et al. vs. Intermediate Appellate Court, et al., G.R. No. 64159, September 10, 1985, 138 SCRA 489.chanrobles virtual law library 23 Blondeau, et al. v. Nano, et al., 6 Phil. 625 (1935), citing 53 C.J. 1141; Act No. 496 as amended, Secs. 47, 51, 55.chanrobles virtual law library 24 De Lara vs. Ayroso, supra,; Manila Surety & Fidely Co. vs. Luna 107, Phil. 281 (1960).chanrobles virtual law library 25 Blanco et al. vs. Esquierdo, et al., 110 Phil. 494 (1960); torres vs. Court of Appeals, et al., supra.; Philippine National Bank vs. Court of Appeals, et al., supra.chanrobles virtual law library 26 Pajarillo, et al. vs. Intermediate Appellate Court, et al., G.R. No. 72908, August 11, 1989, 176 SCRA 340; Tomas, et al. vs. Court of Appeals, et al., G.R. No. 79328, May 21, 1990, 185 SCRA 627. EN BANC G.R. No. L-3970 October 29, 1952 GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA SINGH PABLA, OJAGAR SINGH, DHARAM SINGH, TALOK SINGH and CIPRIANO TAN ENG KIAT, petitioners-appellees, vs. HERMOGENES REYES and TEODORA TANTOCO, respondentsappellants. LABRADOR, J.: chanrobles virtual law library This is an appeal prosecuted by the respondents-appellants against an order of the Court of First Instance of Manila dated November 29, 1949, compelling them to surrender owner's duplicates of Transfer Certificates of Title Nos. 8071 and 8072, so that the contract of lease entered into between petitioners-appellees and the owner of the land covered by said certificates of title be annotated thereon. John Tan Chin Eng is the owner of the land covered by the above-mentioned certificates of title, and on July 23, 1948, he entered into a contract (Exhibit A) with the petitioner-appellees, under the terms of which petitioners-appellees were to construct thereon a three-story building of concrete and of strong materials valued at from P80,000 to P90,000. The contract also provided that the building shall become the exclusive property of the owner of the land, but that the petitioner-appellees were to occupy, hold, or possess it as lessees for a period of three years and six months from its completion, without paying any rentals therefor, the sum spent in the construction being considered as the rentals; that after the above period of three years and six months petitioners-appellees were to continue occupying the said building for another two years at a monthly rental of P2,000. This contract of lease was filed and registered in the office of the Register of Deeds of Manila on August 10, 1948, under Primary Entry No. 3352, Volume 15. At the time that the contract was entered into there was an existing mortgage over the land in favor of Jose Calvo and Carlos Calvo for the sum of P110,000. This mortgage in favor of the Calvos was cancelled, and a new mortgage was executed by the owner in favor of respondents-appellants herein, Honorable Hermogenes Reyes and his spouse Teodora Tantoco, dated March 8, 1949, which was registered on the same date in the office of the Register of Deeds of Manila under

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Primary Entry No. 5014. On May 14, 1949, the original contract of lease, Exhibit A, was amended by Exh. C, by virtue of which the period under which the lessees were to hold any occupy the property without rentals was extended to seven years and four months, and the rental for the additional two years thereafter reduced to P1,148. This amended contract of lease, Exhibit C, was also registered in the office of the Register of Deeds of Manila under Primary Entry No. 5014, Volume 16, on May 20, 1949.chanroblesvirtualawlibrary chanrobles virtual law library On May 25, 1949, counsel for petitioners-appellees wrote respondentsappellants requesting them to allow him to take the certificates of title to the office of the Register of Deeds of Manila for the annotation of the contracts of lease entered into by the owner with them (Exhibit D), and on May 27, 1949, the son of respondents-appellants acknowledged receipt of the said letter but informed counsel for the petitionerappellees that the request could not be granted without the written consent of the owner of the certificates of title (Exhibit E). On June 16, 1949, respondents-appellants' son wrote the owner of the land (Exhibit M) demanding the payment of the overdue interest on the mortgage with the following statement: . . . For this reason, I wish to request that you come over to my office before 12:00 noon to pay the said interest before we can deliver your Transfer Certificate of Title to Atty. Manuel P. Calanog who will take charge of registering the lease contract between Mr. Singh Pabla and your goodself. On June 3, 1949, the