Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-8936
October 2, 1915
CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffsappellants,
vs.
N.M. SALEEBY, defendant-appellee.
Singson, Ledesma and Lim for appellants.
D.R. Williams for appellee.
JOHNSON, J.:
From the record the following facts appear:
First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the
district of Ermita in the city of Manila.
Second. That there exists and has existed a number of years a stone wall
between the said lots. Said wall is located on the lot of the plaintiffs.
Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the
Court of Land Registration for the registration of their lot. After a consideration of
said petition the court, on the 25th day of October, 1906, decreed that the title of
the plaintiffs should be registered and issued to them the original certificate
provided for under the torrens system. Said registration and certificate included
the wall.
Fourth. Later the predecessor of the defendant presented a petition in the Court
of Land Registration for the registration of the lot now occupied by him. On the
25th day of March, 1912, the court decreed the registration of said title and
issued the original certificate provided for under the torrens system. The
description of the lot given in the petition of the defendant also included said wall.
Fifth. Several months later (the 13th day of December, 1912) the plaintiffs
discovered that the wall which had been included in the certificate granted to
them had also been included in the certificate granted to the defendant .They
immediately presented a petition in the Court of Land Registration for an
adjustment and correction of the error committed by including said wall in the
registered title of each of said parties. The lower court however, without notice to
the defendant, denied said petition upon the theory that, during the pendency of
the petition for the registration of the defendant's land, they failed to make any
objection to the registration of said lot, including the wall, in the name of the
defendant.
Sixth. That the land occupied by t he wall is registered in the name of each of the
owners of the adjoining lots. The wall is not a joint wall.
Under these facts, who is the owner of the wall and the land occupied by it?
The decision of the lower court is based upon the theory that the action for the
registration of the lot of the defendant was a judicial proceeding and that the

judgment or decree was binding upon all parties who did not appear and oppose
it. In other words, by reason of the fact that the plaintiffs had not opposed the
registration of that part of the lot on which the wall was situate they had lost it,
even though it had been theretofore registered in their name. Granting that
theory to be correct one, and granting even that the wall and the land occupied
by it, in fact, belonged to the defendant and his predecessors, then the same
theory should be applied to the defendant himself. Applying that theory to him,
he had already lost whatever right he had therein, by permitting the plaintiffs to
have the same registered in their name, more than six years before. Having thus
lost hid right, may he be permitted to regain it by simply including it in a petition
for registration? The plaintiffs having secured the registration of their lot,
including the wall, were they obliged to constantly be on the alert and to watch all
the proceedings in the land court to see that some one else was not having all, or
a portion of the same, registered? If that question is to be answered in the
affirmative, then the whole scheme and purpose of the torrens system of land
registration must fail. The real purpose of that system is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims which
were noted at the time of registration, in the certificate, or which may arise
subsequent thereto. That being the purpose of the law, it would seem that once a
title is registered the owner may rest secure, without the necessity of waiting in
the portals of the court, or sitting in the "mirador de su casa," to avoid the
possibility of losing his land. Of course, it can not be denied that the proceeding
for the registration of land under the torrens system is judicial
(Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with all the forms
of an action and the result is final and binding upon all the world. It is an action in
rem. (Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil. rep.,
49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American
Land Co. vs. Zeiss, 219 U.S., 47.)
While the proceeding is judicial, it involves more in its consequences than does an
ordinary action. All the world are parties, including the government. After the
registration is complete and final and there exists no fraud, there are no innocent
third parties who may claim an interest. The rights of all the world are foreclosed
by the decree of registration. The government itself assumes the burden of giving
notice to all parties. To permit persons who are parties in the registration
proceeding (and they are all the world) to again litigate the same questions, and
to again cast doubt upon the validity of the registered title, would destroy the
very purpose and intent of the law. The registration, under the torrens system,
does not give the owner any better title than he had. If he does not already have
a perfect title, he can not have it registered. Fee simple titles only may be
registered. The certificate of registration accumulates in open document a precise
and correct statement of the exact status of the fee held by its owner. The
certificate, in the absence of fraud, is the evidence of title and shows exactly the
real interest of its owner. The title once registered, with very few exceptions,
should not thereafter be impugned, altered, changed, modified, enlarged, or

diminished, except in some direct proceeding permitted by law. Otherwise all

security in registered titles would be lost. A registered title can not be altered,
modified, enlarged, or diminished in acollateral proceeding and not even by a
direct proceeding, after the lapse of the period prescribed by law.
For the difficulty involved in the present case the Act (No. 496) providing for the
registration of titles under the torrens system affords us no remedy. There is no
provision in said Act giving the parties relief under conditions like the present.
There is nothing in the Act which indicates who should be the owner of land which
has been registered in the name of two different persons.
The rule, we think, is well settled that the decree ordering the registration of a
particular parcel of land is a bar to future litigation over the same between the
same parties .In view of the fact that all the world are parties, it must follow that
future litigation over the title is forever barred; there can be no persons who are
not parties to the action. This, we think, is the rule, except as to rights which are
noted in the certificate or which arise subsequently, and with certain other
exceptions which need not be dismissed at present. A title once registered can
not be defeated, even by an adverse, open, and notorious possession. Registered
title under the torrens system can not be defeated by prescription (section 46, Act
No. 496). The title, once registered, is notice to the world. All persons must take
notice. No one can plead ignorance of the registration.
The question, who is the owner of land registered in the name of two different
persons, has been presented to the courts in other jurisdictions. In some
jurisdictions, where the "torrens" system has been adopted, the difficulty has
been settled by express statutory provision. In others it has been settled by the
courts. Hogg, in his excellent discussion of the "Australian Torrens System," at
page 823, says: "The general rule is that in the case of two certificates of title,
purporting to include the same land, the earlier in date prevails, whether the land
comprised in the latter certificate be wholly, or only in part, comprised in the
earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R.,
155; Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152;
Register of Titles, vs. Esperance Land Co., 1 W.A.R., 118.)" Hogg adds however
that, "if it can be very clearly ascertained by the ordinary rules of construction
relating to written documents, that the inclusion of the land in the certificate of
title of prior date is a mistake, the mistake may be rectified by holding the latter
of the two certificates of title to be conclusive." (See Hogg on the "Australian
torrens System," supra, and cases cited. See also the excellent work of Niblack in
his "Analysis of the Torrens System," page 99.) Niblack, in discussing the general
question, said: "Where two certificates purport to include the same land the
earlier in date prevails. ... In successive registrations, where more than one
certificate is issued in respect of a particular estate or interest in land, the person
claiming under the prior certificates is entitled to the estate or interest; and that
person is deemed to hold under the prior certificate who is the holder of, or whose
claim is derived directly or indirectly from the person who was the holder of the
earliest certificate issued in respect thereof. While the acts in this country do not

expressly cover the case of the issue of two certificates for the same land, they
provide that a registered owner shall hold the title, and the effect of this
undoubtedly is that where two certificates purport to include the same registered
land, the holder of the earlier one continues to hold the title" (p. 237).
Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be
conclusive upon and against all persons, including the Insular Government and all
the branches thereof, whether mentioned by name in the application, notice, or
citation, or included in the general description "To all whom it may concern." Such
decree shall not be opened by reason of the absence, infancy, or other disability
of any person affected thereby, nor by any proceeding in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived of
land or of any estate or interest therein by decree of registration obtained
by fraud to file in the Court of Land Registration a petition for review within one
year after entry of the decree (of registration), provided no innocent purchaser for
value has acquired an interest.
It will be noted, from said section, that the "decree of registration" shall not be
opened, for any reason, in any court, except for fraud, and not even for fraud,
after the lapse of one year. If then the decree of registration can not be opened
for any reason, except for fraud, in a direct proceeding for that purpose, may such
decree be opened or set aside in a collateral proceeding by including a portion of
the land in a subsequent certificate or decree of registration? We do not believe
the law contemplated that a person could be deprived of his registered title in
that way.
We have in this jurisdiction a general statutory provision which governs the right
of the ownership of land when the same is registered in the ordinary registry in
the name of two persons. Article 1473 of the Civil Code provides, among other
things, that when one piece of real property had been sold to two different
persons it shall belong to the person acquiring it, who first inscribes it in the
registry. This rule, of course, presupposes that each of the vendees or purchasers
has acquired title to the land. The real ownership in such a case depends upon
priority of registration. While we do not now decide that the general provisions of
the Civil Code are applicable to the Land Registration Act, even though we see no
objection thereto, yet we think, in the absence of other express provisions, they
should have a persuasive influence in adopting a rule for governing the effect of a
double registration under said Act. Adopting the rule which we believe to be more
in consonance with the purposes and the real intent of the torrens system, we are
of the opinion and so decree that in case land has been registered under the Land
Registration Act in the name of two different persons, the earlier in date shall
prevail.
In reaching the above conclusion, we have not overlooked the forceful argument
of the appellee. He says, among other things; "When Prieto et al. were served
with notice of the application of Teus (the predecessor of the defendant) they
became defendants in a proceeding wherein he, Teus, was seeking to foreclose
their right, and that of orders, to the parcel of land described in his application.

Through their failure to appear and contest his right thereto, and the subsequent
entry of a default judgment against them, they became irrevocably bound by the
decree adjudicating such land to Teus. They had their day in court and can not set
up their own omission as ground for impugning the validity of a judgment duly
entered by a court of competent jurisdiction. To decide otherwise would be to hold
that lands with torrens titles are above the law and beyond the jurisdiction of the
courts".
As was said above, the primary and fundamental purpose of the torrens system is
to quiet title. If the holder of a certificate cannot rest secure in this registered title
then the purpose of the law is defeated. If those dealing with registered land
cannot rely upon the certificate, then nothing has been gained by the registration
and the expense incurred thereby has been in vain. If the holder may lose a strip
of his registered land by the method adopted in the present case, he may lose it
all. Suppose within the six years which elapsed after the plaintiff had secured
their title, they had mortgaged or sold their right, what would be the position or
right of the mortgagee or vendee? That mistakes are bound to occur cannot be
denied, and sometimes the damage done thereby is irreparable. It is the duty of
the courts to adjust the rights of the parties under such circumstances so as to
minimize such damages, taking into consideration al of the conditions and the
diligence of the respective parties to avoid them. In the present case, the
appellee was the first negligent (granting that he was the real owner, and if he
was not the real owner he can not complain) in not opposing the registration in
the name of the appellants. He was a party-defendant in an action for the
registration of the lot in question, in the name of the appellants, in 1906.
"Through his failure to appear and to oppose such registration, and the
subsequent entry of a default judgment against him, he became irrevocably
bound by the decree adjudicating such land to the appellants. He had his day in
court and should not be permitted to set up his own omissions as the ground for
impugning the validity of a judgment duly entered by a court of competent
jurisdiction." Granting that he was the owner of the land upon which the wall is
located, his failure to oppose the registration of the same in the name of the
appellants, in the absence of fraud, forever closes his mouth against impugning
the validity of that judgment. There is no more reason why the doctrine invoked
by the appellee should be applied to the appellants than to him.
We have decided, in case of double registration under the Land Registration Act,
that the owner of the earliest certificate is the owner of the land. That is the rule
between original parties. May this rule be applied to successive vendees of the
owners of such certificates? Suppose that one or the other of the parties, before
the error is discovered, transfers his original certificate to an "innocent
purchaser." The general rule is that the vendee of land has no greater right, title,
or interest than his vendor; that he acquires the right which his vendor had, only.
Under that rule the vendee of the earlier certificate would be the owner as
against the vendee of the owner of the later certificate.

We find statutory provisions which, upon first reading, seem to cast some doubt
upon the rule that the vendee acquires the interest of the vendor only. Sections
38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and
be protected against defenses which the vendor would not. Said sections speak of
available rights in favor of third parties which are cut off by virtue of the sale of
the land to an "innocent purchaser." That is to say, persons who had had a right
or interest in land wrongfully included in an original certificate would be unable to
enforce such rights against an "innocent purchaser," by virtue of the provisions of
said sections. In the present case Teus had his land, including the wall, registered
in his name. He subsequently sold the same to the appellee. Is the appellee an
"innocent purchaser," as that phrase is used in said sections? May those who
have been deprived of their land by reason of a mistake in the original certificate
in favor of Teus be deprived of their right to the same, by virtue of the sale by him
to the appellee? Suppose the appellants had sold their lot, including the wall, to
an "innocent purchaser," would such purchaser be included in the phrase
"innocent purchaser," as the same is used in said sections? Under these examples
there would be two innocent purchasers of the same land, is said sections are to
be applied .Which of the two innocent purchasers, if they are both to be regarded
as innocent purchasers, should be protected under the provisions of said
sections? These questions indicate the difficulty with which we are met in giving
meaning and effect to the phrase "innocent purchaser," in said sections.
May the purchaser of land which has been included in a "second original
certificate" ever be regarded as an "innocent purchaser," as against the rights or
interest of the owner of the first original certificate, his heirs, assigns, or vendee?
The first original certificate is recorded in the public registry. It is never issued
until it is recorded. The record notice to all the world. All persons are charged with
the knowledge of what it contains. All persons dealing with the land so recorded,
or any portion of it, must be charged with notice of whatever it contains. The
purchaser is charged with notice of every fact shown by the record and is
presumed to know every fact which the record discloses .This rule is so well
established that it is scarcely necessary to cite authorities in its support
(Northwestern National Bank vs. Freeman, 171 U.S., 620, 629; Delvin on Real
Estate, sections 710, 710 [a]).
When a conveyance has been properly recorded such record is constructive
notice of its contents and all interests, legal and equitable, included therein.
(Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97;
Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351;
McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne, 7 House of Lords Cases,
341.)
Under the rule of notice, it is presumed that the purchaser has examined every
instrument of record affecting the title. Such presumption is irrebutable. He is
charged with notice of every fact shown by the record and is presumed to know
every fact which an examination of the record would have disclosed. This
presumption cannot be overcome by proof of innocence or good faith. Otherwise

the very purpose and object of the law requiring a record would be destroyed.
Such presumption cannot be defeated by proof of want of knowledge of what the
record contains any more than one may be permitted to show that he was
ignorant of the provisions of the law. The rule that all persons must take notice of
the facts which the public record contains is a rule of law. The rule must be
absolute. Any variation would lead to endless confusion and useless litigation.
While there is no statutory provision in force here requiring that original deeds of
conveyance of real property be recorded, yet there is a rule requiring mortgages
to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a mortgage
is indispensable to its validity. (Art .1875.) In the face of that statute would the
courts allow a mortgage to be valid which had not been recorded, upon the plea
of ignorance of the statutory provision, when third parties were interested? May a
purchaser of land, subsequent to the recorded mortgage, plead ignorance of its
existence, and by reason of such ignorance have the land released from such
lien? Could a purchaser of land, after the recorded mortgage, be relieved from the
mortgage lien by the plea that he was a bona fide purchaser? May there be
a bona fide purchaser of said land, bona fide in the sense that he had no
knowledge of the existence of the mortgage? We believe the rule that all persons
must take notice of what the public record contains in just as obligatory upon all
persons as the rule that all men must know the law; that no one can plead
ignorance of the law. The fact that all men know the law is contrary to the
presumption. The conduct of men, at times, shows clearly that they do not know
the law. The rule, however, is mandatory and obligatory, notwithstanding. It
would be just as logical to allow the defense of ignorance of the existence and
contents of a public record.
In view, therefore, of the foregoing rules of law, may the purchaser of land from
the owner of the second original certificate be an "innocent purchaser," when a
part or all of such land had theretofore been registered in the name of another,
not the vendor? We are of the opinion that said sections 38, 55, and 112 should
not be applied to such purchasers. We do not believe that the phrase "innocent
purchaser should be applied to such a purchaser. He cannot be regarded as an
"innocent purchaser" because of the facts contained in the record of the first
original certificate. The rule should not be applied to the purchaser of a parcel of
land the vendor of which is not the owner of the original certificate, or his
successors. He, in nonsense, can be an "innocent purchaser" of the portion of the
land included in another earlier original certificate. The rule of notice of what the
record contains precludes the idea of innocence. By reason of the prior registry
there cannot be an innocent purchaser of land included in a prior original
certificate and in a name other than that of the vendor, or his successors. In order
to minimize the difficulties we think this is the safe rule to establish. We believe
the phrase "innocent purchaser," used in said sections, should be limited only to
cases where unregistered land has been wrongfully included in a certificate under
the torrens system. When land is once brought under the torrens system, the
record of the original certificate and all subsequent transfers thereof is notice to

all the world. That being the rule, could Teus even regarded as the holder in good
fifth of that part of the land included in his certificate of the appellants? We think
not. Suppose, for example, that Teus had never had his lot registered under the
torrens system. Suppose he had sold his lot to the appellee and had included in
his deed of transfer the very strip of land now in question. Could his vendee be
regarded as an "innocent purchaser" of said strip? Would his vendee be an
"innocent purchaser" of said strip? Certainly not. The record of the original
certificate of the appellants precludes the possibility. Has the appellee gained any
right by reason of the registration of the strip of land in the name of his vendor?
Applying the rule of notice resulting from the record of the title of the appellants,
the question must be answered in the negative. We are of the opinion that these
rules are more in harmony with the purpose of Act No. 496 than the rule
contended for by the appellee. We believe that the purchaser from the owner of
the later certificate, and his successors, should be required to resort to his vendor
for damages, in case of a mistake like the present, rather than to molest the
holder of the first certificate who has been guilty of no negligence. The holder of
the first original certificate and his successors should be permitted to rest secure
in their title, against one who had acquired rights in conflict therewith and who
had full and complete knowledge of their rights. The purchaser of land included in
the second original certificate, by reason of the facts contained in the public
record and the knowledge with which he is charged and by reason of his
negligence, should suffer the loss, if any, resulting from such purchase, rather
than he who has obtained the first certificate and who was innocent of any act of
negligence.
The foregoing decision does not solve, nor pretend to solve, all the difficulties
resulting from double registration under the torrens system and the subsequent
transfer of the land. Neither do we now attempt to decide the effect of the former
registration in the ordinary registry upon the registration under the torrens
system. We are inclined to the view, without deciding it, that the record under the
torrens system, supersede all other registries. If that view is correct then it will be
sufficient, in dealing with land registered and recorded alone. Once land is
registered and recorded under the torrens system, that record alone can be
examined for the purpose of ascertaining the real status of the title to the land.
It would be seen to a just and equitable rule, when two persons have acquired
equal rights in the same thing, to hold that the one who acquired it first and who
has complied with all the requirements of the law should be protected.
In view of our conclusions, above stated, the judgment of the lower court should
be and is hereby revoked. The record is hereby returned to the court now having
and exercising the jurisdiction heretofore exercised by the land court, with
direction to make such orders and decrees in the premises as may correct the
error heretofore made in including the land in the second original certificate
issued in favor of the predecessor of the appellee, as well as in all other duplicate
certificates issued.
Without any findings as to costs, it is so ordered.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-79787 June 29, 1989
APOLONIO EGAO AND BEATRIZ EGAO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS
AND SEVERO BONTILAO,respondents.
Eliud J. Pailagao for petitioners.
Guerrero A. Adaza for private respondents.
PADILLA, J.:
This is a land dispute which culminated in the filing by private respondents Severo
Dignos and Severo Bontilao of a verified complaint for Quieting of Title and/or
Recovery of Possession and Ownership before the RTC of Manolo Fortich,
Bukidnon, * against petitioners Apolonio and Beatriz Egao.
Private respondents' complaint alleged that they are the legitimate owners and
possessors of two (2) parcels of land situated at Lonocan, Manolo Fortich,
Bukidnon, per deed of absolute sale dated 21 December 1979 which, among
others, recited thus:
WHEREAS, the abovementioned Parcels of land Lot No. 662 is covered by Original
Certificate of Title No. P-3559 Free Patent No. 298112 registered in the name of
APOLONIO EGAO married to Beatriz Menosa and Lot No. 661 is covered by
Original Certificate of Title No. P-3558 Free Patent No. 303249 registered in the
name of RAULITA CONEJOS married to Pedro Conejos, all transcribed in the
Registration Book in the Register of Deeds for the Province of Bukidnon;
WHEREAS, Lot No. 662 has been transferred in ownership from BEATRIZ MENOSA
EGAO, married to Apolonio Egao in favor of ROBERTO N. MARFORI per Deed of
Absolute Sale executed before Tommy C. Pacana, Notary Public of Cagayan de Oro
City entered in his Notarial Registry under Doc. No. 75; Page No. 15; Book V Series
of 1965; and Lot No. 661 likewise has been transferred in ownership from RAULITA
R. CONEJOS in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed
before Tommy C. Pacana, Notary Public of Cagayan de Oro City, dated June 3,
1965, entered in his Notarial Registry under Doc. No. 20; Page 4; Book V; Series of
1965.
WHEREAS, the VENDEES herein is [sic] aware of the fact that the Certificate of
Title over the abovementioned parcels of land have not yet been transferred in
favor of ROBERTO N. MARFORI except for the tax declarations but that the
VENDOR herein is in actual, physical, continuous, uninterrupted, and adverse
possession of the above described parcels of land free from all liens and
encumbrances whatsoever; 1

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were
introduced and taxes paid by private respondents. Sometime in June 1983, herein
petitioners allegedly occupied illegally portions of the land. 2
Petitioners' answer to the complaint asserted that Apolonio Egao is the registered
owner of the parcel of land known as Lot No. 662, Pls 854 with an area of 3,451
sq. meters evidenced by OCT No. P-3559 issued by the Register of Deeds of
Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965; that he
(Apolonio Egao) and his family have been in actual, physical, adverse, open and
continuous possession thereof even before the issuance to him of the free patent;
that the land has never been sold by reason of the prohibition against alienation
under Commonwealth Act No. 141 (Public Land Law); and that the instant case
was the fourth in a series filed against the Egaos and is part of respondents'
scheme to grab said parcel of land from the petitioners.
Judge Felicidario M. Batoy ruled in favor of the Egaos, herein petitioners
(defendants in the court a quo), ordering respondent Severo Bontilao (plaintiff in
the court a quo) to immediately deliver to the Egaos the owner's duplicate copy
of Original Certificate of Title No. P-3559. Said trial judge held:
In the instant case, 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 Free Patent No. 29811 2 on August 12, 1965,
the said deeds of sale (Exhs. A & B) were ipso facto cancelled or superseded by
said free patent. Moreover, it appears from the evidence that defendants never
vacated or abandoned their possession of Lot No. 662 as they have continuously
lived on said lot since 1950, a fact admitted by the plaintiffs themselves. And as
long as Original Certificate of Title No. P-3559 remains in the name of defendant
Apolonio Egao, married to Beatriz Menoza Egao, this is the ultimate and best
evidence of title granted by the government which must be honored and
respected by the courts. In a nutshell, the plaintiffs miserably failed to present or
show any title to Lot No. 662, PLS-854 which should be quieted or freed from any
cloud of doubt as prayed for in their complaint and they further failed to show
that they are entitled to the ownership and possession to Lot No. 662, PLS-854. 3
Private respondents went to the Court of Appeals in CA-G.R. No. 09539. Setting
aside the RTC decision, the appellate court ** held, in part, thusThat the land is titled in the name of defendant Apolonio Egao is not in question.
The main point in issue is whether defendants could validly sell the land to
Marfori who in turn transferred ownership thereof to the plaintiff. 4
Marfori and Egao were both held by the Court of Appeals in pari delicto for
violating the five (5) year restriction under Sec. 118, Commonwealth Act No. 141
as amended by Act No. 496 against encumbrance or alienation of lands acquired
under a free patent or homestead; hence, they cannot, according to the appellate
court, seek affirmative relief, but respondents on the other hand were declared
innocent purchasers for value who obtained the owner's duplicate copy of the
OCT (still in the name of the Egaos) from Marfori who transferred to them

(respondents) physical possession of the property. Finally, the Court of Appeals

held:
WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is
rendered:
1. Declaring the plaintiffs as the absolute owners of the land known as Lot No.
662, Pls-854 of the Land Registry of Bukidnon;
2. Ordering the Register of Deeds of Bukidnon to effect the cancellation of
Original Certificate of Title No. P-3559 in the name of Apolonio Egao and in lieu
thereof, another one be issued in the names of plaintiffs, after payment of the
proper fees;
3. Ordering the defendants to surrender peaceful possession of the land to
plaintiffs and to desist from further disturbing the possession over the land of
plaintiffs;
4. Ordering the defendants to pay the costs.
SO ORDERED. 5
Petitioners turn to this Court for relief, assailing the appellate court for allegedly
committing grave abuse of discretion amounting to lack of jurisdiction in holding
that:
a. Petitioners sold Lot 662 to Roberto Marfori;
b. It was only in 1983 when Petitioners wrested possession over the land from
private respondents;
c. Petitioners never denied the sales made in favor of Marfori, in their answer;
d. Private Respondents are "innocent purchasers for value. 6
and/or for allegedly deciding questions of substance not in accordance with law
and/or applicable decisions of this Court.
Without giving due course to the petition, the Court required respondents to
comment. 7 After comment, the Court resolved to require petitioners to file a
reply, which they did. Respondents filed a rejoinder. Considering the allegations,
issues and arguments adduced, the Court resolved to give due course to the
petition. Upon submission by the parties of their respective memorandum, the
petition was submitted for decision. 8
Validity of the Deeds of Sale executed between Marfori (as purchaser) and the
petitioners (as sellers) is the main issue to be resolved, in determining
respondents' right over the disputed land, the respondents being the transferees
of Marfori.
It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio
Egao over Lot No. 662 on 12 August, 1965. Sec. 118 of Commonwealth Act No.
141, as amended, prohibits the alienation or encumbrance, within a period of five
(5) years from the date of issuance of the patent, of lands acquired under free
patent or homestead. Assuming, arguendo, the authenticity of the Deeds of Sale
executed by the Egaos in favor of Marfori over portions of Lot No. 662 (the land in
question), dated 7 May 1964, 14 January and 6 October 1965, it clearly appears
that all deeds were executed within the prohibited period of five (5) years. As
correctly found by the appellate court-

Section 124 of the Public Land Act provided [sic] that any acquisition,
conveyance, abenation, transfer or other contract made or executed inviolation of
any of the provisions of Sections 118,121,120,122 and 123 of this Act shall be
unlawful, null and void from its execution and shall produce the effect of annulling
and cancelling the grant, title, patent or permit originally issued, recognized or
confirmed, actually or prescriptively, and cause the reversion of the property and
its improvements to the state. 9
Petitioners deny the authenticity and due execution of the notarized deeds of sale
in favor of Marfori, asserting continued ownership over the land by virtue of a
Torrens Certificate of Title issued in their name. While the Court is not satisfied
with respondents' explanation of their failure to present the notaries public (who
were residents of a neighboring province) to affirm their participation in the
preparation of the Deeds, the Court also finds as insufficient the mere denials by
petitioners as to due execution and authenticity of said Deeds of Sale. A notarial
document is evidence of the facts in clear unequivocal mariner 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. 10 The
question of authenticity being one of fact, the Court will not disturb the
conclusions of the Court of Appeals on the matter.
Original Certificate of Title No. P-3559 over the land in dispute was issued on 1
March 1966, a few months afterthe execution by the Egaos of the last Deed of
Sale in favor of Marfori. 11 The OCT is registered in the name of the Egaos, herein
petitioners.
A Torrens title, once registered, cannot be defeated, even by adverse open and
notorious possession. A registered title under the Torrens system cannot be
defeated by prescription. The title, once registered, is notice to the world. All
persons must take notice. No one can plead ignorance of the registration. 12
Contrary to the appellate court's conclusion, respondents are not innocent
purchasers for value. 13 An "innocent purchaser for value" is deemed, under the
Torrens system, to include an innocent lessee, mortgagee or other encumbrancer
for value. 14 Where a purchaser neglects to make the necessary inquiries and
closes his eyes to facts which should put a reasonable man on his guard as to the
possibility of the existence of a defect in his vendor's title, and relying on the
belief that there was no defect in the title of the vendor, purchases the property
without making any further investigation, he cannot claim that he is a purchaser
in good faith for value. 15
Furthermore, a private individual may not bring an action for reversion or any
action which would have the effect of cancelling a free patent and the
corresponding certificate of title issued on the basis thereof, with the result that
the land covered thereby will again form part of the public domain, as only the
Solicitor General or the officer acting in his stead may do so. 16
The rule of pari delicto non oritur actio (where two persons are equally at fault
neither party may be entitled to relief under the law), admits of exceptions and
does not apply to an inexistent contract, such as, a sale void ab initio under the

Public Land Act, when its enforcement or application runs counter to the public
policy of preserving the grantee's right to the land under the homestead law. 17
Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of
the Land Registration Act (Act No. 496) expressly provides that the registration of
the Deed is the operative act that binds or affects the land insofar as third
persons are concerned. The law requires a higher degree of prudence from one
who buys from a person who is not the registered owner, when the land object of
the transaction is registered land. While one who buys from the registered owner
need not look behind the certificate of title, one who buys from another who
is notthe registered owner is expected to examine not only the certificate of title
but all factual circumstances necessary for him to determine if there are any
flaws in the title of the transferor, or in his capacity to transfer the land. Failing to
exercise caution of any kind whatsoever is tantamount to bad faith. 18
Deeds of sale of patented lands, perfected within the prohibited five (5) year
period are null and void (Sec. 124, Public Land Act). No title passed from the
Egaos to Marfori which could be validly transferred to herein respondents Bontilao
and Dignos. Nemo dat quod non habet (nobody can dispose of that which does
not belong to him). 19
While the government has not taken steps to assert its title, by reversion, to a
homestead sold in violation of the Public Land Act, the vendor or his heirs is
better entitled to the possession of the said, the vendee being in no better
situation than any intruder. 20
Accordingly, respondents who are not innocent purchasers for value have no
standing to question petitioners' right to the land and to file an action for quieting
of title.
WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No.
09539 is REVERSED and SET ASIDE. Meanwhile, petitioners as registered owners
are entitled to remain in physical possession of the disputed property.
Respondents are ordered to deliver the owner's duplicate copy of the OCT (No. P3559) to petitioners, without prejudice to an action for reversion of the land,
which may be instituted by the Solicitor General for the State.
Let a copy of this decision be furnished the Solicitor General.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-41233 November 21, 1979
J.M. TUASON & CO., INC., petitioner,
vs.
HON. COURT OF APPEALS, ALFONSO DE LEON and ROSARIO G. DE
LEON, respondents.

Araneta, Mendoza & Papa for petitioner.

Martin B. Laurea for private respondents.
DE CASTRO, J.:
Appeal by certiorari from the decision of respondent Court of Appeals (CA-G.R. No.
54695-R) affirming with modification the decision of the Court of First Instance of
Manila in Civil Case No. 89119, which is an action based on warranty against
eviction, and to recover the value of a subdivision lot at the time of eviction, plus
damages.
The following facts may be regarded as without any dispute:
On January 31, 1952, petitioner J.M. Tuason & Co., Inc. executed, in favor of
Ricardo de Leon, a contract to sell Lot No. 15, Block 460 of the Sta. Mesa Heights
Subdivision containing an area of 1,703.6 square meters with the agreed price of
P24.60 per square meter or a total of P41,908.56. At the execution of the
contract, Ricardo de Leon paid the down-payment of P4,190.86 and agreed to pay
the balance in the monthly installment of P498.63 including the agreed annual
interest of 10% (Exhibit A).
Meanwhile, on April 10, 1953, petitioner signed a compromise agreement with the
Deudors (in another Civil Case No. Q-135, captioned Florencio Deudor, et al. vs.
J.M. Tuason, et al.).
On July 19, 1965 with the consent of the petitioner, Ricardo de Leon transferred
all his rights to the lot in favor of his parents, herein private respondents Alfonso
and Rosario de Leon (exhibit B). On the same date, private respondents paid the
outstanding balance of the purchase price (Exhibit 1-B). On August 5, 1965
petitioner executed in favor of private respondents the deed of sale over the lot
(Exhibit C) and upon its registration, the Register of Deeds issued to the
respondents the Transfer Certificate of Title No. 96143 (Exhibit 3; Annex B, Rollo,
39-40).
At the time of the execution of the contract to sell, the contracting parties knew
that a portion of the lot in question was actually occupied by Ramon Rivera.
However, it was their understanding that the latter will be ejected by the
petitioner from the premises (Annex B, Id).
On May 13, 1958, herein petitioner filed a complaint of ejectment against Ramon
Rivera before the Court of First Instance of Rizal (Civil Case No. Q-2989) and later
petitioner petitioner Ricardo de Leon and respondents Alfonso and Rosario de
Leon as necessary parties. In this Civil Case No. Q-2989, the decision of the lower
court, principally based on the compromise agreement executed in another Civil
Case No. Q-135 entitled Florencio Deudor, et al. vs. J.M. Tuason, et al. has the
following dispositive portion:
WHEREFORE, the complaint against the defendant Ramon Rivera is hereby
DISMISSSED ordering the plaintiff to enter into an agreement with Ramon Rivera
allowing said defendant to purchase 1,050 square meters to land now covered by
Lot 15, Block 460 of the Sta. Mesa Heights Subdivision to be priced at the
prevailing cost in the year 1958 which is placed by this Court to be P60.00 per

square meters; to pay attorney's fees of P3,000.00 to defendant Ramon Rivera,

with costs against the plaintiff ... (Emphasis supplied)
The Court of Appeals wholly affirmed this decision with costs against plaintiffappellant J.M. Tuason & Co., Inc. (CA-G.R. No. 38212-R), and denied the motion for
reconsideration filed by the other plaintiffs-appellants Alfonso and Rosario de
Leon, stating among others: ... We believe, however, that these questions should
be properly ventilated in the proper action which the plaintiffs- appellants, the De
Leons, may file against the plaintiff-appellant (J.M. Tuason & Co., Inc.) for failure of
the latter to deliver to them the possession of the whole of Lot 15, Block 460 of
the Sta. Mesa Heights Subdivision ... (Annex E, 4-5).
This decision of the Court of Appeals became final and executory in September,
1971 when the De Leons were evicted from the premises in question (Annex E, 6).
Pursuing the step as suggested by the Court of Appeals advising herein private
respondents to file the proper action the latter instituted on December 5,1972
before the Court of First Instance of Manila, Branch XXIX, Civil Case No. 89119, an
action against J.M. Tuason & Co., Inc. to enforce the vendor's warranty against
eviction or to recover the value of the land amounting to P315,000.00, plus
damages.
The lower court decided the case against herein petitioner J.M. & Co., Inc.
(defendant below) disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against
the defendant:
(1) Ordering defendant to pay plaintiffs the sum of TWO HUNDRED TEN
THOUSAND (P210,000.00) PESOS representing the value of the 1,050 square
meters at P200.00 per square meter, from which the latter were evicted, with
legal interest from December 5, 1972, the date of filing of the complaint;
(2) Ordering defendant to pay plaintiffs the sum of TWENTY FIVE THOUSAND
(P25,000.00) PESOS, by lay of moral damages, TEN THOUSAND (P10,000.00)
PESOS, by way of exemplary damages, and FIFTEEN THOUSAND (P15,000.00)
PESOS, for and as attorney's fees; and
(3) For costs of this suit.
This decision of the lower court was appealed to herein respondent Court of
Appeals (CA-G.R. No. 54695-R), which on July 2, 1975 affirmed it with the sole
modification on the reduction of the awarded moral damages from P25,000.00 to
P5,000.00 (Annex B, Rollo, p. 52).
Hence, this petition before Us with the prayer that the decision of respondent
court be reversed and another rendered, 'dismissing the complaint and ordering
respondents De Leons to accept from petitioner J.M. Tuason & Co., Inc. the sum of
P60.00 per square meter for the 1,050 square meters which the petitioner was
ordered to sell to Ramon Rivera, and to pay petitioner P30,000.00 as attorney's
fees plus costs.
Petitioner J. M. Tuason & Co., Inc. alleges that dent court erred: (1) in holding that
the compromise agreement was the proximate cause of its failure to comply with
its contract to self in favor of Ricardo de Leon; (2) in holding that it entered into

the compromise agreement without the knowledge and behind the back of
Ricardo de Leon and thereafter continued the collection of the installments until
the purchase price was fully paid and thus it wilfully committed fraud against him;
(3) in not considering that Ricardo de Leon was guilty of bad faith in entering into
the contract to sell and therefore he is not entitled to the warranty against
eviction; and (4) in granting moral and exemplary damages.
The real point in issue is whether respondents De Leon are entitled to the
vendor's warranty against eviction and damages.
The appellate court, in this action of warranty against eviction, found that
petitioner J.M. Tuason & Co., Inc. failed to comply with its obligation to transfer
ownership over the lot to the De Leons due to the compromise agreement it
entered with the Deudors, and that petitioner is guilty of "wilful deception,
intentional forsaking of one to whom defendant was bound in a contract to
convey, and worse yet, even at that, after the compromise, defendant still
continued to collect installments from buyer ...
Contrary to these findings, this Court holds that it was not petitioner's own
making that it executed the compromise agreement with the Deudors. This
agreement was sanctioned by the court after the Deudors filed an action against
petitioner in Civil Case No. Q-135 entitled "Florencio Deudor, et al. vs. J.M. Tuason
et al." The prior right of Ramon Rivera to purchase the lot in litigation was based
more on his prior occupancy to the same since 1949, about which fact
respondents De Leon were informed by petitioner at the time of the execution of
the contract to sell. The execution of the compromise agreement merely
recognized this prior right, under the condition as stipulated in said agreement,
that it was possible to do so.
Petitioner claims, without having been contradicted, that it executed the
compromise agreement with the Deudors in the honest belief that the lots it
already sold. like the lot in question, were excluded from the coverage of the
agreement. This claim finds support in paragraph "SEVENTH" of the compromise
agreement which reads ... It shall be the joint and solidary obligation of the
Deudors to make the buyers of the lots purportedly sold by them recognize the
title of the OWNERS over the property purportedly bought by them, and to make
them sign,whenever possible, new contracts of purchase for the said property at
the current prices and terms specified by the OWNERS in their sales of lots in
their subdivision known as Sta. Mesa Heights Subdivision ... " (Annex C, Rollo, p.
55). In fact, in their brief as appellants in CA-G.R. No. 38212-R, private
respondents stated that "as correctly pointed out in the brief for plaintiffappellant, it was not the intention of the signatories of the Compromise
Agreement to include within its coverage those parcels of land already sold by
plaintiff-appellant (petitioner herein) to third parties," and "We reproduce herein
by way of reference the arguments in pp. 1-2 to 39 of plaintiffs- appellants' brief."
(See Annex C, Petition, pp. 3-4). Private respondents should not be allowed to turn
back from what they stated in their brief in CA-G.R. No. 38212-R, to impute "wilful
deception" as the respondent court said in its decision under review.

