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G.R. No.

116426

April 12, 2000

REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, petitioner, vs. GERARDO SODSOD, Respondent.

PARDO, J.: What is before the Court for review via appeal by certiorari is the decision of the Court of Appeals 1 affirming that of the trial court 2 ordering Lot No. 10367 of the Cadastral Survey of Oas, Albay to be registered and confirmed in the names of Gerardo Sodsod and Felicidad Rellores. The facts are as follows: Sometime prior to July 1973, the Director of Lands filed with the Court of First Instance of Albay, Ligao cadastral proceedings 3 for the coverage under the torrens system of the lands in Oas Cadastre, Oas, Albay. On July 19, 1973, spouses Gerardo Sodsod and Felicidad Rellores filed an answer to the petition, claiming ownership of Lot No. 10367, Oas Cadastre, consisting of 52,847 square meters, located at Tablon, Oas, Albay, by virtue of their more than thirty (30) years possession including that of their predecessor-in-interest. During the cadastral hearings, the lot was uncontested. The evidence showed that respondent Sodsod and his predecessor-in-interest occupied and possessed the lot in question in the concept of owner, openly, continuously, adversely, notoriously and exclusively since 1929, or for more than thirty (30) years. On July 27, 1990, the Regional Trial Court rendered decision, the dispositive portion of which reads: WHEREFORE, Lot No. 10367 of the Cadastral Survey of Oas, Albay more particularly described in the plan and technical description thereof is hereby ordered registered and confirmed in the names of the SPOUSES GERARDO SODSOD and FELICIANO RELLORES, Filipinos, of legal ages, and residents of Tablon, Oas, Albay. Once this decision becomes final, let the decree and original certificate of title be issued in their favor. SO ORDERED. Ligao, Albay, Philippines, July 27, 1990. 4 In due time, petitioner appealed to the Court of Appeals. 5 On July 25, 1994, the Court of Appeals promulgated its decision affirming that of the trial court. 6 Hence, this petition. 7 We deny the petition. The issue is whether respondent and his predecessor-in-interest possessed the land in question for more than thirty years sufficient to vest in him registrable title over the same.

The issue is factual. The factual findings of the Court of Appeals are conclusive and may not be reviewed on appeal. 8 Nonetheless, looking into the facts of this case, we agree with the Court of Appeals that respondent has fully complied with the requirements under Section 48 (b), C. A. No. 141 for confirmation of title over the lot in question. Ipso jure, respondent has acquired private ownership of the land by mere possession and occupation for more than thirty (30) years under claim of ownership. 9 Since 1929 up to the filing of the cadastral case, respondent and his predecessor had been in actual, open, continuous, exclusive, peaceful and notorious possession and occupation of the lot involved in the concept of owners.1wphi1 Hence, they have acquired private ownership of the land, and are entitled to confirmation of registrable title. WHEREFORE, we DISMISS the appeal and AFFIRM in toto the decision of the Court of Appeals in CA - G. R. CV No. 29577. No costs.1wphi1.nt SO ORDERED. Davide, Jr., C.J., Puno, Kapunan and Ynares-Santiago, JJ., concur. G.R. No. L-77468 August 25, 1999

EDUARDO LUCENA and NATIVIDAD PARALES, petitioners, vs. COURT OF APPEALS and RURAL BANK OF NAUJAN, INC., ROGELIO PINEDA, MARIANITO BAJA, PATRICIA ARAJA, BRAULIO BAGUS, REYNALBO MAMBIL and RAMON GARCIA, respondents. QUISUMBING, J.: This is a petition for review of the Decision dated January 20, 1987 of the Court of Appeals in CA - G.R. CV No. 65526-R entitled Eduardo Lucena, et al. vs. Rural Bank of Naujan, Inc., et al. as well as its Resolution dated February 16, 1987 denying petitioners' motion for reconsideration.1 The assailed decision reversed the judgment of the then Court of First Instance of Oriental Mindoro in Civil Case No. R-3004, "Eduardo Lucena, et al. vs. Rural Bank of Naujan, et al. (Reconveyance with Damages)" and dismissed herein petitioners' complaint.2 The factual antecedents are as follows:. Petitioners allege they are the registered owners of a parcel of land located at the barrio of Mag-asawang Tubig, Municipality of Naujan, Oriental Mindoro, covered by Transfer Certificate of Title No. T-41512 of the Registry of Deeds of Oriental Mindoro. On October 29, 1969, petitioner Eduardo Lucena obtained a loan from the private respondent Rural Bank of Naujan, Inc. in the amount of three-thousand pesos (P3,000.00) secured by a real estate mortgage constituted on said parcel of land. On October 1, 1970, after the loan had matured, petitioners paid to the Rural Bank of Naujan, Inc., the sum of two-thousand six pesos and ninety centavos (P2,006.90) in partial satisfaction of their debt, thereby leaving a balance of one-thousand pesos (P1,000.00) in its favor.1wphi1.nt

On May 7, 1974, after previous demand by the rural bank for the petitioners to settle the balance of their matured loan went unheeded, the subject property was extrajudicially foreclosed and sold at public auction where the rural bank as highest bidder acquired the property. Prior to the auction sale, notices of foreclosure were posted in at least three conspicuous public places in the municipality where the subject property was located, as indicated in the affidavit of posting dated May 6, 1974.3 No notices were posted in the barrio where the property was located, nor were any published in a newspaper of general circulation. The Certificate of Sale dated May 7, 1974 issued by private respondent Deputy Sheriff Braulio Bagus was registered with the Registry of Deeds of Oriental Mindoro only on January 9, 1975.4 On June 26, 1975, an affidavit of consolidation of ownership was executed by the Rural Bank of Naujan through its manager, private respondent Rogelio P. Pineda. The affidavit of consolidation was subsequently registered by private respondent Reynaldo Mambil in his capacity as acting Register of Deeds on July 8, 1975, under Entry No. 134351. Transfer Certificate of Title No. T-41512 in the name of the petitioners was thus cancelled and Transfer Certificate of Title No. T-68547 of the Registry of Deeds of Oriental Mindoro was then issued in favor of the rural bank also on July 8, 1975. Thereafter, on July 14, 1975, a deed of sale was executed by the rural bank through its manager whereby the subject property was sold to private respondent spouses Marianito Baja and Patricia Araja, resulting in the cancellation of TCT No. T-68547 and the subsequent issuance of TCT No. T-68680 in the name of said respondents. Said deed of sale dated July 14, 1975 was accepted and registered by private respondent Ramon G. Garcia, then acting Register of Deeds of Oriental Mindoro.5 On January 12, 1977, petitioners filed a complaint for reconveyance and damages against private respondents before the then Court of First Instance of Oriental Mindoro, to recover the subject property from private respondents and to compel the latter to compensate them for damages and losses suffered.6 After trial, the court a quo promulgated its decision dated September 12, 1978, ruling in sum that there was no valid foreclosure sale of the subject property. The dispositive portion thereof reads: WHEREFORE, in view of the foregoing the Court believes and so holds that the preponderance of evidence militates in favor of the plaintiffs and against the defendants, and the Court renders judgment, to wit: (1) Orders the defendants Marianito Baja and Patricia Araja to reconvey the parcel of land registered in their name under TCT No. T-68680 of the Register of Deeds of Oriental Mindoro in favor of herein plaintiffs Eduardo Lucena and Natividad Parales, free from all liens and encumbrances, except the remaining unpaid balance including accrued interest thereon in favor of the Rural Bank of Naujan, Inc.; (2) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay the herein plaintiffs actual damages in the amount of P17,500.00 for unrealized rentals from subject property; (3) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay herein plaintiffs moral damages in the amount of P10,000.00; (4) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay plaintiffs attorney's fees in the amount of P5,000.00, and to pay the costs of suit. SO ORDERED.7 Not satisfied with the judgment, both petitioners and private respondents elevated the case to the Court of Appeals. On January 20, 1987, the respondent court rendered its decision reversing and setting aside the trial court's judgment. It ruled in sum that (a) posting of notices in the barrio where the property is situated is not required, as all the law requires is posting in the municipality or city where the property is located; (b) there is no need to publish the notice of auction sale in a newspaper of general circulation, because the balance of the