petitioners-appellees filed a motion in the Court of First Instance of Manila praying that an order issue to the owner for the delivery of the owner's duplicates of transfer certificates of title Nos. 8071 and 8072 to the petitioners in order that the Register of Deeds of Manila may be able to make the annotation thereon of the contract of lease, Exhibit A, and its amendment, Exhibit C. Against this petition Hermogenes Reyes and Teodora Tantoco filed an opposition, alleging that they had no knowledge whatsoever of the contract of lease, Exhibit A, or of its amendments, Exhibit C, and that the execution of the amendment, Exhibit C, violated the express provision of the mortgage, to the effect that the owner could not sell, assign, or encumber the mortgaged premises without the written consent of the mortgages. It is to be noted that with respect to the original contract of lease, Exhibit A, no allegation is made in the opposition of the respondents-appellants that they were not aware of the existence of the contract, Exhibit A, their only allegation being that the only annotation on the certificates of title at the time they entered into the contract of mortgage was the mortgage in favor of Jose Calvo and Carlos Calvo. It is also to be noted that respondents-appellants do not deny an express allegation of paragraph 13 of the amended petition to the effect that notice was given to the public by a big sign board placed on the premises while the building was under construction that petitioners-appellees are the owners of the building. The amended petition further states, without denial on the part of the respondentsappellants, that as early as October 9, 1948, the Register of Deeds of Manila had demanded in writing from the owner of the land the submission of his duplicate certificates of title Nos. 8071 and 8072 in order that the lease executed by him in favor of the petitionersappellees may be given due course. At the hearing of the motion no oral evidence was submitted; only documentary evidence was presented.chanroblesvirtualawlibrary chanrobles virtual law library Thereafter the Court of First Instance of Manila issued the order already mentioned above, directing respondents to surrender the certificates of title to the Register of Deeds of Manila in order that petitioners-appellees' contract of lease may be noted thereon. It expressly found that respondents-appellants had knowledge of the lease contract, Exhibit A, but that respondents' deed of mortgage of March 8, 1949, has priority over petitioner's amended contract of lease, Exhibit C. As regards the (supposed) prohibition contained in the contract of mortgage, the court held that the prohibition gives a right of foreclosure; in other words, that in spite of the prohibition the amended contract of lease, Exhibit C, may not be considered as null and void.chanroblesvirtualawlibrary chanrobles virtual law library In this court on appeal claim is made on behalf of the respondentsappellants that the court a quo erred in holding that respondentsappellants had knowledge of the contract of lease, Exhibit A; that it erred in holding that Tirso T. Reyes is the attorney-in-fact of the

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respondents-appellants; that it erred in ordering the registration of the contract of lease, Exhibit A; and that it erred in not holding that the registration of the contracts, Exhibits A and C, will prejudice the rights and interest of respondentsappellants.chanroblesvirtualawlibrary chanrobles virtual law library It should be noted that all that the petitioners demand or pray for is the surrender of the titles to the Register of Deeds so that their contracts of lease, Exhibits A and C, may be noted thereon. The only issue, therefore, is whether petitioners have a right to have said deeds registered. It is not denied that the contracts have been executed by the registered owner of the land, or that they have been lawfully executed, or that they have all the qualities of registerable documents. Indeed, the owner is agreeable to the registration. The objections interposed by respondents, who are mortgagees merely, that they had no knowledge of the contract of lease, or that their mortgage has priority, or that they will be prejudiced, are beside the issue.chanroblesvirtualawlibrary chanrobles virtual law library The purpose of registering an instrument is to give notice thereof to all persons (section 51, Act No. 496); it is not intended by the proceedings for registration to seek to destroy or otherwise affect already registered rights over the land, subsisting or existing at the time of the registration. The rights of these parties, who