This particular stipulation in the compromise agreement discloses an

understanding between the petitioner and the Deudors that the buyers of lots
from the Deudors, like Ramon Rivera, may, acquire lots from the subdivision
being sold by petitioner and sign new contracts of purchase with the latter 6
whenever possible", or only when said lots have not already been sold to third
'parties. Relying on the above-quoted provision, petitioner believed in good faith
that said lot sold to the De Leons would not be adversely affected. Nonetheless,
with the inevitable and admitted fact that Ramon Rivera was a prior occupant
thereof, petitioner was compelled by judicial fiat in Civil Case No. 2989 of the
Court of First Instance of Rizal, to recognize the preferential right of Rivera to
rightfully purchase the lot. This fact is not of itself a proof under the circumstance
just cited, of bad faith on the part of the petitioner or that it is guilty of
committing fraud and deception upon the respondents as the respondent court
found. Its good faith in with Ricardo de Leon who was the one branded as a
"buyer in bad faith" by the Court of Appeals in its decision affirming of the Court
of First Instance of Rizal in CA-G.R. No. No. 38212-R seems beyond question.
If petitioner continued the collection of the outstanding monthly after the
execution of the compromise agreement on April 10,1953 pursuant to the
agreements embodied in the contract to sell (Exhibit A), its act only proved its
honest belief that it found no barrier against the enforceability of the contract to
sell, the terms of which have the force of law between the parties and must be
complied with in good faith (Lazo vs. Republic Surety & Insurance Co., Inc., 311
SCRA 329; Ramos vs. Central Bank of the Philippines, 41 SCRA 565; Enriquez vs.
Ramos, 73 SCRA 116; De Cortes vs, Venturanza, 79 SCRA 709). The collection of
the monthly installment payments terminated upon the fun payment of the
purchase price on July 19, 1965, long before the ejectment case against Ramon
Rivera was finally resolved by the appellate court in September, 1971 (Civil Case
No. Q-2989; CA-G.R. No. 38212-R). As properly claimed by the petitioner, it had
the right to hopefully expect to win the ejectment case. It was not exactly its fault
that it lost the case. Private respondents joined in a common cause with it.
The subsequent execution of a deed of sale upon the total payment of the
purchase price in favor of herein respondents on August 5, 1965 in lieu of the
previous contract to sell made in favor of Ricardo de Leon, through which deed of
sale the respondents acquired a transfer certificate of title over the questioned
lot, is further evidence of the honesty and good faith of petitioner in dealing with
private respondents. Petitioner owns vast tracts of land, with the lot in question
possibly put an insignificant part in terms of value, and it would be much too
difficult to make the serious imputations made to petitioner.
In fulfillment of the assurance made to eject the occupant from the lot, petitioner,
on May 13, 1958, later joined by Ricardo de Leon and respondents Alfonso and
Rosario de Leon, instituted a complaint of ejectment against Ramon Rivera in Civil
Case No. Q- 2989. Unfortunately, however, the decision of the lower court
dismissing the complaint of ejectment was affirmed by the appellate court in CAG.R. No. 38212-R, which decision, of the latter upon its finality in September,

1971 resulted in the eviction of herein respondents from the lot. It is meet, at this
juncture, to repeat that in its decision, the Court of Appeals branded Ricardo de
Leon as a buyer in bad faith.
In manifesting its desire to compensate respondents, as disclosed by prayer in
the instant petition in the sum of P60.00 per square meter for the 1,050 meters
which it was ordered by the courts, in Civil Case No. Q-2989 and CA-G.R. No.
38212-R, to sell to Ramon Rivera, again reveals how fair petitioner would want to
be to private respondents, not to defraud them as the respondent court would
ascribe such base intent to petitioner, which is by no means not a disreputable
but a respectable, corporation.
For all the foregoing circumstances, We have no hesitation to give to petitioner
the benefit of the doubt of its having acted in good faith, which is always
presumed,, without any intention of taking advantage of the other party dealing
with it. "Good faith consists in an honest intention to abstain from taking any
unconscientious advantage of another. Good faith is an opposite of fraud and of
bad faith and its non-existence must be established by competent proof." (Leung
Yee vs. Strong Machinery Company, 37 PhiL 645; Cui vs. Henson, 51 Phil. 606,
612; Fule vs. De Legare, 7 SCRA 351).
Moreover, at the time of the execution of the contract to sell it is an admitted fact
that Ricardo de Leon knew that a third party was occupying a part of the lot
subject of the sale. Ricardo de Leon ought to have known that he was buying a
property with the distinct possibility of not being able to possess and own the
land due to the occupancy of another person on the same. So there had to be an
understanding between him and the petitioner for the latter to eject the
occupant, something which, by the facts then obtaining and the law relevant
thereto, would make the ejectment more speculative than certain. Nonetheless,
Ricardo de Leon knowingly assumed the risk when he bought the, land, and was
even called a vendee in bad faith by the Court of Appeals in doing so, clearly not
an innocent purchaser in good faith. If petitioner that it would eject Ramon Rivera,
he did so, not knowing that the compromise agreement would stand on the way,
as it had thought, in all good faith, that paragraph 7 of the compromise
agreement excluded the lot in question, having been already sold to Ricardo de
Leon before the agreement was executed in court.
This Court is impelled to declare that private respondents were lacking in good
faith for knowing beforehand, at the time of the sale, the presence of an obstacle
to their taking over the possession of the land, which, in effect, would amount to
eviction from said land, and still they bought the land without first removing that
obstacle. (Angelo vs. Pacheco, 56 Phil. 70; Andaya vs. Manansala, 107 Phil 1151).
One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith, as against
the true owner of the land or of an interest therein; and the same rule must be
applied to one who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the defects
in the title of his vendor. A purchaser cannot close his eyes to facts which should

put a reasonable man upon his guard and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor (Leung
Yee vs. Strong Machinery Company, supra; Manancop Jr. vs. Cansino, 1 SCRA 572;
Paylago vs. Jarabe, 22-SCRA 1247; Barrios vs. Court of Appeals, 78 SCRA 427;
Emphasis supplied).
Without being shown to be vendees in good faith, herein respondents are not
entitled to the warranty against eviction nor are they On titled to recover
damages (Article 1555 of the Civil Code). However, for justice and equity sake,
and in consonance with the salutary principle of non-enrichment at another's
expense, herein petitioner J.M. Tuason & Co., Inc. should compensate respondents
De Leons in the total sum of ONE HUNDRED TWENTY SIX THOUSAND
(P126,000.00) PESOS, representing the aggregate value of the 1,050 square
meters (which petitioner was judicially ordered to sell to Ramon Rivera at the year
1958 prevailing rate of P60.00 per square meter) at the value of P120.00 per
square meter, doubling the price of P60.00 per square meter which amount
petitioner voluntarily offered to pay herein respondents following how indemnity
for death had been raised from P6,000.00 to P12,060.00 (People vs. Pantoja, 25
SCRA 468, 474 [1968]) based on grounds of equity, due to the reduced
purchasing power of the peso, with the legal rate of interest from December 5,
1972, the date respondents filed their complaint, until the said total sum is fully
paid.
WHEREFORE, the judgment of respondent court is hereby modified by ordering
petitioner J.M. Tuason & Co., Inc. to pay the respondents the amount of ONE
HUNDRED TWENTY-SIX THOUSAND (Pl26,000.00) PESOS plus the legal rate of
interest from December 5, 1972, the date of filing the complaint until the s aid
total sum is fully paid. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84908 December 4, 1989
SPOUSES FELIX ABAD and ELENA R. ABAD, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and SPOUSES NEAL DAYAP and
PROFETIZA M. DAYAP,respondents.
Benjamin M. Dacanay for petitioners.
Prudencio W. Valido for private respondents.
GANCAYCO, J.:
The decision of the Court of Appeals ** in CA-G.R. CV No. 09424 which reversed
the decision of Branch 101 of the Regional Trial Court of Quezon City in Civil Case
No. Q-35941 is assailed in this petition for review oncertiorari.

A certain piece of real property designated by the Bureau of Lands as Lot B, VS04-00182 is the center of dispute in this case. To fully understand the facts from
which the controversy arose, it is indispensable to include in Our discussion Civil
Case No. Q-27582 which by supervening events became tightly intertwined with
the case at bar.
To begin, about two decades ago, four persons, namely, Herminigildo Aquino,
Juanito Dichoso, Damian Garcia and herein petitioner Felix Abad agreed among
themselves to contribute to a certain fund in order to purchase from Cres Pilias
and Narciso Adaya a parcel of land situated in Diliman, Quezon City described as
follows:
Lot 2-E, Blk. E-1 of Psd-67763, containing an area of 441-6 square meters, more
or less at Malaya Avenue, Subdivision. 1
To conform with the rules and regulations of the People's Homesite and Housing
Corporation (PHHC), Cres Pilias and Narciso Adaya executed a Deed of
Assignment naming Herminigildo Aquino as the only assignee of the said parcel of
land.
To the end that the rights of all the other co-owners will be protected, Aquino
executed an affidavit on October 10, 1969 stating among others that although he
is the sole assignee in the Deed of Assignment executed jointly by Cres Pilias and
Narciso Adaya, in truth and in fact, Juanito Dichoso, Damian Garcia and herein
petitioner Felix Abad are also assignees as they have contributed equally to the
amount corresponding to the payments made on the property; that he voluntarily
recognizes and acknowledges the above-named persons as his co-owners of the
property; and that after the corresponding transfer certificate of title is issued in
his name, he would execute the necessary deed of absolute sale to each coowner . 2
On April 18, 1972, Transfer Certificate of Title No. 175968 was finally issued in the
name of the Aquino spouses covering the lot which was purchased by the four coowners. In pursuance of his legitimate claim over the property and as earlier
agreed upon by everyone concerned, petitioner Felix Abad went to see
Herminigildo Aquino to ask the latter to execute the necessary document (deed of
sale) that will cause the issuance of title in his (petitioner's) name. In violation of
the agreement and in contravention of the affidavit that he himself signed,
Aquino refused. This being the case, petitioner had to insure that his interest over
the property would be protected by having his adverse claim duly annotated at
the back of TCT No. 175968. Petitioner Felix Abad also sent letters to Aquino
requesting for a conference so that the document would be executed but the
same were never answered. 3
Hence, petitioner Felix Abad filed Civil Case No. Q-27582 with the Regional Trial
Court of Quezon City to compel Aquino spouses to execute the requisite
instrument recognizing his co-ownership over the property and for the Register of
Deeds to issue a transfer certificate of title in his favor over his portion thereof.
On November 29,1982, the Regional Trial Court in Civil Case No. Q-27582
rendered a decision ordering the Aquino spouses or, in their default, the Branch

10

Clerk of Court, to sign, execute and deliver after the judgment has become final
and executory, a registerable deed of sale in favor of petitioner Felix Abad over
the portion pertaining to him in accordance with the survey conducted by the
Bureau of Lands, that is:
A parcel of land (Lot B, VS-04-000182, L.R.C., record No.___), situated in the
district of Diliman, Quezon City, island of Luzon. Bounded on the N., along lines 71-2 by old course of Culiat Creek (Now Dried), on the E., along lines 2-3-4-5 by Lot
C, VS-04000182, on the S., along line 5-6 by Masaya Interior Street, and on the
W., along line 6-7 by Lot A, VS-04-000182. Beginning at a point marked 'l' on plan,
being N., 8 deg. 45'W., 1728.32 m. from BLIM #10, Quezon City;
thence N., 49 deg. 29'E., 6.06 m. to point 2;
thence S., 12 deg. 11'W., 0.89 m. to point 3;
thence S., 28 deg. 15'W., 4.39 m. to point 4;
thence S., 0 deg. 44'E., 7.88 m. to point 5;
thence N., 83 deg. 38'E., 4.92 m. to point 6;
thence N., 2 deg. 53'W., 8.56 m. to point 7;
thence N., 76 deg. 44'E., 2.95 m. to point of origin;
beginning, containing an area of FIFTY FIVE SQUARE METERS, all points referred
to are indicated on the plan and are marked on the ground by old P.S. cyl., conc.,
mons., 15 x 60 cm., bearing true date of original survey, December 1910 to June
1971 to April 3, 1963 and was approved on November 10, 1981. 4
The Regional Trial Court in the above-mentioned case (Civil Case No. Q-27582)
also ordered the Register of Deeds to issue in favor of petitioner Felix Abad a
transfer certificate of title over the portion conveyed to him on the basis of the
aforestated deed of sale.
Unfortunately, the contest over the property in question did not end there. After
the decision in Civil Case No. Q-27582 was rendered, petitioners Abad spouses
learned that private respondents Dayap spouses intended to build a fence around
the area already allocated to the former by virtue of the above decision. Hence,
petitioners Abad spouses filed another case, Civil Case No. Q-35941, this time
against private respondents Dayap spouses, for injunction with prayer for a writ of
preliminary injunction, to enjoin the latter from building the said fence. In their
Answer, private respondents Dayap spouses admitted the allegations of
petitioners Abad spouses with respect to their act of fencing the area. However,
private respondents claimed that the lot belonged to them as it was within the
property they bought from Herminigildo Aquino.
Considering that both parties were asserting their right over the same piece of
property, the lower court ordered the Bureau of Lands to make a survey that
would determine the Identity of the land claimed by each party based on the
titles and other documents of ownership submitted in court.
After conducting a verification survey, the Bureau of Lands submitted a report
informing the court that the construction made by the private respondents Dayap
spouses is entirely within Lot B, VS- 04-000182 which was the same land already
assigned to petitioner Felix Abad by virtue of Civil Case No. Q- 27582 . 5

On February 16, 1984, the lower court rendered a decision in favor of petitioners
Abad spouses with the following dispositive portion:
WHEREFORE, premises above-considered, judgment is hereby rendered ordering
defendants and/or their agents to desist and refrain from making any
construction, interfering or disturbing plaintiffs in their possession of the subject
land afore-described.
With cost against defendants, including the surveyor's fee.
SO ORDERED. 6
In arriving at its decision, the lower court took into consideration the decision in
Civil Case No. Q-27582.
On appeal to the Court of Appeals, the decision of the lower court was reversed.
The appellate court criticized the Regional Trial Court in Civil Case No. Q-27582 for
adjudicating to petitioners Lot B, VS-04-000182. The Court of Appeals went on to
say that Civil Case No. Q-27582 cannot bind private respondents as they were not
included as parties to the case.
Hence, this petition for review on certiorari with the following assignments of
error.
First Assignment of Error
THE RESPONDENT COURT OF APPEALS ERRED WHEN IT RENDERED A DECISION
BASED ON THE DECISION OF THE COURT OF FIRST INSTANCE OF QUEZON CITY,
BRANCH 31, (NOW REGIONAL TRIAL COURT OF QUEZON CITY BRANCH 89) WHICH
IS NOT ON APPEAL BEFORE IT.
Second Assignment of Error
THE RESPONDENT COURT OF APPEALS ERRED WHEN IT IGNORED THE DOCTRINE
OF THE LAW OF THE CASE.
Third Assignment of Error
THE RESPONDENT COURT OF APPEALS ERRED WHEN IT FOUND FOR THE PRIVATE
RESPONDENTS AND AGAINST THE PETITIONERS. 7
The above-enumerated assignments of error will be taken up together for being
closely related with one another.
Firstly, petitioners aver that instead of deciding the issue regarding the propriety
of the injunctive relief issued in Civil Case No. Q-35941 which was the case on
appeal before it, the Court of Appeals erroneously ruled on the actuations of the
Regional Trial Court in Civil Case No. Q-27582 8 which on the other hand, were not
in issue before it.9 Petitioners contend that the ruling of the Court of Appeals was
baseless inasmuch as Civil Case No. Q-35941 was entirely separate from Civil
Case No. Q-27582 and also because the theory on which the appellate court
proceeded involved factual considerations neither touched upon in the pleadings
or made the subject of evidence at the trial. 10
A perusal of the records of this case would reveal that the Court of Appeals
committed a glaring error in ruling on a case which was not on appeal before it.
We find that the appellate court indeed went beyond its realm of authority when it
criticized the proceedings in Civil Case No. Q-27582, questioning the assignment

11

of the subject lot to herein petitioners and even hinted at the impropriety of the
same. 11
The pronouncements made by the Court of Appeals regarding Civil Case No. Q27582 are uncalled for. As already mentioned, the case was not on appeal before
it and the Regional Trial Court had its own basis for arriving at its decision in favor
of herein petitioners Abad spouses as against the defendant in that case,
Herminigildo Aquino. The duty of the Court of Appeals was to rule on whether or
not petitioners were properly granted their prayer for injunction as against the
private respondents. Whether or not the trial court in Civil Case No. Q27582
committed a mistake in arriving at its decision is an issue that is beyond its
authority to decide.
What makes the error of the Court of Appeals more apparent is that the decision
in Civil Case No. Q-27582 had long become final and duly executed. The appellate
court need not be reminded of the well-entrenched principle that a decision, once
final and executory, can no longer be altered or modified even by the court which
rendered it, otherwise there would be no end to litigation. 12 In Litton Mills, Inc. vs.
Galleon Trade Inc., 13 We made it clear that once a judgment has become final,
the issues therein should be laid to rest. If the trial court itself which rendered the
decision which has become final could no longer reopen the issues that have
already been settled therein, then all the more should the prohibition apply to an
appellate court called upon to decide on a different case. At this juncture, We
reiterate that the main role of courts of justice is to assist in the enforcement of
the rule of law and the maintenance of peace and order, by settling justiciable
controversies with finality. 14
Nonetheless, private respondents maintain that the only reason why the Court of
Appeals cited Civil Case No. Q-27582 is that it was also mentioned in the decision
of the lower court in Civil Case No. Q-35941 which was brought to it on appeal.
Private respondents add that they cannot be bound by the decision in the other
case as they were not parties to it.
In response to the above-written arguments of private respondents, We note that
the word "cite" seems to have been used to mislead this Court into believing that
Civil Case No. Q-27582 was mentioned by the Court of Appeals in its decision with
less significance than what appears to be. However, the decision of the Court of
Appeals would itself reflect its clear intention to openly declare its own finding
that the decision in the said case, not appealed to it, was wrong.
Regarding the point that not only the Court of Appeals but even the lower court in
Civil Case No. Q-35941 included in its decision the other case, We are of the
opinion that the Regional Trial Court had to take into consideration the decision in
Civil Case No. Q-27582 because in deciding whether or not to grant herein
petitioners their prayer for injunction, it had to be established first whether or not
petitioners had a better right to the property than private respondents did. Civil
Case No. Q-27582 came into the picture as it provided the answer the court was
in search of since by virtue of that case, petitioners acquired a strong document

(torrens title) evidencing their ownership of the property as compared to the

inconclusive documents offered by private respondents.
Had the private respondents presented incontestable proof supporting their claim
of ownership over the property, then the lower court may have decided Civil Case
No. Q-35941 in a different manner, regardless of the outcome in Civil Case No. Q27582. However, weighing all the evidence on hand, the lower court found it
reasonable and fair to decide for petitioners as their assertion was backed by a
torrens title whereas private respondents miserably failed to convince the court of
their claim. Hence, the lower court said:
. . . Unless defendants could show, which they failed even to allege indubitably,
that they have a better and stronger right than the plaintiffs over the subject
parcel of land, then the remedy sought by plaintiffs must lie. 15
It is not true that the lower court based its decision entirely on Civil Case No. Q27582 though, admittedly, the outcome in the said case contributed much in
convincing the lower court that petitioners must be granted their prayer for
injunction. Furthermore, there is nothing in the decision of the lower court which
categorically states that private respondents are bound by the decision in Civil
Case No. Q-27582. To repeat, the decision was only brought up to prove that
petitioners had a better right to the property, hence, their prayer for injunction
against private respondents who were planning to make additional constructions,
had to be granted.
As to the other allegations of private respondents-they all sum up to the claim
that they are the rightful owners of the property. To support their stand, they
present the following: (1) they purchased the lot in question from Herminigildo
Aquino in good faith and for value as evidenced by the Deed of Sale executed by
the latter in their favor; and (2) they are the ones in possession of the property.
The issue of ownership having been tackled by the Court of Appeals and there
being a need to settle once and for all the issue of who has a better right to the
property as between the petitioners and private respondents, We make the
following ruling:
With respect to the allegation of private respondents that they purchased the
property in question from Herminigildo Aquino in good faith and for value in 1972
We hold that such sale could not have covered a definite portion of the land
under co-ownership. It has been established on record that from 1969, the
property in question was co-owned by Herminigildo Aquino and three other
persons including petitioner Felix Abad. In 1972, such co-ownership still existed
and even the Court of Appeals does not deny the fact of such co-ownership. It is
well-settled that a co-owner has no right to sell a divided part, by metes and
bounds, of the real estate owned in common. 15a This doctrine was reiterated
in Mercado vs. Liwanag, 16 where it was held that a co-owner may not convey a
physical portion of the land owned in common. Applying the foregoing principles,
We hold, therefore, that Aquino, a mere co-owner, could not have validly sold to
private respondents a specific part of the land he owned in common with
petitioner and two others as described in the Deed of Sale executed by him in

12

favor of private respondents. Private respondents, therefore, cannot claim title to

that definite portion of the land owned in common, wherein they have made and
were about to begin other constructions at the time the complaint for injunction
was filed by petitioners in the lower court.
With regard to the contention of private respondents that they have a better right
to the property since they have occupied and are presently in possession of the
same, it is but proper to reiterate the well-established rule that mere possession
cannot defeat the title of a holder of a registered torrens title to real property. 17 It
is indeed questionable that up to now, private respondents merely have in their
possession a deed of absolute sale executed way back in 1972 to evidence their
claim of ownership. Petitioners, on the other hand, have the affidavit proving their
right as co-owner of the lot, their adverse claim annotated at the back of the
torrens title of Aquino, and a final judgment in their favor. The transfer certificate
of title covering the disputed lot is now in the name of petitioner spouses. Such
title is entitled to respect and great weight until somebody else can show a better
right to the lot.
Of course, this Decision is without prejudice to any right private respondents may
have against Herminigildo Aquino. All constructions built by private respondents
in good faith may be removed by them following the provisions in the Civil Code
on builders in good faith.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CAG.R. No. 09424 is hereby REVERSED and SET ASIDE and the decision of the
Regional Trial Court in Civil Case No. Q-35941 is hereby REINSTATED. The case is
hereby remanded to the Regional Trial Court of Quezon City for immediate
execution. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 73465 September 7, 1989
LEONIDA CUREG, ROMEO, PEPITO, HERNANDO, MANUEL, ANTONIO AND
ELPIDIO (ALL SURNAMED CARNIYAN) petitioner,
vs.
INTERMEDIATE APPELLATE COURT, (4TH CIVIL CASES DIVISION),
DOMINGO APOSTOL, SOLEDAD GERARDO, ROSA GERARDO, NIEVES
GERARDO, FLORDELIZA GERARDO, AND LILIA MAQUINAD,respondent.
Josefin De Alban Law Office for petitioners.
Silvestre Br. Bello for private respondents.
MEDIALDEA, J.:
This petition under Rule 45 of the Rules of Court, seeks the reversal of the
decision of the Intermediate Appellate Court (now Court of Appeals) dated

October 15,1985 in AC-G.R. CV No. 03852 entitled "Domingo Apostol, et al.,

Plaintiffs-Appellees, v. Leonida Cureg, et al., Defendants-Appellants", which
affirmed the decision of the Regional Trial Court of Isabela, Branch XXII declaring
private respondent Domingo Apostol the absolute owner of a parcel of land,
situated in Barangay Casibarag-Cajel, Cabagan, Isabela, more particularly
described as follows:
... containing an area of 5.5000 hectares, and bounded, on the north, by Cagayan
River; on the east, by Domingo Guingab; on the south, by Antonio Carniyan; and
on the west, by Sabina Mola, with an assessed value of P3,520. (par. 9 of
complaint, p. 4, Record; Emphasis supplied)
On November 5, 1982, private respondents Domingo Apostol, Soledad Gerardo,
Rosa Gerardo, Nieves Gerardo, Flordeliza Gerardo and Lilia Maquinad, filed a
complaint for quieting of title and damages with preliminary injunction against
herein petitioners Leonida, Romeo, Pepito, Hernando, Manuel, Antonio and Elpidio,
all surnamed Carniyan with the Regional Trial Court of Isabela and docketed as
Civil Case No. Br. 111-373. A temporary restraining order was issued by the trial
court on November 12, 1982.
The complaint alleged that private respondents, except Domingo Apostol, are the
legal and/or the forced heirs of the late Domingo Gerardo, who died in February
1944, the latter being the only issue of the late Francisco Gerardo, who died
before the outbreak of the second world war; that since time immemorial and/or
before July 26, 1894, the late Francisco Gerardo, together with his predecessorsin-interest have been in actual, open, peaceful and continuous possession, under
a bona fide claim of ownership and adverse to all other claimants, of a parcel of
land (referred to as their "motherland"), situated in Casibarag-Cajel, Cabagan,
Isabela, more particularly described as follows:
... containing an area of 2.5000 hectares, more or less, and bounded on
the North, by Cagayan River; on the East, by Domingo Guingab (formerly Rosa
Cureg); on the south by Antonio Carniyan;and on the West by Sabina Mola, ... (p.
2, Record)
that said land was declared for taxation purposes under Tax Declaration No. 083023 in the name of Francisco Gerardo, which cancels Tax Declaration No. C9669, also in the name of Francisco Gerardo; that upon the death of Francisco
Gerardo, the ownership and possession of the "motherland" was succeeded by his
only issue, Domingo Gerardo who, together with three (3) legal or forced heirs,
namely Soledad Gerardo, one of private respondents herein, Primo Gerardo and
Salud Gerardo, both deceased, have also been in actual, open, peaceful and
continuous possession of the same; that Primo Gerardo is survived by herein
respondents, Rosa, Nieves and Flordeliza, all surnamed Gerardo and Salud
Gerardo is survived by respondent Lilia Maquinad; that in 1979, respondents
Soledad Gerardo, Rosa Gerardo, Nieves Gerardo, Flordeliza Gerardo and Lilia
Maquinad verbally sold the "motherland" to co-respondent Domingo Apostol; that
on September 10, 1982, the verbal sale and conveyance was reduced into writing
by the vendors who executed an "Extra-Judicial Partition with Voluntary

13

Reconveyance (Exhibit "Q", p. 206, Rollo); that about the time of the execution of
the Extra-Judicial Partition, their "motherland" already showed/manifested signs
of accretion of about three (3) hectares on the north caused by the northward
movement of the Cagayan River; that Domingo Apostol declared the motherland
and its accretion for tax purposes under Tax Declaration No. 08-13281 on
September 15, 1982.
The complaint also stated that sometime about the last week of September
and/or the first week of October 1982, when private respondents were about to
cultivate their "motherland" together with its accretion, they were prevented and
threatened by defendants (petitioners herein) from continuing to do so. Named
defendants in said case are herein petitioners Leonida Cureg and Romeo, Pepito,
Hernando, Manuel, Antonio and Elpidio, all surnamed Carniyan, surviving spouse
and children, respectively, of Antonio Carniyan. Further, the complaint stated that
Antonio Carniyan was the owner of a piece of land situated in Casibarag-Cajel,
Cabagan, Isabela and more particularly described as follows:
... containing an area of 2,790 sq. m., more or less bounded on
the north by Domingo Gerardo; on the East, by Domingo Guingab; on the south,
by Pelagio Camayo; and on the west by Marcos Cureg, declared for taxation
purposes under Tax Declaration No. 13131, with an assessed value of P70.00. (P.
5, Record)
that deceased Antonio Carniyan revised on November 28, 1968 his Tax
Declaration No. 13131 dated July 24, 1961 to conform with the correct area and
boundaries of his Original Certificate of Title No. P-19093 issued on November 25,
1968; that the area under the new Tax Declaration No.15663 was increased from
2,790 square meters to 4,584 square meters and the boundary on the north
became Cagayan River, purposely eliminating completely the original boundary
on the north which is Domingo Gerardo.
Petitioners' answer alleged that the "motherland" claimed by private respondents
is non-existent; that Antonio Carniyan, petitioners' predecessor-in-interest, was
the owner of a piece of land bounded on the north by Cagayan River and not by
the land of Francisco Gerardo as claimed by private respondents; that the
"subject land" is an accretion to their registered land and that petitioners have
been in possession and cultivation of the "accretion" for many years now.
The application for the issuance of a writ of preliminary injunction was denied on
July 28,1983 (pp. 244-250,Rollo) on the ground that the defendants were in actual
possession of the land in litigation prior to September 1982. In a decision
rendered on July 6, 1984, the trial court held that respondent Domingo Apostol,
thru his predecessors-in-interest had already acquired an imperfect title to the
subject land and accordingly, rendered judgment: 1. declaring Domingo Apostol
its absolute owner; 2. ordering the issuance of a writ of preliminary injunction
against herein petitioners; 3. ordering that the writ be made permanent; and 4.
ordering herein petitioners to pay private respondents a reasonable attorney's fee
of P5,000.00, litigation expenses of P1,500.00 and costs (pp. 143-145, Rollo).

On July 17, 1984, petitioners appealed to the then Intermediate Appellate Court
which affirmed the decision of the trial court on October 15, 1985. Petitioners'
Motion for Reconsideration was denied on January 8, 1986. Hence, this petition for
review on the following assigned errors:
A. It erred in ruling that the subject land or "accretion" (which is bounded on the
north by the Cagayan River) belongs to the private respondents and not to the
petitioners when the petitioners "Original Certificate of " Title No. 19093 states
clearly that the petitioners' land is bounded on its north by the Cagayan River.
B. It erred in construing the tax declarations against the interest of the herein
petitioners who are only the heirs of the late Antonio Carniyan since the late
Francisco (supposed predecessor of the respondents) could not have executed the
recently acquired tax declarations (Exhibits "A" to "A-2") as he died long before
World War II and since the late Antonio Carniyan could no longer stand up to
explain his side.
C. Contrary to the evidence and the finding of the Regional Trial Court, it wrongly
ruled that petitioners have never been in possession of the land (p. 7 of Annex
"A", ibid.).
D. It erred in awarding the accretion of 3.5 hectares to the private respondents
who incredibly claimed that the accretion occurred only in 1982 and is a "gift from
the Lord. (pp. 24-25, Rollo)
This petition is impressed with merit.
The object of the controversy in this case is the alleged "motherland" of private
respondents together with the accretion of about 3.5 hectares, the totality of
which is referred to in this decision as the "subject land."
In this case, petitioners claimed to be riparian owners who are entitled to the
"subject land" which is an accretion to the registered land while private
respondents claimed to be entitled to the 3.5 hectares accretion attached to their
"motherland."
It should be noted that the herein private respondents' claim of ownership of their
alleged two and a half (2 & ) hectare "motherland" is anchored mainly on four
(4) tax declarations (Exhibits "A", "A-1", "A-2" and "B", pp. 191, 192, 193,
194, Rollo). This Court has repeatedly held that the declaration of ownership for
purposes of assessment on the payment of the tax is not sufficient evidence to
prove ownership. (Evangelista v. Tabayuyong, 7 Phil. 607; Elumbaring v.
Elumbaring, 12 Phil. 384; cited in Camo v. Riosa Bayco, 29 Phil. 437, 444). For
their part, petitioners relied on the indefeasibility and incontrovertibility of their
Original Certificate of Title No. P-19093, dated November 25, 1968 (Exhibit "3", p.
189, Rollo) issued in the name of Antonio Carniyan (petitioners' predecessor-ininterest) pursuant to Free Patent No. 399431 dated May 21, 1968, clearly showing
that the boundary of petitioners' land on the north is Cagayan River and not the
"motherland" claimed by respondents. The said registered land was bought by
the late Antonio Carniyan from his father-in-law, Marcos Cureg, on October 5,
1956, as evidenced by an Absolute Deed of Sale (Exhibit "8", p. 195, Rollo) which
states that the land is bounded on the north by Cagayan River.

14

In the case of Ferrer-Lopez v. Court of Appeals, G.R. No. 50420, May 29, 1987, 150
SCRA 393,401-402, We ruled that as against an array of proofs consisting of tax
declarations and/or tax receipts which are not conclusive evidence of ownership
nor proof of the area covered therein, an original certificate of title indicates true
and legal ownership by the registered owners over the disputed premises.
Petitioners' OCT No.P-19093 should be accorded greater weight as against the tax
declarations (Exhibit "A', dated 1979; Exhibit "A-1 " undated and Exhibit "A2"
dated 1967, pp. 191, 192, 193, Rollo) offered by private respondents in support of
their claim, which declarations are all in the name of private respondents'
predecessor-in-interest, Francisco Gerardo, and appear to have been subscribed
by him after the last war, when it was established during the trial that Francisco
Gerardo died long before the outbreak of the last war.
Anent Tax Declaration No. 13131, in the name of Antonio Carniyan (Exhibit "C", p.
203, Rollo), which the appellate court considered as an admission by him that his
land is bounded on the north by the land of Domingo Gerardo and that he
(Carniyan) is now estopped from claiming otherwise, We hold that said tax
declaration, being of an earlier date cannot defeat an original certificate of title
which is of a later date. Since petitioner's original certificate of title clearly stated
that subject land is bounded on the north by the Cagayan River, private
respondents" claim over their "motherland," allegedly existing between
petitioners" land and the Cagayan River, is deemed barred and nullified with the
issuance of the original certificate of title.
It is an elemental rule that a decree of registration bars all claims and rights
which arose or may have existed prior to the decree of registration (Ferrer-Lopez
v. CA, supra., p. 404). By the issuance of the decree, the land is bound and title
thereto quieted, subject only to exceptions stated in Section 39, Act 496 (now
Sec. 44 of PD No. 1529). Moreover, the tax declarations of the late Antonio
Camiyan subsequent to the issuance of OCT P-19093 (Exhibit "D", p. 204, Rollo)
already states that its northern boundary is Cagayan River. In effect, he has
repudiated any previous acknowledgment by him, granting that he caused the
accomplishment of the tax declarations in his name before the issuance of OCT
No. P- 19093, of the existence of Francisco Gerardo's land.
Finally, the trial court concluded that petitioners have never been in possession of
the "subject land" but the evidence on record proves otherwise. First, the trial
court on page 11 of its Decision (p. 121, Rollo), stated the reason for denying
private respondents' petition for the issuance of a preliminary injunction, that is,
"... the defendants (petitioners herein) were in actual possession of the land in
litigation prior to September, 1982" (p. 121, Rollo). Second, witness for private
respondents, Esteban Guingab, boundary owner on the east of the land in
question and whose own land is bounded on the north of Cagayan River, on crossexamination, revealed that when his property was only more than one (1) hectare
in 1958, (now more than 4 hectares) his boundary on the west is the land of
Antonio Carniyan (T.S.N., 5 May 1983, pp. 19-20). Third, witness Rogelio C.
Albano, a geodetic engineer, on direct examination stated that in 1974, the late

Antonio Carniyan requested him to survey the land covered by his title and the
accretion attached to it, but he did not pursue the same because he learned from
the Office of the Director of the Bureau of Lands that the same accretion is the
subject of an application for homestead patent of one Democrata Aguila, (T.S.N.,
May 18, 1984, pp. 12-13) contrary to the statement of the trial court and the
appellate court that Albano "made three attempts to survey the land but he did
not continue to survey because persons other than defendants were in possession
of the land," which statement appears only to be a conclusion (p. 7, Rollo). Fourth,
We note Exhibit "20" (p. 273, Rollo) for petitioners which is an order by the
Director of Lands dated August 14,1980 in connection with the Homestead
Application of Democrata Aguila of an accretion situated in Catabayungan,
Cabagan, Isabela. Aguila's application was disapproved because in an
investigation conducted by the Bureau of Lands of the area applied for which is an
accretion, the same was found to be occupied and cultivated by, among others,
Antonio Carniyan, who claimed it as an accretion to his land. It is worthy to note
that none of the private respondents nor their predecessors-in-interest appeared
as one of those found occupying and cultivating said accretion.
On the other hand, the allegation of private respondents that they were in
possession of the "motherland" through their predecessors- in-interest had not
been proved by substantial evidence. The assailed decision of the respondent
court, which affirmed the decision of the trial court, stated that since the
"motherland" exists, it is alsopresumed that private respondents were in
possession of the "subject land" through their predecessors- in-interest since prior
to July 26, 1894. The trial court relied on the testimony of Soledad Gerardo, one of
the private respondents in this case, an interested and biased witness, regarding
their possession of the "motherland." From her testimony on pedigree, the trial
court presumed that the source of the property, the late Francisco Gerardo, was
in possession of the same since prior to July 26, 1894 (pp. 137-140, Rollo).
The foregoing considerations indubitably show that the alleged "motherland"
claimed by private respondents is nonexistent. The "subject land" is an alluvial
deposit left by the northward movement of the Cagayan River and pursuant to
Article 457 of the New Civil Code:
To the owners of land adjoining the banks of river belong the accretion which they
gradually receive from the effects of the current of the waters.
However, it should be noted that the area covered by OCT No. P-19093 is only
four thousand five hundred eighty four (4,584) square meters. The accretion
attached to said land is approximately five and a half (5.5) hectares. The increase
in the area of petitioners'land, being an accretion left by the change of course or
the northward movement of the Cagayan River does not automatically become
registered land just because the lot which receives such accretion is covered by a
Torrens title. (See Grande v. Court of Appeals, L-17652, June 30, 1962). As such, it
must also be placed under the operation of the Torrens System. ACCORDINGLY,
the petition is hereby GRANTED. The decision appealed from is REVERSED and