loan was only one-thousand pesos (P1,000.00); (c) personal notice of the auction sale to the petitioners was not required; (d) the trial court was correct in holding that the date of registration of the sheriff's certificate of sale and not the date of the sale itself was the reckoning point for the start of the one-year redemption period of the petitioners; and (e) the petitioners did not redeem their property within the one-year period from the date of registration of the certificate of sale, and having lost their right of redemption, cannot squirm their way out of their predicament by asking for reconveyance of the subject property.8 Petitioners now seek recourse through this petition. They assign the following errors: (1) ABSENCE OF POSTING OF NOTICES IN THE BARRIO OF MAGASAWANG TUBIG, WHERE THE LAND IS LOCATED, AS REQUIRED BY REPUBLIC ACT NO. 5939, RENDERED NULL AND VOID THE SALE IN QUESTION. (2) PUBLICATION WAS A REQUISITE SINE QUA NON IN THIS CASE, BECAUSE THE AMOUNT OF THE LOAN WAS P3,000.00; HENCE, PARAGRAPH 3, SECTION 5 OF REPUBLIC ACT NO. 720, WAS NOT APPLICABLE, BECAUSE THE LAW DOES NOT SPEAK OF THE "BALANCE UNPAID" BUT THE "AMOUNT OF THE LOAN". (3) THE PREMATURE AND FRAUDULENT CONSOLIDATION OF OWNERSHIP AND MALICIOUS IMMEDIATE SALE OF THE LAND IN QUESTION IN FAVOR OF MARIANITO BAJA AND PATRICIA ARAJA BEFORE THE EXPIRATION OF THE PERIOD OF REDEMPTION CLOSED THE DOOR FOR LEGAL REDEMPTION; SO THAT AN ACTION FOR RECONVEYANCE, BECAME THE PROPER REMEDY. (4) THE AFFIDAVIT OF CONSOLIDATION OF OWNERSHIP HEREIN WAS NULL AND VOID FOR LACK OF NOTARIZATION.9 We find that the pertinent issues to be resolved are: (1) whether or not a valid foreclosure sale of the subject property was conducted and (2) whether or not reconveyance and damages is the proper remedy available to petitioners. With respect to the first issue, this Court has ruled that failure to comply with statutory requirements as to publication of notice of auction sale constitutes a jurisdictional defect which invalidates the sale.10 Even slight deviations therefrom are not allowed.11 Section 5 of Republic Act No. 720 as amended by Republic Act No. 5939 provides:12 The foreclosure of mortgages covering loans granted by rural banks shall be exempt from the publication in newspapers were the total amount of the loan, including interests due and unpaid, does not exceed three thousand pesos. It shall be sufficient publication in such cases if the notices of foreclosure are posted in at least three of the most conspicuous public places in the municipality and barrio were the land mortgaged is situated during the period of sixty days immediately preceding the public auction. Proof of publication as required herein shall be accomplished by affidavit of the sheriff or officer conducting the foreclosure sale and shall be attached with the records of the case: . . . . (emphasis supplied) In the case at bar, the affidavit of posting executed by the sheriff states that notices of the public auction sale were posted in three (3) conspicuous public places in the municipality such as (1) the bulletin board of the Municipal Building (2) the Public Market and (3) the Bus Station. There is no indication that notices were posted in the barrio where the subject property lies. Clearly, there was a failure to publish the notices of auction sale as required by law.

In Roxas vs. Court of Appeals,13 this Court has ruled that the foreclosure and public auction sale of a parcel of land foreclosed by a rural bank were null and void when there was failure to post notices of auction sale in the barrio where the subject property was located. This Court finds that the same situation obtains in the case at bar. Further still, there was a failure on the part of private respondents to publish notices of foreclosure sale in a newspaper of general circulation. Section 5 of R.A. 720 as amended by R.A. 5939 provides that such foreclosures are exempt from the publication requirement when the total amount of the loan including interests due and unpaid does not exceed three-thousand pesos (P3,000.00). The law clearly refers to the total amount of the loan along with interests and not merely the balance thereof, as stressed by the use of the word "total." At the time of foreclosure, the total amount of petitioners' loan including interests due and unpaid was P3,006.90. Publication of notices of auction sale in a newspaper was thus necessary. In light of private respondents' failure to comply with the statutory requirements of notice and publication, we rule that the foreclosure and public auction sale of petitioners' property are null and void. Hence, the Rural Bank of Naujan did not acquire valid title to the property in question. This reversal of the Court of Appeals disposes of the other errors assigned by petitioners. Anent the second issue, the above conclusion requires a determination of whether or not petitioners are entitled to a reconveyance of their property. If the property has not yet passed to an innocent purchaser for value, an action for reconveyance is still available.14 It is a condition sine qua non for an action for reconveyance to prosper that the property should not have passed to the hands of an innocent purchaser for value.15 He is considered an innocent purchaser who acquired the property for a valuable consideration not knowing that the title of the vendor or grantor was null and void.16 Good faith or its absence must thus be established on the part of spouses Marianito Baja and Patricia Araja at the time that they purchased the subject property from the Rural Bank of Naujan. Good faith, or the lack of it, is in the last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined.17 To determine whether or not the Baja spouses were in good faith at the time they purchased the subject property from the Rural Bank of Naujan thus entails a review of the evidence on record. The trial court concluded that Marianito Baja and Patricia Araja were purchasers in bad faith. The trial court noted that when Marianito Baja verified the title of the subject property at the rural bank, he must have noticed that the certificate of sale was registered with the Office of the Register of Deeds only on January 9, 1975, so that he is presumed to know that the petitioners had at least one year from that date or up to January 8, 1976 to redeem the subject property.18 It is a well-settled rule that 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. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.19 In the case at bar, Marianito Baja testified on cross-examination that Victor Atienza, Baja's cousin and petitioners' tenant on the subject property, informed him of the rural bank's intention to sell the land in question.20 He said that from the time this information was relayed to him until the execution of the deed of sale by the bank in favor of the Baja spouses on July 14, 1975, a period of about half a year elapsed.21 He further stated that upon learning from Victor Atienza that the property was being sold, he immediately went to the rural bank to verify this information, as well as ascertain if the land was titled.22 Baja also said that before the deed of sale was executed on July 14, 1975, he made his offer to buy the property from the bank about one month

before said date.23 On direct examination, however, Baja claimed that he verified the title to the subject property to be in the rural bank's name before the sale was effected.24 From the records, it appears that title to the property was issued in the rural bank's name only on July 8, 1975, when the bank's affidavit of consolidation of ownership dated June 26, 1975 was registered with the Registry of Deeds of Oriental Mindoro.25 Said registration was the operative act to prompt the Register of Deeds to cancel the title in the name of petitioners and to issue a new one in the name of the rural bank. Hence, if Marianito Baja claims to have offered to buy the property one month before July 14, 1975, or sometime in the middle of June of that year, he must have noticed that the title was not yet in the rural bank's name. More so, he also would have noticed that the title was not yet in the bank's name when he verified the status of the property and the title thereto immediately after Victor Atienza told him that the property was being sold, which, according to him, was about half a year before July 14, 1975. What Baja should have noticed, if we follow his own chronological estimates, was that the title was still in the petitioners' name when he verified the status of the land in question. Thus, he must have seen that the certificate of auction sale was registered only on January 9, 1975. As the trial court has said, he is presumed by law to know that the petitioners had one year from this date or until January 8, 1976 to redeem the subject property. In addition, Baja was completely aware of the fact that Victor Atienza was a tenant of the petitioners. Hence, at the time the property in question was being sold to him by the rural bank, possession thereof was with the petitioners, exercised through their tenant Victor Atienza. In Santiago vs. Court of Appeals,26 we cited De Guzman, Jr. vs. Court of Appeals (156 SCRA 701 [1987]): The failure of appellees to take the ordinary precautions which a prudent man would have taken under the circumstances, specially in buying a piece of land in the actual, visible and public possession of another person, other than the vendor, constitutes gross negligence amounting to bad faith. In this connection, it has been held that were, as in this case, the land sold is in the possession of a person other than the vendor, the purchaser is required to go beyond the certificate of title and ma[k]e inquiries concerning the rights of the actual possessor. (Incala vs. Mendoza, CA-G.R. No. 13677-R, November 9, 1965; De Jesus vs. Revilla, CA-G.R. No. 13562-R, October 5, 1965; Martelino vs. Manikan, CA-G.R. No. 32792-R, June 22, 1956) xxx xxx xxx