have registered their rights, are not put in issue when an instrument is subsequently presented for registration; nor are its effects on other instruments previously registered put in issue by the procedure of registration. Thus, the objections raised by respondents-appellants that they had no knowledge of the contract of lease, Exhibit A, before the property was mortgaged to them, or that the same violates their contract of mortgage with the owner of the land - these are not passed upon by the order for the registration of petitioners-appellees' contract of lease. The objections, as well as the relative rights of all parties who have registered their deeds, shall be decided in the proper suit or proceeding when the opportune occasion arises; but they are not now in issue, nor may they be adjudicated upon, simply because petitioners-appellees have applied for the registration of their contract of lease.chanroblesvirtualawlibrary chanrobles virtual law library The impropriety and inconvenience of proceeding to determine completely and in advance all the possible consequences of a document, upon all parties affected thereby, in the proceeding for its registration becomes apparent when, as in this case, important and complicated questions of fact and of law were presented by the respondents-appellants about their alleged lack of knowledge of the contracts of lease and the invalidity thereof. The court a quo passed upon vital issues of fact upon the motion and the opposition thereto, and upon the documents, letters, and receipts presented, without any other evidence than the above. Yet the question of knowledge is mainly a question of fact and requires inquiry into many and complicated circumstances, which can not be satisfactorily shown except by testimony.chanroblesvirtualawlibrary chanrobles virtual law library On the other hand, the supposed invalidity of the contracts of lease is no valid objection to their registration, because invalidity is no proof of their non-existence or a valid excuse for denying their registration. The law on registration does not require that only valid instruments shall be registered. How can parties affected thereby be supposed to know their invalidity before they become aware, actually or constructively, of their existence or of their provisions? If the purpose of registration is merely to give notice, then questions regarding the effect or invalidity of instruments are expected to be decided after, not before, registration. It must follow as a necessary consequence that registration must first be allowed, and validity or effect litigated afterwards.chanroblesvirtualawlibrary chanrobles virtual law library The foregoing, however, must not be understood as an absolute and invariable rule of procedure, for parties may, by mutual consent, submit issues for determination at the time of the proceeding to register a document. But the court should only proceed therewith (determination of the issues) upon giving all the parties concerned sufficient opportunity to present their respective sides and the evidence in support thereof, and that if this can not be done, the determination of the issues should be reserved in a subsequent proceeding and the registration of the document ordered.chanroblesvirtualawlibrary chanrobles virtual law library

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In accordance with the above opinion, we find that the issues raised by respondents-appellants, namely, that the contracts of lease, Exhibits A and C, are invalid because they violate the contracts of mortgage executed in favor of the owner of the land, that Tirso T. Reyes is not the attorney-in-fact of the respondents-appellants, and that the respondents-appellants had no knowledge of the execution of the contract of lease, Exhibits A and C - these issues were not properly investigated because respondents-appellants did not have the opportunity to present evidence thereon and did not even present copy of their mortgage at the hearing, and the trial court decided the questions without full and complete investigation. The ruling of the trial court on the above issues should, therefore, be set aside and their determination reserved in a proper proceeding.chanroblesvirtualawlibrary chanrobles virtual law library Wherefore, the opposition to the motion for the surrender of the certificates of title to the Register of Deeds of Manila is overruled, and the order appealed from, in so far as it orders the surrender of the certificates of title for the registration of the contracts of lease, is hereby affirmed, but the other rulings are reversed, and the other issues raised by respondents-appellants