15

SET ASIDE and judgment is hereby rendered DISMISSING Civil Case No. Br. III-373
for quieting of title and damages.
Costs against private respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-68291
March 6, 1991
ARCADIO, MELQUIADES, ABDULA, EUGENIO, APOLONIO, all surnamed
YBAEZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT and VALENTIN O.
OUANO, respondents,
Dominador F. Carillo for petitioners.
Pableo B. Baldoza for private respondent.
FERNAN, C.J.:
This petition for certiorari, prohibition and mandamus which this court treated as
a petition for review on certiorariin its resolution of August 22, 1984 seeks to
nullify the decision of the Intermediate Appellate Court (now Court of Appeals)
dated June 29, 1984, modifying the decision of the Court of First Instance (now
Regional Trial Court) of Davao Oriental, dated June 8, 1981, ordering the herein
petitioners to vacate the property in controversy; to return its possession to
private respondent and to pay P10,000.00 representing proceeds of the land from
January 4, 1975, and attorney's fees.
Records show that private respondent Valentin Ouano, a claimant-occupant of Lot
No. 986, Pls-599-D situated at sitio Bagsac, barrio of Manikling, Governor
Generoso (now San Isidro), Davao del Norte, containing an area of three (3)
hectares, 48 ares and 78 centares which was surveyed on March 13, 1958, as
evidenced by the "Survey Notification Card" issued in his name, filed on February
27, 1959, a homestead application 1 with the Bureau of Lands. The said
application, recorded as Homestead Application No. 20-107001, was approved in
an order dated March 3, 1959 issued by the District Land Officer, Land District No.
20, for and by authority of the Director of Lands.
Three (3) years thereafter, or on September 5, 1962, a "Notice of Intention to
Make Final Proof was made by Valentin Ouano to establish his claim to the lot
applied for and to prove his residence and cultivation before Land Inspector
Lorenzo Sazon at the Bureau of Lands, Davao City at 10:00 o'clock A.M.
appending thereto an affidavit attesting that a copy of his intention to make final
proof relative to his Homestead Application No. 20-10701 was posted at the
Municipal building of the Municipality of Gov. Generoso (now San Isidro), Davao,
on the bulletin board of the barrio where the land applied for is located, and in a

conspicuous place on the land itself on the 5th day of August, 1962 and remained
so posted for a period of thirty days, until September 5, 1962. 2
On the said date, or on September 5, 1962, Valentin Ouano made his "Final Proof"
before Land Inspector Lorenzo Sazon pursuant to Section 14, Commonwealth Act
No. 141, as amended.
The following year, or on March 4, 1963, an order for the issuance of patent was
issued by the Bureau of Lands.
On April 15, 1963, an "Original Certificate of Title No. P-15353" was issued to
private respondent Valentin Ouano over Homestead Patent No. 181261 which was
transcribed in the "Registration Book" for the province of Davao on October 28,
1963. 3
On January 4, 1975, after 19 years of possession, cultivation and income derived
from coconuts planted on Lot No. 986, private respondent Valentin Ouano was
interrupted in his peaceful occupation thereof when a certain Arcadio Ybanez and
his sons, Melquiades, Abdula, Eugenia Numeriano, Apolonio and Victoriano,
forcibly and unlawfully entered the land armed with spears, canes and bolos.
Because of the unwarranted refusal of Arcadio Ybanez, et al. to vacate the
premises since the time he was dispossessed in 1975, private respondent
Valentin Ouano filed on September 24, 1978 a complaint for recovery of
possession, damages and attorney's fees before the then Court of First Instance
(now RTC) of Davao Oriental against Arcadio Melquiades, Abdula, Eugenia
Numeriano, Apolonio, Victoriano and Servando, all surnamed Ybanez, 4 docketed
as Civil Case No. 671, seeking to enjoin the Ybanezes from further the coconuts
therefrom and restore to him the peaceful possession and occupation of the
premises. In his complaint, Valentin Ouano, then plaintiff therein, alleged that he
has been in lawful and peaceful possession since 1956 of a parcel of land
designated as Lot No. 986, Pls-599-D situated in Bagsac, Manikling, Governor
Generoso (now San Isidro), Davao Oriental, to which an Original Certificate of Title
No. P-(l5353)-P-3932 was issued in his name; that petitioners, then defendants
therein, unlawfully entered his land on January 4, 1975 and started cultivating
and gathering the coconuts, bananas and other fruits therein, thereby illegally
depriving him of the possession and enjoyment of the fruits of the premises.
Petitioners, on the other hand, alleged that plaintiff Valentin Ouano, now private
respondent, has never been in possession of any portion of Lot No. 986 as the
same has been continously occupied and possessed by petitioners since 1930 in
the concept of owner and have introduced valuable improvements thereon such
as coconuts and houses; that Lot No. 986 was the subject matter of
administrative proceedings before the Bureau of Lands in Mati, Davao Oriental
which was consequently decided in their favor by the Director of Lands on the
finding that Valentin Ouano has never resided in the land; that it was declared by
the Director of Lands that the homestead patent issued to private respondent
Valentin Ouano was improperly and erroneously issued, since on the basis of their
investigation and relocation survey, the actual occupation and cultivation was
made by petitioner Arcadio Ybaez and his children, consisting of 9.6 hectares

16

which cover the whole of Lot No. 986 and portions of Lot Nos. 987, 988 and 989;
that based on the ocular inspection conducted, it was established that Valentin
Ouano did not have a house on the land and cannot locate the boundaries of his
titled land for he never resided therein. 5
The trial court, after hearing, rendered on June 8, 1991 its decision 6 in favor of
private respondent, the dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
1 The defendants are ordered to vacate the premises of Lot 986, PLS-599-D,
situated at Sitio Bagsac, Manikling, San Isidro, Governor Generoso and to return
the possession thereof to the plaintiff Valentin Ouano together with all the
improvements therein;
2 To pay unto the plaintiff the sum of P12,000.00, the proceeds of the sale of
copra from January 4, 1975 to the present;
3 To pay attorney's fees of P7,500.00;
4 To desist from entering the property again after they have turned it over to
plaintiff; and
5 To pay the costs of this suit. 7
Petitioners appealed to the Intermediate Appellate Court.
On June 29, 1984, the Intermediate Appellate Court, First Civil Cases Division
promulgated a decision, 8 affirming the decision of the trial court, with the
modification that the award of Pl2,000.00 representing the proceeds of the land
from January 24, 1975 was reduced to P10,000.00 and the amount of P7,500.00
as attorney's fees was fixed at P5,000.00. 9
Hence the instant recourse by petitioners.
At the outset, it must be noted that in assailing the appellate court's decision
which affirmed that of the trial court, petitioners relied on the Order dated July 19,
1978 issued by the Director of the Bureau of Lands resolving the protest filed by
them on January 3, 1975, later amended on February 6, 1975, against the
Homestead Application No. 20-107001 of Valentin Ouano over Lot No. 986, Pls599-D, docketed as B.L. Claim No. 2809, D.L.O. Confect No. (XI-7)102.
Petitioners claimed that the complaint for recovery of possession, damages and
attorneys fees against them should have been dismissed by the trial court for
failure of private respondents, as patentee-respondent in the protest case before
the Bureau of Lands, to exhaust administrative remedies which is tantamount to a
lack of cause of action under Section 1, Rule 16 of the Rules of Court; that the
decision or order on a question of fact by the Bureau of Lands that Patent No.
101201 issued to private respondent was improperly and erroneously issued
should have been respected by the trial court and the appellate court; that the
indefeasibility of a certificate of title must not be a sword for an offense nor
should it be allowed to perpetrate fraud.
We find the contentions unmeritorious.
It was erroneous for petitioners to question the Torrens Original Certificate of Title
issued to private respondent over Lot No. 986 in Civil Case No. 671, an ordinary
civil action for recovery of possession filed by the registered owner of the said lot,

by invoking as affirmative defense in their answer the Order of the Bureau of

Lands, dated July 19, 1978, 10 issued pursuant to the investigatory power of the
Director of Lands under Section 91 of Public Land Law (C.A. 141 as amended).
Such a defense partakes of the nature of a collateral attack against a certificate of
title brought under the operation of the Torrens system of registration pursuant to
Section 122 of the Land Registration Act, now Section 103 of P.D. 1259. The case
law on the matter does not allow a collateral attack on the Torrens certificate of
title on the ground of actual fraud. 11 The rule now finds expression in Section 48
of P.D. 1529 otherwise known as the Property Registration Decree.
The certificate of title serves as evidence of an indefeasible title to the property in
favor of the person whose name appears therein. After the expiration of the one
(1) year period from the issuance of the decree of registration upon which it is
based, it becomes incontrovertible. 12 The settled rule is that a decree of
registration and the certificate of title issued pursuant thereto may be attacked
on the ground of actual fraud within one (1) year from the date of its entry and
such an attack must be direct and not by a collateral proceeding. 13 The validity of
the certificate of title in this regard can be threshed out only in an action
expressly filed for the purpose. 14
It must be emphasized that a certificate of title issued under an administrative
proceeding pursuant to a homestead patent, as in the instant case, is as
indefeasible as a certificate of title issued under a judicial registration proceeding,
provided the land covered by said certificate is a disposable public land within the
contemplation of the Public Land Law. 15
There is no specific provision in the Public Land Law (C.A. No. 141, as amended)
or the Land Registration Act (Act 496), now P.D. 1529, fixing the one (1) year
period within which the public land patent is open to review on the ground of
actual fraud as in Section 38 of the Land Registration Act, now Section 32 of P.D.
1529, and clothing a public land patent certificate of title with indefeasibility.
Nevertheless, the pertinent pronouncements in the aforecited cases clearly reveal
that Section 38 of the Land Registration Act, now Section 32 of P.D. 1529 was
applied by implication by this Court to the patent issued by the Director of Lands
duly approved by the Secretary of Natural Resources, under the signature of the
President of the Philippines in accordance with law. The date of issuance of the
patent, therefore, corresponds to the date of the issuance of the decree in
ordinary registration cases because the decree finally awards the land applied for
registration to the party entitled to it, and the patent issued by the Director of
Lands equally and finally grants, awards, and conveys the land applied for to the
applicant. 16 This, to our mind, is in consonance with the intent and spirit of the
homestead laws, i.e. conservation of a family home, and to encourage the
settlement, residence and cultivation and improvement of the lands of the public
domain. If the title to the land grant in favor of the homesteader would be
subjected to inquiry, contest and decision after it has been given by the
Government thru the process of proceedings in accordance with the Public Land
Law, there would arise uncertainty, confusion and suspicion on the government's

17

system of distributing public agricultural lands pursuant to the "Land for the
Landless" policy of the State.
In the instant case, the public land certificate of title issued to private respondent
attained the status of indefeasibility one (1) year after the issuance of patent on
April 15, 1963, hence, it is no longer open to review on the ground of actual fraud.
Consequently, the filing of the protest before the Bureau of Lands against the
Homestead Application of private respondent on January 3, 1975, or 12 years
after, can no longer re-open or revise the public land certificate of title on the
ground of actual fraud. No reasonable and plausible excuse has been shown for
such an unusual delay. The law serves those who are vigilant and diligent and not
those who sleep when the law requires them to act. 17
In rendering judgment restoring possession of Lot No. 986 to private respondent
Ouano, the duly registered owner thereof, the trial court merely applied the rule
and jurisprudence that a person whose property has been wrongly or erroneously
registered in another's name is not to set aside the decree, but, respecting the
decree as incontrovertible and no longer open to review, to bring an ordinary
action in the ordinary court of justice for reconveyance or, if the property has
passed into the hands of an innocent purchaser for value, for damages. 18
Although petitioners may still have the remedy of reconveyance, assuming that
they are the "owners" and actual occupants of Lot No. 986, as claimed by them
before the trial court, this remedy, however, can no longer be availed of by
petitioners due to prescription. The prescriptive period for the reconveyance of
fraudulently registered real property is ten (10) years reckoned from the date of
the issuance of the certificate of title. 19
While there is no dispute that the Director of Lands has the authority to conduct
an investigation of any alleged fraud in securing a homestead patent and the
corresponding title to a public land notwithstanding the status of indefeasibility
attached to the certificate of title of private respondent, and such investigation
cannot be enjoined by a writ of prohibition, it must be observed however, that
whatever may be the result of the factual finding in this administrative
proceedings under Section 91 of the Public Land Law is not decisive of the issue
as to who has a better right of possession (possession de jure) over Lot No. 986 in
Civil Case No. 671. The action instituted by private respondent before the trial
court partakes of the nature of an accion publiciana which is basically intended
for the recovery of possession, and is a plenary action in an ordinary civil
proceeding before a Court of First Instance (now RTC). 20
On the other hand, in the case of the administrative investigation under Section
91 of the Public Land Law, the sole and only purpose of the Director of Lands is to
determine whether or not fraud had been committed in securing such title in
order that the appropriate action for reversion may be filed by the
Government. 21 It is not intended to invalidate the Torrens certificate of title of the
registered owner of the land. Unless and until the land is reverted to the State by
virtue of a judgment of a court of law in a direct proceedings for reversion, the

Torrens certificate of title thereto remains valid and binding against the whole
world.
In resolving the basic issue of an accion publiciana, the trial court acted within its
sphere of competence and has correctly found that private respondent Ouano has
a better right of possession over Lot No. 986 than petitioners who claimed to own
and possess a total of 12 hectares of land including that of Lot No. 986. Records
indicate that petitioners have not taken any positive step to legitimize before the
Bureau of Lands their self-serving claim of possession and cultivation of a total of
12 hectares of public agricultural land by either applying for homestead
settlement, sale patent, lease, or confirmation of imperfect or incomplete title by
judicial legalization under Section 48(b) of the Public Land Law, as amended by
R.A. No. 1942 and P.D. 1073, or by administrative legalization (free patent) under
Section 11 of Public Land Law, as amended.1wphi1 What was clearly shown
during the trial of the case was that petitioners wrested control and possession of
Lot No. 986 on January 4, 1975, or one (1) day after they filed their belated
protest on January 3, 1975 before the Bureau of Lands against the homestead
application of private respondent, thus casting serious doubt on their claim of
prior possession and productive cultivation.
What is more, it was only in 1975 that petitioners came to know and realize that
they do not have actual possession of the so-called 12 hectares because, as
testified by Ernesto Domanais, son-in-law of Arcadio Ybanez, three (3) hectares of
their land were found to be in possession of a certain Rodolfo Beneguian; and that
petitioners did not object when said portion of land was removed from their
occupation thereby reducing their purported claim of 12 hectares to only nine (9)
hectares. 22 It is relatively easy to declare and claim that one owns and possesses
a 12-hectare public agricultural land, but it is entirely a different matter to
affirmatively declare and to prove before a court of law that one actually
possessed and cultivated the entire area to the exclusion of other claimants who
stand on equal footing under the Public Land Law (CA 141, as amended) as any
other pioneering claimants.
WHEREFORE, the petition is DENIED for lack of merit. The decision of the
Intermediate Appellate Court, now Court of Appeals, dated June 29, 1984, is
hereby affirmed. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 70191 October 29, 1987
RODOLFO L. CORONEL, petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT and ELIAS MERLAN,

18

BRIGIDO MERLAN, JOSE MERLAN, TEODORICO NOSTRATIS, SEVERO JECIEL

SANTIAGO FERNAN and FORTUNATO OCAMPO,respondents.
GUTIERREZ, JR., J.:
This is a petition to review the decision of the then Intermediate Appellate Court,
now the Court of Appeals, which affirmed the decision and order of the then Court
of First Instance of Cavite in Civil Case No. 651. The dispositive portion of the trial
court's decision reads:
WHEREFORE, in the interest of moral justice, judgment is hereby rendered in
favor of all the defendants and intervenor; hereby DISMISSING the complaint;
however, the Court hereby orders instead the immediate partition of the land,
subject-matter on this case, without prejudice to the plaintiff, and in accordance
with the express but undivided apportionments corresponding to the original coownership, and pursuant to Transfer Certificate of Title No. T-1444 (EXHIBIT 4-b) of
the Registry of Deeds for the Province of Cavite, as entered on May 19, 1960;
Hereby declaring null and void, Transfer Certificate of Title No, T-75543 of the
same registry.
Without pronouncements as to costs. (At p. 71, Record on Appeal)
The dispositive portion of the questioned order of the trial court reads.
WHEREFORE, under our present alternatives, as prayed for by defendants and
Intervenor, through Lawyer Eleuterio A. Beltran, in their present incident recorded
on January 10, 1980; the Decision subject matter hereof is amended in the
following significance:
Plaintiff Rodolfo Coronel is further ordered to submit a complete Inventory and
Accounting of all the harvests of palay produced from the parcel of land (Lot
1950-A) subject matter of the present litigation, and to deliver the corresponding
shares to the defendants and intervenors correlated with all the harvests of palay
done by the plaintiffs; considering the unrebutted finality of the testimony of
defendant Brigido Merian in congruence with his supplication for the Inventory
and Accounting of all the palay gathered by plaintiff Radolfo Coronel who is
likewise ordered, finally, to pay Iawyer Eleuterio Beltran as counsel for defendants
and intervenors, Four Thousand (P400000) Pesos for his professional services.
Naic, Cavite, February 13, 1980. (pp. 88-89, Record on Appeal).
Petitioner Rodolfo Coronel filed a complaint for recovery of possession of a parcel
of land registered under his name (Transfer Certificate of Title No. T-75543 in the
Registry of Deeds for the Province of Cavite) and more particularly described as
follows:
A parcel of land (lot 1950-A of the subdivision plan (LRC) Psd-104544 being a
portion of Lot 1950, Naic, Estate, LRC Rec. No. 8340), situated in the Municipality
of Naic, Province of Cavite, Island of Luzon. Bounded on the NE., pts. 12 to 14 by
Irrigation Ditch; on the SE and SW pts. 14 to 15 and 15 to 1 by Lot 1950-D of the
subdivision plan; on the SW pts. 1 to 2 by lot 2304, and pts. 2 to 11 by Lot 1951,
both of Naic, Estate; and on the NW pts. 11 to 12 by Road. ... ; containing an area

of TWELVE THOUSAND ONE HUNDRED EIGHTY NINE (12,189) SQUARE METERS,

more or less. ... (p. 10, Record on Appeal)
The complaint docketed as Civil Case No. 651 was filed against the private
respondents Elias Merlan, Brigido Merlan, Jose Merlan, Teodorico Nostrates,
Severo Jeciel Santiago Fernan and Fortunato Ocampo before the then Court of
First Instance of Cavite.
Coronel alleged in his complaint that at the time he purchased the subject parcel
of land, the defendants (private respondents herein) were already occupying a
portion thereof as "tenants at will" and that despite demands to vacate the
premises, the defendants failed and refused to move out from the land.
In their Answer with Counterclaim and With Third-Party Complaint, the defendants
denied that Coronel was the owner of the whole parcel of land and alleged that
the lots occupied by them form part of a 1/3 undivided share of brothers Brigido
Merlan and Jose Merlan which they inherited from their deceased father Gabriel
Merlan, one of the three heirs of Bernabela Lontoc, the original owner of Lot No.
1950-A of the Naic Estate; that the Merlan brothers together with their two
brothers and a sister never sold their undivided 1/3 share of the lot to anybody;
that it was actually their other co-heirs who sold their undivided portions and that
the plaintiff's claim of ownership of the whole parcel of land, if ever it has basis, is
fraudulent, void, and without effect; that the Merlans have always been in open
and peaceful possession of their undivided share of the lot throughout the years
from the first sale by their co-heirs of Lot No. 1950-A in 1950; and that the other
defendants were legitimate tenants. They prayed that the plaintiff respect their
rights over 1/3 (4,063 square meters) of Lot No. 1950-A of the Naic Estate,
In their Third-Party Complaint, the defendants charged that the third-party
defendants, owners of the remaining portion of Lot No. 1950-A, defrauded them
when they sold the entire parcel.
Third-Party Defendants Marcelo Novelo, Paz Anuat Daniel Anuat and Rosario
Cailao the defendants' co-owners of Lot No. 1950-A denied that they had
something to do with the fraudulent acts or illegal machinations which deprived
the defendants of their share in the subject parcel of land, and that what they
sold was only their 2/3 undivided shares in said parcel. They also filed a crossclaim against their co-defendant Mariano Manalo whom they charged might have
connived with others Including the plaintiff to deprive the defendants and their
co-heirs of their share in the subject parcel of land.
As stated earlier, the lower court ruled in favor of the defendants and on appeal,
the lower court's decision was affirmed with the following modification by the
then Intermediate Appellate Court, to wit:
WHEREFORE, PREMISES CONSIDERED, there being no reversible error in the main
decision appealed from dated December 7, 1979, and the Order of the Court
dated February 13, 1980, the same are hereby AFFIRMED with the modification
that after the word "intervenor" in the main decision, the following shall be
inserted:

19

l) Declaring them as the absolute owners of the remaining 1 1/3 of the 2/8 portion
pertaining to the late Bernabela Lontoc, nameIy, Lot 1950-A of the Naic Estate
pursuant to Art. 845 of the New Civil Code. (At p. 29.)
The petitioner states that the appellate court erred as follows:
I
THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT
CONSIDERING THAT THE CLAIM OF PRIVATE RESPONDENTS TO THE LAND IN
QUESTION HAS BEEN BARRED BY THE STATUTE OF LIMITATION OR BY ESTOPPEL
BY LACHES.
II
THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT
CONSIDERING PETITIONER AS A PURCHASER IN GOOD FAITH AND FOR VALUABLE
CONSIDERATION OF THE LAND IN QUESTION.
III
THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN
DECLARING AS NULL AND VOID TRANSFER CERTIFICATE OF TITLE NO. T-75543 OF
THE REGISTRY OF DEEDS OF CAVITE WHICH IS ALREADY PACEL IN THE NAME OF
PETITIONER. (at pp.1-2 Brief for the Petitioners)
The records show that the 12,189 square meter lot was part of a 48,755 square
meter lot covered by Transfer Certificate of Title No. 3116 (RT-5010) of the Naic
Estate located at Muzon, Naic, Cavite in the names of the spouses Valentin
Gutierrez and Eligia Mangahas with a calculated portion of 2/8; spouses Jose
Perea and Celestia Naces with a calculated portion of 3/8; Josefa Nazareno with a
calculated portion of 1/8 and Bernabela Lontoc with a calculated portion of 2/8. In
dispute in the instant case is the 2/8 share of Bernabela Lontoc which is
equivalent to 12,189 square meters.
When Lontoc died in 1945, she was survived by three sets of heirs: 1) Bernardino
Merlan, a grandson by her son Enrique Merlan who died in 1918; 2) Jose Merlan
and Brigido Merlan, defendants in the case below and private respondents herein,
Graciano Merlan, Agapito Merlan and Corazon Merlan, children of her son Gabriel
who died in 1937; and 3) Daniel Anuat and Paz Anuat children of her daughter
Francisca Merlan.
In 1950, Bernardino Merlan, Daniel Anuat and Paz Anuat sold their 2/3 undivided
portion of the lot to spouses Ignacio Manalo and Marcela Nobelo.
In 1960, Transfer Certificate of Title No. (T-3116) RT-5010 was cancelled by
Transfer Certificate of Title No. T-1444 but carried the same afore-specified
registered co-owners with an annotation carried from the former Transfer
Certificate of Title, to wit:
"Entry No. 4953-SALE in favor of IGNACIO MANALO, married to Marcela Nobelo
covering the rights, interest and participation of Bernardino Merlan, married to
Rosario Cailao DANIEL ANUAT married to Dionisia Loyola, and PAZ ANUAT widow,
on the share of BERNABELA LONTOC, consisting of twenty 20 gantas of seedling,
on the land described in this Certificate of for the sum of THREE THOUSAND
PESOS (P3,000.00) by virtue of the deed of sale, executed before the Notary

Public for the City of Cavite Mr. Primo D. Anuat (Doc. No. 652; page No. 77; Book
No. VII Series of 1950) on file in this Registry.
Date of Instrument March 11, 1950.
Date of Inscription March 13, 1950 at 2:35 p.m. (At pp. 23, Court of Appeals
Decision; pp. 18-19, Rollo)
In 1968, Lot No. 1950 of the Naic Estate was subdivided according to a Sketch
Plan (Exh. A). The sketch plan was approved by the Commission on Land
Registration on August 15, 1969. Bernabela Lontoc's 2/8 portion of Lot No. 1950
became Lot No. 1950-A with an area of 12,189 square meters.
Sometime in 1970, Ignacio Manalo sold his interest in Lot 1950-A to Mariano
Manalo. The pertinent portions of the deed of sale executed by spouses Ignacio
Manalo and Marcela Nobelo in favor of spouses Mariano Manalo and Jorga Manalo
states:
Ang pagkamayari namin ng bahaging binabanggit sa itaas nito ay natatalikod ng
titulo big. T-3116 na gaya ng sumusunod:
(Entry No. 4953-SALE In favor of IGNACIO MANALO married to MARCELA
NOVELO covering the rights, interests and participations of BERNADINO MERLAN
married to ROSARIO CAILAO DANIEL ANUAT 'married to DIONISIA LOYOLA, and
PAZ ANUAT widow, on the share of BERNABELA LONTOC, consisting of twenty (20)
gantas of seedling, on the land described in this certificate of title of the sum of
THREE THOUSAND PESOS (P3,000.00), by virtue of the deed of sale executed
before the Notary Public for the City and Prov. of Cavite Mr. Primo D. Anuat (Doc.
No. 652; Page No. 77; Book No. VII, Series of 1950) on file in this Registry. Date of
instrument-March 13, 1950-at 2:35 p.m. (sgd) ESCOLASTICO CUEVAS, Register of
Deeds.
Na alang-alang sa halagang ISANG LIBONG P1.000.00 PISO salaping (blurred), na
sa amin ay ibinayad ni G. MARIANO MANALO kasal kay JORGA MANALO may sapat
na gulang, Filipino at ang tirahan at pahatirang sulat ay (blurred) Cavite, ay aming
ipinagbili ng tuluyan (Venta Real y Absoluta) ang nabanggit na DALAWANG PUNG
(20) salop na binhi, bahagi ng Lote blg. 1950 (blurred) tiyak sa lote na unahan
nito sa naturang G. Mariano Manalo, sa kanyang tagamana o kahaliti sa matuwid
magpakailan man. Dito'y sinasaysay rin namin ang nasabing lupang tubigan ay
walang sinasagutang pagkakautang kanino mang tao. (pp. 25-26, Rollo)
The deed of sale was registered in the Registry of Deeds in Cavite. Thereafter,
Transfer Certificate of Title No. T-1444 was cancelled and Transfer Certificate of
Title No. T-41175 was issued for Lot No. 1950-A of the Naic Estate in the name of
Mariano Manalo married to Jorga Lagos of Naic, Cavite. The certificate of title
issued in the name of spouses Mariano Manalo and Jorga Lagos covered the whole
Lot No. 1950-A without any mention of the 1/3 share of the private respondents in
the parcel of land which was not sold to them.
Relying on the transfer certificate of title of the spouses Mariano Manalo and Jorga
Lagos and the Sketch Plan (Exhibit "A"), petitioner Rodolfo Coronel then bought
Lot No. 1950-A of the Naic Estate from the former for the consideration of
P27,000.00 as per Doc. No. 341; Page No. 70; Book No. V Series of 1974 in the

20

Notarial Register of Notary Public Nonilo A. Quitangon of the City of Manila. The
deed of sale was registered on December 19, 1974 causing the cancellation of
Transfer Certificate of Title No. T-41175 and the issuance of Transfer Certificate of
Title No. T-75543 in the name of petitioner Rodolfo Coronel.
Considering these facts, it is evident that the private respondents never sold their
1/3 share over Lot No. 1950-A of the Naic Estate; that what their co-owners sold
to Ignacio Manalo was their 2/3 share of the same lot; and that Ignacio Manalo
sold only the 2/3 share to third-party defendant Mariano Manalo, the predecessorin-interest of petitioner Rodolfo Coronel. Consequently, there was a mistake when
Transfer Certificate of Title No. 41175 was issued to Mariano Manalo covering the
whole area of Lot No. 1950-A. Unfortunately, Mariano Manalo who was included as
third-party defendant as well as the subject of a cross- claim filed by the other
third-party defendants, and who could have shed light on this controversy was at
the time residing abroad and was not served with the third-party complaint.
Moreover, private respondents Brigido Merlan and Jose Merlan were in open,
peaceful and adverse possession of their 1/3 share over the lot even after 1950
when the first sale of the lot took place. The first time they knew about Coronel's
claim over the whole lot was when they were served a copy of his complaint in
1975.
Under these circumstances, the first assignment of error is not well taken.
The petitioner contends that the claim of the private respondents over their 1/3
undivided portion of Lot No. 1950-A 25 years after the registration of the deed of
sale in favor of Ignacio Manalo in 1950 and more than five (5) years after the
registration of the deed of sale in favor of Mariano Manalo is barred by
prescription or laches. According to him, there was undue delay on the part of the
private respondents to claim their 1/3 portion of Lot No. 1950-A of the Naic Estate
and that the action for annulment should have been brought within four (4) years
(Art. 1391, New Civil Code) counted from the date of the registration of the
instrument.
The counterclaim of the private respondents which was in effect a reconveyance
to them of their 1/3 undivided share over lot No. 1950-A has not prescribed. As
lawful possessors and owners of the lot in question their cause of action falls
within the settled jurisprudence that an action to quiet title to property-in one's
possession is imprescriptible, Their undisturbed possession over a period of more
than 25 years gave them a continuing right to seek the aid of a court of equity to
determine the nature of the adverse claim of a third party and the effect of his
own title. If at all, the private respondents' right, to quiet title, to seek
reconveyance and to annul Transfer Certificate of Title No. T-75543 accrued only
in 1975 when they were made aware of a claim adverse to their own. It was only
at that time that, the statutory period of prescription may be said to have
commenced to run against them. (Sapto, et al. v. Fabiana, 103 Phil. 683, Faja v.
Court of Appeals, 75 SCRA 441; Caragay-Layno v. Court of Appeals, 133 SCRA
718).

In the same manner, there is no bar based on laches to assert their right over 1/3
of the disputed property. "Laches has been defined as 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." (Tejido
v. Zamacoma, 138 SCRA 78 citing Tijam et al. v. Sibong-hanoy et al., 23 SCRA 29,
Sotto v Teves, S6 SCRA 154) The facts of the case show that the private
respondents have always been in peaceful possession of the 1/3 portion of the
subject lot, exercising ownership thereto for more than 25 years disrupted only in
1975 when the petitioner tried to remove them by virtue of his torrens title
covering the entire Lot 1950-A of the Naic Estate. It was only at this point that
private respondents knew about the supposed sale of their 1/3 portion of Lot
1950-A of the Naic Estate and they immediately resisted.
The petitioner, however, insists that he is a purchaser in good faith. Thus, he
argues that Transfer Certificate of Title No. T-41175 in the name of his successorin-interest Mariano Manalo was very clear to the effect that there is no lien or
encumbrance stated therein which could have been seen by his parents who
represented him in the sale as he was then in the United States and by the lawyer
contracted by him to execute or prepare the corresponding deed of sale.
This notwithstanding, we cannot close our eyes to the fact that neither the private
respondents nor their co-owners of the subject parcel of land sold the former's
share of the lot. Furthermore, even Ignacio Manalo to whom the third-party
defendants sold their share resold only the 2/3 shares to Mariano Manalo, the
successor-in-interest of the petitioner. Whether or not there was fraud or just a
mistake or oversight of an employee of the Register of Deeds of Cavite is not
clear from the records. The point is that the 1/3 undivided portion of the private
respondents over Lot No. 1950-A was mistakenly included in the transfer
certificate of title of Mariano Manalo.
We apply equitable considerations:
Nor does the mere fact that respondent-appellee Marcelo Coral could show a
certificate of Torrens Title in his favor conclude the matter, the question of fraud
having been seasonably raised and the remedy of reconveyance sought. Only
recently, in Philippine Commercial and Industrial Bank v. Villalva (L-28194,
November 24, 1972, 48 SCRA 31) this Court had occasion to state: There is,
however, a countervailing doctrine, certainly not of lesser weight, that mitigates
the harshness of the iron-clad application of the principle attaching full faith and
credit to a Torrens certificate. It is inspired by the highest concept of what is fair
and what is equitable. It would be a sad day for the law if it were to be oblivious
to the demands justice The acceptance accorded the Torrens system of
registration would certainly be impaired if it could be utilized to perpetrate fraud
and chicanery. If it were thus, then no stigma would attach to a claim based solely
on a narrow and literal reading of a statutory prescription, devoid of any shadow
of moral right. That is not the juridical norm as recognized by this Court. Deceit is

21

not to be countenanced; duplicity is not to be rewarded. Witness the favor with

which jurisprudence has looked on the action for reconveyance as well as the
recognition of the constructive trust. There is thus the stress of rectitude. (Ibid, p.
39). (Monticenes v. Court of Appeals, 53 SC RA 14, 21; Emphasis supplied).
Moreover, we ruled in an earlier case that:
xxx xxx xxx
... The simple possession of a certificate of title, under the Torrens System, does
not necessarily make the possessor a true owner of all the property described
therein. If a person obtains a title, under the Torrens system, which includes by
mistake or oversight land which cannot be registered under the Torrens systems,
he does not, by virtue of said certificate alone, become the owner of the lands
illegally included. (Ledesma v. Municipality of Iloilo, 49 Phil. 769, 773, citing
Legarda and Prieto v. Saleeby, 31 Phil., 590; see also Caragay-Layno v. Court of
Appeals, supra).
We find no reversible error on the part of the lower courts in recognizing the
ownership of the private respondents over 1/3 of Lot No. 1950-A of the Naic
Estate. The petitioner is bound to recognize the lien in favor of the private
respondents which was mistakenly excluded and therefore not inscribed in the
torrens title of the land of his predecessors-in-interest.
WHEREFORE, the instant petition is hereby DISMISSED. The questioned decision is
AFFIRMED but with a modification to the effect that the statement "Hereby
declaring null and void, Transfer Certificate of Title No. T-75543 of the same
registry" is deleted. Instead, the Registrar of Deeds of Cavite is ordered to
segregate the 1/3 portion of Lot No. 1950-A of the Naic Estate (4,063 square
meters) from the entire portion embraced in Transfer Certificate of Title No. T75543 and issue a new certificate of title in favor of the heirs of Gabriel Merlan
over the disputed one-third portion and another new certificate of title over the
remaining two-thirds portion of the land in favor of petitioner Rodolfo Coronel
after cancelling Transfer Certificate of Title No. T-75543. The questioned order is
also AFFIRMED. No costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-40399 February 6, 1990
MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO
ESCORPIZO, ISABELO MAURICIO, HEIRS OF ROMAN DAMASO, NAMELY:
JORGE DAMASO and ALEJANDRO DAMASO, HEIRS OF FRANCISCO RAMOS,
NAMELY: ENCARNACION R. LEANO and DOMINGA R. MEDRANO, HEIRS OF
SABINA GELACIO AGAPITO, NAMELY: SERAPIO AGAPITO, and NICOLASA
AGAPITO, FELISA DICCION AGNE, ESTANISLAO GOROSPE, LIBRADO
BADUA, NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO, NAMELY:

FORTUNATA PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS,

PANFILO SOINGCO, BERNARDO PALATTAO, MARCELINO S. SANTOS and
PAULINO D. AGNE JR. (Minor), represented by his mother FELISA DICCION
AGNE, petitioners,
vs.
THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN
GASCON and HON. ROSALIO C. SEGUNDO, Presiding Judge, Court of First
Instance of Pangasinan, Branch V, respondents.
G.R. No. L-72255 February 6,1990
MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased),
represented by FLORENTINO C. TAGANAS, FELISA DICCION AGNE,
HILARIO ESCORPIZO, NICOLAS VILLANUEVA, ISABELO MAURICIO,
ESTANISLAO GOROSPE (deceased), represented by ELIZABETH G. BADUA
and SILVINA G. VALERIO, LIBRADO BADUA, JOSE ALSISTO, SERAPIO
AGAPITO, NICOLASA AGAPITO, JORGE DAMASO, ALEJANDRO DAMASO,
ENCARNACION RAMOS, DOMINGA RAMOS and CARLOS
PALADO, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON
GASCON and JOAQUIN GASCON,respondents.
Espiritu Taganas for petitioners.
Adriatico T. Bruno for private respondents.
REGALADO, J.:
Before us are two separate petitions for review on certiorari of the order of the
defunct Court of First Instance of Pangasinan, Branch V, in Civil Case No. 2649,
entitled "Marcelino Agne et al. vs. The Director of Lands, et al.," dismissing the
complaint filed by herein petitioners in said case; 1 and the decision of the then
Intermediate Appellate Court in AC-G.R. CV No. 60388-R, entitled "Presentacion
Agpoon Gascon vs. Marcelino C. Agne et al.," promulgated on January 30, 1985,
affirming in toto the decision of the trial court in favor of herein private
respondents 2 which cases are docketed herein as G.R. No. L-40399 and G.R. No.
72255, respectively.
These two petitions, arising from the same facts and involving the same parties
and common questions of law, were ordered consolidated in our resolution of
August 9, 1989.
As found by respondent court and disclosed by the records, the land subject
matter of this case was originally covered by Free Patent No. 23263 issued on
April 17, 1937 in the name of Herminigildo Agpoon. On May 21, 1937, pursuant to
the said patent, the Register of Deeds of Pangasinan issued to said Herminigildo
Agpoon Original Certificate of Title No. 2370. 3 Presentacion Agpoon Gascon
inherited the said parcel of land upon the death of her father, Herminigildo, and
was issued Transfer Certificate of Title No. 32209 on April 6,1960. Respondent

22

Presentacion declared the said land for taxation purposes in her name under Tax
Declaration No. 11506 and taxes were paid thereon in her name. 4
On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the
then Court of First Instance of Pangasinan for recovery of possession and
damages against petitioners. Their complaint states that they are the registered
owners under the aforesaid Transfer Certificate of Title No. 32209 of the parcel of
land situated in Barrio Bantog, Asingan, Pangasinan which is now in the
possession of petitioners; that during the Japanese occupation, petitioners, taking
advantage of the abnormal conditions then obtaining, took possession of said
land by means of fraud, stealth, strategy and intimidation; that private
respondents repeatedly demanded the surrender of the physical possession of
said property but the latter refused. 5
Petitioners, in answer to said complaint, alleged that the land in question was
formerly a part of the river bed of the Agno-Chico River; that in the year 1920, a
big flood occurred which caused the said river to change its course and abandon
its original bed; that by virtue of the provisions of Article 370 of the Spanish Civil
Code which was then the law in force, petitioners, by operation of law, became
the owners by accession or accretion of the respective aliquot parts of said river
bed bordering their properties; that since 1920, they and their predecessors in
interest occupied and exercised dominion openly and adversely over said portion
of the abandoned river bed in question abutting their respective riparian lands
continuously up to the present to the exclusion of all other persons, particularly
Herminigildo Agpoon; that they have introduced improvements thereon by
constructing irrigation canals and planting trees and agricultural crops
thereon 6 and converted the land into a productive area.
In their joint stipulation of facts, the parties agreed as follows:
1. That the parties admit the identity and area of the land in question, which
forms part of the river bed of the Agno-Chico River, and further admit that the
said river bed was abandoned as a result of a flood in 1920 and opened a new
bed. The location and course of the aforesaid abandoned river bed as well as the
relative position of the lands bordering the same can be gleaned from Cadastral
Survey Plan of Asingan, Pangasinan, Street No. 49 thereof, as approved by the
Director of Lands on October 12, 1912, a photostat copy of which is hereto
attached and made an integral part hereof a Annex "A".
2. That the parties admit that the defendants are the riparian owners of the area
in question and further admit that the defendants are in possession thereof but
that each of them is in possession only of an aliquot part of the said area
proportionate to the length of their respective lands. (As amended).
3. That the parties likewise admit that a Free Patent No. 23263 in the name of
Herminigildo Agpoon covering the area in question was issued on April 17, 1937
and that they admit O.C.T. No. 2370 of the Register of Deeds of Pangasinan
covering the same parcel of land was issued to the same Herminigildo Agpoon on
May 21, 1937, a photostat copy of said O.C.T. is hereto attached as Annex "B".