One who purchases real property which is in the actual possession of another should, at least make some inquiry concerning the right of those in possession. The actual possession by other than the vendor should, at least put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessors" (Conspecto vs. Fruto, 31 Phil. 144)." xxx xxx xxx

Marianito Baja testified on cross-examination that he was working for about half a year in another area about a hundred meters away from the subject property before the same was offered to him for sale.27 Her thus had visual notice that petitioners' tenant Victor Atienza was working on the land in question. He also learned from Atienza that petitioner Eduardo Lucena was the landlord of the former.28 In fact, prior to the date that he acquired the property, Baja instructed Atienza to inform said petitioner that the rural bank was selling the property to him.29 Baja, however, never communicated directly with petitioner Eduardo Lucena, nor did he receive any response coming from said petitioner.30 He did learn, however, that Lucena scolded Victor Atienza when the latter went to see him, indicating that he was aware of said petitioner's aversion to the sale of the property by the rural bank.31

All things considered, Marianito Baja did not make any reasonable inquiry regarding the status of the land in question, despite being aware that the property was still in the possession of the petitioners. He did not even make any effort to communicate directly with petitioner Eduardo Lucena. All he did was to instruct Victor Atienza to inform Lucena of the proposed sale of the property. He did not instruct Atienza, however, to make inquiries concerning the status of the property. Furthermore, Baja's claim that he saw that title to the property was in the name of the rural bank prior to the sale is not credible. Granting arguendo that the title was in the name of the rural bank when he first saw it, he nonetheless had notice that the possession of the property was with persons other than the vendors thereof. It was thus incumbent upon him to look beyond the title to the subject property and make the necessary inquiries. This he neglected to do. When the Baja spouses purchased the subject property from the rural bank on July 14, 1975, they did so well within the one-year redemption period of petitioners. In doing so, not only did said respondents have notice of a defect in the title of the rural bank over the subject property, but by purchasing the latter, they also closed the door on the petitioners' right to redeem it. Accordingly, we adopt the finding of the lower court that said respondents purchased the subject property in bad faith. We rule that petitioners are entitled to a reconveyance of the property as it has not yet passed to an innocent purchaser for value. In their petition, petitioners also pray that this Court render a decision pursuant to their prayers as appellants in the Court of Appeals. Essentially, petitioners implored the respondent court to raise the amount of damages awarded them by the trial court and to find private respondents Braulio Bagus, Reynaldo Mambil and Ramon Garcia liable for damages as well. Petitioners also asked for the inclusion of exemplary damages and litigation fees in the award. We find that there is no substantial reason to modify the trial court's award of damages. There is no convincing proof to support petitioners' allegations that private respondents Braulio Bagus, Reynaldo Mambil and Ramon Garcia performed their duties as Deputy Provincial Sheriff and Registers of Deeds with unlawful intent and in bad faith. Furthermore, petitioners' allegations as to the amount of unrealized rentals due them as actual damages are mere assertions unsupported by factual evidence. In determining actual damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss.32 There is also no sound basis for increasing the award of moral damages. The well-entrenched rule is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case.33 We find that the trial court exercised its sound discretion in awarding actual and moral damages as it did to the petitioners, as well as in not granting the exemplary damages for lack of sufficient basis. WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 20, 1987 is hereby SET ASIDE; and the decision of the CFI of Oriental Mindoro dated September 12, 1978, is hereby REINSTATED and AFFIRMED.1wphi1.nt Costs against private respondents. SO ORDERED. G.R. No. 126875 August 26, 1999

HEIRS OF MARIANO, JUAN, TARCELA and JOSEFA, all surnamed BRUSAS, petitioners, vs. COURT OF APPEALS and HEIRS OF SPOUSES INES BRUSAS and CLETO REBOSA, respondents. BELLOSILLO, J.:

This is a bitter dispute spanning more than two (2) decades of protracted legal entanglements and deep-seated enmity among the protagonists, even descending to their children, each claiming ownership over a 19-hectare land located in San Francisco, Baao, Camarines Sur. In view of the prolonged litigation, the original parties have since died and are now substituted by their heirs. Petitioners, heirs of Juan, Mariano, Tarcela and Josefa, all surnamed Brusas, claimed that the disputed property, formerly a public land, was part of the 33-hectare land in the actual physical possession of their grandfather Sixto Brusas since 1924, having inherited the same from their great grandfather Pedro Brusas. Sometime in 1946 Sixto Brusas caused the property to be surveyed in the name of his five (5) children, namely, Juan, Ines, Mariano, Tarcela and Josefa. The survey was approved as Psu-116520.1 As indicated in the survey plan the property was traversed by the Barit River, and the eastern portion thereof with an aggregate area of 19.8992 hectares was denominated as Lots 1 and 2, while the western portion measuring 13.2439 hectares was designated as Lots 3 and 4. In the same year, the property was subdivided among the five (5) children of Sixto Brusas. The partition was made lengthwise so that each heir would have access to the river and, as was the custom of the place, the distribution was made according to their age: the southernmost lot was assigned to Juan being the eldest, followed successively by Ines, Mariano, Tarcela and Josefa.2 All of them purportedly took immediate possession of their respective shares.1wphi1.nt On 17 July 1968 Ines Brusas applied for and was granted a free patent over Lots 1 and 2 of Psu-116520 with an aggregate area of 19.8992 hectares for which OCT No. 23356 was issued in her name. Thus, when Mariano Brusas and Josefa Brusas filed their sworn statements of landholdings in 1973 they supposedly discovered that their properties were already titled in the name of their sister Ines. The discovery triggered a controversy among the Brusas siblings and earnest efforts to settle the conflict before the barangay officials, the local police and the PC Provincial Commander proved futile. Private respondents, heirs of Ines Brusas and Cleto Rebosa, denied on the other hand that Lots 1 and 2 were owned and possessed by their grandfather Sixto Brusas during his lifetime. They asserted that Ines Brusas was the absolute owner having entered the property as early as 1924. Since then Ines Brusas and her husband Cleto Rebosa were clearing the land on their own by cutting down trees and removing their roots it being a forested area. In 1957 Ines Brusas applied for a free patent which was approved and the corresponding certificate of title issued in 1967. Sometime in 1974 Ines Brusas filed a complaint for recovery of six (6) hectares of land alleging that her brothers and sisters forcibly entered and deprived her of that portion of the property.3 Juan, Josefa, Mariano and Tarcela countered by instituting in the same court an action for reconveyance imputing fraud, misrepresentation and bad faith to Ines Brusas in using a forged affidavit to obtain title over Lots 1 and 2 despite full knowledge that she owned only 1/5 portion thereof.4 After the cases were consolidated trial dragged on for nineteen (19) years. The lower court finally rendered its decision in 1993 dismissing the complaint filed by Ines Brusas, declaring Lots 1 and 2 as the pro-indiviso property of the Brusas siblings, and ordering Ines Brusas to reconvey to her brothers and sisters their respective shares in the disputed property. On appeal, however, the Court of Appeals in its Decision of 16 July 1996 reversed and set aside the decision of the trial court thus WHEREFORE . . . . the appealed decision is REVERSED and SET ASIDE and another judgment is hereby rendered as follows: 1. In Civil Case No. IR-1058, ordering defendants and/or their successors-in-interest to vacate the land described in paragraph 4 of the complaint and/or to deliver possession thereof to plaintiffs or their successors-in-interest;