reserved for determination in a proper proceeding. With costs against the respondentsappellants.chanroblesvirtualawlibrary chanrobles virtual law library Paras, C. J., Bengzon, Padilla, Montemayor and Jugo, JJ., concur. PABLO, J., dissenting: chanrobles virtual law library Los opositores Hermogenes Reyes y Teodora Tantoco son acreedores hipotecarios de los lotes con certificados de transferencia de titulo Nos. 8071 y 8072 y, en virtud de una clausula de dicha hipoteca, el dueno no puede vender, trasparar o gravar dichos lotes hipotecados sin el consentimiento por escrito de los acreedores. El dueno, por tanto, no podia legalmente arrendar dichas fincas a los hoy mocionantes sin dicho consentimiento. Si, en contravencion de dicho contrato, el dueno los arrendo a los mocionantes, dicho arrendamiento no debe ser anotado, en proteccion de los arrendatarios que no obraron de buena fe, en los certificados de transferencia de titulo Nos. 8071 y 8072. La inscripcion en la Oficina del Registrador de Titulos de la hipoteca era una notificacion a todo el mundo de que el propietario no podia gravar, arrendar, etc., los lotes, sin consentimiento de los acreedores hipotecarios.chanroblesvirtualawlibrary chanrobles virtual law library Si los mocionantes hubieran obrado con la prudencia ordinaria de ver el titulo de dichos lotes en la Oficina del Registrador de Titulos, habrian descubierto que el dueno no podia arrendarlos sin el consentimiento de los acreedores hipotecarios. Es evidente que los mocionantes quieren subsanar la falta de precaucion con que debian haber obrado antes de arrendar los lotes, en perjuicio de los acreedores hipotecarios.chanroblesvirtualawlibrary chanrobles virtual law library Ordenar la anotacion del arrendamiento es proteger a los arrendatarios que no obraron de acuerdo con las disposiciones legales y conculcar los derechos legitimos de los acreedores, debidamente inscritos.chanroblesvirtualawlibrary chanrobles virtual law library El articulo 51 de la Ley No. 496 tiene aplicacion a los casos en que, sin intervencion de la otra parte o sin su conocimiento, el interesado consigue inscribir escritura de traspaso, hipoteca, arrendamiento, embargo, etc. an la Oficina del Registrador de Titulos. En tales casos, la inscripcion surtira el efecto de notificacion a todos los que puedan tener reclamacion, y no en camos, como el presente, en que los acreedores ya se oponen abiertamente a la anotacion pedida, despues de notificados de la presentacion de la mocion. Cuando hay una oposicion que alega violacion de un derecho substancial, lo que procede es no ordenar la inscripcion sino hacer que las partes presenten todas las pruebas en apoyo de su respectiva alegacion, o que litiguen en el tribunal correspondiente, suspendiento toda accion sobre la mocion en que se pide la presentacion al registrador del duplicado del certificado de transferencia de titulo para la anotacion.chanroblesvirtualawlibrary chanrobles virtual law library Siguiendo la teoria de la mayoria, la notificacion a los interesados solamente comenzara a tener lugar despues que se haya inscrito el arrendamiento impugnado por orden de este Tribunal, y que desde esa fecha pueden iniciar los pleitos que las partes quieran suscitar. Me parece que eso es ceremonia innecessaria para este caso particular. Los acreedores ya han planteado su oposicion a la anotacion. Su objecion esta fundada en los terminos precisos del contrato de

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hipoteca; parte de las pruebas ya se han presentado; lo que procede, en mi opinion, es devolver el expediente al juzgado de origen dando a las partes oportunidad de presentar todas sus pruebas y despues decidir si cabe o no la anotacion. Es hacer perder el tiempo a las partes interesadas y a los juzgados obligarles a litigar despues que este Tribunal haya ordenado la anotacion de dicho arrendamiento, y en el caso de que se decidiese que los mocionantes no tienen derecho a anotar la escritura de arrendamiento, entonces se habra de ordenar la cancelacion de la anotacion ya ordenada por este Tribunal. Habra algun juzgado inferior que se atreva a ordenar la cancelacion de una anotacion ordenada por este Tribunal? Y para que fueron notificados los acreedores de la vista de la mocion si, despues de todo, sin oir sus pruebas, se ordena tal anotacion? Eso es contrario al espiritu que informa nuestro sistema de legislacion: de proporcionar a las partes justa, pronta y no costosa administracion de justicia.chanroblesvirtualawlibrary chanrobles virtual law library Voto por la revocacion de la orden apelada y que se devuela el expediente para ulterior tramitacion, como tengo indicado.