4. That the parties admit that the property in controversy is now covered by T.C.T.
No. 32209 in the name of Presentacion Agpoon Gascon and by Tax Declaration
No. 11506 in the name of said Presentacion Agpoon Gascon, a photostat
reproduction of said T.C.T. No. and Tax Declaration are hereto attached and
marked as Annexes "C" and "F", respectively. 7
On March 6, 1974, while the above-mentioned case was still pending, petitioners
filed a complaint against the respondents Director of Lands and spouses Agpoon
with the former Court of First Instance of Pangasinan for annulment of title,
reconveyance of and/or action to clear title to a parcel of land, which action was
docketed as Civil Case No. U-2649. Petitioners alleged in their said complaint that
the land in question, which was formerly a portion of the bed of Agno-Chico river
which was abandoned as a result of the big flood in 1920, belongs to them
pursuant to the provision of Article 370 of the old Civil Code; that it was only on
April 13, 1971, when respondent spouses filed a complaint against them, that
they found out that the said land was granted by the Government to Herminigildo
Agpoon under Free Patent No. 23263, pursuant to which Original Certificate of
Title No. 2370 was issued in the latter's name; and that the said patent and
subsequent titles issued pursuant thereto are null and void since the said land, an
abandoned river bed, is of private ownership and, therefore, cannot be the
subject of a public land grant. 8
On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the
dispositive part of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders judgment:
1. Ordering the defendants to surrender to the plaintiffs the physical possession
of the land in question described in paragraph 3 of the amended complaint;
2. Ordering the defendants to pay jointly and severally to the plaintiff the produce
of the land in question in the total sum of P5,000.00 per year from the date of the
filing of the present action at the rate of 6% interest per annum until fully paid;
3. Ordering the defendants to pay jointly and severally the amount of P800.00
representing attorney's fees;
4. And to pay the costs.
SO ORDERED. 9
Not satisfied with said decision, petitioners appealed to respondent court. As
earlier stated, on January 30, 1985 the former Intermediate Appellate Court
affirmed in toto in AC-G.R. CV No. 60388-R the said decision of the courta
quo, 10 and with the denial of petitioner's motion for reconsideration, 11 the case
came up to us as G.R. No. 72255.
On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on
the motion to dismiss filed by respondents Director of Lands and spouses Agpoon,
issued an order dismissing Civil Case No. U-2649 for annulment of title by
merely citing the statement in the case of Antonio, et al. vs. Barroga, et al. 12 that
an action to annul a free patent many years after it had become final and
indefeasible states no cause of action . 13 Petitioners' motion for the

23

reconsideration of said order was denied on September 11, 1974, 14 hence the
recourse to us in G.R. No. L-40399.
In these petitions, petitioners raise the following issues:
1. Whether or not the lower court is justified in dismissing the complaint by simply
invoking the ruling in the aforestated case of Antonio although the facts and
circumstances set forth in the complaint show that the land in question was
private land under Article 370 of the old Civil Code and that the subsequent
derivative certificates of title in question were null and void ab initio because the
said land was not within the authority of the government to dispose of in favor of
any party and must be ordered annulled, cancelled or rescinded; 15
2. Whether or not the trial court and the former Intermediate Appellate Court
were justified in not basing their judgments on the judicial admissions of private
respondents in the stipulation of facts of the parties, since such admissions have
the legal force and effect of precluding private respondents from disputing such
admission;
3. Whether or not respondent court can presume that private respondents or their
predecessor had prior possession of the land in dispute in the light of provisions
of law which oblige them to prove such possession, as well as the stipulated facts
and other facts and circumstances on record showing that private respondents or
their predecessor were not in actual occupancy of the said land, and without
appreciating the evidence put up by petitioners to prove their prior possession
thereof;
4. Whether or not respondent court was justified in its application of Section 41 of
the Code of Civil Procedure in favor of private respondents, although the private
respondents did not invoke said law in this case and did not adduce any evidence
or proof that all the essential requisites of acquisitive prescription under the said
law were present in their favor;
5. Whether or not the Government had the right to convey by way of free patent
to any party the land in dispute which belonged to the riparian owners as decreed
by Article 370 of the old Civil Code, the law then in force, and despite the fact that
the patentee herein never occupied the said land during the period prescribed by
Act No. 2874; and
6. Whether or not private respondents are guilty of laches for not having
attempted to file suit to recover the land in dispute during an interval of 50 or 30
years. 16
The issues and arguments raised by the proponents in these petitions are well
taken.
We agree with petitioners that the lower court erred in ordering the dismissal of
Civil Case No. U-2649. The aforesaid case of Antonio relied upon by the lower
court in its dismissal order is not controlling. In that case, the complaint was
dismissed for failure to state a cause of action, not only because of the delay in
the filing of the complaint but specifically since the ground relied upon by the
plaintiff therein, that is, that the land was previously covered by a titulo real, even

if true, would not warrant the annulment of the free patent and the subsequent
original certificate of title issued to defendant. Thus:
It is true that by filing the application for a free patent Barroga impliedly admitted
either the invalidity or insufficiency of Titulo Real No. 12479 issued in the name of
his predecessor in interest on July 22, 1894, but neither the allegation made in his
answer that his aforesaid predecessor in interest was the absolute owner of the
property covered by said Titulo Real nor his implied admission of the latter's
invalidity or insufficiency are grounds for the annulment of the free patent and
original certificate of title in question. Evidently, it was Barroga's privilege to rely
or not to rely upon his claim of private ownership in favor of his predecessor in
interest and of whatever the latter's Titulo Real was worth. He decided not to rely
upon them and to consider that the property covered by the Titulo Real was still
part of the public domain. Acting accordingly he applied for a free patent and was
successful. It must be borne in mind that the Titulo Real was not an indefeasible
title and that its holder still had to prove that he had possessed the land covered
by it without interruption during a period of ten years by virtue of a good title and
in good faith (Royal Decree of June 25,1880). We may well presume that Barroga
felt that he had no sufficient evidence to prove this, for which reason he decided
to acquire the land as part of the public domain.
In the case at bar, the facts alleged in the complaint, which are deemed
hypothetically admitted upon the filing of the motion to dismiss, constitute a
sufficient cause of action against private respondents. Petitioners in their
complaint in Civil Case No. U-2649 alleged, among others, that the disputed area
was formerly an abandoned river bed formed due to natural causes in 1920; that
the riparian owners of the lands abutting said abandoned river bed were the
plaintiffs and/or their predecessors in interest; that since then and up to the
present, they have been occupying and cultivating aliquot portions of the said
land proportionate to the respective lengths of their riparian lands; that they are
the real and lawful owners of the said land as decreed by Article 370 of the old
Civil Code, the law then in force; that since the said area was a private land, the
same could not have been the subject matter of an application for free patent;
and that all these facts were known to the private respondents and their
predecessor in interest.
If the said averments are true, and the factual recitals thereon have been
admitted in the stipulation of facts hereinbefore quoted, then the land in question
was and is of private ownership and, therefore, beyond the jurisdiction of the
Director of Lands. The free patent and subsequent title issued pursuant thereto
are null and void. The indefeasibility and imprescriptibility of a Torrens title issued
pursuant to a patent may be invoked only when the land involved originally
formed part of the public domain. If it was a private land, the patent and
certificate of title issued upon the patent are a nullity. 17
The rule on the incontrovertibility of a certificate of title upon the expiration of
one year, after the entry of the decree, pursuant to the provisions of the Land
Registration Act, does not apply where an action for the cancellation of a patent

24

and a certificate of title issued pursuant thereto is instituted on the ground that
they are null and void because the Bureau of Lands had no jurisdiction to issue
them at all, the land in question having been withdrawn from the public domain
prior to the subsequent award of the patent and the grant of a certificate of title
to another person. Such an action is different from a review of the decree of title
on the ground of fraud. 18
Although a period of one year has already expired from the time a certificate of
title was issued pursuant to a public grant, said title does not become
incontrovertible but is null and void if the property covered thereby is originally of
private ownership, and an action to annul the same does not
prescribe. 19 Moreover, since herein petitioners are in possession of the land in
dispute, an action to quiet title is imprescriptible. 20 Their action for reconveyance
which, in effect, seeks to quiet title to property in one's possession is
imprescriptible. Their undisturbed possession for a number of years gave them a
continuing right to seek the aid of a court of equity to determine the nature of the
adverse claims of a third party and the effect on her title. 21 As held in CaragayLayno vs. Court of Appeals, et al., 22an adverse claimant of a registered land,
undisturbed in his possession thereof for a period of more than fifty years and not
knowing that the land he actually occupied had been registered in the name of
another, is not precluded from filing an action for reconveyance which, in effect,
seeks to quiet title to property as against the registered owner who was relying
upon a Torrens title which could have been fraudulently acquired. To such adverse
claimant, the remedy of an action to quiet title is imprescriptible. In actions for
reconveyance of property predicated on the fact that the conveyance complained
of was voidab initio, a claim of prescription of the action would be unavailing. 23
The resolution of the other assigned errors hinges on the issue of who, as
between the riparian owner presently in possession and the registered owner by
virtue of a free patent, has a better right over the abandoned river bed in dispute.
We rule in favor of petitioners.
The claim of ownership of herein petitioners is based on the old Civil Code, the
law then in force, which provides:
The beds of rivers which remain abandoned because the course of the water has
naturally changed belong to the owners of the riparian lands throughout their
respective lengths. If the abandoned bed divided estates belonging to different
owners, the new dividing line shall run at equal distance therefrom. 24
It is thus clear under this provision that once the river bed has been abandoned,
the riparian owners become the owners of the abandoned bed to the extent
provided by this article. The acquisition of ownership is automatic. 25There need
be no act on the part of the riparian owners to subject the accession to their
ownership, as it is subject theretoipso jure from the moment the mode of
acquisition becomes evident, without the need of any formal act of
acquisition. 26Such abandoned river bed had fallen to the private ownership of the
owner of the riparian land even without any formal act of his will and any
unauthorized occupant thereof will be considered as a trespasser. The right in

re to the principal is likewise a right in re to the accessory, as it is a mode of

acquisition provided by law, as the result of the right of accretion. Since the
accessory follows the nature of the principal, there need not be any tendency to
the thing or manifestation of the purpose to subject it to our ownership, as it is
subject thereto ipso jure from the moment the mode of acquisition becomes
evident. 27
The right of the owner of land to additions thereto by accretion has been said to
rest in the law of nature, and to be analogous to the right of the owner of a tree to
its fruits, and the owner of flocks and herds to their natural increase. 28 Petitioners
herein became owners of aliquot portions of said abandoned river bed as early as
1920, when the Agno River changed its course, without the necessity of any
action or exercise of possession on their part, it being an admitted fact that the
land in dispute, prior to its registration, was an abandoned bed of the Agno River
and that petitioners are the riparian owners of the lands adjoining the said bed.
The failure of herein petitioners to register the accretion in their names and
declare it for purposes of taxation did not divest it of its character as a private
property. Although we take cognizance of the rule that an accretion to registered
land is not automatically registered and therefore not entitled or subject to the
protection of imprescriptibility enjoyed by registered property under the Torrens
system. 29 The said rule is not applicable to this case since the title claimed by
private respondents is not based on acquisitive prescription but is anchored on a
public grant from the Government, which presupposes that it was inceptively a
public land. Ownership over the accession is governed by the Civil Code.
Imprescriptibility of registered land is a concern of the Land Registration Act.
Under the provisions of Act No. 2874 pursuant to which the title of private
respondents' predecessor in interest was issued, the President of the Philippines
or his alter ego, the Director of Lands, has no authority to grant a free patent for
land that has ceased to be a public land and has passed to private ownership, and
a title so issued is null and void. 30 The nullity arises, not from the fraud or deceit,
but from the fact that the land is not under the jurisdiction of the Bureau of
Lands. 31 The jurisdiction of the Director of Lands is limited only to public lands
and does not cover lands privately owned. 32 The purpose of the Legislature in
adopting the former Public Land Act, Act No. 2874, was and is to limit its
application to lands of the public domain, and lands held in private ownership are
not included therein and are not affected in any manner whatsoever thereby.
Land held in freehold or fee title, or of private ownership, constitute no part of the
public domain and cannot possibly come within the purview of said Act No. 2874,
inasmuch as the "subject" of such freehold or private land is not embraced in any
manner in the title of the Act 33 and the same are excluded from the provisions or
text thereof.
We reiterate that private ownership of land is not affected by the issuance of a
free patent over the same land because the Public Land Act applies only to lands
of the public domain. 34 Only public land may be disposed of by the Director of
Lands. 35 Since as early as 1920, the land in dispute was already under the

25

private ownership of herein petitioners and no longer a part of the lands of the
public domain, the same could not have been the subject matter of a free patent.
The patentee and his successors in interest acquired no right or title to the said
land. Necessarily, Free Patent No. 23263 issued to Herminigildo Agpoon is null and
void and the subsequent titles issued pursuant thereto cannot become final and
indefeasible. Hence, we ruled in Director of Lands vs. Sisican, et al. 36 that if at
the time the free patents were issued in 1953 the land covered therein were
already private property of another and, therefore, not part of the disposable land
of the public domain, then applicants patentees acquired no right or title to the
land.
Now, a certificate of title fraudulently secured is null and void ab initio if the fraud
consisted in misrepresenting that the land is part of the public domain, although it
is not. As earlier stated, the nullity arises, not from the fraud or deceit but, from
the fact that the land is not under the jurisdiction of the Bureau of Lands. 37 Being
null and void, the free patent granted and the subsequent titles produce no legal
effects whatsoever. Quod nullum est, nullum producit effectum. 38
A free patent which purports to convey land to which the Government did not
have any title at the time of its issuance does not vest any title in the patentee as
against the true owner. 39 The Court has previously held that the Land
Registration Act and the Cadastral Act do not give anybody who resorts to the
provisions thereof a better title than what he really and lawfully has.
. . . The Land Registration Act as well as the Cadastral Act protects only the
holders of a title in good faith and does not permit its provisions to be used as a
shield for the commission of fraud, or that one should enrich himself at the
expense of another (Gustilo vs. Maravilla, 48 Phil. 838). The above-stated Acts do
not give anybody, who resorts to the provisions thereof, a better title than he
really and lawfully has. If he happened to obtain it by mistake or to secure, to the
prejudice of his neighbor, more land than he really owns, with or without bad faith
on his part, the certificate of title, which may have been issued to him under the
circumstances, may and should be cancelled or corrected (Legarda and Prieto vs.
Saleeby, 31 Phil., 590). . . . 40
We have, therefore, to arrive at the unavoidable conclusion that the title of herein
petitioners over the land in dispute is superior to the title of the registered owner
which is a total nullity. The long and continued possession of petitioners under a
valid claim of title cannot be defeated by the claim of a registered owner whose
title is defective from the beginning.
The quality of conclusiveness of a Torrens title is not available for use to
perpetrate fraud and chicanery. To paraphrase from Angeles vs. Samia, supra, the
Land Registration Act does not create or vest title. It only confirms and records
title already existing and vested. It does not protect a usurper from the true
owner. It cannot be a shield for the commission of fraud. It does not permit one to
enrich himself at the expense of another. Stated elsewise, the Torrens system was
not established as a means for the acquisition of title to private land. It is
intended merely to confirm and register the title which one may already have on

the land. Where the applicant possesses no title or ownership over the parcel of
land, he cannot acquire one under the Torrens system of registration. 41 Resort to
the provisions of the Land Registration Act does not give one a better title than he
really and lawfully has. 42 Registration does not vest title. It is not a mode of
acquiring property. It is merely evidence of such title over a particular property. It
does not give the holder any better title than what he actually has, especially if
the registration was done in bad faith. The effect is that it is as if no registration
was made at all. 43
Moreover, the failure of herein private respondents to assert their claim over the
disputed property for almost thirty 30 years constitute laches 44 and bars an
action to recover the same. 45 The registered owners' right to recover possession
of the property and title thereto from petitioners has, by long inaction or
inexcusable neglect, been converted into a stale demand. 46
Considering that petitioners were well within their rights in taking possession of
the lot in question, the findings of respondent court that herein petitioners took
advantage of the infirmities and weakness of the preceding claimant,
Herminigildo Agpoon, in taking possession of said land during the Japanese
occupation is neither tenable in law nor sustained by preponderant evidence in
fact.
Where the evidence show that the plaintiff is the true owner of the land subject of
the free patent and title granted to another and that the defendant and his
predecessor in interest were never in possession thereof, the Court, in the
exercise of its equity jurisdiction and without ordering the cancellation of said title
issued upon the patent, may direct the defendant registered owner to reconvey
the property to the plaintiff. 47 Further, if the determinative facts are before the
Court and it is in a position to finally resolve the dispute, the expeditious
administration of justice will be subserved by such a resolution and thereby
obviate the needless protracted proceedings consequent to the remand of the
case of the trial court. 48 On these considerations, as well as the fact that these
cases have been pending for a long period of time, we see no need for remanding
Civil Case No. 2649 for further proceedings, and we hold that the facts and the
ends of justice in this case require the reconveyance by private respondents to
petitioners of the disputed lot.
WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No.
60388-R and the questioned order of dismissal of the trial court in its Civil Case
No. 2649 are hereby REVERSED and SET ASIDE and judgment is hereby rendered
ORDERING private respondents to reconvey the aforesaid parcel of land to
petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

26

G.R. No. L-6746

August 31, 1954
ESPERANZA V. BUHAT, ET AL., plaintiffs-appellants,
vs.
ROSARIO BESANA, ETC., ET AL., defendants-appellees.
Vicente Abalajon for appellants.
Santiago Abela Vito for appellees.
PARAS, C.J.:
On May 31, 1924, Jose M. Besana mortgaged his undivided one-half share in lot
No. 1406 of the cadastral survey of Panay in favor of Luis Bernales, to secure an
indebtedness of P900, payable within six years from said date. On October 27,
1926, original certificate of title No. RO-1364 (10255) was issued in the name of
Jose M. Besana and Rosario Besana, brother and sister, covering lot No. 1406 in
undivided equal shares; and on said certificate the mortgage in favor of Luis
Bernales was noted. Jose M. Besana died and his portion passed to his surviving
sister, Rosario Besana. Luis Bernales also died and his mortgage credit against
Jose M. Besana was inherited by Antonio Bernales, who in turn transferred the
same to the herein plaintiffs, Esperanza V. Buhat and Mauro A. Buhat. Rosario
Besana sold her portion to Manuel B. Bernales who, on June 30, 1950, conveyed it
to the plaintiffs. As the indebtedness above referred to remained unpaid, the
present action was instituted in the Court of First Instance of Capiz by the
plaintiffs against Rosario Besana and her husband Lorenzo Contreras on
December 6, 1952, for the foreclosure of the mortgage of May 31, 1924. The
defendants Rosario Besana and Lorenzo Contreras filed a motion to dismiss the
complaint, on the ground that plaintiffs' cause of action had prescribed, the
complaint having been filed more than ten years from May 31, 1930 (in fact some
22 years after the obligation has become due and demandable). On May 6, 1953,
the Court of First Instance of Capiz issued an order dismissing the case without
costs. The plaintiffs have appealed.
Appellants' contention is that, as the mortgage was registered, the action to
foreclose did not prescribe, because section 46 of the Land Registration Act, No.
496, provides that "No title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession." This is
clearly without merit. The citation speaks of the title of the "registered owner"
and refers to prescription or adverse possession as a mode of acquiring
ownership, the whole philosophy of the law being merely to make a Torrens title
indefeasible and, without more, surely not to cause a registered lien or
encumbrance such as a mortgage and the right of action to enforce
it imprescriptible as against the registered owner. The important effect of the
registration of a mortgage is obviously to bind third parties.
Wherefore, the appealed order is affirmed, and it is so ordered with costs against
the appellants.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 139442
December 6, 2006
LOURDES DELA CRUZ, petitioner,
vs.
HON. COURT OF APPEALS and MELBA TAN TE, respondents.
DECISION
VELASCO, JR., J.:
For unto every one that hath shall be given, and he shall have abundance: but
from him that hath not shall be taken away even that which he hath.
Holy Bible, Matthew 25:29
The Case
This petition for review seeks to nullify the April 30, 1999 Decision and the July
16, 1999 Resolution of the Court of Appeals in CA-G.R. SP No. 49097, which
reversed the Decision of the Manila Regional Trial Court (RTC), Branch 35, in Civil
Case No. 98-89174, and reinstated the Decision of the Manila Metropolitan Trial
Court (MeTC), Branch 20, which ordered petitioner Dela Cruz to vacate the subject
lot in favor of respondent Tan Te.1
The Facts
The Reyes family, represented by Mr. Lino Reyes, owned the lot located at No.
1332 Lacson Street (formerly Gov. Forbes Street), Sampaloc, Manila. Petitioner
Lourdes Dela Cruz was one of their lessees, and she religiously paid rent over a
portion of the lot for well over 40 years. Sometime in 1989, a fire struck the
premises and destroyed, among others, petitioners dwelling. After the fire,
petitioner and some tenants returned to the said lot and rebuilt their respective
houses; simultaneously, the Reyes family made several verbal demands on the
remaining lessees, including petitioner, to vacate the lot but the latter did not
comply. On February 21, 1994, petitioner was served a written demand to vacate
said lot but refused to leave. Despite the setback, the Reyes family did not initiate
court proceedings against any of the lessees.
On November 26, 1996, the disputed lot was sold by the Reyeses to respondent
Melba Tan Te by virtue of the November 26, 1996 Deed of Absolute Sale.
Respondent bought the lot in question for residential purposes. Despite the sale,
petitioner Dela Cruz did not give up the lot.
On January 14, 1997, petitioner was sent a written demand to relinquish the
premises which she ignored, prompting respondent Tan Te to initiate conciliation
proceedings at the barangay level. While respondent attempted to settle the
dispute by offering financial assistance, petitioner countered by asking PhP
500,000.00 for her house. Respondent rejected the counter offer which she
considered unconscionable. As a result, a certificate to file action was issued to
Tan Te.

27

On September 8, 1997, respondent Tan Te filed an ejectment complaint with

damages before the Manila MeTC, entitled Melba Tan Te v. Lourdes Dela Cruz and
docketed as Civil Case No. 156730-CV. The complaint averred that: (1) the
previous owners, the Reyeses were in possession and control of the contested lot;
(2) on November 26, 1996, the lot was sold to Tan Te; (3) prior to the sale, Dela
Cruz forcibly entered the property with strategy and/or stealth; (4) the petitioner
unlawfully deprived the respondent of physical possession of the property and
continues to do so; and, (5) the respondent sent several written demands to
petitioner to vacate the premises but refused to do so.
On October 24, 1997, petitioner filed her answer and alleged that: (1) the MeTC
had no jurisdiction over the case because it falls within the jurisdiction of the RTC
as more than one year had elapsed from petitioners forcible entry; (2) she was a
rent-paying tenant protected by PD 20; 2 (3) her lease constituted a legal
encumbrance upon the property; and (4) the lot was subject of expropriation.
The Ruling of the Manila MeTC
On April 3, 1998, the MeTC decided as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff as follows:
1. Ordering the defendant and all persons claiming right under her to vacate the
premises situated at 1332 Lacson Street (formerly Gov. Forbes Street), Sampaloc,
Manila and peacefully return possession thereof to plaintiff;
2. Ordering the defendant to pay the plaintiff the amount of P360.00 a month
from December 1996 to November 1997; P432.00 a month from December 1997
to November 1998, plus 20% for each subsequent year until the premises shall
have been vacated and turned over to the plaintiff;
3. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as
attorneys fees; and, the costs of the suit.
SO ORDERED.3
The Ruling of the Regional Trial Court
Unconvinced, petitioner Dela Cruz appealed the Decision of the MeTC in the
Manila RTC and the appeal was docketed as Civil Case No. 98-89174. On
September 1, 1998, the RTC rendered its judgment setting aside the April 3, 1998
Decision of the Manila MeTC and dismissed respondent Tan Tes Complaint on the
ground that it was the RTC and not the MeTC which had jurisdiction over the
subject matter of the case. The RTC believed that since Tan Tes predecessor-ininterest learned of petitioners intrusion into the lot as early as February 21, 1994,
the ejectment suit should have been filed within the one-year prescriptive period
which expired on February 21, 1995. Since the Reyes did not file the ejectment
suit and respondent Tan Te filed the action only on September 8, 1997, then the
suit had become an accion publiciana cognizable by the RTC.
The Ruling of the Court of Appeals
Disappointed at the turn of events, respondent Tan Te appealed the adverse
Decision to the Court of Appeals (CA) which was docketed as CA-G.R. SP No.
49097. This time, the CA rendered a Decision in favor of respondent Tan Te

reversing the Manila RTC September 1, 1998 Decision and reinstated the Manila
MeTC April 3, 1998 Decision.
Petitioner tried to have the CA reconsider its Decision but was rebutted in its July
16, 1999 Resolution.
Unyielding to the CA Decision and the denial of her request for reconsideration,
petitioner Dela Cruz now seeks legal remedy through the instant Petition for
Review on Certiorari before the Court.
The Issues
Petitioner Dela Cruz claims two (2) reversible errors on the part of the appellate
court, to wit:
A
THE HON. COURT OF APPEALS, WITH DUE RESPECT, WENT BEYOND THE ISSUES
OF THE CASE AND CONTRARY TO THOSE OF THE TRIAL COURT.
B
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN REVERSING THE
DECISION OF THE RTC AND IN EFFECT, REINSTATING THE DECISION OF THE
[MeTC] WHICH IS CONTRADICTED BY THE EVIDENCE ON RECORD.4
The Courts Ruling
Discussion on Rule 45
Before we dwell on the principal issues, a few procedural matters must first be
resolved.
Petitioner Dela Cruz asks the Court to review the findings of facts of the CA, a
course of action proscribed by Section 1, Rule 45. Firm is the rule that findings of
fact of the CA are final and conclusive and cannot be reviewed on appeal to this
Court provided they are supported by evidence on record or substantial evidence.
Fortunately for petitioner, we will be liberal with her petition considering that the
CAs factual findings contradict those of the RTC, and there was an asseveration
that the court a quo went beyond the issues of the case. Indeed, these grounds
were considered exceptions to the factual issue bar rule.
Secondly, the petition unnecessarily impleaded the CA in violation of Section 4,
Rule 45. We will let this breach pass only because there is a need to entertain the
petition due to the conflicting rulings between the lower courts; however, a
repetition may result to sanctions.
The actual threshold issue is which court, the Manila RTC or the Manila MeTC, has
jurisdiction over the Tan Te ejectment suit. Once the jurisdictional issue is settled,
the heart of the dispute is whether or not respondent is entitled to the ejectment
of petitioner Dela Cruz from the premises.
However, the petition is bereft of merit.
On the Issue of Jurisdiction
Jurisdiction is the power or capacity given by the law to a court or tribunal to
entertain, hear and determine certain controversies.5 Jurisdiction over the subject
matter is conferred by law.
Section 33 of Chapter III -- on Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts of B. P. No. 1296 provides:

28

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases.Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall exercise:
xxxx
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession.
Thus exclusive, original jurisdiction over ejectment proceedings (accion
interdictal) is lodged with the first level courts. This is clarified in Section 1, Rule
70 of the 1997 Rules of Civil Procedure that embraces an action for forcible entry
(detentacion), where one is deprived of physical possession of any land or
building by means of force, intimidation, threat, strategy, or stealth. In actions for
forcible entry, three (3) requisites have to be met for the municipal trial court to
acquire jurisdiction. First, the plaintiffs must allege their prior physical possession
of the property. Second, they must also assert that they were deprived of
possession either by force, intimidation, threat, strategy, or stealth. Third, the
action must be filed within one (1) year from the time the owners or legal
possessors learned of their deprivation of physical possession of the land or
building.
The other kind of ejectment proceeding is unlawful detainer (desahucio), where
one unlawfully withholds possession of the subject property after the expiration or
termination of the right to possess. Here, the issue of rightful possession is the
one decisive; for in such action, the defendant is the party in actual possession
and the plaintiffs cause of action is the termination of the defendants right to
continue in possession.7 The essential requisites of unlawful detainer are: (1) the
fact of lease by virtue of a contract express or implied; (2) the expiration or
termination of the possessors right to hold possession; (3) withholding by the
lessee of the possession of the land or building after expiration or termination of
the right to possession; (4) letter of demand upon lessee to pay the rental or
comply with the terms of the lease and vacate the premises; and (5) the action
must be filed within one (1) year from date of last demand received by the
defendant.
A person who wants to recover physical possession of his real property will prefer
an ejectment suit because it is governed by the Rule on Summary Procedure
which allows immediate execution of the judgment under Section 19, Rule 70
unless the defendant perfects an appeal in the RTC and complies with the
requirements to stay execution; all of which are nevertheless beneficial to the
interests of the lot owner or the holder of the right of possession.
On the other hand, Section 19, of Chapter II of B.P. No. 129 on Regional Trial
Courts provides:
Section 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise
exclusive original jurisdiction:

xxxx
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts.
Two (2) kinds of action to recover possession of real property which fall under the
jurisdiction of the RTC are: (1) the plenary action for the recovery of the real right
of possession (accion publiciana) when the dispossession has lasted for more than
one year or when the action was filed more than one (1) year from date of the last
demand received by the lessee or defendant; and (2) an action for the recovery of
ownership (accion reivindicatoria) which includes the recovery of possession.
These actions are governed by the regular rules of procedure and adjudication
takes a longer period than the summary ejectment suit.
To determine whether a complaint for recovery of possession falls under the
jurisdiction of the MeTC (first level court) or the RTC (second level court), we are
compelled to go over the allegations of the complaint. The general rule is that
what determines the nature of the action and the court that has jurisdiction over
the case are the allegations in the complaint. These cannot be made to depend
upon the defenses set up in the answer or pleadings filed by the defendant. 8
This general rule however admits exceptions. In Ignacio v. CFI of Bulacan, it was
held "that while the allegations in the complaint make out a case for forcible
entry, where tenancy is averred by way of defense and is proved to be the real
issue, the case should be dismissed for lack of jurisdiction as the case should
properly be filed with the then Court of Agrarian Relations." 9
The cause of action in a complaint is not what the designation of the complaint
states, but what the allegations in the body of the complaint define and describe.
The designation or caption is not controlling, more than the allegations in the
complaint themselves are, for it is not even an indispensable part of the
complaint.10
Let us refer to the allegations of the complaint filed in the Manila MeTC in Civil
Case No. 98-89174, which we quote verbatim:
3. That plaintiff is the absolute and registered owner of a parcel of land located at
No. 1332, Lacson Street, Sampaloc, Manila now being occupied by defendant;
4. That plaintiff purchased the above-said parcel of land together with its
improvements from the legal heirs of the late EMERLINDA DIMAYUGA REYES on
November 26, 1996, under and by virtue of a Deed of Absolute Sale x x x;
5. That pursuant to the said deed of sale, the title to the land and all its
improvements was transferred in plaintiffs name as evidenced by Transfer
Certificate of Title No. 233273 issued by the Register of Deeds of Manila on April
22, 1997 x x x;
6. That prior to said sale, the previous owners, represented by Mr. Lino Reyes,
husband of the said deceased Emerlinda D. Reyes and the administrator of her
estate, was in possession and control of the property subject of this complaint;

29

7. That also prior to said sale, defendant, without the knowledge and consent of
Mr. Lino Reyes, surreptitiously and by means of stealth and strategy entered,
used and occupied the said premises thus depriving the former of rightful
possession thereof;
8. That on February 21, 1994, Mr. Lino Reyes, through Atty. Alejo Sedico, his
lawyer, furnished the defendants a letter formally demanding that defendant
vacate the premises x x x;
9. That, however, defendant failed and refused to vacate despite just and legal
demand by Mr. Lino Reyes;
10. That after the sale to plaintiff of said premises, plaintiff has several times
demanded of defendants to vacate the premises, the last demand having been
made on them personally and in writing on January 14, 1997 x x x;
11. That defendant failed and refused and still fails and refuses to vacate the
premises without legal cause or justifiable reason whatsoever; 11
The answer of petitioner averred:
4. The Court has no jurisdiction over the case, having been filed by plaintiff more
than the reglementary one year period to commence forcible entry case, which is
reckoned from the date of the alleged unlawful entry of defendant by the use of
stealth and strategy into the premises;
5. For more than four decades now, defendant has been and still is a rent-paying
tenant of the subject land occupied by their residential house, dating back to the
original owner-lessor, the Dimayuga family. Her lease with no definite duration,
commenced with a rent at P60.00 per month until it was gradually increased in
the ensuing years. As of November 1996, it stood at P300.00 a month;
6. In this circumstances [sic], defendant enjoys the protective mantle of P.D. 20
and the subsequent rental control status against dispossession. She cannot be
ejected other than for causes prescribed under B.P. Blg. 25. Further, in case of
sale of the land, she has the right of first refusal under the express provision of
P.D. 1571;
7. Throughout the years of her tenancy, defendant has been updated in her rental
payment until the collector of the original owner-lessor no longer came around as
she has done theretofore;
7.1. As a result, she was compelled to file a petition for consignation of rent
before the Metropolitan Trial Court of Manila;
8. A bona fide tenant within the ambit if [sic] P.D. 20 and the subsequent rental
control status, including B.P. Blg. 25, under its terms, cannot be ousted on a plea
of expiration of her monthly lease;
9. Her lease constitutes a legal encumbrance upon the property of the
lessor/owner and binds the latters successor-in-interest who is under obligation
to respect it;
10. The land at bench is the subject of a pending expropriation proceedings;
11. Plaintiff being a married woman cannot sue or be sued without being joined
by her husband;12

Undeniably, the aforequoted allegations of the complaint are vague and iffy in
revealing the nature of the action for ejectment.
The allegations in the complaint show that prior to the sale by Lino Reyes,
representing the estate of his wife Emerlinda Reyes, he was in possession and
control of the subject lot but were deprived of said possession when petitioner, by
means of stealth and strategy, entered and occupied the same lot. These
circumstances imply that he had prior physical possession of the subject lot and
can make up a forcible entry complaint.
On the other hand, the allegation that petitioner Dela Cruz was served several
demands to leave the premises but refused to do so would seem to indicate an
action for unlawful detainer since a written demand is not necessary in an action
for forcible entry. It is a fact that the MeTC complaint was filed on September 8,
1997 within one (1) year from the date of the last written demand upon petitioner
Dela Cruz on January 14, 1997.
As previously discussed, the settled rule is jurisdiction is based on the allegations
in the initiatory pleading and the defenses in the answer are deemed irrelevant
and immaterial in its determination. However, we relax the rule and consider the
complaint at bar as an exception in view of the special and unique circumstances
present. First, as inIgnacio v. CFI of Bulacan,13 the defense of lack of jurisdiction
was raised in the answer wherein there was an admission that petitioner Dela
Cruz was a lessee of the former owners of the lot, the Reyeses, prior to the sale to
respondent Tan Te. The fact that petitioner was a tenant of the predecessors-ininterest of respondent Tan Te is material to the determination of jurisdiction. Since
this is a judicial admission against the interest of petitioner, such admission can
be considered in determining jurisdiction. Second, the ejectment suit was filed
with the Manila MeTC on September 8, 1997 or more than nine (9) years ago. To
dismiss the complaint would be a serious blow to the effective dispensation of
justice as the parties will start anew and incur additional legal expenses after
having litigated for a long time. Equitable justice dictates that allegations in the
answer should be considered to aid in arriving at the real nature of the action.
Lastly, Section 6, Rule 1 of the Rules of Court clearly empowers the Court to
construe Rule 70 and other pertinent procedural issuances "in a liberal manner to
promote just, speedy, and inexpensive disposition of every action and
proceeding."
Based on the complaint and the answer, it is apparent that the Tan Te ejectment
complaint is after all a complaint for unlawful detainer. It was admitted that
petitioner Dela Cruz was a lessee of the Reyeses for around four (4) decades.
Thus, initially petitioner as lessee is the legal possessor of the subject lot by
virtue of a contract of lease. When fire destroyed her house, the Reyeses
considered the lease terminated; but petitioner Dela Cruz persisted in returning to
the lot and occupied it by strategy and stealth without the consent of the owners.
The Reyeseshowever tolerated the continued occupancy of the lot by
petitioner. Thus, when the lot was sold to respondent Tan Te, the rights of the
Reyeses, with respect to the lot, were transferred to their subrogee, respondent

30

Tan Te, who for a time also tolerated the stay of petitioner until she decided to
eject the latter by sending several demands, the last being the January 14, 1997
letter of demand. Since the action was filed with the MeTC on September 8, 1997,
the action was instituted well within the one (1) year period reckoned from
January 14, 1997. Hence, the nature of the complaint is one of unlawful detainer
and the Manila MeTC had jurisdiction over the complaint.
Thus, an ejectment complaint based on possession by tolerance of the owner,
like the Tan Te complaint, is a specie of unlawful detainer cases.
As early as 1913, case law introduced the concept of possession by tolerance in
ejectment cases as follows:
It is true that the landlord might, upon the failure of the tenant to pay the
stipulated rents, consider the contract broken and demand immediate possession
of the rented property, thus converting a legal possession into illegal possession.
Upon the other hand, however, the landlord might conclude to give the tenant
credit for the payment of the rents and allow him to continue indefinitely in the
possession of the property. In other words, the landlord might choose to give the
tenant credit from month to month or from year to year for the payment of their
rent, relying upon his honesty of his financial ability to pay the same. During such
period the tenant would not be in illegal possession of the property and the
landlord could not maintain an action of desahucio until after he had taken steps
to convert the legal possession into illegal possession. A mere failure to pay the
rent in accordance with the contract would justify the landlord, after the legal
notice, in bringing an action of desahucio. The landlord might, however, elect to
recognize the contract as still in force and sue for the sums due under it. It would
seem to be clear that the landlord might sue for the rents due and [unpaid,
without electing to terminate the contract of tenancy;] [w]hether he can declare
the contract of tenancy broken and sue in an action desahucio for the possession
of the property and in a separate actions for the rents due and damages, etc. 14
The concept of possession by tolerance in unlawful detainer cases was further
refined and applied in pertinent cases submitted for decision by 1966. The rule
was articulated as follows:
Where despite the lessees failure to pay rent after the first demand, the lessor
did not choose to bring an action in court but suffered the lessee to continue
occupying the land for nearly two years, after which the lessor made a second
demand, the one-year period for bringing the detainer case in the justice of the
peace court should be counted not from the day the lessee refused the first
demand for payment of rent but from the time the second demand for rents and
surrender of possession was not complied with.15
In Calubayan v. Pascual, a case usually cited in subsequent decisions on
ejectment, the concept of possession by tolerance was further elucidated as
follows:
In allowing several years to pass without requiring the occupant to vacate the
premises nor filing an action to eject him, plaintiffs have acquiesced to
defendants possession and use of the premises. 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. The status of
the defendant is analogous to that of a lessee or tenant whose term of lease has
expired but whose occupancy continued by tolerance of the owner. In such a
case, the unlawful deprivation or withholding of possession is to be counted from
the date of the demand to vacate.16 (Emphasis supplied.)
From the foregoing jurisprudence, it is unequivocal that petitioners possession
after she intruded into the lot after the firewas by tolerance or leniency of the
Reyeses and hence, the action is properly an unlawful detainer case falling under
the jurisdiction of the Manila MeTC.
Even if we concede that it is the RTC and not the MeTC that has jurisdiction over
the Tan Te complaint, following the reasoning that neither respondent nor her
predecessor-in-interest filed an ejectment suit within one (1) year from February
21, 1994 when the Reyeses knew of the unlawful entry of petitioner, and hence,
the complaint is transformed into an accion publiciana, the Court deems it fair
and just to suspend its rules in order to render efficient, effective, and expeditious
justice considering the nine (9) year pendency of the ejectment suit. More
importantly, if there was uncertainty on the issue of jurisdiction that arose from
the averments of the complaint, the same cannot be attributed to respondent Tan
Te but to her counsel who could have been confused as to the actual nature of the
ejectment suit. The lawyers apparent imprecise language used in the preparation
of the complaint without any participation on the part of Tan Te is sufficient
special or compelling reason for the grant of relief.
The case of Barnes v. Padilla17 elucidates the rationale behind the exercise by this
Court of the power to relax, or even suspend, the application of the rules of
procedure:
Let it be emphasized that the rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed. Even the Rules of Court reflect this
principle. The power to suspend or even disregard rules can be so pervasive and
compelling as to alter even that which this Court itself has already declared to be
final x x x.
The emerging trend in the rulings of this Court is to afford every party litigant the
amplest opportunity for the proper and just determination of his cause, free from
the constraints of technicalities. Time and again, this Court has consistently held
that rules must not be applied rigidly so as not to override substantial justice. 18
Moreover, Section 8, Rule 40 authorizes the RTCin case of affirmance of an
order of the municipal trial court dismissing a case without trial on the merits and
the ground of dismissal is lack of jurisdiction over the subject matterto try the
case on the merits as if the case was originally filed with it if the RTC has
jurisdiction over the case. In the same vein, this Court, in the exercise of its rule-

31

making power, can suspend its rules with respect to this particular case (pro hac
vice), even if initially, the MeTC did not have jurisdiction over the ejectment suit,
and decide to assume jurisdiction over it in order to promptly resolve the dispute.
The issue of jurisdiction settled, we now scrutinize the main issue.
At the heart of every ejectment suit is the issue of who is entitled to physical
possession of the lot or possessionde facto.
We rule in favor of respondent Tan Te for the following reasons:
1. Petitioner admitted in her Answer that she was a rent-paying tenant of the
Reyeses, predecessors-in-interest of respondent Tan Te. As such, she recognized
the ownership of the lot by respondent, which includes the right of possession.
2. After the fire raged over the structures on the subject lot in late 1989 the
contracts of lease expired, as a result of which Lino Reyes demanded that all
occupants, including petitioner, vacate the lot but the latter refused to abandon
the premises. During the duration of the lease, petitioners possession was legal
but it became unlawful after the fire when the lease contracts were deemed
terminated and demands were made for the tenants to return possession of the
lot.
3. Petitioners possession is one by the Reyeses tolerance and generosity and
later by respondent Tan Tes.
Petitioner fully knows that her stay in the subject lot is at the leniency and
magnanimity of Mr. Lino Reyes and later of respondent Tan Te; and her
acquiescence to such use of the lot carries with it an implicit and assumed
commitment that she would leave the premises the moment it is needed by the
owner. When respondent Tan Te made a last, written demand on January 14, 1997
and petitioner breached her promise to leave upon demand, she lost her right to
the physical possession of the lot. Thus, respondent Tan Te should now be allowed
to occupy her lot for residential purposes, a dream that will finally be realized
after nine (9) years of litigation.
Petitioner raises the ancillary issue that on March 15, 1998, the Manila City
Council passed and approved Ordinance No. 7951:
[a]uthorizing the Manila City Mayor to acquire either by negotiation or
expropriation certain parcels of land covered by Transfer Certificates of Title Nos.
233273, 175106 and 140471, containing an area of One Thousand Four Hundred
Twenty Five (1,425) square meters, located at Maria Clara and Governor Forbes
Streets, Sta. Cruz, Manila, for low cost housing and award to actual bonafide
residents thereat and further authorizing the City Mayor to avail for that purpose
any available funds of the city and other existing funding facilities from other
government agencies x x x.19
It readily appears that this issue was not presented before the Court of Appeals in
CA-G.R. SP No. 49097 despite the fact that the respondents petition was filed on
September 25, 1998, six months after the ordinance was passed. Thus, this issue
is proscribed as are all issues raised for the first time before the Court are
proscribed.