2. Dismissing the complaint for reconveyance and damages in Civil Case No. IR-1059. The Court of Appeals ratiocinated Apart from the self-serving and bare allegations of appellees, no competent evidence was adduced to substantiate their claim of fraud on the part of Ines Brusas in her application for a free patent over the land in dispute. They submitted specimens of their signatures to the NBI office at Naga City for examination but failed to submit to the court the result thereof. Such failure indicates either that they did not pursue their request for examination or that, if they did, the result thereof is adverse to their cause. It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11, strongly suggests that the Brusas recognized Ines Brusas as the sole claimant of Lots 1 and 2 and Mariano Brusas, the sole claimant of lots 3 and 4. There is likewise a presumption of regularity in the performance of official duty. There is no showing that the grant of a free patent in favor of Ines Brusas was predicated solely on the affidavit of waiver, Exhibit 4, or that without it her application would not have been given due course. It must be borne in mind, in this regard, that the land in dispute was originally a public land. The occupation and cultivation thereof by Sixto Brusas, the father of Ines, Tarcela, Josefa, Juan and Mariano Brusas, did not make it a part of his hereditary estate. If he had complied with all the legal requirements for the grant of a free patent, he could have filed the corresponding application therefor. But he did not. Hence, he could not have transmitted ownership thereof to his heirs upon his death (citing Naval v. Jonsay, 50 O.G. 4792) Their motion for reconsideration having been denied by the Court of Appeals in its Resolution of 30 September 1996, petitioners now come to us through this petition for review. The pivotal issues to be resolved are: first, who are the rightful owners of the disputed property is it the heirs of Mariano, Juan, Josefa and Tarcela Brusas, whose claim of ownership is evidenced by a survey and subdivision plan; or, is it the heirs of spouses Ines Brusas and Cleto Rebosa, whose claim of ownership flows from an original certificate of title in the name of their parents, and covering the litigated property? And second, was there fraud on the part of Ines Brusas in causing the registration of the disputed land under her name thus entitling petitioners to the reconveyance of their shares therein? It is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. A title once registered under the Torrens System cannot be defeated even by adverse, open and notorious possession; neither can it be defeated by prescription. It is notice to the whole world and as such all persons are bound by it and no one can plead ignorance of the registration.5 The real purpose of the Torrens System of land registration is to quiet title to land and stop forever any question as to its legality. Once a title is registered the owner may rest secure without the necessity of waiting in the portals of the court, or sitting on the mirador de su casa, to avoid the possibility of losing his land.6 Indeed, titles over lands under the Torrens system should be given stability for on it greatly depends the stability of the country's economy. Interest reipublicae ut sit finis litium. This does not mean, however, that the landowner whose property has been wrongfully or erroneously registered in another's name is without remedy in law. When a person obtains a certificate of title to a land belonging to

another and he has full knowledge of the rights of the true owner, he is considered guilty of fraud. He may then be compelled to transfer the land to the defrauded owner so long as the property has not passed to the hands of an innocent purchaser for value.7 In the instant case, the litigated property is still registered in the name of Ines Brusas, so that insofar as procedure is concerned, petitioners were correct in availing of the remedy of reconveyance. However, an action for reconveyance presupposes the existence of a defrauded party who is the lawful owner of the disputed property. It is thus essential for petitioners to prove by clear and convincing evidence their title to the property, and the fact of fraud committed by Ines Brusas in registering their property in her name, which they miserably failed to do. Primarily, the survey and subdivision plan submitted in evidence by petitioners are inferior proofs of ownership and cannot prevail against the original certificate of title in the name of Ines Brusas who remains and is recognized as the registered owner of the disputed property. The survey of the land in the name of the five (5) children of Sixto Brusas is only an indication that each has an interest over the property, but it does not define the nature and extent of those interests, nor the particular portions of the property to which those interests appertain. The subdivision plan, on the other hand, is of doubtful evidentiary value and can hardly be the basis of a claim of ownership. A careful examination thereof shows that it is nothing but a sketch of the land purportedly prepared by a private land surveyor. It is not apparent therein when and where the partition was made, or who caused the property to be subdivided. Worse, this document was not even signed by any of the parties to the supposed partition to show their conformity thereto, nor acknowledged in writing by any of them or their heirs. Even petitioners' tax declarations and tax receipts are unavailing. It is well-settled that they are not conclusive evidence of ownership or of the right to possess land, in the absence of any other strong evidence to support them.8 The fact that the disputed property may have been declared for taxation purposes in the names of the brothers and sisters of Ines Brusas does not necessarily prove their ownership thereof. The tax receipts and tax declarations are merely indicia of a claim of ownership. What perhaps militates heavily against petitioners is the Affidavit (of waiver) marked Exh. "4" executed sometime in 1960 by Mariano, Tarcela, Juan and Josefa, whereby they relinquished, ceded and transferred to Ines Brusas their rights and interests over the controversial property, and recognized her as the absolute owner thereof, thus WE, MARIANO BRUSAS, JUAN BRUSAS, TARCELA BRUSAS and JOSEFA BRUSAS, all of legal age, married except the last who is a widow, residence (sic) and with postal address at Baao, Camarines Sur, after having been duly sworn to according to law, state the following, to wit That we are the brothers and sisters of Ines Brusas, applicant of Free Patent Application No. 10-4375 covering Lots 1 and 2, Psu-116520, situated in Baao, Camarines Sur; That by virtue of this instrument, we relinquish, cede and transfer whatever rights and interests we might have over Lots 1 and 2, Psu-116520 in favor of our sister, Ines Brusas; That we do not have any opposition to Ines Brusas acquiring title to said Lots 1 and 2, Psu-116520 by virtue of her Free Patent Application No. 10-4375; That we recognize our sister, Ines Brusas as the legal and absolute owner of Lots 1 and 2, Psu-116520 as covered by her Free Patent Application No. 10-4375;

WHEREFORE, we sign this instrument of our own will and voluntary act and after the same has been translated in our own native dialect and understood fully its contents, this April 20, 1960 at Naga City. (SGD) MARIANO BRUSAS (SGD) TARCELA BRUSAS (SGD) JUAN BRUSAS (SGD) JOSEFA BRUSAS

On the basis of the foregoing reasons alone the instant case should immediately be dismissed. Having failed to show any valid title to the land involved petitioners are not the proper parties who can rightfully claim to have been fraudulently deprived thereof. Nonetheless, for the satisfaction of all and sundry, we shall proceed to refute their accusation of fraud. First, Ines Brusas allegedly misrepresented in her application for free patent that she was the only claimant of the disputed property, without disclosing that her other brothers and sisters were claiming portions that supposedly belonged to them. It is worthy to emphasize, to the point of being repetitious, that Juan, Tarcela, Mariano and Josefa executed an affidavit of waiver recognizing Ines Brusas as the legal and absolute owner of Lots 1 and 2, and manifesting that they have no opposition to Ines Brusas' acquiring certificates of title over those lots. It was on the basis of this affidavit of waiver that Ines stated in her application for free patent that she was the sole claimant of Lots 1 and 2. Certainly this is not fraud. At any rate, it appears from the records that Juan, Tarcela, Mariano and Josefa were notified of the application for free patent of Ines Brusas and duly afforded the opportunity to object to the registration and to substantiate their claims, which they failed to do. Hence their opposition was accordingly disregarded and Ines Brusas' application was given due course.9 Petitioners cannot thus feign ignorance of the registration. Moreover, it is significant that petitioners never contested the order of the Bureau of Lands disregarding their claims, i.e., by filing a motion for reconsideration, or an appeal, for that purpose. This could only mean that they either agreed with the order or decided to abandon their claims. Petitioners next assailed the genuineness of Exh. "4" asserting that the signatures therein were forged. However, no evidence was adduced by them to substantiate their allegation. It appears that they submitted for examination by the NBI eighteen (18) specimen signatures of Juan, Tarcela, Mariano and Josefa. Unfortunately, no standard signature could be found for the year 1960 when Exh. "4" was executed.10 Petitioners admitted that they were unable to produce what was required by the NBI, hence, they "just had to give up."11 Furthermore, there was another Affidavit (Exh. "11") signed in the same year by the Brusases, Ines included, recognizing Mariano Brusas as the sole claimant of Lots 3 and 4 and waiving their interests therein in his favor. This fact all the more confirms that the affidavit of waiver in favor of Ines Brusas was authentic. As correctly observed by the appellate court It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit, was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11, strongly suggests that the Brusas[es] recognized Ines Brusas as the sole claimant of Lots 1 and 2 and Mariano Brusas, the sole claimant of Lots 3 and 4.12 It is not for private respondents to deny forgery. The burden of proof that the affidavit of waiver is indeed spurious rests on petitioners. Yet, significantly, even as they insist on forgery they never really took serious efforts in establishing such allegation by preponderant evidence. It must be stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner injure him, must be specifically alleged and proved.

The affidavit of waiver in favor of Ines, being a public document duly acknowledged before a notary public, under his hand and seal, with his certificate thereto attached, is prima facie evidence of the facts stated therein.13 Petitioners cannot impugn its validity by mere self-serving allegations. There must be evidence of the clearest and most satisfactory character. Correlatively, in granting the application of Ines Brusas for free patent, the Bureau of Lands enjoyed the presumption of regularity in the performance of its official duties. This presumption has not been rebutted by petitioners as there was likewise no evidence of any anomaly or irregularity in the proceedings which led to the registration of the land. Finally, as we are not trier of facts, we generally rely upon and are bound by the conclusions of the lower courts, which are better equipped and have better opportunity to assess the evidence first-hand, including the testimony of witnesses. We have consistently adhered to the rule that findings of the Court of Appeals are final and conclusive, and cannot ordinarily be reviewed by this Court as long as they are based on substantial evidence. Among the exceptions to this rule are: (a) when the conclusion is grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; and, (f) when the Court of Appeals, in making its findings, goes beyond the issues of the case and the same is contrary to the admissions of both the appellant and appellee. We emphasize that none of these exceptions is present in this case. WHEREFORE, the petition is DENIED. The 16 July 1996 Decision of the Court of Appeals ordering petitioners to vacate the disputed property and restore respondents in possession thereof, as well as its 30 September 1996 Resolution denying reconsideration, is AFFIRMED. Costs against petitioners.1wphi1.nt SO ORDERED. Mendoza, Quisumbing and Buena, JJ., concur. G.R. No. L-56483 May 29, 1984 SOSTENES CAMPILLO, petitioner, vs. HON. COURT OF APPEALS and ZENAIDA DIAZ VDA. DE SANTOS, in her capacity as Administratrix of the Intestate Estate of the late SIMPLICIO S. SANTOS, respondents. Rosendo J. Tansinsin for petitioner. Buenaventura Evangelista for private respondent.

DE CASTRO, J.: In this petition for review on certiorari of the decision of the defunct Court of Appeals in CA-G.R. No. 62842-R issued on March 9, 1981, the only issue is whether who has a better right or title to the herein disputed two (2) parcels of land Simplicio Santos who earlier purchased them in a private sale but failed to register his sale, or petitioner Sostenes Campillo who subsequently purchased them at an execution sale and obtained a certificate of title. The pertinent undisputed facts, may be summarized as follows: On February 27, 1961, Tomas de Vera and his wife Felisa Serafico sold two (2) parcels of land located in Tondo, Manila, designated as Lots 1 and 2 of the consolidation and subdivision plan (LRC) Pcs. 888 and segregated from Transfer Certificate of Title No. 37277 under Transfer Certificate of Title No. 63559, to Simplicio Santos, now

deceased and is represented by his administratrix, Zenaida Diaz Vda. de Santos, the herein private respondent. Said sale was however never presented for registration in the office of the Registry of Deeds of Manila nor noted in the title covering the property. On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of money against Tomas de Vera in Civil Case No. 49060 of the Court of First Instance of Manila. That judgment became final and executory, and petitioner obtained an order for the issuance of a writ of execution. The writ was issued on April 4, 1962 and pursuant thereto, the City Sheriff levied on three (3) parcels of land covered by TCT No. 63559 in the name of Tomas de Vera, including the two (2) parcels of land which the latter previously sold to Simplicio Santos. On June 26, 1962, notice of the sale of said lots was issued by the Sheriff and published in the "Daily Record" and La Nueva Era." On July 25, 1962, the three parcels of land were sold at public auction for P17,550.81 in favor of petitioner who was issued the corresponding certificate of sale. After the lapse of one year, the City Sheriff executed the final deed of sale in favor of petitioner over the three (3) parcels of land levied and sold on execution. On February 4, 1964, TCT No. 63559 was cancelled and in lieu thereof, TCT No. 73969 was issued by the Registry of Deeds of Manila in the name of petitioner Sostenes Campillo. Upon petition by the latter, the Registry of Deeds cancelled TCT No. 73969 and issued in hell thereof TCT Nos. 74019 and 74020 over the disputed Lots 1 and 2, respectively. Claiming to be the owner of the two parcels of land by reason of the previous sale to him by Tomas de Vera, Simplicio Santos filed an action to annul the levy, notice of sale, sale at public auction and final deed of sale of Lots 1 and 2 in favor of petitioner Campillo, with damages. In resisting the complaint, the herein petitioner as one of the defendants below, alleged that he is an innocent purchaser for value and that the supposed previous sale could not be preferred over the levy and sale at public action because it was not registered. After due trial, the lower court rendered judgment sustaining the validity of the levy and sale at public auction primarily because at the time of the levy and sale, the disputed properties were still registered in the name of the judgment debtor, Tomas de Vera. Besides, the trial court ruled, the sale to Simplicio Santos which was not registered nor noted in the title of the subject lots, cannot bind third persons. On appeal at the instance of the herein private respondent, the respondent appellate court modified the decision of the lower court, as follows:
WHEREFORE, the judgment of the trial court is hereby modified as follows: (1) The dismissal of the amended complaint as against defendant Sostenes Campillo only and ordering the plaintiff to pay the costs of suit are set aside; (2) Declaring the levy, sheriff's sale and sheriff's certificate in favor of defendant Sostenes Campillo null and void and of no effect; (3) Declaring plaintiff Simplicio Santos, now his estate, to be the owner of the two parcels of land under litigation and embraced in Transfer Certificate of Title No. 63559; and (4) Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title Nos. 74019 and 74020 in the name of defendant Sostenes Campillo and to issue the proper certificate of title in the name of the estate of Simplicio Santos.