Even granting for the sake of argument that we entertain the issue, we rule that
the intended expropriation of respondents lot (TCT No. 233273) by the city
government of Manila will not affect the resolution of this petition. For one thing,
the issue can be raised by petitioner in the appropriate legal proceeding.
Secondly, the intended expropriation might not even be implemented since it is
clear from the ordinance that the City Mayor will still locate available funds for
project, meaning the said expense is not a regular item in the budget.
WHEREFORE, this petition is DENIED for lack of merit. The April 30, 1999
Decision of the Court of Appeals reinstating the April 3, 1998 MeTC Decision in
Civil Case No. 156730-CV and the July 16, 1999 Resolution in CA-G.R. SP No.
49097 are hereby AFFIRMED IN TOTO.
No costs.
SO ORDERED.
Republic
of
the
Philippines
SUPREME
COURT
Manila
EN BANC
G.R. No. L-6097
July 13, 1953
GERONIMO
MIRAFLOR, petitioner,
vs.
HON. ELADIO R. LEAO, ETC., AURELIA MIRAFLOR, and HERMENEGILDA
TAN, respondents.
Mauricio
M.
Gualberto Cruz for respondents.

Monta

for

petitioner.

REYES, J.:
Vicente Miraflor of Santa Cruz, Zambales, died intestate in 1927. He was survived
by his second wife, Hermenegilda Tan, an only child with her, Aurelia Miraflor, and
an only child (named Antero Miraflor) with his deceased first wife. Before his
death, Vicente Miraflor had commenced in the court of first instance of the
province case No. 140, G.L.R.O. record No. 32440 for the registration of a parcel of
land with an area of 60,775 square meters acquired by him during the lifetime of
his first wife; but as he was already dead when the case was terminated,
registration was decreed in favor of his two children above-named and original
certificate of title No. 2889 was there-after issued in their name.
Antero Miraflor having died without issue in 1941, his half-sister Aurelia Miraflor
and the latter's mother filed a petition on May 15, 1951, in said case No. 140,
G.L.R.O. record No. 32440, alleging that the deceased Antero Miraflor had left no
heir except the petitioner Aurelia Miraflor, that there existed no known claim

32

against the estate of the deceased, and that she was willing to have his property
adjudicated unto her. Invoking section 112 of Act No. 496, the petition prayed that
original certificate of title No. 2889 be cancelled and a new one issued in the
name of the petitioner Aurelia Miraflor.
Acting upon the above petition, the court had the same set for hearing, and after
hearing rendered an order, dated August 10, 1951, ordering the cancellation of
the certificate of title in question and the issuance in its place of anew certificate
in the name of Aurelia Miraflor, subject to the claims mentioned in section 4, Rule
74, of the Rules of Court as well as to the usufructuary right of Hermenegilda Tan,
the surviving spouse of Vicente Miraflor.
On September 10, 1951, one Geronimo Miraflor appeared and filed a motion,
alleging that Antero Miraflor, who died without issue, was surviving by an only
ascendant, Catalina del Fierro, the deceased' grandmother, who should be the
one to succeed to his inheritance to the exclusion of his half-sister Aurelia
Miraflor; that as sole heir of the deceased Antero Miraflor; Catalina del Fierro had
already sold her share in the parcel of land covered by original certificate of title
No. 2889 to the movant Geronimo Miraflor, as evidenced by a deed dated July 3,
1946, attached to the motion; that neither Catalina del Fierro nor movant
Geronimo Miraflor was notified by publication or otherwise of the petition of
Aurelia Miraflor and Hermenegilda Tan for the issuance of a new title; and that it
was only in early September, 1951, that the movant learned of the order granting
the petition. The movant, therefore, prayed that the said order be reconsidered
and set aside, and a new order entered for the registration of the deed of sale in
his favor and the issuance of the corresponding transfer certificate of title in his
name.
The court denied the above motion in its order of September 21, 1951, holding
that the question raised therein could not be determined in the registration case,
so that what the movant should do was to file the proper action in court for the
protection of his rights, if he had any. To contest this ruling as well as the order of
August 10, 1951, and others ancillary thereto, the movant filed the present
petition for certiorari, which had been certified to this Court by the Court of
Appeals as involving a question of jurisdiction, the petition alleging that the said
order of August 10, 1951, was issued without jurisdiction "due to the absence," so
the petition says." of notices to all parties in interest and the publication in
accordance with law and jurisprudence.
It is obvious from the record that, as alleged in the petition for certiorari, the
petition of respondents Aurelia Miraflor and Hermenegilda Tan to have the original
certificate of title No. 2889 cancelled and anew one issued in the name of said
Aurelia Miraflor, was heard and decided without publication or notice to all parties

whose interest might be affected thereby. But it is contended that the court had
jurisdiction to hear and determine said petition without notice to any adverse
claimant of whose existence the court was not aware, and as authority for this
proposition, respondents cite the case of Government of the P.I. vs. Serafica, et
al.,(61 Phil., 93), where resort to section 112 of Act No. 496 to effect the transfer
of title to land from the registered owners, who were already dead, to their heirs
was sanctioned. It should be noted, however, that in the case cited there was no
controversy among the heirs, who, instead of instituting intestate proceedings in
court with a view to the final distribution of the estate of the deceased, had
preferred to resort to section 112 of Act No. 496 by filing a petition in the
registration case where title to the property in question was issued, to have the
said title cancelled and a new one issued in the name of the heirs. And this court
there expressed the opinion that a petition of that kind came within the scope of
section 112 of the Land Registration Law, which provides, among other things,
that "... Any registered owner or other person in interest may at any time apply
by petition to the court, upon the ground that any registered interests of any
description, whether vested, contingent, expectant, or inchoate, have terminated
and ceased; or that new interests have arisen or been created which do not
appear upon the certificate; ... or upon any other reasonable ground; and the
court shall have jurisdiction to hear and determine the petition after notice to all
parties in interest, and may order the entry of anew certificate ... or grant any
other relief upon such terms and conditions, requiring security if necessary, as it
may deem proper: ...," the petition to be filed and entitled in the original case in
which the decree of registration was entered. As the heirs in that case were in
agreement, the transfer to them of the registered title of the deceased owners
presented no controversial question, and probably for that reason this court
saw no need for the institution of an ordinary civil action and considered the case
on the same footing as a petition for the transfer of title from the vendor to the
vendee of registered land, which, in the absence of any serious controversy, may
without doubt be disposed of through the summary procedure contemplated in
the land registration law. It should be noticed, however, that despite its approval
of that procedure, this court nevertheless set aside the order granting the petition
for the transfer of title in that case because the petition had not been published
as required by law to give notice to those who might be affected thereby. This fact
is important because in the case before us it is not disputed that notice by
publication or otherwise was not given to all parties whose interest might be
affected by the petition for the transfer of title..
As it did not involve any controversy at all, the case cited is no authority for the
application of section 112 of Act No. 496 to the present case where a substantial
controversy has arisen because of the claim of ownership asserted by the
petitioner Geronimo Miraflor, who appears to be the son and grantee of Catalina
del Fierro, alleged sole heir of Antero Miraflor, co-owner of the land in dispute.

33

That is a controversy that pertains to an ordinary civil action. It is not a mere

incidental or routinary matter that could summarily be disposed of by the Court of
First Instance in the exercise of its special and limited jurisdiction as a land
registration court under the section cited. As was said in the case of Castillo et al.
vs. Ramos et al.,* 45 Off. Gaz. 183, the remedy provided for in that section "is
summary and not adequate for the litigation of issues pertaining to an ordinary
civil action."
In view of the foregoing, we think the lower court should have invoked its order
authorizing the transfer of title to the respondent Aurelia Miraflor once it was
shown that not all interested parties had been notified and that this respondent's
claim to the inheritance of her deceased half-brother was not free from
controversy and could not, therefore, be disposed of under the summary
procedure contemplated in section 112 of Act No. 496..
Wherefore, the petition is granted and the orders complained of are hereby
annulled without prejudice to the right of the parties to institute the proper action
or proceeding for the enforcement of their respective rights. Without special
pronouncement as to costs..
Paras, C.J., Pablo, Bengzon, Tuason, Montemayor, and Labrador, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4463
March 24, 1953
THE DIRECTOR OF LANDS, for and in representation of the INSULAR
GOVERNMENT OF THE PHILIPPINE ISLANDS, now the REPUBLIC OF THE
PHILIPPINES, petitioner-appellee,
vs.
THE REGISTER OF DEEDS FOR THE PROVINCE OF RIZAL, THE CHIEF OF
THE GENERAL LAND REGISTRATION OFFICE, respondents.
THE MUNICIPALITY OF MALABON, PROVINCE OF RIZAL, respondentappellant.
Assistant Provincial Fiscal Carlos Goco and Jose P. Santillan for appellant.
Office of the Solicitor General Pompeyo Diaz and Solicitor Antonio A. Torres for
appellee.
TUASON, J.:
This is an appeal from an order of Honorable Gavino Abaya, Judge of the Court of
First Instance of Rizal, Caloocan Branch, ordering the issuance of a new certificate

of title to the Republic of the Philippines in lieu of one held by the Municipality of
Malabon, Province of Rizal, upon the facts and petition to be presently set forth.
It appears that Judge Norberto Romualdez, then of the now defunct Court of Land
Registration, on March 9, 1912, handed down a decision confirming the title of the
Government of the Philippine Islands to a parcel of land identified in the
corresponding plan as NOQP and having an area of 81,870 square meters, more
or less. That decision on appeal was affirmed by the Supreme Court on August 25,
1917. But the decree, issued on May 19, 1922, was put not in the name of the
Philippine Government but in that of the Municipality of Malabon in whose
territory the land is located, and so was the certificate of title.
Alleging that the substitution of the Municipality of Malabon for the Government
of the Philippines was due to a clerical error, the Director of Lands, by a petition
dated September 12, 1949, and filed in Land Registration Case No. 4975 the
original case for registration prayed, and the prayer was granted, that the
Municipality of Malabon be ordered to surrender the above-mentioned certificate
of title to the Register of Deeds, and the Register of Deeds to issue in its stead to
the Republic of the Philippines a new one in pursuance of the terms of the
decision theretofore rendered.
It is this order from which the present appeal is being prosecuted.
Several assignments of error are made but they boil down to two questions,
namely: was error really committed in the entry of the decree and certificate of
title in favor of the Municipality of Malabon? Granting, arguendo, that there was
error, does relief lie by petition under section 112 of Act No. 496, known as Land
Registration Law?.
The Chief of the General Land Registration Office, who was made a party
respondent in the Director of Lands' petition, submitted by way of an answer a
report, addressed to the court, of the chief surveyor and chief of the land titles
division of that office. The so-called report states that the record of the case in
question was originally composed of two piezas; that the greater part of this
record, including the plan, was destroyed or lost in consequence of the late war
operations in the City of Manila; that from the papers which have been salvaged it
is the chief surveyors firm belief that the registration in the name of the
Municipality of Malabon was neither irregular nor inadvertent. The report states
further that the personnel assigned to this kind of work were competent and
careful, making the commission of such error as is alleged unlikely.
One of the salvaged papers referred to by Mr. Alzua, the chief surveyor, is a
motion, dated October 8, 1918, of Fiscal L. Garduo of Rizal, below whose
signature is written the words, "Con autorizacion del Fiscal General," who was the
chief law officer of the Government. The Provincial Fiscal in that motion asked for
writ of possession and alleged that the Insular Government had ceded the parcel
which was the subject of the expediente to the Municipality of Malabon, for school
purposes, and that the school authorities wanted to use it; and at the bottom of
the motion is written this court order: "Como se pide. P.M. Moir, Judge, 11th
Judicial District."

34

The truth of Fiscal Garduo's statement that he was authorized by the Attorney
General to apply for a writ of possession upon the grounds mentioned can hardly
be disputed. On no account can it be imagined that the Fiscal could have
committed a brazen falsehood which was certain to leak out and costs him his
position if not lead to his prosecution with no apparent benefit to himself.
Assuming, then, that there was a donation, or at least a proposed donation, it is
not wrong to presume, though not conclusively, that the proper deed was
executed and filed with the court, and the registration of the property donated in
the name of the donee as though it was itself the applicant followed. Section 29
of Act No. 496 authorizes the conveyance of the subject-matter of an application
for registration after trial and before the decree has been issued, "in the same
manner as if no application has been made," and the court, in such case, to order
the entry of the decree in the name of the donee or buyer.
All of this however is a mere speculation, not a finding intended to bind the
Republic of the Philippines. The point which is the only point that should
interest us now is that the registration of land in the name of a party other than
the registration applicant is by no means necessarily strange or anomalous but
may be quite in order. In other words, without losing sight of the possibility that
the grant spoken by Fiscal Garduno was only in the tentative stage and was not
consummated, the court below was confronted with serious, fundamental
contentious matters which under the prevailing statute and practice and
procedure can only be adjudicated after a regular trial in a regular court at law.
Under the circumstances of the case, Judge Abaya as Judge of the Court of Land
Registration, in which capacity he acted, obviously lacked jurisdication to compel
the surrender of the Municipality of Malabon's certificate of title and the issuance
of a new certificate to the Republic of the Philippines. We believe with counsel for
the municipality that section 112 of the Land Registration Act has been
misinterpreted and misapplied.
Roughly, section 112 on which the Director of Lands relies and the order is
planted, authorizes, in our opinion, only alteration which do not impair rights
recorded in the decree, or alterations which, if they do prejudice such rights, are
consented to by all the parties concerned, or alterations to correct obvious
mistakes. By the very fact of its indefeasibility, the Court of Land Registration
after one year loses its competence to revoke or modify in a substantial manner a
decree against the objection of any of the parties adversely affected. Section 112
itself gives notice that it "shall not be construed to give the court authority to
open the original decree of registration," and section 38, which sanctions the
opening of a decree within one year from the date of its entry, for fraud, provides
that after that period every decree or certificate of title issued in accordance with
this section shall be incontrovertible."
Under the disguise of correcting clerical errors, the procedure here followed and
the appealed order were virtual revision and nullification of generation-old decree
and certificate of title. Such procedure and such order strike at the very
foundation of the Torrens System of land recording laid and consecrated by the

emphatic provisions of section 38 and 112 of the Land Registration Act, supra. In
consonance with the universally-recognized principles which underline Act No.
496, the court may not, even it is convinced that a clerical mistake was made,
recall a certificate of title after the lapse of nearly 30 years from the date of its
issuance, against the vigorous objection of its holder. As was said in a similar but
much weaker case than this (Government vs. Judge, etc., 57 Phil., 500):
To hold that the substitution of the name of a person, by subsequent decree, for
the name of another person to whom a certificate of title was issued (five years
before) in pursuance of a decree, effects only a correction of a clerical error and
that the court had jurisdiction to do it, requires a greater stretch of the
imagination than is permissible in a court of justice. (Syllabus.)
It should be noticed that in that case, as in this case, the later decree "was based
on the hypothesis that the decree of May 14, 1925, contained a clerical error and
that the court had jurisdiction to correct such error in the manner aforesaid."
The sole remedy of the land owner whose property has been wrongfully or
erroneously registered in another's name is, after one year from the date of the
decree, not to set aside the decree, as was done in the instant case, but,
respecting the decree as incontrovertible and no longer open to review, to bring
an ordinary action in the ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent purchaser for value, for
damages.
The appealed order is therefore reversed, without prejudice, it is needless to say,
to whatever action the Director of Lands may wish to pursue along the course
indicated, subject to such legal defenses and such proofs as the adverse party
may adduce. Without costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 8160
October 27, 1916
MARCOS DE LA CRUZ, plaintiff-appellee,
vs.
RAMON FABIE, ET AL., defendants-appellants.
Antonio Sanz for appellant Fabie.
No appearance for other appellants.
Thos. D. Aitken for appellee.
ARELLANO, C. J.:
On August 23, 1909, Marcos de la Cruz filed a complaint against Vedasto
Velazquez, in which he alleged the following facts: (1) That he is the administrator
of the estate of Gregoria Hernandez, deceased; (2) that, on January 11, 1904,

35

Gregoria Hernandez was declared by the Court of Land Registration to be the

owner of a parcel of land situated at No. 364 Calle Magdalena, in the district of
Binondo of this city (the other specific circumstances in connection therewith as
alleged in the said complaint are herein taken for granted) and the proper
certificate of title No. 121, was issued in her favor by the register of deeds of the
city of Manila; (3) that the defendant Vedasto Velazquez, being the attorney in
fact of Gregoria Hernandez and having in his possession all documents and
muniments of title relative to the said land, succeeded in having the register of
deeds issue to him a certificate of title thereto on January 18 of the same year, by
presenting a deed of sale executed in his behalf by the said Gregoria Hernandez;
but that the said deed of sale was false and fraudulent and was not executed by
Gregoria Hernandez nor by any person authorized by her so to do, wherefore it
was canceled and annulled by the judgment for December 31, 1907, rendered by
the Court of First Instance of the city of Manila, as a result of the complaint filed
by Gregoria Hernandez against Vedasto Velazquez on September 25, 1906, of
which a notice of lis pendens was served on the register of deeds on May 8, 1907;
(4) that, on November 7, 1904, Vedasto Velazquez sold the said land under pacto
de retro to Ramon Fabie, and in May, 1907, sold it to him outright, whereupon
certificate of title No .766 was issued to the purchaser, Ramon Fabie being
thenceforth the owner of the land and Gregoria Hernandez being deprived of her
ownership therein; (5) that the said land was worth P15,000 and its rental value
P214. By reason of all the foregoing facts, the plaintiff prayed the court to order
Vedasto Velazquez and the Insular Treasurer (the latter subsidiarily in case of
nonpayment by the former) to pay him P29,422, without legal interest, and to pay
the costs.
These facts, it is to be supposed, were admitted by the Attorney-General in behalf
of the Insular Treasurer in demurring to the complaint.
The plaintiff amended paragraph four of his complaint, which was made to read
as follows: That on November 7, 1904, Vedasto Velazques sold the land to Ramon
Fabie under pacto de retro, the sale becoming absolute in May, 1907, no
encumbrance being noted on the certificate of title at the time of the said sale of
November 7, 1904; that on November 7, 1904, Ramon Fabie presented his deed
of sale under pacto de retro for registration, and it was registered on the same
date, November 7, 1904; and that Ramon Fabie received for the register of deeds
title to the said land, through means of certificate No. 766, and since the date of
the registration became, and is still, the owner of the land.
The Court of First Instance of the city of Manila sustained the demurrer and
granted plaintiff five days in which to amend his complaint, but as the plaintiff
would not amend it the court dismissed the complaint and the proceedings with
respect to the Insular Treasurer, with the costs against the plaintiff.

The plaintiff appealed and, on September 23, 1911, this court affirmed the
judgment of the trial court, also with costs against the plaintiff. The latter moved
for a rehearing and his motion was denied on December 4, 1915. Such was the
termination of this suit (case No. 5858). 1
On October 31, 1911, Marcos de la Cruz filed a new complaint against Ramon
Fabie and the register of deeds, in which he prayed the court: (1) To cancel and
annul the deed of conveyance, the Exhibit D; (2) to order the register of deeds to
cancel the entry of registration of the documents A, C, and D and the certificates
Nos. 43 and 766;, and (3) to order Ramon Fabie to restore the land and to pay
P17,1976 for losses and damages, together with legal interest thereon and costs.
The document A is the deed of sale by Gregoria Hernandez to Vedasto Velazques.
Document C is the instrument of sale under pacto de retro from Vedasto
Velazquez to Ramon Fabie. Document D is the deed of final sale by Velazquez to
Fabie.
The history of the case is as follows: Vedasto Velazquez was the attorney in fact of
Gregoria Hernandez. Gregoria Hernandez registered her title of ownership to the
land in question in the property registry and was issued certificate of tittle No.
121. Vedasto Velazquez, being the attorney in fact of Gregoria Hernandez, had in
his possession all the muniments of title of the land, including the certificate of
title No. 121, and, abusing her confidence in him, a few days after the registration
of the land, forged a notarial instrument wherein he made it appear that she had
sold the said land to him for the price of P8,000.
Vedasto Velasquez then went to the register of deeds and applied for the
registration of the land in his own name, presenting Gregoria Hernandez'
certificate of title No. 121 for cancellation, and the deed of conveyance which was
purported to have been made by Gregoria Hernandez in his favor in order that he
might be registered as the true owner of the land. All this was done; Gregoria
Hernandez' title was cancelled and certificate of title No. 43 was issued to
Vedasto Velazquez.
Vedasto Velazquez, on November 7, 1904, sold the land to Ramon Fabie for
P5,000 under pacto de retro, in the following terms: "This sale is condition on that
if, upon the termination of the period of one year from the date of the execution
of the present instrument, I, the vendor, do not repurchase the property from the
vendee for the price above specified, the said present conditional sale shall be
converted into an absolute and unrestricted one;Provided, however, That the said
period may be extended for another year, if both parties are willing."

36

Ramon Fabie presented this deed to the register, who entered on the back of
Vedasto Velazquez' title a memorandum of the sale under pacto de
retro mentioned in the deed.
On May 31, 1907, Vedasto Velazquez sold the land finally and absolutely to
Ramon Fabie, who presented to the register of deeds the notarial instrument
executed for the purpose and was thereupon furnished with the certificate of title
No. 766.
On September 26, 1906, Gregoria Hernandez filed a complaint against a Vedasto
Velazquez in the Court of First Instance of the city of Manila, and the plaintiff says
that the court rendered judgment on December 31, 1907, canceling and annulling
the instrument Exhibit A. This judgment was never presented in evidence in the
former proceedings nor has it been shown in the present case; but, by stipulation
of the parties, it is admitted that the said instrument was fraudulent, null, and
void. Proof of this point is, therefore, no longer necessary.
Notwithstanding that the said complaint was filed on September 26, 1906, the
register of deeds was not notified of the lis pendens (Exhibit B) until May 4, 1907,
although the year stipulated in Exhibit C for the exercise of the right of
redemption, which Vedasto Velasquez had reserved to himself, had elapsed since
November 7, 1905; form this date, November 7, 1905, the sale under right of
repurchase had become converted into an absolute and final sale, pursuant to the
stipulations contained in the said instrument Exhibit C.
Such are the facts of the present case, the same as those of the previous one,
with the difference that the first action was brought against the "assurance fund"
of the Insular Treasury, while the case at bar is an action to recover the land sold
by Velazquez to Fabie, since the sum for which the Insular Treasurer was sued
could not be obtained.
The trial court, presided over by the Honorable Judge Charles S. Lobingier,
granted all the demands of the complaint.
The first demand is that the instrument Exhibit D b avoided and canceled and
that the execution of this instrument be declared null and void in so far as it is
claimed that it affects the plaintiff's rights.
The document Exhibit D is the deed of final sale made by Vedasto Velazquez to
Ramon Fabie.

Nothing is asked for with regard to Exhibit C, which id the pacto de

retro previously executed by Vedasto Velazquez in behalf of this same Fabie. As
may be seen, the plaintiff maintains and recognizes the entire validity of the
said pacto de retro, which, by force of the terms of the covenant itself, was
converted into a final sale on November 7, 1905, therefore making the execution
of the document Exhibit D unnecessary. In his brief in the previous case, No.
5858, the plaintiff said: "The facts show that he (Fabie) bought the property form
Vedasto Velazquez on November 7, 1904, under the right of repurchase, and that
the sale was immediately registered. The evidence also shows that the time of
the purchase the certificate of title bore no entry of any encumbrance.
Consequently, Fabie was vested with a perfect title on November 7, 1904 (see
secs. 50 and 55 of Act No. 496). His title was subject to a right or repurchase
which expired in May, 1907 (not so; it expired on November 7 of the year 1905,
for the period stipulated was one year). 'The validity and sufficiency of a properly
executed contract of purchase and sale is not affected or weakened by the
addition thereto of an agreement of pacto de retroinasmuch as the right of
ownership of the thing sold, although it may be defeated, is thereby transferred to
the vendee, who is substituted for the vendor .(Guillermo vs. Matienzo, 8 Phil.
Rep., 368.)'
Well then , supposing that a notice of lis pendens, in connection with the
case of Gregoria Hernandez vs. Vedasto Velazquez, No. 4912 of the Court
of First Instance, for the cancellation of the fraudulent deed of sale,, had
been presented to the register of deeds on May 8, 1907, what effect could
it have against Fabie? (The plaintiff is talking).The mere fact that the right
to repurchase expired subsequent to the date (no; two and a half years
before) in no manner affects his rights. These were acquired on November
7, 1904. Therefore the questions relative to the lis pendens and the date of
the expiration of the period granted Velazquez to repurchase from Fabie,
may be eliminated. (Brief, pp. 13 and 14.)
This court can not possibly affirm the judgment of the trial court in do far as it
grants the first demand of the complaint, for the legal reasons contained in the
preceding considerations put forward by the plaintiff himself in his said brief, to
wit: (1) Because Ramon Fabie's title is perfect, pursuant to sections 50 and 55 of
Act No. 496; (2) because the ownership of every purchaser, even though it be
subject to a right to redeem and be defeasible by the covenant, originates from
the consummation of the contract or form the time of the delivery to him of the
thing purchased, and the pacto de retro does not affect the ownership of the
thing sold more than to either reconvey it to the vendor or to consolidate it in the
purchaser, once the condition has been fulfilled or extinguished, as decided by
this Supreme Court in the case cited by the plaintiff and in may other decisions
which now constitute settled doctrines; (3) because a notice of lis

37

pendens registered on May 8, 1907, cannot affect a sale consummated since

November 7, 1904, and which had become irrevocable and absolute since the
same date of the following years 1905, and , as the plaintiff himself very properly
insists, all questions regarding the effect of such a notice should be eliminated;
and (4) because the document Exhibit D is one of supererogation or merely
corroborative; it confers no other right, and has no other signification than a
confirmation of what is implied by that which is explicit in accordance with the
formalities of the register. So that, although the document Exhibit D were
declared to be null and void in order to deprive of its effects the absolute sale
therein stipulated, the land would not for that reason cease to belong to Fabie, for
the reasons stated by the plaintiff himself, that is, because the document Exhibit
C, which is a perfect title of ownership, in accordance with law and the cases
cited, remains in force.
The inscription of ownership made in the registry in behalf of Gregoria Hernandez
had disappeared, having been substituted by the entry in the name of Vedasto
Velazquez; and as the registry showed the latter to be the owner of the land,
Fabie was enabled to arrange with him to purchase it.
It having been proven that Fabie's ownership was and is perfect and absolute and
that he is entitled to possess, as he does possess, the land in question, it is
indsiputable that Gregoria Hernandez had lost her property, and so it would
appear that she was entitled to the indemnity she sought to recover in the
previous suit, case No. 5858.
But that indemnity was denied her by both the trial court and this court,
principally for the reason of her negligence .Section 101 of Act No. 496 provides
that any person who without negligence on his part is wrongfully deprived of any
land or any interest therein, by the registration of any other person as the owner
of such land, may bring an action against the Insular Treasurer. Fabie was
registered as the owner, it is true, but Gregoria Hernandez had not proven that he
was enabled to obtain the inscription without negligence on her part.
The lower court states the facts of the case in the following terms: "It is alleged in
the complaint and admitted in the stipulation that Velazquez, on January 18,
1904, succeeded in registering in his own name the part of the property
belonging to the deceased (Gregoria Hernandez) that is the subject matter of
these proceedings by exhibiting for the purpose a forged document (Exhibit A).
On November 7, 1904, Velazquez executed the document Exhibit C in favor of the
defendant Fabie, who in turn presente it to the register of deeds and obtained the
registration in his name .This document contains a clause of pacto de retro, valid
for one year, which subsequently expired on November 7, 1905. The fraud
committed by Velazquez having been discovered in the meanwhile (that is,

between November 7, 1904, and November 7, 1905), the deceased, on

September 21, 1906, brought an action to have said document annulled and on
May 8, 1907, a notification of lis pendens was filed in the office of the register."
In the former proceedings the Attorney-General, in behalf of the Insular Treasurer,
demurred to the complaint filed for the purpose of recovering indemnity, alleging
that the complaint itself showed that if Gregoria Hernandez suffered any loss or
damage whatsoever, it was due to her negligence and to
the deceit and faithlessness of her agent and attorney in fact Vedasto Velazquez
to whom she had confided her certificate of title, and that such loss and damage
did not result from having brought the land under the provisions of the Land
Registration Act, from its being registered by any other person, from any
ommission, mistake, or legal act unduly performed by the clerk or register,
deputy or substitute of the register, in the discharge of their official duties. For
this reason the lower court sustained the demurrer, and principally for this same
reason we affirmed the judgment of the lower tribunal.
Although case No. 5858, the record of which is attached as evidence to these
proceedings, is terminated, we desire to say that, for the reasons which will be
given later on in connection with this case, the reason for sustaining the demurrer
and for finally denying permission to bring an action against the assurance fund,
to wit Gregoria Hernandez' negligence, is solidly founded on good authority and
on facts, though these latter only appear in the present case, because the former
proceedings went no farther than the demurrer and the plaintiff refused to amend
his complaint.
The plaintiff himself testified in these proceedings that Gregoria Hernandez, while
still living, commissioned Adriano Buenaventura to attend to a certain matter
connected with her property titles, and that this was in 1904; that Gregoria
Hernandez said that Vedasto Velazquez had not delivered to her the documents
pertaining to her land, and she made this statement to the plaintiff when her
mental faculties were as yet unimpaired; and when the plaintiff was asked
whether Vedasto Velazquez used to go to Gregoria Hernandez' house very often,
he replied that he did, sometimes in the morning, at others in the afternoons, and
again during the siesta hour (record, pp. 57-58).
Adriano Buenaventura corroborated the references to him made in the testimony
just above mentioned, and stated that Vedasto Velazquez was the person who
handled Gregoria Hernandez' documents; that the land in question was the only
parcel that she possessed and that it was used for building purposes and for
raising forage grass; that Vedasto Velazquez lived in the same house with
Gregoria Hernandez, who had neither husband nor children and was 60 years old;
that when the witness made a demand upon Vedasto Velazquez, the latter told

38

him "that he (Velazquez) would present the document on such and such a day,
and that he would deliver, if not the money, the document;" and that the person
who intervened was Aniceto Reyes as administrator.
From this testimony of the plaintiff's own witnesses it is to be seen that Gregoria
Hernandez, even as far back as 1904, called upon Vedasto Velazquez to deliver to
her the certificate of title, and that Vedasto Velazquez was already speaking of
delivering money to Hernandez, and if not money, the document; that Hernandez
since 1904 interested herself in the matter of her documents and in the only
piece of land she possessed, the rental of which, as set forth in the plaintiff's first
complaint, was P214 per month, or, as he stipulated with Fabie in this second
complaint, only P66 per month, but whether it was P214 or P66, Hernandez was
too much in absolute need of this income for her support not to have been
anxious about it and about her land .Nevertheless, until September, 1906, she
had not commenced any judicial proceedings in respect to the said land, the
alleged fraudulent sale of such by Vedasto Velazquez in November, 1904, she
tried to annul, as it was annulled by the court on December 31, 1907.
James Edward Hoff, the author of a work deemed by the trial judge to be
authoritative, entitled "Australian Torrens System," says on page 448 thereof: "In
some cases damages are recoverable, or are only recoverable under certain
conditions. 1. . . . 2. . . . 3. No damages are recoverable from the `assurance fund'
if the loss has been caused or contributed to by the owner's negligence .4. With
some exceptions, damages are not recoverable from the 'assurance fund for loss
occasioned by breaches of trust.'"
The Attorney-General did not err when he wrote in his brief in the preceding case:
"To hold that the principal may recover damages from the assurance fund on
account of such a fraudulent act as that charged to Vedasto Velazquez in this
case would be equivalent to throwing open the door to fraud, to the great
advantage of the registered landowner and his agent and to the ruin and rapid
disappearance of the assurance fund, and the general funds of the Insular
Treasurer would become liable for the claims for indemnity in cases where none
such was due. This course would in time wreck the Insular Treasurer and enrich
designing scoundrels." (Brief, p. 16.)
The appellant in said case No. 5858 observed that abuse of confidence is the
same as robbery.
The agent's abuse of confidence is not comparable to a robbery. If Vedasto
Velazquez had forced the safe in which Gregoria Hernandez kept her certificate of
title, had removed the certificate therefrom and with it had performed all the
other acts imputed to him, no negligence whatever could have been charged to

Gregoria Hernandez, because the robbery would have been an unforeseen and
fortuitous event; and no one can be held liable for fortuitous happenings; but
abuse of confidence is not a fortuitous event, unforeseen and unavoidable, rather
should it be foreseen and avoided; it is a willful and deliberate act on the part of
the person who commits the abuse, perhaps because of the indolence and
negligence of the person wronged as where a checkbook is received from the
bank and the owner leaves it in the possession of a person because he reposes
confidence in such person, if the latter should draw a check against the bank the
owner of the money cannot excuse himself from liability, because he stands
convicted of negligence or failure to exercise due care in safeguarding his
documents of credit.
This negligence, in the beginning, was the reason for the ruling on the demurrer,
upon the sole facts set up in the complaint in the preceding cause and recited in
the first part of this decision. In the present case, the same plaintiff has offered
evidence of facts which show something more than negligence, to wit, the giving
of an opportunity for the abuse of confidence charged against Vedasto
Velazquez .From the testimony adduced by his witnesses, we agree with the
finding of the lower court at the end of the judgment, to wit, that in the
meanwhile, or between 1904 and 1905, Gregoria Hernandez because aware of
the fraud committed by Vedasto Velazquez, but notwithstanding that fact she
allowed two years to pass before bringing charges in court. And it is not too much
to assert that the conveyance made by Vedasto Velazquez was for a consideration
agreed upon between himself and Gregoria Hernandez; otherwise there is no
explanation of why, when demand was made upon Vedasto Velazquez for the
documents, he should have replied that on such and such a day he would deliver,
if not themoney, the document. Of what money could he have spoken that should
take the place of the document demanded of him? The money which both of them
expected in exchange for the document in case the land was sold. Negligence is
apparent, it being proven that Gregoria Hernandez had not lost sight of Vedasto
Velazquez because he frequented her house in the morning, in the afternoon and
at the siesta hour, as one witness testified, or because, according to another
witness, he lived in the same house as she did.
And though the negligence be comparable to a theft it is certain that, as
prescribed in section 55 of Act No. 496, "in case of the loss or theft of an owner's
duplicate certificate, notice shall be sent by the owner or by some one in his
behalf to the register of deeds of the province in which the land lies as soon as
the loss or theft is discovered." Up to this date neither Gregoria Hernandez nor
the plaintiff has furnished the required notice to the register of deeds of this city.
Even considering the denial of the right of action against the assurance fund from
the point view of the registration of the other owner in the registry, the defendant

39

in the case at bar, the action for recovery of possession here brought is improper.
There is no reason for ordering the register of deeds to cancel the registration A,
C, and D, as requested in the second prayer of the complaint.
In the first place, the first inscription made in the name of Gregoria Hernandez
would not be revived by canceling these other. At the commencement of his
decision the trial judge says that the purpose of these proceedings is to obtain
the cancellation of a registration of title in order to have the register substitute
other documents in place of the one to be canceled and to recover possession of
a piece of property, together with the value of its use and occupation .This court
has not found that any petition had been made to have other documents
substituted in place of those to be canceled. The second prayer of the complaint
reads literally as follows: "That the defendant register of deeds be ordered to
cancel the entry or registration of the documents A, C, and D, and to cancel and
annul the certificates Nos. 43 and 766."
Had Gregoria Hernandez, in due season, complied with her duty to notify the
register of deeds of the loss of he certificate No. 121 and had then petitioned the
court to cancel the registration of the document A, and had the court decreed the
same and ordered the register of deeds to cancel all registrations subsequent to
the original one made in the name of Gregoria Hernandez, he would have
proceeded in entire conformity with law. "In all cases of registration procured by
fraud," says the law, "the owner may pursue all his legal and equitable remedies
against the parties to such fraud. . . . After the transcription of the decree of
registration on the original application, any subsequent registration under this Act
procured by the presentation of a forged duplicate certificate, or of a forged deed
or other instrument, shall be null and void."
Any person other than Gregoria Hernandez would have exercised all her rights of
action against the perpetrator of the fraud, Vedasto Velazquez; he would have
brought proceedings for the abuse of confidence and for the recovery of the
certificate of title No. 121; he would have prosecuted the author for the forgery of
the instrument Exhibit A; in civil proceedings he would have sought to annul the
fraudulent sale contained in instrument Exhibit A; he would have prayed for all
the things above mentioned with regard to the cancellation of the registration of
the document A and the reentry of the original registration in her name, petitions
which she has not made even now in this complaint, filed seven years afterwards
and which therefore could not be and certainly were not granted by the court. The
lower court made only the following pronouncement: "It is decreed and ordered
that the documents ,asked A, C, and D and the certificates numbered 43 and 766
be canceled and annulled, and that the register of deeds be instructed to record
in his registry the said annullment and registration." Nothing is said in the
judgment about substituting any documents in place of those canceled. As far as

the public is concerned, the original registration disappeared the very moment it
was substituted by the registration of the transfer Exhibit A, which up to the
present time stands unchallenged in the registry. It remained in the registry only
as an antecedent or key to the title of the land in question.
It was necessary to institute proceedings for the abuse of confidence, first, in
order to recover the certificate of title No. 121, as in a case of theft, and in order
to be able to demand its reentry as a consequence of the reentry of the original
registration; second, in order to preclude all idea of connivance between the
owner and the thief and avert the suspicion that the loss or theft was feigned and
agreed upon, especially as the owner and the thief were, prior to all of these
events, principal and agent.
The interest which Gregoria Hernandez had in clearing up the situation and
prosecuting the case was far greater than that of the public in exacting its
vengeance. It is not known how the plaintiff came to hold and still holds in his
possession certificate No. 121.
Vedasto Velazquez has not been held to account for the results of his wrongful
act. Its effects have fallen on third persons: In the first proceedings that third
person was the Insular Treasurer; in these second proceedings, the third person is
the purchaser Ramon Fabie.
In the second place, the lower court has not set forth in his judgment any positive
ground for despoiling the defendant of his property for the purpose of returning it
to the plaintiff as the representative of Gregoria Hernadez .He explicitly states
that the defendant is the rightful owner of the land: the law protects Fabie
because he purchased from the owner previously registered; but selecting a
paragraph from the previous decision of the Supreme Court reason for deciding to
the contrary, because our decision was a contrary one in that case and although
it was only on a demurrer, yet all the legal points thus decided are as binding as
though they had been settled in a final judgment.
This Supreme Court made no finding whatever in that decision with respect to the
defendant Ramon Fabie, nor had it anything to decide, because Fabie was not a
party to the proceedings and the proceedings had not reached the stage where a
decision could be rendered on the merits, inasmuch as they had been brought
before us merely on the demurrer to the complaint.
It is true that this court stated in that decision that if Gregoria Hernandez had not
been negligent (this part was suppressed by the trial judge in his citation) she
could have cancelled inscription A and Velazquez' certificate of title No. 43 and,

40

consequently, Fabie's inscription C, not the latter's certificate of title which had
not yet been issued and which, as shown in these second proceedings, was not
issued until after the inscription of D was made. It does not appear that there was
any error on this point.