The rest of the judgment appealed from is hereby affirmed. (p. 45, Rollo)

Rationalizing its stand, the appellate court said that the subject lots could not be legally levied upon to satisfy the judgment debt of the de Veras in favor of petitioner because at the time of the execution sale, the judgment debtor, having previously sold said properties, was no longer the owner thereof; that since the judgment debtor had no more right to or interest on the said properties, then the purchaser at the auction sale acquires nothing considering that a judgment creditor only acquires the Identical interest possessed by the judgment debtor in the property which is the subject of the auction sale, and he takes the property subject to all existing equities to which the property would have been subject in the hands of the debtor; and, while it may be true that Simplicio Santos did not record or register the sale of the disputed lots, the levy on execution does not take precedence over the unrecorded deed of sale to the same property made by the judgment debtor anterior to the said levy since the judgment creditor is not a third party within the meaning of the law and could not therefore be considered as purchaser for value in good faith. After a conscientious review and scrutiny of the records of this case as well as existing legislations and jurisprudence on the matter, We are constrained to reverse the judgment of the respondent appellate court and rule in favor of the herein petitioner. It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private transaction or of a foreclosure or execution sale, becomes legally effective against third persons only from the date of its registration. 1 Consequently, and considering that the properties subject matter hereof were actually attached and levied upon at a time when said properties stood in the official records of the Registry of Deeds as still owned by and registered in the name of the judgment debtor, Tomas de Vera, the attachment, levy and subsequent sale of said properties are proper and legal. The net result is that the execution sale made in favor of the herein petitioner transferred to him all the rights, interest and participation of the judgment debtor in the aforestated properties as actually appearing in the certificate of title, unaffected by any transfer or encumbrance not so recorded therein. Section 51, PD No. 1529, otherwise known as the Property Registration Decree, provides as follows:
Section 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Italics for emphasis)

As succinctly stated in the case of Philippine National Bank vs. Court of Appeals, 98 SCRA 207:
Whatever might have been generally or unqualifiedly stated in the cases heretofore decided by this Court, We hold that under the Torrens System registration is the operative act that gives validity to the transfer or creates a hen upon the land. A person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. To require him to do more is to defeat one of the primary objects of the Torrens system. A bona fide purchaser for value of such property at an auction sale acquires good title as against a prior transferee of same property if such transfer was unrecorded at the time of the auction sale. (Italics for emphasis)

The case of Leyson vs. Tanada, 2 invoked by the private respondent is not in point. In that case, a notice of lis pendens was inscribed at the back of the certificate of title of the land subject therein before it was sold at public auction. Necessarily, the purchaser at public auction is bound by the outcome of the pending case referred to therein. Since it turned out that the judgment debtor is merely a co-owner of the property sold at public auction, then the puchaser thereat is not entitled to the entirety of the land. As the Court held: "The interest acquired by a purchaser in an execution sale is limited to that which is possessed by the debtor. If there is more than one person owning property in common and an execution against one only is levied thereon, the sale effected by the Sheriff under such execution operates exclusively upon the interest of the execution debtor, without being in any wise prejudicial to the interest of the other owners. The result in such case merely is that one new owner in common is substituted for the owner whose interest is alienated by process of law." While it may be true as stated in the aforesaid case of Leyson vs. Tanada, that purchasers at execution sales should bear in mind that the rule of caveat emptor applies to such sales, that the sheriff does not warrant the title to real property sold by him as sheriff, and that it is not incumbent on him to place the purchaser in possession of such property, still the rule applies that a person dealing with registered land is not required to go behind the register to determine the condition of the property and he is merely charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. Hence, the petitioner herein, as the purchaser in the execution sale of the registered land in suit, acquires such right and interest as appears in the certificate of title unaffected by prior lien or encumbrances not noted therein. This must be so in order to preserve the efficacy and conclusiveness of the certificate of title which is sanctified under our Torrens system of land registration. WHEREFORE, the questioned decision of the respondent appellate court is hereby reversed and set aside, and the judgment of the lower court is reinstated. Without pronouncement as to costs. SO ORDERED. Guerrero, J., concur. Escolin, J., concurs in the result. Concepcion Jr., J., is on leave.

G.R. No. L-6122

May 31, 1954

AURELIA DE LARA and RUFINO S. DE GUZMAN, plaintiffs-appellants, vs. JACINTO AYROSO, defendant-appellant. Lauro Esteban for appellants. Alfonso G. Espinosa for appellee. REYES, J.: This is an action for foreclosure of mortgage.

From the stipulation of facts and the additional evidence submitted at the hearing the lower court found and it is not disputed that the spouses Jacinto Ayroso and Manuela Lacanilao were the registered owners of a parcel of land, situated in the municipality of Cabanatuan, Nueva Ecija, their title thereto being evidenced by Transfer Certificate No. 4203 of the land records of that province. The land had an area of a little over 3 1/2 hectares, but according to an annotation on the back of the certificate a large portion of that area a little less than 3 hectares-had already been alienated, sold to the Pilgrim Holiness Church in 1940. The certificate was kept in Jacinto Ayroso's trunk in his house in the poblacion of Cabanatuan, but somehow his daughter, Juliana Ayroso, managed to get possession of it without his knowledge and consent and gave it to a man whose name does not appear in the record. With the certificate in his possession and representing himself to be Jacinto Ayroso, this man was able to obtain from the plaintiff spouses the sum of P2,000, which he agreed to pay back in three months and as security therefor constituted a mortgage on Jacinto Ayroso's interest in the land covered by the certificate, signing the deed of mortgage with the latter's name. At that time, April 19, 1949, Jacinto Ayroso was already a widower, his wife having died on the 31st of the preceding month. Neither Jacinto Ayroso nor the man who impersonated him was personally known to the plaintiffs, though the latter believed in good faith that the two were one and the same person, the impostor being then accompanied by Ayroso's daughter Juliana whom they knew personally and who also signed as a witness to the mortgage deed. The mortgage was later registered in the office of the Register of Deeds of Nueva Ecija and annotated on the back of the certificate of title. Jacinto Ayroso never authorized anyone to mortgage the land and received no part of the mortgage loan. Upon the foregoing facts, the trial court rendered judgment declaring the mortgage invalid, ordering the Register of Deeds of Nueva Ecija to cancel the corresponding annotation on Transfer Certificate of Title No. 4203 and dismissing the complaint with costs. From this judgment an appeal has been taken directly to this court, and the question for determination is whether the said mortgage may be enforced by plaintiffs against the defendant Jacinto Ayroso. There can be no question that the mortgage under consideration is a nullity, the same having been executed by an impostor without the authority of the owner of the interest mortgaged. Its registration under the Land Registration Law lends it no validity because, according to the last proviso to the second paragraph of section 55 of that law, registration procured by the presentation of a forged deed is null and void. Plaintiffs, however, allege that they are innocent holders for value of a Torrens certificate of title, and on the authority of Eliason vs. Wilborn (281 U. S., 457), De la Cruz vs. Fabie (35 Phil., 144), and Blondeau et al. vs. Nano andVallejo (61 Phil., 625), invoke the protection accordedto such holders. But an examination of those cases willshow that they have no application to the one before us. In the case first cited, Eliason vs. Wilborn, the appellants, owners of registered land, delivered the certificate of title to a party under an agreement to sell and the said party forged a deed to himself, had the certificate issued in his name and then conveyed it to others, who were good faith purchasers for value. Upholding the last conveyance, the U. S. Supreme Court said: "The appellants saw fit to entrust it (the certificate) to Napletone and they took the risk ... . As between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss." In the second case, De la Cruz vs. Fabie, the attorney-in-fact of the owner of registered land, having been entrusted with the title to said property, abused the confidence thus reposed upon him, forged a deed in his favor, had anew title issued to himself and then conveyed it to another, who thereafter was issued a new certificate of title. This court held the purchaser to be the absolute owner of the land as an innocent holder of a title for value under section 55 of Act No. 496. It will be noted that in both of the above cases the certificate of title was already in the name of the forger when the land was sold to an innocent purchaser. In such case the vendee 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 vendor appearing on the face of said certificate to be the registered