According to section 55 of the same Act. "After the transcription of the decree of
registration on the original application, any subsequent registration under this Act
procured by the presentation of a forged duplicated certificate, or of a forged
deed or other instrument, shall be null and void."

At the first question was considered in the light of the provisions of the Mortgage
Law of Cuba and the Philippines and afterwards according to those of Act No. 496,
in agreement with Act No. 190.

Quaere: Is the inscription A, made in the name of Vedasto Velazquez, null and
void on account of its being fraudulent and in his certificate No. 43 null and void?
Is the inscription C made in the name of Fabie, which appears on the back of this
certificate, also null and void? No, if it is shown that Fabie was an innocent holder,
because the same section of the Act just above cited provides: "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 to the rights of any
innocent holder for value of a certificate of title."

The Mortgage Law of Cuba and the Philippines was applied, because the appellant
in that suit, the plaintiff herein, subjected to the provisions of that law the
following question .He said: "Now we come to a stage of the proceedings similar
to that discussed in the case of Merchant vs. Lafuente (5 Phil. Rep., 638), a suit
that was decided in accordance with the said Mortgage Law. This is very clear and
cannot be denied, for in accordance with the said Mortgage Law no error
whatever was committed by this court in that pronouncement. Article 34 of the
said law positively says: 'Notwithstanding the statements contained in the
preceding article, the instruments or contracts executed or covenanted by a
person who, according to the registry, has a right thereto, shall not be invalidated
by third persons, after they have once been recorded (as happens with respect to
Fabie) although later the right of the person executing them (let us call him
Velazquez) is annulled or determined by virtue of a prior deed not recorded, or for
reasons which do not clearly appear from the registry.'
Only by virtue of a recorded instrument (like that of Hernandez) may
another later instrument (Fabie's) also recorded, be invalidated to the
prejudice of third persons, with the exceptions mentioned in article 389
(which has nothing to do with the case).
In accordance with Act No. 496, the plaintiff, after having secured a judgment
annulling the spurious sale made by Velazquez and ordering the cancellation of
the inscription A, should have complied with the provision of section 81 of the
said Act, that is to say, he should have requested the registration of the said
judgment. The clerk of the court would then have issued a certified copy thereof
addressed to the register of the province where the property is situated, and the
latter would have entered upon the proper certificate of title a memorandum to
this effect, that is, upon read as to Velazquez' certificate of title No. 43, whereon a
memorandum had been made of the inscription C in Fabie's behalf, and he would
have recorded another memorandum in witness of the annulment of the
fraudulent sale and the cancellation of the said spurious certificate of title in favor
of Velazquez. Nothing of all this was done.

The defect was that it was not alleged in the first complaint (Transcribed in the
first part of this decision) as it was agreed upon in these second proceedings, that
Fabie was an innocent holder of a certificate of title for value and, consequently,
in the demurrer no other fact could be understood as admitted than that affirmed
and in the manner in which it was affirmed in the complaint.
Question: By the mere allegation made by the plaintiff in his complaint and
accepted by the defendant in the demurrer, that Vedasto Velazquez, the notorious
and convicted forger, had sold the land to Ramon Fabie, can it be concluded that
no one other than Fabie should be considered to be the owner of the land as
being an innocent purchaser? Is not a judicial finding as to the ownership of the
land necessary, in order to know who is real vested with the ownership? Is the
affirmation of one of the parties sufficient to resolve so difficult, serious and
important a problem?
This court understood and understands, in agreement with the Attorney-General )
p. 12 of his brief), that it does not devolve upon the plaintiff and his attorney to
decide whether Ramon Fabie is or is not an innocent purchaser for value and
without knowledge of the alleged fraud or participation therein; and in the
amended complaint there is no sufficient allegation of fact to show that Ramon
Fabie is an innocent purchaser for value and that he had no knowledge of the
fraud said to have been committed by Vedasto Velazquez.
The simple allegation contained in the complaint that Fabie is a registered
innocent purchaser is not the same as that of his being a registered
innocent purchaser. The fact of the sale and the fact of the registration are not
sufficient to allow the understanding that it was also admitted in the demurrer
that he was an innocent purchaser.

41

There is no law or doctrine that authorizes such an interpretation .The plaintiff

must set forth in his complaint all the facts that necessarily conduce toward the
result sought by his action. The action was for the purpose of recovering from the
assurance fund indemnity for the damage suffered by the plaintiff in losing the
ownership of his and as a result of the registration obtained by an innocent holder
for value (purchase). It is a necessary requirement of the law that the registered
property shall have been conveyed to an innocent holder for value who shall also
have registered his acquisition. Necessarily the complaint must show these facts
as they are required by the law. Will it be understood as an indisputable fact,
as res judicata, that Fabie was an innocent purchaser merely because the fact of
the purchase and the fact of the registration were alleged in the complaint?
A person who, like Vedasto Velasquez, knew how to forge a deed of sale in his
own behalf might very easily make it appear that the property was sold to a third
party without the knowledge of the said third party and afterwards have the
purchase registered in the name of the third party so as to enable the swindler to
obtain from the assurance fund P29,420 for a piece of land worth only P5,000. We
do not say that this actually happened, but that it could have happened and we
leave the persons who have taken part in this affair their good name and
reputation intact. If in the opinion of the courts the possibility should exists, it is
sufficient to preclude interpretations and presumptions. It is not enough to
alleged in the complaint the fact of the sale and the fact of the registration in
order that it may be understood to be admitted in the demurrer that the
purchaser was presumably innocent. He might not have been innocent. If the
proceedings had gone forward after the allowance of the demurrer it might
perhaps be a question as to whose duty it was to prove that he was or was not an
innocent purchaser, but at all events it cannot but be shown to the Insular
Treasurer that the thing is irremediable, that the plaintiff's ownership has been
lost as to her, because an innocent third person holds the land and his ownership
has been finally and irrevocably entered in the registry; "in other words," says the
Attorney-General in his brief (p. 30), "in order that the court may be informed by
the allegations of the complaint whether the said Ramon Fabie is an innocent
purchaser for value and has acquired the title to said property without notice of
fraud or forgery or any encumbrance, the court is entitled to require the plaintiff
to plead all the material facts in connection with the alleged transfer and
registration of title and on the trial in proof of his allegations to present in
evidence a certified copy of the certificate of title or owner's duplicate alleged to
have been issued to said Ramon Fabie, together with the notations or
indorsements on the back of said certificate of title . . . and the plaintiff must
show the court the reason, if any there be, why the plaintiff did not in due time
pursue his legal and equitable remedies against the parties to the alleged fraud."
Elsewhere in his brief, on page 28 thereof, he also says the following: "It does not
appear why Georgia Hernandez did not file suit for the annulment of the

Fraudulent sale by Vedasto Velazquez until September 25, 1906, nor does it
appear why Georgia Hernandez or her agent did not file the lis pendens with the
register of deeds under section 79, Act No. 496, immediately upon filing her suit
in September 26, 1906, instead of waiting until May, 1907 .There is no allegation
of facts giving any reason why Gregoria Hernandez did not take steps between
January 18, 1904, and November 7, 1904, the date of the alleged sale with pacto
de retro, to have said false and fraudulent deed and the certificate of title issued
thereunder declared null and void, as the law says there are."
As Velazquez perpetrated a crime in order to appear in the registry as the owner
of the land; as the fraudulent sale appearing in the deed Exhibit A was declared to
be null and void in 1907 and, as the certificate of title No .43 was cancelled in
consequence of the annulment of the registration A, naturally a doubt arose as to
whether Vedasto Velazquez, who was not the lawful owner of the land, could
convey any right of ownership whatever to Ramon Fabie in the land acquired by
the latter; and a still greater doubt whether, after the cancellation of Velazquez'
certificate of title, on the back of which noted the sale under pacto de retro made
to Fabie, the memorandum still continued in effect.
The natural consequence of the judicial declaration of the annulment of the sale
of the land and of the certificate of title obtained by Velazquez was the filing of
another suit to compel Velazquez to restore the possession of the land to Gregoria
Hernandez or to her agent and for the cancellation of the inscription A and the
certificate of title No. 43, Ramon Fabie being included in the proceedings, because
of his being the present possessor and because the cancellation of the certificate
of title containing a memorandum of his pacto de retro purchase title might affect
him. Gregoria Hernandez or her agent in the complaint simple states the fact of
Vedasto Velazquez conveying the land to Ramon Fabie by sale under pacto de
retro.
Ramon Fabie can demur to the complaint of Gregoria Hernandez or her agent,
alleging the facts set forth therein do not constitute a right of action, because the
plaintiff must presume that he is an innocent holder of a certificate of title for
value, and, under section 55 of Act No. 496, he can not be sued by reason of such
acquisition. It is certain that in reply the plaintiff would allege that in his
complaint he is not obliged to presume anything that he has only to affirm actual
facts in support of his right of action. If no presumption may be allowed in the
complaint with respect to the facts alleged therein, why must presumption be
allowed in the admission of the demurrer? Necessarily discussion would inevitably
fall upon the principal fact in the case, to wit, whether Ramon Fabie is
aninnocent holder of a certificate of title for value and the court would finally
decide whether he is or is not, in order to determine the propriety or impropriety
of the action for recovery of possession. The Insular Treasurer would necessarily

42

have to have before him a final judgment declaring Fabie to be an innocent holder
for value in order to consider the property lost to one person by reason of the
registration of another as the owner thereof. Without this, there is no court that
can order that an owner be indemnified out of the "assurance fund."
In these proceedings it has only been shown, by virtue of a stipulation of facts,
that Ramon Fabie is an innocent holder of a certificate of title for value;
consequently, in conformity with the oft-cited section 55 of Act No. 496, he is the
absolute owner of the land mentioned in the complaint, and the action for
recovery of possession, improperly brought against him, can in no wise prosper.
It is improper to cancel the registrations A, C, and D .The last two, C, and D, the
deeds of sale under pacto de retro and the final and absolute deed of sale
executed by Vedasto Velazquez, for the reason that they are perfectly legal; and
the registration A, that of the sale forged by Vedasto Velazquez in his favor,
because, according to section 38 of Act No. 496, in case there be an innocent
purchaser for value, the decree of registration fraudulently obtained shall not be
opened, but shall remain in full force and effect forever, subject only to the right
of appeal .This is the registration to which Ramon Fabie found no objection
whatsoever and upon which the certificate No .43 showing his repurchase was
issued .
In turn the defendant asks for the cancellation of the notice of lis pendens made
on the certificate of title No. 766 issued as a result of the absolute sale. This
petition should be allowed, because it was shown by the plaintiff himself that such
was absolutely valueless.
It is improper to tax the costs against Fabie jointly with Velazquez, or in any other
manner, because Velazquez was not made a party defendant, and because Fabie
is entirely in the right.
The judgment appealed from is reversed in so far as it decreed the cancellation of
the documents A, C, and D and the certificates Nos. 43 and 766, directs the
register to record the said cancellation and orders the possession of the land to
be adjudicated to the plaintiff, with the costs against Fabie and Velazquez; and
the judgment is affirmed in so far as it denies the prayer for damages and the
payment of rental. No special finding as to costs. so ordered.
Johnson, J., concurs.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-32762 January 27, 1983
CRISTINA PENULLAR, petitioner,
vs.
PHILIPPINE NATIONAL BANK, respondent.
Teodoro T Junio for petitioner.
Antonio M. Ramos for respondent PNB.
GUTIERREZ, JR., J.:
The principal issue raised in this petition is whether or not the Court of Appeals,
even as it sustained the trial court's finding that the titles covering the disputed
parcels of land are null and void, could still declare that the mortgages annotated
on those titles are valid.
The Court of Appeals stated the facts of this case as follows:
RESOLVING: On Appeal Civil Case No. D-894 of the Court of First Instance of
Pangasinan instituted by Cristina P. Penullar against Florencio Felix et. al., for
declaration of absolute nullity of judicial proceedings in which after filing of the
complaint on 9 May, 1959, answer on 27 May, 1959 by the Philippine National
Bank stipulation of facts on 1 February, 1967 and hearing on 11 August 1967 with
only plaintiff presenting evidence purely documentary there was after that
promulgated decision disposing.
WHEREFORE, in view of all the foregoing the Court rules that:
(1) that the proceedings made under Land Registration Case No. 16347 are null
and void;
(2) that all the titles issued by the Land Registration Court pursuant to the said
Land Registration proceedings, as well as all Certificate of Title flowing from the
said original title are null and void;
(3) that the land covered by this case are the registered properties of the plaintiff
over which she holds an irrevocable and indefeasible title over the same;
(4) that the writ of possession issued by the land registration court on 26 of
September 1958 in connection with Land Registration Case No. 16347 is null and
void; (5) that since the plaintiff has been found to be the sole and absolute owner
of the properties in question, the defendants are hereby ordered to vacate the
same and to surrender the possession as well as the ownership thereof in favor of
the plaintiff;
(6) that the defendants are required to render a true and faithful accounting of
the fruits of the said properties from September 26, 1958 until the possession of
the plaintiff has been restored, and to indemnify value of said products as may be
found in said accounting. The defendants are likewise ordered to pay the costs of
this suit.
xxx xxx xxx

43

which defendant Philippine National Bank has taken here on appeal on the errors
assigned in its brief;
IT APPEARING: That the antecedents are rather complicated; it will be the task of
this Court to simplify; on 27 February, 1936 claiming that she was the absolute
owner but that therein defendants were pretending to have an interest in the
property and had intruded sometime in December, 1935, Genoveva Miguel filed
Civil Case No. 7199 in the Court of First Instance of Pangasinan against Praxedes
Moya et al., predecessors of herein plaintiff Cristina Penullar, for declaration of
ownership over three (3) portions of agricultural land situated at Bayambang,
Pangasinan; Praxedes Moya and companions presented their answer in due time
Exh. A-1; while that Civil Case No. 7199 was pending, Genoveva Miguel presented
formal application for registration of her title on 1 February, 1938 in land Case No.
16347; and Praxedes Moya opposed on 10 June, 1938 Exh. B-3; well then on a
date which is not very clear in the records but during the pendency of both Civil
Case No. 7199 and the land registration Case No. 160.47, Praxedes Moya was
able to obtain free patent over the property and unto her was issued original
certificate of title No. 3148 and on another parcel also was issued a free patent in
the name of one Josefa Sison also one of herein plaintiff's predecessors and unto
her was issued Original Certificate of Title No. 2932; in both cases, Civil Case No.
7199 and Expediente 16347 trial Judge issued order on 15 February, 1940
suspending hearing in order to give a chance to Genoveva Miguel to investigate
the Original Certificates of Title No, 3148 and 2932 Exh. A-4, issuing a
supplementary order on 11 September, 1940 that said cases be held in abeyance,
Until after the Department of Agriculture and Commerce pass upon the complaint
that Genoveva Miguel and others have made for the cancellation or withdrawal of
the free 'patent certificate issued in the name of Praxedes Moya and others.
the parties shall immediately notify the Court soon after the Department of
Agriculture and Commerce renders any action on said claim. 'Exh. B- 6;
but nothing more happened with respect to the cancellation of the free patents;
and so it was that, on 22 May, 1947 Exh. A-7 because
since September 11, 1940 up to this date, the plaintiff has failed to take any steps
for the prosecution of her action.
trial Judge in Civil Case No. 7199 dismissed the case,
without prejudice and without pronouncement as to costs,
and what Genoveva Miguel instead did after that was to prosecute the
registration case and after the same had been finally heard, in the absence of
Praxedes Moya, et. al., the Registration Court promulgated its decision on 20
December, 1955 ordering the inscription of the properties now in question in the
name of applicant Genoveva Miguel's heirs because she had died in the
meantime and as the judgment afterwards became final: Genoveva Miguel or
better stated her successors in interest applied for a writ of possession which was
granted the Registration Court on 25 September, 1958 and it was executed by the
Sheriff on 30 September, 1958 but in the words of the Sheriff, herein plaintiff
successor in interest of oppositor Praxedes Moya,

vehemently objected to the possession of the applicant,'

and a few months after that herein plaintiff Cristina Penullar filed the present Civil
Case No, T-894 for annulment of the Registration Proceeding specifically the
decision rendered therein and the titles issued pursuant to that in the name of the
heirs of Genoveva Miguel, namely Original Certificates No. 14242, 24244, 24240,
14238, 24313 as well as the incumbrance by way of mortgage constituted by the
said adjudicatees in favor of the Philippine National Bank, on the Position that the
lands having already been registered, although by way of free patent, the titles in
the names of Praxedes Moya and Josefa Sison, predecessors in interest of Cristina
Penullar became an absolute bar against posterior registration and in the trial of
the case plaintiff submitted her case on the basis of aforementioned documentary
proofs constituting of Exhs. A to 0, against this, Philippine National Bank in its
answer p. 23 R.A. submitted as special defense that it was an innocent mortgagee
for value having granted loans to the adjudicatees in the registration case namely
Maximo Alejo, Filomeno Domingo, Serafina Gascon relying on their titles which
appeared to be genuine, issued in due course and regular on their face; and it is
to be stated that the fact of this constitution of the mortgages in favor of the
Philippine National Bank by the said adjudicatees successors in interest of
Genoveva Miguel does not appear to be debated; but trial Judge after hearing the
case held for Cristina Penullar successor in the interest of Praxedes Moya and
Josefa Sison and annulled the titles issued pursuant to the decision of the Land
Registration Court in favor of the successors in interest of Genoveva Miguel; ...
The respondent Court of Appeals modified the appealed decision to the effect ...
that the mortgages in favor of Philippine National Bank attacked by plaintiff are
hereby declared valid.' In all other respects, the decision of the lower court was
affirmed. (Annex " D ", p. 18, rollo)
Not satisfied with the modified decision, plaintiff-appellee Cristina Penullar filed a
motion for reconsideration and when the motion was denied by the respondent
court, filed the instant petition.
The petitioner assigns the following errors:
I
THE COURT OF APPEALS ERRED IN HOLDING AS VALID THE MORTGAGES NEVER
ANNOTATED IN PETITIONER'S TITLES BUT IN THE VOID TITLES OF RESPONDENT'S
CO-DEFENDANTS.
II
THE COURT OF APPEALS ERRED IN ADJUDICATING RESPONDENT'S APPEAL UPON
AN ISSUE NOT RAISED IN THE PLEADINGS BEFORE ITSELF NOR BEFORE THE TRIAL
COURT.
III
THE COURT OF APPEALS ERRED IN RESORTING TO PALPABLY UNTENABLE
THEORIES AND POSTULATES TO JUSTIFY ITS DECISION.
The main issue centers on the ruling of the Court of Appeals' sustaining the
validity of the mortgages in favor of the respondent Philippine National Bank.

44

The petitioner contends: 1. that the Court of Appeals did not have a basis to rule
on the matter since the issue of the Philippine National Bank as a mortgagee in
good faith was never raised before the trial court and the Court of Appeals, and 2.
under the facts obtaining in the case was not justified in ruling that respondent
Philippine National Bank's mortgages were valid.
The record on Appeal filed by the Philippine National Bank shows that in the
Answer of the bank, there was alleged the special defense .. that the Philippine
National Bank, a credit institution, in the ordinary course of business, in good faith
and for valuable consideration, is an innocent purchaser having granted loans to
Maximo Alejo. ... and to Filomeno Domingo and Serafina Gascon ... under the
security of Torrens Title issued to the borrower and relying on the fact of the same
which appeared to be genuine, regular and in due form." (Record on Appeal, p.
24) Moreover, respondent Philippine National Bank on the very theory that it was
a mortgage in good faith filed a Motion to Dismiss the case as against it. (Record
on Appeal, pp. 31-34) And this motion was subject to another URGENT MOTION
for Resolution filed by respondent Philippine National Bank (Record on Appeal, pp.
39-40).1wph1.t The same motion prompted the petitioner plaintiff in the trial
court, to file an Opposition thereto, (Record on Appeal, PP- 40-41) which in turn
led the respondent Philippine National Bank to file a Reply to the Opposition.
(Record on Appeal pp, 48- 50).
In its appeal to the Court of Appeals, the Philippine National Bank maintained its
position that it was a mortgagee in good faith. Thus, in the third Assignment of
Error of its brief filed before the appellate court, the Philippine National Bank
adequately discussed its being a mortgagee in good faith. The first proposition is
without merit.
The second proposition covered by the first and third assignments of errors is
premised on the following arguments: Since the torrens titles wherein respondent
Philippine National Bank's mortgages were annotated were declared void,
necessarily the same mortgages annotated in the said torrens title should also be
declared void, on the theory that a mortgage is but an accessory contract. The
petitioner maintains that her torrens title should not answer for the same
mortgages since the latter were not annotated considering the "fundamental
principle of registration that Torrens titles are affected only by the encumbrance
registered and annotated in said titles." Furthermore, she argues that to validate
the mortgages annotated in the void titles of Philippine National Bank's codefendants but never annotated in her torrens titles would in effect revalidate the
void titles to co-exist with her valid title.
The petitioner considers the ruling of the Court of Appeals inconsistent because
according to her no valid lien could emanate from a void title.
The petitioner's arguments have no merit. The Court of Appeals fully explained
the reasons why the mortgages annotated in the void torrens titles should be
considered valid. Thus:
... now in resolving this question let it be granted that there is clear logic in the
position of appellees that the titles of the heirs of Genoveva Miguel mortgagors to

Philippine National Bank having been declared void, on the principle that the
rights of Philippine National Bank being dependent upon those void titles,
Philippine National Bank should not be permitted to pretend that its mortgages
should be considered a valid encumbrance upon the property, for it is like the
branch of a dead tree so to speak but the trouble is that cases cannot be decided
upon pure logic; the fact of the matter is that the Bank relief upon regular Torrens
Titles issued pursuant to a regular judgment of the registration Court: there is no
showing, absolutely no showing, that the Bank was made specifically aware of the
fact that the very property already covered by the free patents were only
afterwards adjudicated to and Torrens Titles issued in the name of the heirs of
Genoveva Miguel, who were the parties that afterwards had secured the
mortgages from the Bank, not only this, the declaration of nullity of the titles of
the heirs of Genoveva Miguel due to the fact that there had already been free
patents issued in the name of plaintiff's predecessors Praxedes Moya and Josefa
Sison came in only much later and in fact as of the time when these mortgages
were accepted by the Bank, there was as yet no decision declaring the titles of
the mortgagors null and void; stated otherwise there can be no denying the fact
that the Bank was made to rely and had the right to rely upon regular certificates
of title first presented to it by the mortgagors; ... (Rollo, pp. 17-18)
The foregoing findings and conclusions of the respondent Court are sustained by
rulings in precedent cases.
In Director of Lands v. Abache (73 Phil. 606) the principal issue hinged on whether
or not the mortgage lien annotated on the torrens title which was declared null
and void should likewise be ordered null and void. We said:
Where, however, 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
certificates 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. And this is contrary to the
evident purpose of the law. Section 39 of Act No. 496 provides that every person
receiving a certificate of title in pursuance of a dectree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value
in good faith, shall hold the same free of all encumbrance except those noted on
said certificate. We have heretofore emphasized, and do so now, that 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
behind the certificate to determine the condition of the property .
Resolving a similar issue in Blanco, et al. v. Esquierdo, et al. (110 Phil. 495) this
Court ruled:
That the certificate of title issued in the name of Fructuosa Esquierdo (mortgagor)
is a nullity, the same having been secured thru fraud, is not here in question. The
only question for determination is whether the defendant bank is entitled to the

45

protection accorded to 'innocent purchasers for value', which phrase, according to

sec. 38 of the Land Registration Law, includes an innocent mortgagee for value.
The question, in our opinion, must be answered in the affirmative.
The trial court, in the decision complained of, made no finding that the defendant
mortgagee bank was a party to the fraudulent transfer of the land to Fructuosa
Esquierdo. Indeed, there is nothing alleged in the complaint which may implicate
said defendant mortgagee in the fraud, or justify a finding that it acted in bad
faith. On the other hand, the certificate of title was in the name of the mortgagor
Fructuosa Esquierdo when the land was mortgaged by her to the defendant bank.
Such being the case, the said defendant bank, as mortgagee, had the right to rely
on 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 mortgagor appearing on the fact of said certificate. (De Lara, et. al.
vs. Ayroso 95 Phil. 185; 50 Off. Gaz., [101 4838; Joaquin vs. Madrid, et al., 106
Phil. 1060). Being thus an innocent mortgagee for value, its right or lien upon the
land mortgaged must be respected and protected, even if the mortgagor obtained
her title thereto thru fraud. ...
In the instant case, the Philippine National Bank relied on the torrens titles of the
mortgagors which had been regularly issued. The torrens titles were the result of
regular land registration proceedings duly registered with the Register of Deeds.
There was nothing in the torrens titles which would excite suspicion that the same
were fraudulently processed by the mortgagors. Applying, therefore, the
principles enunciated in the afore- cited cases, the respondent Bank was not duty
bound to further investigate the validity and/or invalidity of the torrens title.
The assertion that the Philippine National Bank could not be an innocent
mortgagee in good faith considering that the same parcel of land covered by the
invalidated titles was previously mortgaged by: first, Domingo Cayabyab, a
predecessor-in-interest of the petitioner and second, by the petitioner herself
under Transfer Certificate of Title No. 8822 to the respondent Philippine National
Bank is not well-taken. An examination of the technical descriptions of the parcels
of land covered by the three subject torrens titles shows that they are different
from each other and there is no way for a reader to detect that the void torrens
titles covered the same parcels of land in Transfer Certificate of Title No. 8822,
previously mortgaged to the respondent Bank. Thus, Transfer Certificate of Title
No. 8822 has the following technical description of the land it covers:
A parcel of land Plan F-61451, situated in the barrio of Pant-at Municipality of
Bayambang, Province of Pangasinan, Islands of Luzon, Bounded on the Northeast
by Lot No. 1-B of Plan Psd 8364, Lot No. 1 of Plan Psu-30431-Amd. and Lot No. 2 of
plan Psu-37494 vs. Lot No. 2 of plan Psu 30431 Amd. on the Southeast, by
property of Josefa Sison de Mananzan, on the Southwest, by properties of
Maximiano Felix and Heirs of Martin Palisoc, and on the Northwest by Lot No. 5 of
plan Psu-103094, and Lot No. 1-B of plan Psd 8364. Containing an area of ONE
HUNDRED FIVE THOUSAND TWO HUNDRED SEVENTY EIGHT (105,278), square
meters more or less. Surveyed under authority of Sections 41, 43, Act No. 2874

and in accordance with existing regulations of the Bureau of Lands by Pedro

Terrado, Private Land Surveyor, on Dec. 17, 1933.
On the other hand, the technical description of the parcel of land awarded to
Maximo Alejo, mortgagor in one of the subject mortgages in favor of the
respondent Bank, which appears in the writ of possession issued by the cadastral
court in the voided land registration proceedings and which necessarily must
have been included in the Original Certificate of Title No. 14240 issued in the
name of the same Maximo Alejo reads:
4. A parcel of land (Lot No. 3, plan Psu-103094). Bounded on the NE, by property
of Gregorio de Leon & Domingo Rodriguez (before) Onofre Sison Abalos (now); on
the SE. by lot No. 2; on the SW. by properties of Flaviano Junio and Vicente
Castillo; and on the NW. by Lot No. Area 14,807 square meters. Adjudicated in
favor of Maximo Alejo.
The technical description of the parcel of land awarded to Filomeno Domingo, the
mortgagor in the other mortgage in favor of respondent Philippine National Bank,
which description necessarily must have been inscribed on Transfer Certificate of
Title No. 24313 issued in his name reads:
1. A parcel of land (Lot No. 1, plan Psu- 103094).Bounded on the N. and NW. by
Lot No. 2; on the NE. by property of Gregorio de Leon & Domingo Rodriguez
(before) Onofre Sison Abalos (now); on the SE. by Vecinal Road (before) heirs of
German Maramba (now); and on the SW. by properties of Faustino Pinto and
Filemon Padua. Area 27,463 square meters. Adjudicated in favor of Florencio Felix.
2. A parcel of land (Lot No. 2, Plan Psu-103094). Bounded on the NE: by property
of Gregorio de Leon & Domingo Rodriguez before Onofre Sison Abalos (now); on
the SE. and S. by Lot No. 1; on the SW. by property of Flaviano Junio and on the
NW. by Lot No. 3. Area 26,870 square meters. Adjudicated in favor of Florencio
Felix.
We agree with the invocation by the Court of Appeals of the principle of equity:
... if there be any doubt as to the correctness of this solution this court might as
well invoke the principle that where one of two innocent parties must have to
suffer due to the act of a third person, he whose negligence had caused the
damage should be made to bear the loss; in the present case if 'he heirs of
Genoveva Miguel, that is to say herein plaintiff had only been diligent, and had
appealed from the decision in the registration case, no certificate of Title would
have been issued just like that in the name of the heirs of Genoveva Miguel and
no mortgage could have been constituted by them in favor of Bank but as it is,
said successors of Praxedes Moya and Josefa Sison failed to do that; instead they
let the decision in the registration case gain the status of finality; allowed without
prior protest, the certificate of title to be issued; did not even as early as possible,
annotate an adverse claim on the "titles; and they filed this case only several
months afterwards, it was their negligence that permitted said adjudicatees in the
said registration case to apply for and secure mortgages from the Bank.
The petitioner argues that neither she nor her predecessors could have appealed
the decision in the land registration proceedings because: 1) her predecessors

46

were already dead at the time of the promulgation of the decision, and 2) she was
not substituted as a party nor was she aware of said registration proceedings, 3)
petitioner's predecessor Praxedes Moya who was aware of the land registration
proceedings had the right to rely on the previous suspension of the land
registration proceedings; and 4) petitioner's predecessor had the right to rely on
the dismissal of Civil Case No. 7199 filed by respondent's co-defendant against;
petitioner's predecessors for "declaration of ownership 'over the subject, parcels
of land and that nobody notified petitioner or her predecessors of the revival of
the void subsequent registration proceedings.
The arguments are not well-taken. The records show that Praxedes Moya,
predecessor-in-interest of the petitioner, was fully aware of the subject land
registration proceedings. From the stipulation of the Facts" alone, the extent of
her knowledge can be gleaned Thus:
xxx xxx xxx
(7) That Notice of Hearing of the Registration Case No. 16347, G.L.R.O. Record No.
52435, dated July 11, 1955 was issued by the Court, setting the trial for October
6, 1955.
(8) Copy of this Notice of Hearing was sent by registered mail, under Registered
letter No. 118, which was received by counsel for Praxedes Moya Atty. Jose M.
Garcia, on July 22, 1955, as evidenced by Registry Return Card of letter No. 118
attached in the Record of the said registration case on page 148; and,
(9) Praxedes Moya herself received or. July 23, 1955 copy of the Notice of Hearing
as evidenced by Registry Return Card of registered letter No. 119 attached to the
records of Registration Case No. 16347 on page 151. (See minutes of October 6,
1955, page 153 of the Records of Registration Case No. 16347, G.L.R.O. Records
No. 524 35.
(10) On December 20, 1955, the Court rendered its decision in said Reg. Case
16347, Record 52435 making the following adjudication ...
xxx xxx xxx
Copy of this Decision were (sic) sent by registered mail to Atty. Jose M. Garcia,
counsel for Praxedes Moya who received it on January 27, 1956 as evidenced by
Registry Return Card of Letter No. 39 attached to the Record of Registration Case
No. 16347, on page 187,
(12) Praxedes Moya, herself, was also notified of this decision, furnished to her by
registered letter which she received on January 30, 1956 as evidenced by Registry
Return Card of Registered Letter No. 138, attached to the record of this
registration Case 16347, on page 179. " (Record on Appeal pp, 55-56)
xxx xxx xxx
As successor-in-interest, the petitioner did not only succeed to the rights and
interests of her predecessor-in-interest but she was also bound to recognize the
liens and/or encumbrances attached to the subject parcels of land which by law
are considered to be valid though not inscribed in the torrens title of that land.
The petitioner cannot invoke her relationship with her predecessor when it is to
her advantage and yet disclaim the effects of said relationship on exactly the

same subject matter when it is to her disadvantage. This is the principle which
the Court of Appeals took into consideration when it ruled that the negligence of
petitioner's predecessor-in-interest was binding upon the petitioner herself
notwithstanding her non- substitution as party to the subject land registration
proceedings.
WHEREFORE. the decision appealed from is hereby affirmed. Costs against the
petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 83290 September 21, 1990
STA. MONICA INDUSTRIAL AND DEVELOPMENT CORPORATION, petitioner,
vs.
THE COURT OF APPEALS AND THE REPUBLIC OF THE
PHILIPPINES, respondents.
Ocampo, Dizon & Domingo for petitioner.
CORTES, J.:
This case arose from proceedings to annul a 1912 decision of the land registration
court.
In 1912, the Tribuna del Registro de la Propiedad (Court of Land Registration) of
Zambales, through Judge James Ostrand, in Land Registration Case (LRC) No.
6431, confirmed the title of Justo de Perio over two (2) parcels of land in
Zambales. On August 28, 1912, Decree No. 9328 was issued by the court ordering
the registration of the two (2) parcels of land in the name of De Perio. On
December 6, 1912, Original Certificate of Title No. 48 of the Registry of Deeds of
Zambales was issued to De Perio. Parcel No. 1 consists of an area of eleven
thousand six hundred ninety-seven square meters (11,697 sq.m.) while Parcel No.
2 consists of three hundred forty thousand eight hundred twenty square meters
(340,820 sq.m.). In 1936, a portion consisting of ten thousand four hundred
square meters (10,400 sq.m.) of Parcel No. 2 was sold to the Province of
Zambales. The sale was annotated at the back of OCT No. 48. In 1954, OCT No.
48 was cancelled and TCT No. T-1369 was issued to Mercedes de Valencia
pursuant to an extrajudicial settlement of De Perio's estate. In 1962, De Valencia
sold Parcel No. 1 to Ricardo Baloy. Baloy was issued TCT No. T-7696 in 1966. In
1967, De Valencia subdivided Parcel No. 2 into five (5) lots (Lots 2-A to 2-E). TCT
No. T-1369 was cancelled and TCT Nos. 11865, 11866, 11867, and 11869 were
issued to De Valencia. TCT No. 11 868, corresponding to the portion previously
sold to the Province of Zambales, was issued to the Republic of the Philippines. In
1970, De Valencia sold the lots covered by TCT Nos. 11865 and 11866 to
petitioner Sta. Monica Industrial and Development Corporation. TCT Nos. 11865
and 11866 were cancelled and TCT Nos. T-12054 and T-12055 were issued to

47

petitioner. Petitioner consolidated the two (2) parcels of land and subdivided them
into five hundred thirty-six (536) residential lots which it sold to individual buyers.
In 1985, respondent Republic of the Philippines, through the Solicitor General,
filed with the Court of Appeals a complaint for the annulment of the decree in LRC
No. 6431, OCT No. 48 (issued to De Perio), TCT No. T-1369 (issued to De Valencia)
and TCT No. T-7696 (issued to Baloy). Respondent alleged that the decree in LRC
No. 6431 was null and void for lack of jurisdiction because the land was inside the
U.S. naval reservation and that it was still within the forest zone in 1912, having
been released therefrom only in 1961, and hence cannot be the subject of
disposition or alienation as private property. Named defendants were De Valencia
and her husband, Baloy and his wife and the Register of Deeds of Zambales. The
case was docketed as CA-G.R. SP No. 06259.
The Baloy spouses filed their answer to the complaint.
With leave of court, petitioner intervened and filed an answer-in-intervention.
Later, petitioner filed its first motion for preliminary hearing on the affirmative
defense of res judicata, which the Court of Appeals denied. Petitioner did not seek
reconsideration thereof.
Trial on the merits ensued. The Republic offered its evidence, consisting of a land
classification map prepared by the Director of Forestry in 1961 to prove that the
land became alienable and disposable only in 1961, and rested its case. Petitioner
then proceeded to present its evidence. This was, however, cut short when the
Republic moved to amend its complaint to include as party defendants all the
other transferees of the land and, thereafter, filed its amended complaint.
Petitioner again moved for a preliminary hearing on its affirmative defense of res
judicata in an effort to shorten the proceedings.
The Court of Appeals, holding that res judicata cannot be invoked as a bar to an
action for annulment of judgment on the ground of lack of jurisdiction, denied the
motion. Petitioner's motion for reconsideration was also denied, hence this
petition.
After the comment and reply were filed, the Court gave due course to the petition
and, as required, the parties filed their respective memoranda.
On April 2, 1990, the Court set the case for hearing on May 7, 1990 because, as
stated in the resolution:
...after deliberating extensively on it, the Court finds the need to hear the oral
arguments of the parties on issues which are considered determinative of the
case, including the following:
1. the nature and classification, under the pertinent laws traced back to the turn
of the century, of the two parcels of land decreed and originally titled in 1912 to
De Perio; and
2. the legal considerations that compelled the Government to seek the annulment
of the decree of the Court of Land Registration issued in favor of De Perio, his
title, and the titles of his successors-in-interest.
The parties were heard in oral argument and thereafter they were required to
submit their memoranda in amplification of their arguments.

The question presented before the Court is whether or not respondent CA

committed reversible error of law in denying petitioner's motion for preliminary
hearing on its affirmative defense of res judicata.
As iterated in a long line of cases, the following requisites must concur for a prior
judgment to constitute a bar to a subsequent case: (1) the judgment must be
final; (2) the judgment must have been rendered by a court having jurisdiction
over the subject matter and the parties; (3) the judgment must be on the merits;
and (4) there must be between the first and second actions, Identity of parties, of
subject matter, and of causes of action [San Diego v. Cardona, 70 Phil. 281
(1940); Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals, G.R. No. L15430, September 30, 1963, 9 SCRA 72; Yusingco v. Ong Hing Lian, G. R. No. L26523, December 24, 1971, 42 SCRA 589; Aroc v. People's Homesite and Housing
Corporation, G.R. No. L-39674, January 31, 1978, 81 SCRA 350; Republic v.
Alagad, G.R. No. 66807, January 26, 1989, 169 SCRA 455; Vencilao v. Vano G.R.
No.
L-25660, February 23, 1990].
In contending that the judgment in LRC No. 6431 should be annulled because the
land registration court had no jurisdiction over the subject matter of the case, the
respondent Republic puts in issue the presence of the second requisite. Therefore,
the ultimate issue before the Court is whether or not the land registration court
had jurisdiction over the two (2) parcels of land claimed by De Perio, the
predecessor-in-interest of the petitioner herein.
Necessarily, the resolution of this issue requires an inquiry into the nature of the
subject parcels of land in light of the laws prevailing at the time the judgment in
the land registration case was rendered.
Petitioner's primary argument, as summarized in its memorandum, was as
follows:
17. It must, therefore, be presumed that in LRC Case No. 6431, the court found
from the evidence adduced by the parties that (1) the two parcels of land in
question were agricultural lands as the phrase is used in Act No. 926, (2) Justo de
Perio had been in the open, continuous, exclusive and notorious possession
thereof for at least 10 years, before July 26, 1912, and (3) his possession of the
said parcels of land was in the concept of owner; and thus the court confirmed
Justo de Perio's title thereto and ordered their registration in his name. If the
Attorney General, the Director of Forestry, the Director of Lands and the Director
of Public Works opposed the application, then it must be presumed that the court
declared the said two parcels of land to be agricultural lands over their
opposition. If they did not oppose, then it must be presumed that they agreed
with the court that the said lands were really agricultural lands. It must be pointed
out that the question as to whether the two parcels of land in question are
agricultural lands and not timber lands is a question of fact and the finding of
Judge Ostrand that they are agricultural can not be reviewed by this Honorable
Court at this point in time [Petitioner's Memorandum, pp. 8-9; Rollo, pp. 211-212].

48

Additionally, petitioner argued that the boundaries of the two parcels of land, as
described in Decree No. 9328, debunk the contention that they are forest lands.
The parcels of land were bounded by privately owned property. Moreover, they
were described in the notice published in the March 1912 issue of the Official
Gazette, pp. 766-767 as "lying within the Civil Reservation, town site of Olongapo,
situated in the municipality of Olongapo, Province of Zambales, P. I." [Annex "A" of
Petitioner's Memorandum; Rollo, pp. 222-223].
On the other hand, the public respondent, through the Office of the Solicitor
General, contended:
Records disclose that by virtue of Proclamation dated November 11, 1908, then
Governor-General James F. Smith reserved for naval purposes certain lands of the
public domain in Subic, Zambales which included the parcels of land embraced
under Original Certificate of Title (OCT) No. 48 secured by De Perio in 1912. It was
only in 1961 that such Proclamation was revoked by a subsequent issuance,
Proclamation No. 731, issued by then President Garcia on February 2, 1961 and
such portions already classified as alienable and disposable and not needed for
government purposes were declared open for disposition under R.A. No. 274, in
relation to C.A. 141 and Act No. 3038. This means that the lands, subject matter
of the case, were portions of the U.S. naval reservation and were declared open
for disposition only on February 2, 1961 [Public Respondent's Memorandum, p. 3;
Rollo, p. 230].
Public respondent then reiterated that "[a]t the time Original Certificate of Title
No. 48 was issued on December 9, 1912, the parcel of land covered by the title
was still within the forest zone and it was not until January 31, 1961 that said land
was released by the Bureau of Forest Development as alienable and disposable
under Land Classification Map No. 2427" [Ibid].
It also added that "Land Classification Map No. 665 dated June 7, 1927 ... shows
that the parcels of land covered by OCT No. 48 were still part of the unclassified
public forest at the time of the registration" [Public Respondent's Memorandum,
p. 4; Rollo, p. 231].
Weighing the arguments raised by the parties, we find that the Republic has failed
to make out a convincing case for the annulment of the decree in Land
Registration Case No. 6431. It has been established that the land registration
court had jurisdiction over the two (2) parcels of land, and that OCT No. 48 and
the Transfer Certificates of Title (TCT) derived from OCT No. 48 are valid.
Act No. 926, known as the Public Land Act, which was enacted into law on
October 7, 1903 but which took effect on July 26, 1904, was the law applicable to
De Perio's petition for confirmation of his title to the two (2) parcels of land. It
provided:
SEC. 54. The following-described persons or their legal successors in right,
occupying public lands in the Philippine Islands, or claiming to own any such lands
or an interest therein, but whose titles to such lands have not been perfected,
may apply to the Court of Land Registration of the Philippine Islands for

confirmation of their claims and the issuance of a certificate of title therefor to

wit:
xxx xxx xxx
6. All persons who by themselves or their predecessors in interest have been in
the open, continuous, exclusive, and notorious possession and occupation of
agricultural public lands, as defined by said act of Congress of July first, nineteen
hundred and two, under a bona fide claim of ownership except as against the
Government, for a period of ten years next preceding the taking effect of this Act,
except when prevented by war or force majeure shall be conclusively presumed
to have performed all the conditions essential to a government grant and to have
received the same, and shall be entitled to a certificate of title to such land under
the provisions of this chapter.
xxx xxx xxx
In other words, a person who had been in open, continuous, exclusive and
notorious session and occupation of public agricultural land for a period of at least
ten (10) years prior to July 24, 1904 could petition for the confirmation of his title
over the land he had so possessed and occupied.
The land registration court confirmed De Perio's title to the two (2) parcels of land
after due notice and hearing. From this, the following conclusions may be derived:
1. that the two (2) parcels of land are agricultural as defined by law, i.e., that they
are neither timber land nor mineral land [Mapa v. Insular Government, 10 Phil.
175 (1908)];
2. that De Perio had been in open, continuous, exclusive and notorious possession
and occupation of the two (2) parcels of land for at least ten (10) years prior to
1904;
3. that his possession and occupancy was under a bona fide claim of ownership;
and
4. that under the law De Perio had title to the land as of 1904, although it was
confirmed only later in 1912.
These conclusions serve as premises to arrive at other conclusions determinative
of the case.
If the land is agricultural as defined by law, and as confirmed by Judge Ostrand, it
could not have been forest land as claimed by public respondent, the subsequent
land classification map notwithstanding. This conclusion is supported by the fact
that the two (2) parcels of land were in the Olongapo townsite and were bounded
by privately-owned land.
If De Perio had title to the land in 1904, although still imperfect, then it could not
have been prejudiced by the proclamation of Governor-General Smith in 1908
which reserved for naval purposes land in Subic, Zambales. Said proclamation
recognized the existence of private rights, thus:
xxx xxx xxx
...por la presente exceptuo de venta o colonizacion hasta nueva orden y separo
para reserva naval,salvo los derechos privados, todos y cada uno de los terrenos
publicos comprendidos dentro de los siguientes limites, a saber: [Proclamation del

49

Gobernador General de las Islas Filipinos, 11 Noviembre 1908, para. 2, 6 O.G.

1885 (2 December 1908)].
Public respondent has also failed to explain the Republic's sudden interest in the
annulment of the decree and the certificate of title issued to De Perio and the
subsequent titles issued to his successors after some seventy-three (73) years of
inaction and after a portion of the land has been developed by petitioner into a
subdivision and hundreds of residences have been built thereon. At this point in
time, that portion of land developed into a subdivision cannot, by any stretch of
imagination, be conceived as forest land. Anyway, the area wherein the two (2)
parcels of land are found, were released from the unclassified public forest and
the territory comprising the Subic naval reservation way back in 1961.
Moreover, it is now almost thirty (30) years since the land was released in 1961.
In a few more months, the possessors of the land would acquire title to the
portions they adversely possess through acquisitive prescription, without need of
title or of good faith, pursuant to the Civil Code [Art. 1137].
Finally, we find the need to emphasize that in an action to annul a judgment, the
burden of proving the judgment's nullity rests upon the petitioner. The petitioner
must establish by clear and convincing evidence that the judgment is fatally
defective. When the proceedings were originally filed by the Republic before the
Court of Appeals, the petitioner contended that when the decree in favor of De
Perio was issued by Judge Ostrand in 1912 the parcels of land were still part of
the inalienable public forests. However, petitioner's case rested solely on land
classification maps drawn several years after the issuance of the decree in 1912.
These maps fail to conclusively establish the actual classification of the land in
1912 and the years prior to that. Before this Court, petitioner reiterates said
'contention and refers, for the first time, to a 1908 proclamation reserving the
land in Zambales as a naval reservation and alleging that the subject parcels of
land are parts thereof. These, for reasons discussed earlier, are insufficient to
overcome the legal presumption in favor of the decree's regularity, more so when
we consider that notice of the application for registration and the date of hearing
thereof, addressed to the Attorney General, the Director of Lands, the Director of
Public Works and the Director of Forestry, among others, was published in the
Official Gazette and that Governor General Smith's Proclamation of 1908 itself
recognizes private rights.
WHEREFORE, the petition is granted and the Court of Appeals is ordered to
DISMISS CA-G.R. SP No. 06259.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 88623 February 5, 1990
THE REGISTER OF DEEDS OF MALABON, METRO MANILA, petitioner,
vs.
THE HONORABLE REGIONAL TRIAL COURT, MALABON, METRO MANILA,
BRANCH 170, respondent.
Benjamin M. Bustos for petitioner.
GRINO-AQUINO, J.:
On March 17, 1988, a Deed of Absolute Sale of a property covered by Transfer
Certificate of Title No. R-3899 in the name of Salome Castillo in favor of Jose M.
Castillo, was presented to the Register of Deeds (Atty. Francisco Romero) at the
Glovic Bldg. in Caloocan City for registration. It could not be given due course
because the original of said TCT No. R-3899 in the Registry of Deeds was missing.
According to the petitioner, the Registry of Deeds for Malabon became
operational on April 5, 1988. As the missing title covered a parcel of land in
Malabon, Atty. Gaudencio Cena, the Register of Deeds for Malabon, filed on April
12, 1988 in the Regional Trial Court of Malabon, a verified petition for
reconstitution of the original of TCT No. R-3899 under Rep. Act No. 26. The
petition was given due course on April 22, 1988. The court directed that a copy of
its order giving due course to the petition and setting it for hearing on August 17,
1988 be published in two (2) consecutive issues of the Official Gazette as
provided in Section 9 of Republic Act No. 26.
At the hearing on August 17, 1988, for the purpose of establishing the
jurisdictional requirement of publication of the notice of the hearing of the
petition, the petitioner submitted the following exhibits:
a) a certification dated August 10, 1988, of the Director of the National Printing
Office certifying that the order dated April 22, 1988 was included in Volume 84,
Nos. 21 and 22, May 23 and May 30,1988 issues of the Official Gazette (Exh. B);
b) the sheriffs certificate of posting (Exh. D); and
c) the registry return receipts for the copies of the notices which were sent to the
Director of Lands, the Office of the Solicitor General, the National Land Title's and
Deeds Registration Administration (NLTDRA) Salome Castillo, and Jose Castillo
(Exhs. C, C-1 to C-4).
At the continuation of the hearing on November 3, 1988, the petitioner caused to
be marked as Exhibit G the certificate of publication issued by the Director of the
National Printing Office stating that the order of the court dated April 22, 1988

50

was published in Volume 84, Nos. 21 and 22, May 23 and May 30, 1988 issues of
the Official Gazette and that the May 30, 1988 issue was released for circulation
on October 3, 1988. The May 23 and May 30 issues of the Official Gazette were
also marked as Exhibits B-1 and B-2, respectively.
The Register of Deeds of Caloocan City testified that the original TCT No. R-3899
had been missing from the files of his office since 1981, as revealed by an
inventory team of the Land Registration Commission (Exh. H )that the Deed of
Sale of the property of Salome Castillo in favor of Jose Castillo (Exh. E) was
presented for registration but it could not be registered because the original of
TCT No. R-3899 in the Registry of Deeds of Caloocan City could not be found; and
that he was authorized by the administrator of the NLTDRA to file a petition for
reconstitution of the lost original copy of TCT No. R-3899 (Exhs. I, J, K and L).
Respondent Judge of the Regional Trial Court in Malabon dismissed the petition for
lack of jurisdiction because the notice of the petition was not published in the
Official Gazette "at least thirty (30) days prior to the date of hearing" (Sec. 9, R.A.
No. 26) which had been set on August 17, 1988. The May 23 and May 30 issues of
the Official Gazette were actually released for circulation on October 3, 1988, or
forty-seven (47) days after the scheduled hearing of the petition.
Section 9 of Republic Act No. 26 provides:
Sec. 9. A registered owner desiring to have his reconstituted certificate of title
freed from the encumbrance mentioned in section seven of this Act, may file a
petition to that end with the proper Court of First Instance, giving his reason or
reasons therefor. A similar petition may, likewise, be filed by a mortgagee, lessee
or other lien holder whose interest is annotated in the reconstituted certificate of
title. Thereupon, the court shall cause a notice of the petition to be published, at
the expense of the petitioner, twice in successive issues of the Official Gazette,
and to be posted on the main entrance of the provincial building and of the
municipal building of the municipality or city in which the land lies, at least thirty
days prior to the date of hearing, and after hearing, shall determine the petition
and render such judgment as justice and equity may require. The notice shall
specify, among other things, the number of the certificate of title, the name of the
registered owner, the names of the interested parties appearing in the
reconstituted certificate of title, the location of the property, and the date on
which all persons having an interest in the property must appear and file such
claim as they may have. The petitioner shall, at the hearing, submit proof of the
publication and posting of the notice. (Emphasis supplied.)
Citing the ruling of this Court in Tahanan Development Corporation vs. Court of
Appeals, 118 SCRA 273, 303, the respondent judge ruled that: "Republic Act No.
26 specifically provides the special requirements and mode of procedure that
must be followed before the court can properly act, assume, and acquire
jurisdiction or authority over the petition, and grant the reconstitution prayed for."
As the publication required by law was null and void and of no effect because of
its tardiness, the court held that it did not acquire jurisdiction to hear and grant
the petition for reconstitution.

The petitioner filed a petition for certiorari in this Court raising a purely legal
issue: whether the actual publication of the notice of the petition in the Official
Gazette forty-seven (47) days after the hearing, instead of "at least thirty (30)
days prior to the date of hearing" was sufficient to vest jurisdiction in the court to
hear and determine the petition.
Evidently, it did not. The purpose of the publication of the notice of the petition
for reconstitution in the Official Gazette is to apprise the whole world that such a
petition has been flied and that whoever is minded to oppose it for good cause
may do so within thirty (30) days before the date set by the court for hearing the
petition. It is the publication of such notice that brings in the whole world as a
party in the case and vests the court with jurisdiction to hear and decide it.
In Director of Lands vs. The Court of Appeals and Demetria Sta. Maria de
Bernal, Greenfield Development Corporation, Alabang Development Corporation
and Ramon Bagatsing, 102 SCRA 370, this Court ruled that "in all cases where the
authority of the courts to proceed is conferred by a statute and when the manner
of obtaining jurisdiction is mandatory, it must be strictly complied with, or the
proceedings will be utterly void."
Where there is a defect in the publication of the petition, such defect deprives the
court of jurisdiction (Po vs. Republic, 40 SCRA 37). And when the court a quo lacks
jurisdiction to take cognizance of a case, it lacks authority over the whole case
and all its aspects (Pinza vs. Aldovino, 25 SCRA 220, 224).
Apart from the defective publication of the petition, another reason for its
dismissal is that the Register of Deeds for Malabon is not the proper party to file
the petition for reconstitution. Section 6 of Republic Act No. 26, which allowed the
Register of Deeds to motu proprio reconstitute a lost or destroyed certificate of
title from its corresponding owner's duplicate certificate, was expressly repealed
or declared to be "inoperative" by Section 6 of Republic Act 6732, approved on
July 17, 1989. A petition for reconstitution may now be filed only by "the
registered owner his assigns, or any person who has an interest in the property"
(Section 12, Republic Act No. 26). In other respects, the special procedure
provided in Republic Act No. 26 remains unchanged and therefore still applies
(Zuiga vs. Vicencio, 153 SCRA 720).
WHEREFORE, the petition for certiorari is denied for lack of merit. No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84201 August 3, 1990

51

NORMA S. TIRADO, petitioner,

vs.
LILIA SEVILLA, THOMAS S. ONG, CELSO UY and COURTS OF
APPEALS, respondents.
Jose P. Villanueva for petitioner.
Advincula /Rigor Law Office for private respondents.
Alfonso B. Manayon for Ong and Uy.
MEDIALDEA, J.:
This petition seeks to review on certiorari the decision of the Court of Appeals,
dated March 1, 1988, which modified and/or amended the decision of the
Regional Trial Court of Kalookan City by declaring private respondents Celso Uy
and Thomas S. Ong purchasers in good faith and for value of a parcel of land
(contrary to the findings of the trial court) as follows:
WHEREFORE, IN VIEW OF THE ABOVE, the appealed decision is hereby MODIFIED
and TCT-12456 issued in the names of Thomas S. Ong and Celso Uy is hereby
declared valid without prejudice on the part of plaintiff-appellee to file a separate
action for reimbursement for the value of said property from appellant Lilia
Sevilla.
Other than the modification above indicated, the rest of the decision appealed
from dated April 25, 1984 is hereby AFFIRMED in toto. No pronouncement as to
cost.
SO ORDERED. (p. 6, Rollo)
As culled from the decision of the trial court 1 the facts of the case are as follows:
Petitioner Norma S. Tirado (hereafter Mrs. Tirado) acquired ownership of a parcel
of land under a Deed of Assignment executed by her father Jose Dimzon on
October 12, 1967. The deed assigned 73,000 sq. m. of Dimzon's land consisting of
361,558 sq. m., (Plan of Lot B-2, Psd-4350, Exh. "C," Lilia Sevilla) (p. 163, Rollo).
Tirado subsequently sought the assistance of respondent Lilia Sevilla to have her
land titled, including that of her father. Mrs. Sevilla agreed, provided Mrs. Tirado
sold one hectare of land to her. A deed of sale was finalized on September
30,1974, under which Mrs. Sevilla would get 10,600 sq. m. (1 ha.) for a
consideration of P500,000.00. Mrs. Sevilla failed to pay the downpayment of
P50,000.00 within the agreed one-week period.
Keenly interested in having her land titled, Mrs. Tirado agreed to execute another
deed of sale whereby she would sell 15,000 sq. m. (or 1.5 has.) to Mrs. Sevilla
who, in turn, would deliver three (3) fishing boats worth P150,000.00 and advance
initial expenses for the titling of the land. The first deed of sale would be deemed
cancelled. The second document of sale was finalized on December 23, 1975.
Despite the lapse of several months, and repeated demands, Mrs. Sevilla failed to
institute any proceedings nor to advance any money for the titling of Mrs. Tirado's
land. Instead, without Mrs. Tirado's consent and knowledge, she filed a petition in
her name (Civil Case 1755, CFI, Br. XXXII Kalookan City) for the issuance of title

over the entire area of Lot B-2, Psd-4350 (Dimzon's land) which includes Mrs.
Tirado's 73,000 sq. m.
On December 23, 1976, TCT No. 4128 (covering both Mrs. Tirado and Dimson's
lands, or the entire Lot B-2 of Plan Psd 4350) was issued in Mrs. Sevilla's name.
Later, Mrs. Sevilla submitted a subdivision plan on the basis of which three (3)
transfer certificates of title (TCT Nos. C-5374, C-5379 and C-5380) were issued in
lieu of TCT-4128, likewise in the name of Mrs. Sevilla.
On March 29, 1977, TCT No. C-5380 was cancelled and in its stead Transfer
Certificate of Title Nos. C-10298 and C-10299 were issued, again in Mrs. Sevilla's
name.
On November 8, 1977, Mrs. Sevilla sold 4/5 portion of TCT No. C-10299 to Thomas
Ong and, on November 15, 1977, 1/5 portion thereof to Celso Uy (p. 77, Rollo). On
February 14, 1978, TCT No. C-12456 was issued to Ong and Uy, (co-respondents
in this petition).
On the other hand, Mrs. Tirado who had verified the issuance of TCT No. 4128,
filed on December 23, 1977, this case (CC No. 6667, RTC, Br. XXXIII, Kalookan
City) for the annulment of the judgment in Civil Case 1755 and the corresponding
cancellation of TCT No. 4128. Respondent Sevilla was declared in default for
failure to file her answer and petitioner was allowed to present her evidence ex
parte. Ong and Uy, who had been impleaded on an amended complaint (filed on
January 14, 1980) filed an answer with counterclaim and crossclaim against Lilia
Sevilla, on September 12, 1980.
On February 20, 1984, Ong and Uy were likewise declared in default for failure of
their counsel, who had been given a special power of Attorney, to appear on their
behalf at the pre-trial. Petitioner was likewise allowed to present her evidence ex
parte against Ong and Uy.
On April 25, 1984, the trial court rendered a decision, the dispositive portion of
which provides:
WHEREFORE, judgment is rendered in favor of petitioner and against respondent
Lilia Sevilla, ordering the questioned decision partly nullified and transfer
certificate of title No. 4128 issued therefrom is hereby amended to exclude the
claim of herein petitioner to the extent of 73,000 square meters. Necessarily,
subsequent transfers, if any, from the said title particularly Transfer of Certificate
Nos. C-5380, C-10298, C-10299 and C-12456, involving the property awarded to
herein petitioner are declared null and void ab initio. As to petitioner's prayer that
the Register of Deeds for the City of Kalookan be directed to issue separate
transfer certificate of title in the name of herein petitioner for the area claimed by
her totalling seventy three thousand (73,000) square meters, this Court cannot
rule on this prayer considering that the issuance of such title by the Register of
Deeds shall be subject to the submission of a subdivision plan duly approved by
the Land Registration Commission. Further respondent Lilia Sevilla is ordered to
pay unto petitioner the following:
1. The amount of P30,000.00 for moral damages and the further sum of
P20,000.00 as exemplary damages;

52

2. The amount of P10,000.00 for and as attorney's fees; and

3. The costs of suit.
With regards (sic) to the cross-claim interposed against respondent Liha D. Sevilla
and as aforestated, respondent Lilia D. Sevilla is further ordered to pay
respondents Thomas S. Ong and Celso Uy the following:
1. The amount of the purchase price of the parcel of land purchased by
respondents Thomas S. Ong and Celso Uy from respondent Lilia D. Sevilla and
which property is more particularly described in the herein cancelled TCT No. C12456;
2. The amount of P10,000.00 for and as attorney's fees; and
3. Costs of suit.
The counterclaim as interposed by respondents Thomas Ong and Celso Uy are
hereby DISMISSED for lack of basis to support the same.
SO ORDERED. (pp. 55-56, RTC Decision, Rollo)
A motion for reconsideration filed by Ong and Uy was denied on October 23,
1984.
On appeal by Mrs. Sevilla, Ong and Uy, the Court of Appeals modified the decision
by declaring Ong and Uy purchasers in good faith and for value, in effect
depriving Mrs. Tirado of that portion of land to the extent covered by TCT No.
12456.
Hence, this petition by Mrs. Tirado questioning the validity of TCT No. C-12456
issued in the names of Ong and Uy.
We affirm the ruling of the Court of Appeals.
Mrs. Tirado anchors her argument on the lis pendens earlier inscribed in TCT Nos.
10298 and 10299 on July 29, 1977. This was, however, done at the instance of
the counsel of Mrs. Tirado's mother, Mrs, Roqueta Rodriguez-Dimson who had
earlier flied CC- 1836, in the then CFI, Br. 120, Kalookan City (p. 97, Rollo) for the
annulment likewise of TCT No. 4128 and all titles emanating therefrom. The case
was however subsequently dismissed on December 15, 1977 because Mrs.
Dimson was not the real party-in-interest (p. 105, Rollo). The order cancelling Mrs.
Dimson's lis pendens was inscribed on February 7, 1978 (p. 75, Rollo) or seven (7)
days prior to the issuance of TCT No. 12456 on February 14, 1978 in Ong and Uy's
name. Mrs. Tirado insists that since the lis pendens had been duly inscribed on
TCT No. 5380 on July 29, 1977, and subsequently carried over to TCT Nos. 10298
and 10299, Ong and Uy had been duly forwarned about an infirmity in said title;
hence, at the time they purchased subject property in November, 1977, they
could not be considered purchasers in good faith, and the subsequent issuance of
TCT 12456 was an error.
The purpose of filing notice of lis pendens is to charge strangers with notice of the
particular litigation referred to in the notice; and if the notice is effective, a third
person who acquires the property affected by the lis pendens takes same subject
to the eventuality of the litigation. But when the adverse right fails in such
litigation, the lis pendens loses its efficacy (Atkins Kroll & Co. vs. Domingo, 46

Phil. 362, 1924) cited in Noblejas and Noblejas, Registration of Land Titles and
Deeds, Ann., 1986 Ed., p. 304)
Thus, the Court of Appeals correctly ruled:
... at the time appellants Ong and Uy purchased the realty in question (TCT No. C10299), they were well aware that it was involved in a litigation because of a
notice of lis pendens filed by the counsel of Roqueta Rodriguez on July 28, 1977.
However, they (Ong and Uy) took a calculated risk and brought (sic) it just the
same from Lilia Sevilla, hoping all the while mayhap, that a decision would be
rendered favorable to their predecessor-in-interest, Lilia Sevilla in Civil Case No. C1836. And true enough and as per their expectation, after said sale to appellants
(Ong and Uy), said notice of lis pendens was cancelled by virtue of the order of
the Court of First Instance of Rizal, Caloocan, Branch XII on December 17, 1977,
by virtue of a favorable decision rendered in favor of said Lilia Sevilla. On
February 14, 1978, T.C.T. No. C-12456 was issued in the names of defendantsappellants Thomas S. Ong and Celso S. Uy (Exh. C. Uy-Ong; p. 177, Records). Said
Torrens Title does not also show any notice (sic) lis pendens annotated therein,
(pp. 39-40, Rollo, CA Decision)
xxx xxx xxx
At bar, it is beyond question that at the beginning, Lilia Sevilla's title to said
property was contested by Roqueta Rodriguez, However, once the Court of First
Instance of Caloocan, Branch XII rendered its decision in favor of said Lilia Sevilla,
her title thereto became judicially settled so that it ineluctably follows that the
title awarded to her is a legal title. It also logically follows that appellants Uy and
Ong then stepped into the shoes of Lilia Sevilla so that the latter (Uy and Ong) are
to all intents and purposes purchasers in good faith and for value because their
predecessor's title was held valid by the court in Civil Case No. 1836. (p. 72, Rollo,
CA Resolution on Motion for Reconsideration)
To require Ong and Uy to go beyond the lis pendens annotation or to look beyond
TCT No. 10299 would be to impose an additional burden on Ong and Uy since the
lis pendens annotation sufficiently served its purpose.
Moreover, the lis pendens annotation, although considered a "general notice to all
the world, . . . it is not correct to speak of it as a part of the doctrine of notice, the
purchaser pendente lite is affected, not by notice, but because the law does not
allow litigating parties to give to others, pending the litigation, rights to the
property in dispute so as to prejudice the opposite party. The doctrine rests upon
public policy, not notice." (2 Bouvier, Law Dictionary and Concise Encyclopedia, p.
2032, SCRA Annotation on Civil Law, the Public Land Act and the Property
Registration Decree, 1983 Ed., Central Lawbook Publishing Co., Inc., pp. 118-119)
(emphasis supplied).
It is now pointed out that Mrs. Tirado had likewise caused to be inscribed a lis
pendens on TCT No. 10298 which had remained titled in Sevilla's name. The
parcel of land covered by said title however was never the subject of any deed of
sale between her and Ong and Uy. Moreover, such lis pendens was inscribed only
on August 31, 1979, two years after Ong and Uy had brought the land covered by

53

TCT No. 10299 in 1977, and a year after TCT No. 10299 was cancelled on
February 14, 1978 to give way to TCT No. 12456 in Ong and Uy's name.
Petitioner again points out that she had likewise caused to be inscribed a lis
pendens on TCT No. 12456 (p. 8,Rollo). This move however is irrelevant since the
inscription was made on April 22, 1980, or two years after TCT 12456 had long
become indefeasible. We quote from the CA decision:
In a host of cases, our Supreme Court has enunciated the well-settled rule that
"The Certificate serves as evidence of an indefeasible title to the property in favor
of the person whose name appears therein. After the expiration of the one year
period from the issuance of the decree of registration upon which it is based, it
becomes incontrovertible (Pamintuan vs. San Agustin, 43 Phil. 558; Reyes and
Nadres vs. Borbon and Director of Lands, 50 Phil. 791; Manuel Syjuco et al. vs.
Luis Francisco, 53 O.G. 2186, April 15, 1957; Brizuela, et al. vs. Ciriaco Vda. de
Vargas, 53 O.G. 2822, May 15, 1987. (p. 41, Rollo)
Besides, Ong and Uy were impleaded by Mrs. Tirado on an amended complaint on
January 14, 1980, two years after the issuance of TCT 12456.
ACCORDINGLY, we AFFIRM the decision of the Court of Appeals. No Costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. L-46898-99 November 28, 1989
PHILIPPINE NATIONAL BANK, petitioner,
vs.
HON. RUSTICO DE LOS REYES, AMANDO ARANA and JULIA
REYES, respondents.
The Chief Legal Counsel, for petitioner.
Alegre Law Office for private respondents.
REGALADO, J.:
Assailed in this petition for review on certiorari are (1) the decision 1 of the then
Court of First Instance of Sorsogon, Branch I, dated May 11, 1976 in Civil Case No.
2677, entitled "Amando Arana et al. vs. Philippine National Bank," and Special
Proceeding No. 2679, entitled "Philippine National Bank, Petitioner-Appellant, Re:
Properties of Spouses Amando Arana and Julia Reyes;" and (2) the resolution 2 of
the same court, dated January 17, 1977, denying petitioner's motion for
reconsideration of said decision.
The records show that on August 30, 1966, respondent spouses mortgaged six (6)
parcels of land located at Cantilla, Sorsogon to petitioner bank (PNB) to secure
the payment of a loan of P10,000.00. Two (2) of the six (6) parcels of land are
covered by free patent titles while the other four (4) are untitled and covered only
by tax declarations.

For failure of respondent spouses to pay the loan after its maturity, petitioner
bank, pursuant to a special power of attorney in the mortgage deed, effected the
extrajudicial foreclosure of the mortgage under Act No. 3135, as amended, and
purchased the same at public auction for P12,735.30 which amount included the
expenses of sale, interest and attorney's fees. The certificate of sale, dated July 1,
1969, was duly registered with the Register of Deeds on July 8, 1970. 3
After the one-year redemption period provided in said law expired without
respondent spouses having exercised their right or redemption, petitioner
executed and registered an affidavit of consolidation of ownership over the six (6)
parcels of land on July 9, 1970 and new titles were issued in its name for the two
(2) parcels covered by free patent titles and the corresponding tax declarations
for the four (4) parcels were placed in its name. 4
On May 12, 1971, Jose Barrameda, then the manager of petitioner's Sorsogon
Branch, sent a letter to respondent spouses informing them of the consolidation
of title and inviting them to repurchase the lands not later than June 15, 1971.
Respondent spouses replied on October 28, 1971 through a letter written and
signed by Alejandro Liadones, Municipal Mayor of Castilla, Sorsogon, requesting
petitioner to extend the period of repurchase to November 5, 1971. On December
19, 1971, petitioner sent another letter to respondent spouses reminding them of
the projected repurchase and informing them that petitioner would take actual
possession of the lands unless the repurchase would be effected on or before
November 30, 1971. 5
On May 9, 1972, petitioner entered into a contract to sell the six (6) parcels of
land to one Gerardo Badong for P27,000.00, with P5,400.00 as down payment
upon the execution of the contract. Petitioner informed respondent spouses of the
transaction in a letter dated May 31, 1972. 6
On July 12, 1972, respondent spouses instituted Civil Case No. 2677 for legal
redemption of the six (6) parcels of land, invoking Section 119 of the Public Land
Act, with damages. 7 Petitioner filed its answer on August 15, 1972, conceding to
respondent spouses the right to repurchase the two (2) parcels of land covered by
free patent titles, but refused the redemption of the other four (4) lots covered by
tax declarations. 8
Gerardo Badong, on the other hand, could not take possession of the two lots
covered by Tax Declarations Nos. 7245 and 7246 (formerly Tax Declarations Nos.
5824 and 5825) as respondent spouses refused to surrender possession of the
premises, and he forthwith informed petitioner of such fact in a letter dated July 3,
1972. On July 24, 1972, petitioner filed ex parte petition in Special Proceeding No.
2679 for the issuance of a writ of possession over the aforesaid two (2) lots, which
writ was granted by the court in its order of July 27, 1972. 9
The trial court noted in its decision in Civil Case No. 2677 that when the aforesaid
order was issued, said case had already been filed on July 12, 1972 by Amando
Arana and his wife, Julia Reyes.
Due to the refusal of respondent spouses to relinquish posession of the two (2)
lots in defiance of the writ of possession by the court, petitioner filed in Special

54

Proceeding No. 2679 a motion to hive respondent spouses cited for contempt of
court. 10
Civil Case No. 2677 and the motion to cite respondent spouses for contempt of
court in Special Proceeding No. 2679 were beard jointly by agreement of the
parties. At the pre-trial thereof on December 27, 1973, the parties stipulated as
follows:
1. That parcels 1 and 2 in the complaint are title lands and bear Free Patent Titles
P-123 and P-130;
2. That parcels 3, 4, 5, and 6 are not titled but plaintiffs have filed the proper
application for the issuance of free patent titles to the lands;
3. That the Philippine National Bank instituted extrajudicial foreclosure
proceedings against the lands upon failure of the plaintiffs to redeem the original
mortgage in the sum of P10,000.00 and that at the time of foreclosure the claim
of the bank was Pl 2,735.30;
4. That there was no judicial confirmation of the consolidation of title in favor of
the bank;
5. That the plaintiffs deposited the sum of P12,500.00 on account of the
redemption with the Legaspi Branch of the Philippine National Bank which deposit
is intended for the Sorsogon Branch;
6. That the Philippine National Bank is willing to have the two parcels of titled land
redeemed but not the untitled parcels. Plaintiffs counsel advanced the view that
the mortgage is indivisible and therefore the plaintiffs have the right to redeem all
the parcels, the titled as well as the untitled. 11
It further appears that during the pendency of the suit, private respondents
deposited the sum of P12,500.00 with the clerk of court of the trial court. 12
After trial on the merits, the lower court rendered its aforesaid decision of May 11,
1976 holding that respondent spouses are entitled to redeem the six (6) parcels
of land on the theory of "indivisibility of mortgage" and dismissing the petition in
Special Proceeding No. 2679 to declare the respondent spouses in contempt of
court. The dispositive portion of said decision reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby
rendered as follows:
a IN CIVIL CASE NO. 2677 the Court finds that the plaintiff (sic) have the right
to redeem the six (6) parcels of land which are the subject of the original contract
of mortgage for the sum of TWELVE THOUSAND SEVEN HUNDRED THIRTY FIVE
PESOS AND THIRTY CENTAVOS (P12,735.30). The plaintiffs having already
deposited the sum of TWELVE THOUSAND FIVE HUNDRED PESOS (P12,500.00)
with the Legaspi Branch of the Bank on account of the redemption, the deficiency
shall be paid and upon receipt of payment, the Bank is directed to execute a
release of mortgage in favor of the plaintiffs;
b The contract of promise to sell executed between the Bank and Gerardo
Badong is rescinded and cancelled and the Bank is directed to return the amount
paid by Badong on the contract without interest. Both defendants are also

ordered to turn over the possession of the parcels of land of about four (4)
hectares now in their possession to the plaintiffs;
c In SPECIAL PROCEEDING NO. 2679, the petition to declare the respondents in
contempt of court is dismissed;
d Without pronouncement as to costs in both instances. 13
Acting on petitioner's motion of May 27, 1976 for the reconsideration of said
decision, the lower court issued its challenged resolution of January 17, 1977
modifying the ratio decidendi of its decision by ruling that the applicability of the
doctrine of "indivisibility of mortgage" was deemed to have been waived by
petitioner when it agreed to the redemption of the two (2) titled lots, and holding
that the period of redemption for the four (4) untitled parcels of land is one (1)
year, not five (5) years. However, it allowed the redemption of said four (4) lots
for reasons of equity. 14
Considering that the disputed issues raised by the parties involve only questions
of law, a direct appeal bycertiorari was made to this Court. Thereafter, in a
resolution dated March 24, 1980, the Court considered the case submitted for
decision without respondents' brief for failure of the latter to file the same within
the required period. 15
On its part, petitioner's assignment of errors faults the court a quo for holding
that respondent spouses are entitled to redeem the four (4) parcels of land not
covered by free patent upon a so-called "equitable ground," that in the
foreclosure of mortgage under Act No. 3135, as amended, judicial confirmation of
the sale is necessary to vest in the purchaser absolute ownership and the
corollary right to take actual possession of the foreclosed property; and that the
issuance of a writ of possession ex parte is null and void as violative of due
process. 16
Petitioner accedes to the redemption by respondents of the two (2) parcels
covered by free patent titles, pursuant to the provisions of the Public Land Act,
the period of five (5) years after the grant of the patents not having expired. This
is correct since pursuant to Section 119 of Commonwealth Act No. 141, the Public
Land Act which is the applicable law in this case, the mortgagor had five (5) years
from the date of conveyance within which to redeem the property. 17 It is not even
necessary for the preservation of such right to repurchase to make an offer to
redeem, or tender payment of the purchase price within said period of five (5)
years. The filing of an action to redeem within that period is equivalent to a
formal offer to redeem. There is not even a need for the consignation of the
redemption price.18
Petitioner, however, denies such right to redeem in the case of the four (4)
untitled parcels due to the failure of private respondents to effect the redemption
within the period of one (1) year after the auction sale. This contention is
premised on the theory that private respondents had only one (1) year from the
foreclosure sale to redeem the untitled properties, pursuant to Section 6 of Act
No. 3135, as amended by Act No. 4118, and Section 20 of the PNB charter,
Republic Act No. 4300, as amended.