owner. It should also be noted that in both cases fraud was made possible by the owner's act in entrusting the certificate of title to another. And this should be emphasized because it is what impelled this court to apply in those cases the principle of equity that "as between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss." In the present case the title was still in the name of the real owner when the land was mortgaged to the plaintiffs by the impostor. And it is obvious that plaintiffs were defrauded not because they relied upon what appeared in a Torrens certificate of title there was nothing wrong with the certificate but because they believed the words of the impostor when he told them that he was the person named as owner in the certificate. As the learned trial judge says in his decision, it was not incumbent upon plaintiffs to inquire into the ownership of the property and go beyond what was stated on the face of the certificate of title, but it was their duty to ascertain the identity of the man with whom they were dealing, as well as his legal authority to convey, if they did not want to be imposed upon. That duty devolves upon all persons buying property of any kind, and one who neglects it does so at his peril. It should be added that the appellee has not entrusted the certificate of title to anybody, an element essential to the application of the principle of equity abovecited. It is thus clear that the circumstances which impelled this court, in the cases cited to extend protection to the innocent holders for value of the Torrens certificates, at the expense of the owner of the registered property, are not present in the case at bar. Nor could the third case cited, Blondeau et al. vs. Nano and Vallejo, serve as a good precedent for the one now before us. That case, it is true, was also for foreclosure of mortgage, and the defense set up by the registered owner was also forgery. But it should be noted that in that case this court found as a fact that the mortgage had not been forged and in addition there was the circumstance that the registered owner had by his negligence or acquiescence, if not actual connivance, made it possible for the fraud to be committed. It is thus obvious that the case called for the application of the same principle of equity already mentioned, and the decision rendered by this court was in line with the two previous cases. But that decision does not fit the facts of the present case, where the mortgage is admittedly a forgery and the registered owner has not been shown to have been negligent or in connivance with the forger. The contention that it was negligence on appellee's part to leave the Torrens title in his trunk in his house in the poblacion when most of the time he was in the farm, was we think well answered by the trial court when it said: . . . it was not shown that the defendant has acted with negligence in keeping the certificate of title in his trunk in his own house. That his daughter was able to steal it or take it from the trunk without his knowledge and consent and was able to make use of it for a fraudulent purpose, (it) does not necessarily follow that he was negligent. It is in keeping with ordinary prudence in common Filipino homes for the owners thereof to keep their valuables in their trunks. It would be too much to expect of him that he should carry said certificate with him to wherever he goes. On the other hand the considerations underlying the decision in the case of Ch. Veloso and Rosales vs. La Urbana and Del Mar (58 Phil., 681), cited by the appelle, would seem to be applicable to the present case. In the case cited, the plaintiff Veloso, owner of certain parcels of registered land, brought action to annul certain mortgages constituted thereon by her brother-in-law, the defendant Del Mar, using two powers of attorney purportedly executed for that purpose by plaintiff and her husband Rosales, but which were in reality forged, the forgery having been committed by Del Mar himself. How Del Mar obtained possession of the certificate of title the report does not show, but the mortgages were duly registered and noted on the certificates of title. In holding the mortgages void, this court said: . . . Inasmuch as Del Mar is not the registered owner of the mortgaged properties and inasmuch as the appellant was fully aware of the fact that it was dealing with him on the strength of the alleged powers of attorney purporting to have been conferred upon him by the plaintiff, it was his duty to ascertain the genuineness of said instruments and not rely absolutely and exclusively upon the fact that the said powers of attorney appeared to have been registered. In view of its failure to proceed in this manner, it

acted negligently and should suffer the consequences and damages resulting from such transactions. (P. 683.) Appellants, however, contend that the doctrine laid down in that case has already been overruled by the Blondeau case, supra. This is not so, and to show that it is still good jurisprudence, this court quotes it with approval in Lopez vs. Seva et al. (69 Phil., 311), a case decided after the Blondeau decision. We are with the learned trial judge in applying to the present case the principle underlying the decision in the Veloso case, which, as His Honor well says, "is fair and just because it stands for the security and stability of property rights under any system of laws, including the Torrens system," affording protection against the dangerous tendency of unprincipled individuals "to enrich themselves at the expense of others thru illegal or seemingly lawful operations." And as His Honor also says, "as between an interpretation and application of the law which serves as an effective weapon to curb such dangerous tendency or that which technically may aid or foment it, the choice is clear and unavoidable." For, as repeatedly stated by this court, although the underlying purpose of the Land Registration Law is to impart stability and conclusiveness to transactions that have been placed within its operations, still that law does not permit its provisions to be used as a shield for the commission of fraud. In view of the foregoing, the judgment appealed from is affirmed, with costs against the appellants. Paras, C.J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, Labrador and Concepcion, JJ., concur. G.R. No. L-13953 July 26, 1960

MONS. CARLOS INQUIMBOY, plaintiff-appellant, vs. MARIA CONCEPCION PAEZ VDA. DE CRUZ, defendant-appellee. Mamerto N. Makapagal for appellant. Conrado T. Reyes for appellee. GUTIERREZ DAVID, J.: This appeal brings up for the review of the decision of the Court of First Instance of Nueva Ecija dismissing plaintiff's complaint. The facts are: Plaintiff's Carlos Inquimboy was the registered owner of the disputed land located in Bongabon, Nueva Ecija, as per T.C.T. No. 15600, Register of Deeds of Nueva Ecija (Annex B). On October 31, 1941, he sold the land, together with another parcel described in T.C.T. No. 15599, for the sum of P4,000.00 to Cenon Albea, who after making the down payment, promised to pay the balance in two installments, that is, P500.00 in may, 1942 (Annex C). On two other registered parcels, to Pedro Cruz (Annex D). This deed of sale was presented for registration on January 3, 1944. As to the two other piece of land, registration was duly had, but with respect to the disputed land, registration was refused because the land was still in the Inquimboy's name, Albea not having registered his deed of sale. On February 18, 1944, the sale in Albea not having registered his deed of sale. On February 18, 1944, the sale in Albea's favor was registered, Inquimboy's title was cancelled and in lieu thereof T.C.T. No. 20142 was issued to Albea (Annex E). On February 23, 1944, Inquimboy filed against Albea in the Court of First Instance of Nueva Ecija a complaint alleging, inter alia, that Albea failed to pay him on November 15, 1941, the sum of P2,500.00 and in May, 1942, the sum of P500.00 stipulated in the contract between them and therefore prayed that the contract of sale be rescinded, and that Albea be ordered to returned to him T.C.T. Nos. 15599 and 15600 (Civil Case No. 93-J).

On May 26, 1944, T.C.T. No. 20142 in Albea's name was cancelled and in lieu thereof T.C.T. No. 20584 was issued to Pedro Cruz. The civil case which Inquimboy had filed against Albea was passed upon by the lower court, then by the Court of Appeals and finally by this Court, which in a decision rendered in May 19, 1950 (89 Phil., 1601; 47 Off. Gaz. [12] 131) ordered Albea to reconvey and deliver to Inquimboy the properties litigated therein (one of which is now in litigation), unless within thirty days after final judgment he should pay the balance of the purchase price and P500.00 as liquidated damages and attorney's fees (Annex A). On October 11, 1957, Inquimboy instituted in the Court of First Instance of Nueva Ecija the present action against Maria Concepcion Paez Vda. de Cruz, surviving spouse of the now deceased Pedro Cruz, seeking annulment of T.C.T. No. 20584 and issuance of a new one in his name. The parties admitted the case in stipulation of facts, which, together with the annexes thereto, disclosed the above-narrated facts. The lower court dismissed the complaint. Reversal of the lower court's decision is sought by plaintiff on three grounds, namely, (1) Pedro Cruz was not a buyer in good faith; (2) Cruz was bound by this Court's decision in G. R. No. L-1601; and (3) appellant is not guilty of laches in asserting his right. Contrary to appellant's principal contention, Pedro Cruz was a buyer in good faith. It is true that we have several decisions wherein we enunciated the general rule that one who buys from a person who is not the registered owner is not a purchaser in good faith (Veloso and Rosales vs. La Urbana and Del Mar, 58 Phil., 681 ; Mari vs. Bonilla, 83 Phil., 137; 46 Off. Gaz., 4258; Mirasol vs. Gerochi, 93 Phil., 480; De Lara and De Guzman vs. Ayroso, 95 Phil., 185; 50 Off. Gaz., [10] 4838; Revilla and Fajardo vs. Galindez, 107 Phil., 480). But in deciding the question of good faith , the legal environment of each case must be considered. In all the instances where the above rule was followed, it should be noted that the buyer never dealt with the registered owner, yet the certificate of title was transferred from the registered owner directly to the buyer a fact which should have made the buyer investigate the right of his transferor was not and never became the registered owner of the litigated land. Herein, the sale in favor of Cruz was executed by Albea on December 20, 1943, when the land February 18, 1944, appellant's certificate of title was cancelled and another issued to Albea. And May 26, 1944, Albea's title was cancelled and in lieu thereof T.C.T. No. 20584 was issued to Cruz. Hence, while Albea may not have been a registered owner at the time he executed the deed of sale of favor of Cruz, he nevertheless subsequently acquired valid title in his own name which title he later transferred to Cruz. When a person who is not the owner of a thing sells and delivers it, and later the seller acquires title thereto, such tittle passes by operation of law to the buyer(Article 1434, New Civil Code). A purchaser in good faith is one who buys property of another without notice that some other person has a right to, or interest in such property and prays in full and fair price for the same, at the time of such purchase, and before he has notice of the claim or interest of some other person in the property (Cui and Joven vs. Henson, 51 Phil., 612). This definition fits Pedro Cruz. At the time he brought the property from Albea, he did not have knowledge, actual or imputable, of the right of another person on the property. His transferor, Albea, had in his possession the proper deed of conveyance executed by appellant in his favor, as well as appellant's certificate of title. So as between appellant and Albea, the land already belonged to the latter (Section 50, Act 496). And the registration of the land in Albea's name effectively operated to convey it to him. Albea's title was clean there was no lien or encumbrance annotated thereon. Of course, Albea's title was cancelled and another issue to Cruz only on May 26, 1944, while as early as February 23, 1944, appellant had already instituted a suit against Albea for recovery of the land. But since appellant never filed a notice of lis pendens, Cruz could not have known of the pending action, and consequently cannot be bound by the result thereof (Section 79, Act 496). Having found that Cruz' purchase of the land was characterized by good faith, we deem it unnecessary to take up the other points raised by appellant.