55

Upon the other hand, the theory of private respondents is that the mortgage is
indivisible, hence the right to redeem the titled parcels necessarily includes the
untitled ones. They further contend that having applied for the issuance of free
patents on the four (4) untitled parcels of land which applications were then
pending consideration in the Bureau of Lands, the five-year period in the Public
Land Act also applies to these particular parcels.
The parties were accordingly embroiled in a hermeneutic disparity on their
aforesaid contending positions. Yet, the rule on the indivisibility of mortgage finds
no application to the case at bar. The particular provision of the Civil Code
referred to provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or of the creditor.
Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is
not completely satisfied.
Neither can the creditor's heir who received his share of the debt return the
pledge or cancel the mortgage, to the prejudice of the other heirs who have not
been paid.
From these provisions is excepted the case in which, there being several things
given in mortgage or pledge, each one of these guarantees only a determinate
portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or
mortgage as the portion of the debt for which each thing is specially answerable
is satisfied.
From the foregoing, it is apparent that what the law proscribes is the foreclosure
of only a portion of the property or a number of the several properties mortgaged
corresponding to the unpaid portion of the debt where before foreclosure
proceedings partial payment was made by the debtor on his total outstanding
loan or obligation. This also means that the debtor cannot ask for the release of
any portion of the mortgaged property or of one or some of the several lots
mortgaged unless and until the loan thus, secured has been fully paid,
notwithstanding the fact that there has been a partial fulfillment of the obligation.
Hence, it is provided that the debtor who has paid a part of the debt cannot ask
for the proportionate extinguishment of the mortgage as long as the debt is not
completely satisfied. 19
That the situation obtaining in the case at bar is not within the purview of the
aforesaid rule on indivisibility is obvious since the aggregate number of the lots
which comprise the collaterals for the mortgage had already been foreclosed and
sold at public auction. There is no partial payment nor partial extinguishment of
the obligation to speak of. The aforesaid doctrine, which is actually intended for
the protection of the mortgagee, specifically refers to the release of the mortgage
which secures the satisfaction of the indebtedness and naturally presupposes that
the mortgage is existing. Once the mortgage is extinguished by a complete

foreclosure thereof, said doctrine of indivisibility ceases to apply since, with the
full payment of the debt, there is nothing more to secure.
Neither does the instant case fall within the exception contemplated in the last
two paragraphs of Article 2089 in which, there being several things given in
mortgage, each of them guarantees only a determinate portion of the account.
There is no proof or any averment to that effect.
Noteworthy, however, is an overriding consideration that should not be
overlooked in the solution of this dispute. It is admitted that applications for free
patent covering the four (4) unregistered parcels of land had been filed by
respondent spouses, and were then still pending action, which thus gives rise to
the admission that said properties involved in the aforestated cases were public
lands. 20 This presumption was never rebutted by petitioner. Hence, the right of
petitioner to foreclose its mortgage on the subject properties virtually depends on
whether the deed of mortgage is at all valid and enforceable since the four (4)
lots mortgaged apparently still formed part of the public domain when the
mortgage thereon was constituted.
It is an essential requisite to the validity of a mortgage that the mortgagor be the
absolute owner of the property, mortgaged. 21 Consequently, private respondents,
not being owners as yet of the subject lots when the same were supposedly
mortgaged, they could not have validly made any disposition of or created an
encumbrance on said four (4) lots to which they had neither title nor any vested
right. At most, what they had was a mere right of expectancy dependent on the
continuance of the circumstances then existing or a contingent right dependent
on the performance of some conditions, 22 but which could not be the proper
object of a valid mortgage contract. Since the mortgage is absolutely null and
void and ineffective from its inception, petitioner, as mortgagee, acquires no
better rights, the registration of the mortgage notwithstanding. 23 Nor would the
subsequent acquisition by the mortgagor of title over said properties through the
issuance of free patents thereover validate and legalize the mortgage thereon
under the doctrine of estoppel, 24 since upon the issuance of said patents, the lots
in question are thereby brought under the operation of the Public Land Act which
prohibits the taking of said properties for the satisfaction of debts contracted prior
to the expiration of five (5) years from the date of the issuance of the patents. 25
Consequently, there was no need for private respondents to repurchase the four
(4) parcels from petitioner. That aspect of the case actually calls for mutual
restitution as an equitable remedy, especially since the records before us are
barren of the factual background, or the mode of acquisition by petitioners, of
their possession of said lots and the circumstances under which the mortgage in
question was arranged between the parties. Therefore, incident to the nullity ab
initio of the mortgage, 26 mutual restitution by the parties of what they had
respectively received from each other under the contract in connection with the
four (4) lots must be made and is hereby ordered to be effected by them.
While the law bars recovery in a case where the object of the contract is contrary
to law and one or both parties acted in bad faith, we cannot here apply the

56

doctrine of in pari delicto 27 which admits of an exception, namely, that when the
contract is merely prohibited by law, not illegal per se, and the prohibition is
designed for the protection of the party seeking to recover, he is entitled to the
relief prayed for whenever public policy is enhanced thereby. 28 Under the Public
Land Act, the prohibition to alienate is predicated on the fundamental policy of
the State to preserve and keep in the family of the homesteader that portion of
public land which the State has gratuitously given to him, 29 and recovery is
allowed even where the land acquired under the Public Land Act was sold and not
merely encumered, within the prohibited period. 30This is without prejudice to
such appropriate action as the Government may take should it find that violations
of the public land laws were committed or involved in said transaction and
sanctions are in order.
WHEREFORE, under the considerations as amplified above and with the
modification with respect to the four (4) parcels of land not covered by free
patent titles, the proper disposition whereof we have hereinbefore directed, the
judgment appealed from is AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-48695
September 30, 1942
ANTONIO GONZALEZ, petitioner-appellee,
vs.
FELICIANO BASA, JR., and PILAR LOPEZ DE BASA, oppositors-appellants.
Javier & Javier for appellants.
Antonio Gonzalez in his own behalf.
OZAETA, J.:
This is an appeal from a decision of the fourth branch of the Court of First
Instance of Manila instructing the register of deeds of Manila to register a certain

project of partition in its entirety as requested by the appellee and not in a

mutilated form as requested by the appellants.
It appears that in the matter of the estate of the deceased Amalia Arcega y
Alfonso Vda. de Basa, case No. 50872 of the Court of First Instance of Manila, Pilar
Lopez de Basa, as administratix; Feliciano Basa, Jr., as sole and universal heir, and
Antonio Gonzalez, as creditor and attorney of the estate, presented to the court a
project of partition jointly signed by them and asked that it be approved. The said
document consists of several clauses. Clause 2 contains an inventory of the
properties left by the deceased, and clause 3 contains a list of all the obligations
of the estate. Among said obligations is that specified on page 22, letter (d), as
follows:
(d)
Se ha presentado ante los comisionados de avaluo y reclamaciones, con la
conformidad de los infrascritos, una reclamacion por el Sr. Antonio Gonzales por
la cantidad de veinte mil doscientos cincuenta pesos (P20,250) que la finada
Amalia Arcega y Alfonso Vda. de Basa le debia al tiempo de su muerte.
La naturaleza de la reclamacion apareces explicada en el escrito presentado por
dicho Sr. Antonio Gonzales al que va unido los documentos corespondientes. Los
infrascritos Pilar Lopez de Basa, como administradora judicial, y Feliciano Basa Jr.,
como unico heredero de la finada Amalia Arcega y Alfonso Vda. de Basa, han
prestado su conformidad a dicha reclamacion por ser justa y fundada. Y los
comisionados lo han aprobado en su totalidad.
Ademas los infrascritos Pilar Lopez de Basa, como administradora judicial, y
Feliciano Basa, Jr. como unico heredero de la causante Amalia Arcega y Alfonso
Vda. de Basa, han convenido con el referido Sr. Antonio Gonzalez en que el
importe de sus honorarios como abogado por la tramitacion de este expediente
es de cinco mil pesos (P5,000), los cuales sumados a los veinte mil doscientos
cincuenta pesos (P20,250) dan un total de veinticinco mil doscientos cincuenta,
cantidad esta que ni la infrascrita administradora ni el infrascrito heredero
Feliciano Basa, Jr. pueden pagar ahora por no tener dinero: pero dichos Pilar Lopez
de Basa y el referido Feliciano Basa Jr. mancomunada y solidariamente se
comprometen y obligan a pagarlo en lo futuro, devengando mientras tanto dicha
cantidad de P25,250 intereses a razon del ocho por ciento (8%) anual, y en
garantia del pago de dicho principal e intereses el Sr. Feliciano Basa Jr. cede y
traspasa en hipoteca a favor del Sr. Antonio Gonzales LOS BIENES INMUEBLES
descritos en la clausula segunda (A) Nos. 1 al 48 de este proyecto de particion,
por lo que la adjudicacion de dichos bienes iNmuebles a favor del infrascrito
Feliciano Basa Jr. se hace sujeto a dicha hipoteca a favor del Sr. Antonio Gonzales.
The adjudication is contained in clause 4, which reads as follows:
ADJUDICACION
Como quiera que la causante AMALIA ARCEGA Y ALFONSO VDA. DE BASA murio
viuda y no tuvo en su matrimonio mas que un solo hijo, el mencionado FELICIANO
BASA jr., Y como quiera que en el testamento legalizado en este expediente al
referido Sr. FELICIANO BASA jr. se instituye unico y universal heredero de todos

57

los bienes dejados por la finada, se le adjudica en este proyecto de particion

todos dichos bienes mencionados y descritos en la CLAUSULA SEGUNDA de este
proyecto de particion; pero sujeta dicha adjudicacion a los gravamenes
hipotecarios mencionados en los parrafos (a), (b) y (d) de la clausula
tercera, intitulada OBLIGACIONES, de este proyecto de particion, sobre los bienes
ahi mencionados y especificados.
Said project of partition was approved by the court "en todas sus partes" in an
order dated January 12, 1938.
Thereafter Feliciano Basa, Jr., thru his present attorney Mr. Benedicto M. Javier,
procured from the clerk of court a certified copy of said project of partition in a
modified or mutilated form in that page 22 thereof, which we have copied above,
was omitted at the express request of Attorney Javier. The certification of the
clerk of court, dated June 18, 1941, reads in part as follows:
I, L. PASICOLAN, Clerk of the above-entitled Court, do hereby certify that the
attached documents, consisting of 26 pages, are true and correct copies of
"LETTERS OF ADMINISTRATION" dated March 16, 1937, "PROYECTO DE
PARTICION" dated December 29, 1937, except the entire page 22 thereof, and the
letter "d" in parenthesis and the words "de la clausula tercera" appearing on page
24, which letter "d" represents the said entire page 22; the "ORDER, dated
January 12, 1938, and the "ORDEN" dated February 12, 1938.
The elimination of the aforementioned page 22, and the letter "d" and the words
"de la clausula tercera" has been expressly requested by Attorney Benedicto M.
Javier.
That certified copy, together with the owner's duplicates of the certificates of title
covering the real properties adjudicated to Feliciano Basa, Jr., was presented to
the register of deeds of Manila for registration with a view to the issuance of the
corresponding transfer certificates of title in the name of Feliciano Basa, Jr., free
from the mortgage lien in favor of Antonio Gonzalez. The latter, upon learning
thereof, objected to the registration of the project of partition as thus mutilated
and requested the register of deeds, in lieu thereof, to register the certified
complete copy of said document which he then and there presented with a view
to the annotation of the mortgage in his favor of the certificates of title to be
issued in the name of Feliciano Basa, Jr. The register of deeds refused to accede
to said request of Attorney Gonzales on the ground that Attorneys Javier & Javier,
representing Feliciano Basa, Jr., refused to grant him authority to annotate said
mortgage on the certificates of title to be issued in the name of Basa, and that
since a mortgage is presumed to be a voluntary transaction between the parties
he had no authority to make such annotation without the consent of both parties.
Thereupon Attorney Gonzalez submitted the matter to the fourth branch of the
Court of First Instance of Manila in consulta under section 200 of the
Administrative Code, with the result already indicated at the outset.
Both parties have filed lengthy briefs entirely out of proportion to the nature of
the question involved. The appellants oppose the registration of the complete
certified copy of the project of partition and try to justify their presentation to the

register of deeds of said document in a mutilated condition by alleging (1) that

they are not indebted to Attorney Gonzalez in the sum of P25,250 or any part
thereof; (2) "that in the remote even that they have signed any contract of
indebtedness for any amount in favor of Attorney Antonio Gonzalez, the same
was without consideration and they have been deceived in signing it without
being first aware of its contents. insofar [inasmuch ] as Attorney Antonio Gonzales
is their "compadre" and formerly enjoyed their absolute confidence"; and (3) that
the mortgage obligation in question was inserted in said project of partition by
Attorney Antonio Gonzalez without their knowledge and consent.
In deciding to comply with the request of the appellants for the registration of the
project of partition as mutilated, over the objection of the appellee, who tendered
a complete, certified true copy of the same document, the register of deeds of
Manila impliedly conceded to them the right to repudiate and annul an obligation
evidenced by said document against the will of the obligee and without judicial
intervention. That is obviously wrong. It is precisely his duty to see to it that a
document presented for registration is regular and in due form. The mutilated
certified copy was irregular on its face and should have been rejected by him. In
fact his authority in the premises goes no father than this. He has no authority to
inquire into the intrinsic validity of a document based upon proofs aliunde. If he
had no authority to inquire into the truth of appellant's allegation as to lack of
consideration for the mortgage in question, much less was he authorized to
assume the truth of such allegation without any investigation. The project of
partition in question of partition in question, having been signed by the parties
and approved by the court, is presumed to be valid and is acceptable for
registration in its entirety. Neither of the parties may alter it without the consent
of the other and the approval of the court.
The reasoning of the register of deeds that, inasmuch as a mortgage is a
voluntary transaction, he had authority to register it without the consent of both
parties, is fallacious. He confuses the execution of a mortgage with its
registration. It is the execution of the mortgage that is voluntary. Once a
mortgage has been signed in due form, the mortgagee is entitled to its
registration as a matter of right. By executing the mortgage the mortgagor is
understood to have given his consent to its registration, and he cannot be
permitted to revoke it unilaterally. The validity and fulfillment of contracts cannot
be left to the will of one of the contracting parties (article 1256 of the Civil Code).
In the last analysis, the case is as if Feliciano Basa, Jr., had presented to the
register of deeds a certified complete copy of the project of partition with the
request that the register of deeds take into consideration only the rights, and
ignore the obligations, evidenced by said document. It is the same as if a buyer of
real property who mortgaged the property bought to secure the payment of the
purchase price, had presented the combined deed of sale and mortgage to the
register of deeds with the request to transfer the title to him without annotating
the mortgage thereon. Is the register of deeds authorized to comply with such

58

request? No reasonable person would so contend; and yet that is what the
register of deeds of Manila proposes to do in the present case.
Feliciano Basa, Jr., claims the right to have the properties of his deceased mother
transferred to his name by the register of deeds in virtue of the adjudication
contained in the project of partition which was duly approved by the court; but
that adjudication was made expressly subject to the mortgage obligation in
question. Basa certainly cannot invoke and at the same time repudiate the said
document. If he wants to annul the mortgage stipulated in said project of partition
and secure a clean title to the property adjudicated to him, he should first procure
the annulment by appropriate judicial action before presenting said document for
registration. He cannot arrogate to himself the right to annul said mortgage or to
amend the court's order approving the project of partition "in all its parts."
The questions of fact raised by appellants in this proceeding concerning the
alleged lack of consideration for the mortgage in question and the circumstances
under which they signed the project of partition, should be litigated in an
appropriate judicial action and not in this consulta, wherein the only question that
may properly be determined is whether the register of deeds should accept for
registration a certified mutilated copy or a certified completecopy of the project of
partition in question. Needles to say, the decision on this question cannot affect
the right of the appellants to attack the validity of the mortgage in question in an
appropriate separate action.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 95095
February 7, 1991
UNITED COCONUT PLANTERS BANK, petitioner,
vs.
HON. LUIS R. REYES, in his capacity as Presiding Judge of the Regional
Trial Court, Branch 22, 4th Judicial Region, Imus, Cavite, respondent.
Encanto, Mabugat & Associates for petitioner.
GANCAYCO, J.:
Does the denial of an ex parte motion for the issuance of a writ of possession filed
by a purchaser at a foreclosure sale after the expiration of the redemption period
constitute grave abuse of discretion by the lower court? This is the issue
presented for resolution in this case.
The spouses Teodoro and Sonia Espiritu obtained credit accommodations
amounting to TWO HUNDRED SIXTY THOUSAND PESOS (P260,000.00) from
petitioner United Coconut Planters Bank. These credit accommodations were
secured by real estate mortgages over four (4) parcels of land located at Kawit,
Cavite owned by the Espiritu spouses.

The Espiritu spouses defaulted in the payment of their obligations so that the
mortgage was extrajudicially foreclosed. At the public auction held on January 12,
1982, the subject properties were sold to petitioner which was issued a certificate
of sale in its favor.
For failure of the spouses to redeem the foreclosed properties, petitioner
consolidated its ownership over the same and secured Transfer Certificates of
Title Nos. T-1 54828, T-154835, T-154837 and T-154836 in its name.
On February 16, 1990, petitioner filed an ex parte motion 1 for the issuance of a
writ of possession in LRC Case No. 598-90 before the Regional Trial Court of Imus,
Cavite, Br. 22 so that it may be placed in possession of the subject properties
which the Espiritu spouses refused to deliver to petitioner and instead continued
to occupy.
After hearing, the respondent judge Luis R. Reyes issued the now questioned
order dated July 6, 1990 2 directing petitioner to file the proper petition making
the Espiritu spouses proper respondents so that they may be summoned and that
the court may exercise jurisdiction over them.
The motion for reconsideration 3 filed by petitioner was denied by respondent
judge in an order dated August 14, 1990 4 for failure to comply with the
requirements that a motion be under oath and that it be set for hearing and for
the further reason that the court has not yet acquired jurisdiction over the subject
matter of the case and over the parties.
On August 24, 1990, petitioner filed another motion for reconsideration, this time
complying with the requirements of law as noted by the respondent judge in his
previous order. 5
On August 29, 1990, respondent judge denied the second motion for
reconsideration for lack of merit. 6
In this petition for certiorari, petitioner questions the denial of its ex parte motion
for issuance of writ for possession alleging grave abuse of discretion on the part
of respondent judge.
Respondent judge filed his comment on the petition in compliance with the
resolution of the Court dated October 8, 1990.
We find the petition meritorious.
Petitioner argues that Section 7 of Act No. 3135, as amended, the law which
regulates extrajudicial foreclosure of mortgage, only requires that the motion for
issuance of a writ of possesison be ex parte. Respondent judge, on the other
hand, avers that the proper petition should be filed in order that the court may
acquire jurisdiction over the subject properties and the Espiritu spouses and in
order that the constitutional requirements of due process are complied with.
Section 7 7 of Act No. 3135 allows the purchaser to take possession of the
foreclosed properties during the period of redemption upon filing of an exparte application and approval of a bond. In De Gracia vs. San Jose,8 cited by
petitioner, the Court, expounding on the meaning of said Section 7, held
As may be seen, the law expressly authorizes the purchaser to petition for a writ
of possession during the redemption period by filing an ex-parte motion under

59

oath for that purpose in the corresponding registration or cadastral proceeding in

the case of property with Torrens title, and upon the filing of such motion and the
approval of the corresponding bond, the law also in express terms directs the
court to issue the order for a writ of possession. Under the legal provisions above
copied, the order for a writ of possession issues as a matter of course upon filing
of the proper motion and the approval of the corresponding bond. No discretion is
left to the court. And any question regarding the regularity and validity of the sale
(and the consequent cancellation of the writ) is left to be determined in a
subsequent proceeding as outlined in section 8. Such question is not to be raised
as a justification for opposing the issuance of the writ of possession, since, under
the Act, the proceeding for this is ex parte.
It should be noted that said Section 7 contemplates a situation in which a writ of
possession is sought during the redemption period. If a writ of possession is
sought after the lapse of the redemption period with the mortgagor having failed
to redeem the foreclosed properties, is an ex-parte motion sufficient for the
issuance of such a writ?
This question has been answered in the affirmative in IFC Service Leasing and
Acceptance Corp. vs. Nera,9where the Court, rejecting the argument that the
jurisdiction of the lower court to issue a writ of possession is limited only to the
duration of the period of redemption and after the expiration of the period, the
mortgagee's remedy is an ordinary action for recovery of possession in order to
give the mortgagor an opportunity to be heard, ruled
The contention is without merit. The applicable provision of Act No. 3135 is
Section 6 which provides that, in cases in which an extrajudicial sale is made,
"redemption shall be governed by the provisions of sections four hundred and
sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure in
so far as those are not inconsistent with the provisions of this Act." Sections 464466 of the Code of Civil Procedure were superseded by Sections 25-27 and
Section 31 of Rule 39 of the Rules of Court which in turn were replaced by
Sections 29-31 and Section 35 of the Revised Rules of Court. Section 35 of Rule
39 of the Revised Rules of Court expressly states that if no redemption be made
within twelve (12) months after the sale, the purchaser. or his assignee is entitled
to a conveyance and possession of the property . . . The possession of the
property shall be given to the purchaser or last redemptioner by the officer unless
a third party is actually holding the property adversely to the judgment debtor.
Indeed, as this Court held in Tan Soo Huat vs. Ongwico, 63 Phil. 746, 749 (1936),

There is no law in this jurisdiction whereby the purchaser at a sheriffs sale of real
property is obliged to bring a separate and independent suit for possession after
the one-year period for redemption has expired and after he has obtained the
sheriffs final certificate of sale. There is neither legal ground nor reason of public
policy precluding the court from ordering the sheriff in this case to yield
possession of the property purchased at public auction where it appears that the

judgment debtor is the one in possession thereof and no rights of third persons
are involved.
The Court further stated in IFC Service Leasing and Acceptance Corp. that if under
Section 7 of Act No. 3135, the court has the power on the ex parte application of
the purchaser to issue a writ of possession during the period of redemption, there
is no reason why it should not also have the same power after expiration of that
period, especially where, as in this case, the purchaser has already consolidated
its ownership and has already secured new titles in its name. 10
Indeed, respondent judge committed a grave abuse of discretion in denying
the ex-parte motion filed by petitioner and instead requiring it to file another
petition to include the Espiritu spouses as private respondents. Petitioner, as the
purchaser in the foreclosure sale, has already obtained new titles over the subject
properties which remained in the possession of the judgment debtors, the Espiritu
spouses. There are also no rights of third persons involved. It was therefore
ministerial upon the lower court to issue a writ of possession in favor of petitioner
upon the filing of its ex-parte application. 11
Respondent judge, however, contends that a proper petition is still necessary
since petitioner did not file a bond.1wphi1He claims that the De Gracia ruling
cited by petitioner cannot apply in the present case since in De Gracia, the
purchaser filed a bond for the protection of the landowner's rights.
In De Gracia, the filing and approval of a bond was necessary before a writ of
possession could be issued by the court since possession was sought by the
purchaser during the period of redemption, when the title to the subject property
was still in the name of the judgment debtor. The bond is required to protect the
rights of the judgment debtor so that he may be indemnified in case it be shown
that the sale was made without violating the mortgage or without complying with
the requirements of the law. 12 Thus, Section 8 of Act No. 3135 allows the debtor
to petition that the sale be set aside and the writ of possession cancelled in the
proceedings in which possession was requested not later than 30 days after the
purchaser was given possession and if the court finds the complaint justified, the
bond furnished by the person who obtained possession in accordance with
Section 7 shall answer in whole or in part for any damage the debtor may have
suffered. It is also observed that the bond required is in an amount equivalent to
the use of the property for 12 months presumably to cover the one-year
redemption period. It can be clearly seen that the bond is only necessary when
the purchaser seeks a writ of possession during the redemption period to insure
the protection of the rights of the judgment debtor in the event that the sale is
set aside. But where the redemption period has already expired and a new title
has been issued in the name of the purchaser, his right over the property has
become absolute so that he has the right to be put in possession thereof which
the court must aid in effecting. 13 To impose a bond requirement upon the
purchaser who is now the owner of the foreclosed properties would be
unreasonable if not illogical for if there are any rights to be protected, they are
those of the purchaser who as owner has a superior right over said properties as

60

against all other persons. In fact, under Section 35 of Rule 39 of the Revised Rules
of Court, the purchaser or his assignee is entitled to a conveyance and possession
of the property if no redemption is made within 12 months after the sale. There is
nothing in the law that may be read to mean that a bond should first be filed by
the purchaser before he may be given possession of the property. The rule,
therefore, is that after the expiration of the redemption period, the purchaser at a
foreclosure sale is entitled to a writ of possession upon filing of an exparte application without the necessity of filing a bond.
WHEREFORE, the petitioner is hereby GRANTED. The orders of the trial court
dated July 6, 1990, August 14, 1990 and August 29, 1990 are set aside.
Respondent judge is hereby ordered to issue a writ of possession in favor of
petitioner. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-62051 March 18, 1985
RURAL BANK OF PARARAQUE, INC., petitioner, vs.
ISIDRA REMOLADO and COURT OF APPEALS, respondents.
AQUINO, J.:
This case is about the repurchase of mortgage property after the period of
redemption and had expired. Isidra Remolado, 64, a widow, and resident of
Makati, Rizal, owned a lot with an area of 308 square meters, with a bungalow
thereon, which was leased to Beatriz Cabagnot (86-7, record on Appeal).
The lot is located at 41 Molave Street, United Paraaque, Rizal. In 1966 she
mortgaged it to the Rural Bank of Paraaque, Inc. as security for a loan of
P15,000. She paid the loan.
On April 17, 1971 she mortgaged it again to the bank. She eventually secured
loans totalling P18,000 (Exh. At D). the loans become overdue. The bank
foreclosed the mortagage on July 21, 1972 and bought the property at the
foreclosure sale for P22,192.70. The one-year period of redemption was to expire
on August 21, 1973.
On August 8, 1973 the bank advised Remolado that she had until August 23 to
redeem the property (Exh. U or 6; 53, Record on Appeal). On August 9, 1973 or 14
days before the expiration of the one-year redemption period, the bank gave her
a statement showing that she should pay P25,491.96 for the redemption of the
property on August 23 (Exh. F). No redemption was made on that date.
On September 3, 1973 the bank consolidated its ownership over the property
(Exh. H). Remolado's title was cancelled. A new title, TCT No. 418737, was issued
to the bank on September 5 (Exh. 0).
On September 24, 1973, the bank gave Remolado up to ten o'clock in the
morning of October 31, 1973, or 37 days, within which to repurchase (not redeem

since the period of redemption had expired) the property (Exh. I-1; 32, Record on
Appeal). The bank did not specify the price.
On October 26, 1973 Remolado and her daughter, Patrocinio Gomez, promised to
pay the bank P33,000 on October 31 for the repurchase of the property (Exh. X or
9; 64, Record on Appeal).
Exhibits 1-1 and X do not evidence any perfected repurchase agreemi6nt. Even if
it is assumed that the bank's commitment to resell the property was accepted by
Remolado, that option was not supported by a consideration distinct from the
price (Art. 1479, Civil Code). Lacking such consideration, the option is void
(Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Company, 97 Phil.
249).
Contrary to her promise, Remolado did not repurchase the property on October
31, Five days later, or on November 5, Remolado and her daughter delivered
P33,000 rash to the bank's assistant manager as repurchase price. The amount
was returned to them the next day, November 6, 1973 (Exh. V, W and 11). The
assistant manager had no intention of receiving the money. It was just left with
her by Remolado (Exh. 10; 42, Record on Appeal). At that time, the bank was no
longer willing to allow the repurchase.
On that day, November 6, Remolado filed an action to compel the bank to
reconvey the property to her for P25,491.96 plus interest and other charges and
to pay P35,000 as damages. The repurchase price was not consigned. A notice
of lis pendens was registered.
On November 15, the bank sold the property to Pilar Aysip for P50,000. A new title
was issued to Aysip with an annotation of lis pendens (Exh. P and 12; 649, Record
on Appeal).
The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other bank
charges and to pay her P15,000 as damages. The Appellate Court affirmed the
judgment. The bank appealed to this Court. It contends that Remolado had no
more right of redemption and, therefore, no cause of action against the bank.
We hold that the trial court and the Appellate Court erred in ordering the
reconveyance of the property, There was no binding agreement for its
repurchase. Even on the assumption that the bank should be bound by its
commitment to allow repurchase on or before October 31, 1973, still Remolado
had no cause of action because she did not repurchase the property on that date.
Justice is done according to law. As a rule, equity follows the law. There may be a
moral obligation, often regarded as an equitable consideration (meaning
compassion), but if there is no enforceable legal duty, the action must fail
although the disadvantaged party deserves commiseration or sympathy.
The choice between what is legally just and what is morally just, when these two
options do not coincide, is explained by Justice Moreland in Vales vs. Villa, 35 Phfl.
769, 788 where he said:
Courts operate not because one person has been defeated or overcome by
another, but because he has been defeated or overcome illegally. Men may do

61

foolish things, make ridiculous contracts, use miserable judgment, and lose
money by them-indeed, all they have in the world; but not for that alone can the
law intervene and restore. There must be, in addition, a violation of law, the
commission of what the law knows as an actionable wrong before the courts are
authorized to lay hold of the situation and remedy it.
In the instant case, the bank acted within its legal rights when it refused to give
Remolado any extension to repurchase after October 31, 1973. It had given her
about two years to liquidate her obligation. She failed to do so.
WHEREFORE, the Appellate Court's judgment is reversed and set aside. The
complaint and counterclaim are dismissed. The notice of lis pendens is cancelled.
No costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-13660
November 13, 1918
E. M. BACHRACH, plaintiff-appellee,
vs.
VICENTE GOLINGCO, defendant-appellant.
Ramon Diokno for appellant.
No appearance for appellee.
STREET, J.:
This is a suit for the recovery of a sum of money claimed as a balance due to the
plaintiff on a promissory note. From a judgment in favor of the plaintiff for the
sum of P8461, as principal, with interest thereon at the rate of 8 per cent per
annum from the 10th day of July, 1916, until paid, and for the further sum of
P2,115.25, as a stipulated attorney's fee, the defendant has appealed.
The note in question represents the purchase price of an automobile truck which
the plaintiff sold to the defendant at the time the note was executed. As security
for the payment of said indebtedness, the plaintiff took a chattel mortgage on the
truck; and after the note had matured this chattel mortgage was foreclosed. At
the foreclosure sale the plaintiff himself became the purchaser for the sum of
P539, which amount was credited upon the indebtedness.
Of the questions raised by the defense only two in our opinion require serious
consideration. The first has reference to irregularities in the foreclosure of the
chattel mortgage; the second to the validity of the agreement for 25 per cent as
an attorney's fee for collection.
We find that the requirements of section 14 of Act No. 1508 (the Chattel Mortgage
of Law) were not observed in the sale of the truck. The irregularity consists in the

fact the truck was brought by Bachrach from Albay (which was the place of
residence of the mortgagor) to the city of Manila and here sold by the sheriff of
the city at the instance of the plaintiff. There is no evidence that the mortgagor
consented to the removal of the truck to Manila or to the sale that was effected in
the city; and it must therefore be held that the sale was improperly accomplished.
The statute requires that the mortgage chattel shall be sold in the municipality
where the mortgagor resides, or where the property is situated; and the latter
expression has reference to the place where the thing is being kept for use by the
mortgagor, not any place where the mortgagee may choose to carry it when he
takes it out of the custody of the mortgagor. It is admitted that notice of the same
was not posted anywhere in the municipality of Albay, as required in the section
cited; and of course publication there would have of little or no value when the
sale was to be made in Manila.
The effect of this irregularity was, in our opinion, to make the plaintiff liable to the
defendant for the full value of the truck at the time the plaintiff thus carried it off
to be sold; and of course the burden is on the defendant to prove the amount of
the damage to which he was thus subjected. With reference to the condition of
the truck when it was sold, we find the following statement in the testimony of
Bachrach:
Q. What was the condition of the truck at the time it was sold? At the
time of the sale, everything that wasn't actually built on the truck was
removed; tires removed, generator, lamps, dynamo, everything that could
be taken off with a monkeywrench was removed. It was in a criminal
condition.
Q. Was the body of the truck, or the chassis, and the motor on at the time
you purchased it at the sheriff's sale? A. No.lawphil.net
Q. Had it been removed? A. Yes. We had a telegram from the sheriff of
Tabaco, saying that the day he was to load the truck for Manila, he had a
protest from Golingco demanding the body, and I telegraphed the sheriff
to deliver the body to Golingco, and send the truck.
There is no evidence to contradict Bachrach's testimony on this point; and we are
bound to credit him when he states his conclusion that the value of the truck at
the time it was sold was the amount he paid for it. In the absence of proof to the
contrary this must also be taken to be its value at the time it was brought away
from Albay. It results that the defendant has failed to prove that he suffered any
damage whatever by the irregular manner in which the sale was conducted.

62

This brings us to the question of the amount of the attorney's fee allowed by the
trial court. It is provided in the note given by the defendant for the purchase price
of the truck that, in the event it becoming necessary to employ counsel to enforce
its collection, the maker is to pay an additional twenty-five per cent "as fees for
the attorney collecting the same." The trial court gave judgment for the full
amount due on the note and for an additional sum of P2,115.25, for attorney's
fees. The appellant assigns this as error and argues that the agreement to pay an
attorney's fee, in addition to the principal and stipulated interest, is void as
usurious and as being grossly excessive.
We are of the opinion that it may lawfully be stipulated in favor of the creditor,
whether the obligation be evidenced by promissory note or otherwise, that in the
event that it becomes necessary, by reason of the delinquency of the debtor, to
employ counsel to enforce payment of the obligation, a reasonable attorney's fee
shall be paid by the debtor, in addition to the amount due for principal and
interest. The legality of such a stipulation, when annexed to a negotiate
instrument is expressly recognized by the Negotiable Instruments Law ((Act No.
2031, sec. 2, par. E). Inasmuch as the statutory allowance for attorney's fees, as
costs, is notoriously less than the amount which attorneys are entitled to receive
from their clients, unless such a stipulation is made and enforced, it follows that a
creditor may be compelled to pay, out of the money due him, a considerable sum
as the necessary cost of enforcing payment by the delinquent debtor.
Such a stipulation is not void as usurious, even when added to a contract for the
payment of the highest rate of interest permissible. The purpose of such a
stipulation is not to increase in any respect the benefits ultimately to accrue to
the creditor. It is true that such a stipulation may be made for the purpose of
concealing usury; but that is a matter of proof to be determined in each case
upon the evidence.
We cite, with approval, the ruling of the supreme court of Georgia upon this
question, as follows:
A contract to pay attorney's fees for collecting, in addition to principal and
interest, is not, on its face, usurious; nor does it become usurious by
reducing the debt to judgment, and including in the judgment ten per cent
for attorney's fees.
The law . . . recognizes the validity of such a stipulation, and it meets the
justice of the case very frequently for the debtor to pay for the collection
rather than the creditor, . . . We do not mean to intimate that usury might
not be covered up by such a stipulation, that it might not be a disguise, or
contrivance for the concealment of usury; but there is no such indication in

this case. There is no evidence that it was not a bona fide stipulation to
cover the contingency of having to incur expense in collecting this debt.
(National bank of Athens vs. Danforth, 80 Ga., 55.)
But the principle that it may be lawfully stipulated that the legal expense involved
in the collection of a debt shall be defrayed by the debtor does not imply that
such stipulations must be enforced in accordance with their terms, no matter how
injurious or oppressive they may be. The lawful purpose to be accomplished by
such a stipulation is to permit the creditor to receive the whole amount due him
under his contract without the deduction of the expenses caused by the
delinquency of the debtor. It should not be permitted for him to convert such a
stipulation into a source of speculative profit at the expense of the debtor.
Contracts for attorney's services in this jurisdiction stand upon an entirely
different footing from contracts for the payment of compensation for any other
services. By the express provision of section 29 of the Code of Civil Procedure, an
attorney is not entitled in the absence of express contract to recover more than a
reasonable compensation for his services; and even where an express contract is
made the court can ignore it and limit the recovery to reasonable compensation if
the amount of the stipulated fee is found by the court to be unreasonable. This is
a very different rule from that announced in section 1091 of the Civil Code with
reference to the obligation of contract in general, where it is said that such
obligation has the force of law between the contracting parties. Had the plaintiff
herein made an express contract to pay his attorney an uncontingent fee of
P2,115.25, for the services to be rendered in reducing the note here in suit to
judgment, it would not have been enforceable against him had he seen fit to
oppose it, as such a fee is obviously far greater than is necessary to remunerate
the attorney for the work involved and is therefore unreasonable. In order to
enable the court to ignore an express contract for an attorney's fees, it is not
necessary to show, as in other contracts, that it is contrary to morality or public
policy (art. 1255, Civil Code). It is enough that it is unreasonable or
unconscionable.
We are not unmindful of the fact that the question as to the propriety of the
stipulation for attorney's fee does not here arise directly between the creditor in
this note and the attorney into whose hands he might place the note for
collection. The stipulation is contained in the contract between the creditor and
his debtor; and the attorney could not be held bound thereby. Nevertheless we
think the same rule applies as if the question had arisen directly between
attorney and client. As the court has power to fix the fee as between the attorney
and the client, it must necessarily have the right to say whether a stipulation, like
this, inserted in a promissory note is valid. A different ruling, as may be readily
seen, would make it exceedingly easy to evade the usury laws. As stated at the

63

beginning of this discussion, the lawful purpose to be accomplished by such

stipulation is to permit the creditor to receive the amount due without the
deduction of the expenses caused by the delinquency of the debtor. It must not
be used as a cloak for an exorbitant exaction.

however, we are compelled to exercise our discretion and make use of our
professional knowledge as to the reasonable compensation to which an attorney
would be entitled for the performance of such services as those which the plaintiff
in this case has had occasion to require from his counsel.

We are therefore of the opinion that we are authorized to reduce the amount in
question to a sum which will enable the plaintiff to pay a reasonable
compensation to his attorney; and we think that P800 is sufficient for this
purpose. It is possible that, as a matter of fact, the plaintiff may have contracted
with his attorney for the performances of the services to be rendered him in this
matter for a sum less than P800, and had it been so made to appear, we would
have reduced the amount recoverable, under this particular clause of the note, to
the corresponding sum. No evidence having been adduced upon this point,

Wherefore it is ordered that the plaintiff have and recover of the defendant the
sum of P8,461, with interest thereon at the rate of 8 per centum per annum, from
the tenth day of July, 1916, until paid, and for the further sum of P800 as
attorney's fees, and for the statutory costs of both instances, exclusive of the
statutory allowance for attorney's fees. So ordered.

64