Wherefore, the appealed decision is hereby affirmed with costs against appellant. Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, and Barrera, JJ., concur. G.R. No. L-47662 September 30, 1942

JOAQUIN V. BASS, plaintiff-appellant, vs. ESTEBAN DE LA RAMA and HIJOS DE I. DE LA RAMA, defendants-appellees. Sotto & Sotto for appellant. Herras & Concepcion for appellees. OZAETA, J.: Pedro Ferrer was the owner of an undivided one-fourth of a parcel of land of 5,047,014 square meters situated in the municipality of Escalante, Province of Occidental Negros, under transfer certificate of title No. 2112. On July 16, 1920, he conveyed his interest our participation in said land to Hijos de I. de la Rama by way of mortgage to secure the payment of P12,500 with interest thereon at 12 per cent per annum. The mortgage was duly recorded in the office of the register of deeds and annotated on the certificate of title on July 27, 1920. On December 18, 1923, the provincial sheriff of Occidental Negros, at the instance of the herein plaintiff Joaquin V. Bass, levied execution on the one-fourth interest of Pedro Ferrer in the said land by virtue of a writ of execution issued by the Court of First Instance of Manila in civil case No. 19816, entitled "Joaquin V. Bass vs.. Pedro Ferrer." Notice of the levy was presented to the office of the register of deeds and entered in the day book on December 18, 1923, but was not annotated on the certificate of title. Pursuant to that levy, the provincial sheriff advertised and sold at public auction the said one-fourth interest of Pedro Ferrer in the land above mentioned, adjudicating it to the judgment creditor Joaquin V. Bass for the sum of P4,811,35, which was the amount of the judgment plus interest, costs, and expenses of the sale. The certificate of sale was presented to the office of the register of deeds and entered in the day book on April 9, 1924; but, like the notice of levy, it was not annotated on the corresponding certificate of title. It does not appear that the sheriff ever issued a final deed of sale in favor of Joaquin V. Bass after the lapse of one year. Neither does it appear whether or not the execution debtor Pedro Ferrer exercised the right of redemption within said statutory period. In or before 1924 Juliana Fuentebella Vda. de Ferrer, Pedro Ferrer, and Francisco Ferrer instituted civil case No. 2911 in the Court of First Instance of Occidental Negros against the Negros Coal Co., Ltd., Esteban de la Rama, and Hijos de I. de la Rama; and by way of cross-complaint filed in said case on July 30, 1924, the defendant Hijos de I. de la Rama foreclosed the mortgage executed by Pedro Ferrer as well as those executed separately by his co-owners Juliana Fuentebella and Francisco Ferrer on the land described in transfer certificate of title No. 2112. By virtue of the judgment obtained in said case by Hijos de I. de la Rama against Pedro Ferrer and his co-owners, the provincial sheriff advertised and sold at public auction on January 5, 1929, the land described in transfer certificate of title No. 2112, adjudicating it to the judgment creditor Hijos de I. de la Rama for the sum of P50,000. Upon presentation of the certificate of sale to the register of deeds of Occidental Negros, the latter, on January 7, 1929, cancelled transfer certificate of title No. 2112 in the name of Juliana Fuentebella, Francisco Ferrer, and Pedro Ferrer and issued transfer certificate of title No. 11411 in the name of Hijos de I. de la Rama. Subsequently the sheriff's sale was confirmed by the court in an order dated July 27, 1929. On the last-mentioned certificate of title are noted the following are subsisting encumbrances on the land in question: (1) A mortgage of P400,000 in favor of the Philippine National Bank, recorded October 24, 1935; (2)

another mortgage in favor of the Philippine National Bank to secure credit of P1,000,000 to P2,000,000, recorded February 25, 1938; and (3) notice of lis pendens by the plaintiff in this case, recorded April 21, 1939. The present action was instituted in or about April, 1939, by Joaquin V. Bass against Esteban de la Rama and Hijos de I. de la Rama to obtain judgment ordering the defendants "to deliver the land in question to the plaintiff and to pay to the latter damages in the sum of P1,220,700" claimed to be the value of the sugar realized from the produce of one-fourth of the said land during the time it has been in the possession of the defendants. That amount has been reduced in the prayer of appellant's brief to P353,365.98. The theory of the plaintiff, as may be gathered from his complaint, is that by virtue of the certificate of sale issued in his favor by the sheriff on February 15, 1924, which was entered in the day book of the register of deeds on April 9 of the same year, he became the absolute owner of one-fourth of the land described in transfer certificate of title No. 2112, equivalent to 127.9271 hectares, but that "the defendants illegally and in bad faith and without the consent of the plaintiff appropriated and took possession of the whole land described in said certificate of title from January 5, 1929, up to the present time, including the one-fourth of the same which is the exclusive property of the plaintiff." The defendants set up the following special defenses: (1) That the defendant Hijos de I. de la Rama acquired a valid title to the land in question thru the foreclosure of its mortgages thereon and the subsequent issuance to it of transfer certificate of title No. 11411; (2) that the plaintiff has no right or interest in the land in question, for, if he ever had it, he transferred such right and interest in the land in question, for if he ever had it, he transferred such right and interest to Gaspar Oliver, who in turn sold it to Alejandro Gamboa, and the latter in turn donated it to his brother Antonio Gamboa; and (3) that the plaintiff has lost whatever right and interest he may have had in said land by extinctive prescription. The trial court dismissed plaintiff's complaint on the ground that whatever right he might have acquired by virtue of the sheriff's sale have been lost thru his failure to redeem Pedro Ferrer's mortgage in favor of Hijos de I. de la Rama before it was foreclosed. Plaintiff appealed. Appellant acquired Pedro Ferrer's interest and participation in the land in question thru the sheriff's sale of February 15, 1924, subject to the right of redemption of the execution debtor or his redemptioner within one year and to the mortgage of P12,500, with interest at 12 per cent annum, in favor of Hijos de I. de la Rama. In order to establish his claim of absolute ownership of one-fourth of the land in question, it was incumbent upon appellant to establish that the title thereof had been consolidated in him. That he could show only by proving (a) that Pedro Ferrer had failed to exercise the right of redemption and (b) that he and (appellant) had satisfied the pre-existing mortgage in favor of Hijos de I. de La Rama. But that he did not even attempt to do. Thus we find that the equity of right acquired by the plaintiff in the land in question did not mature into ownership. Does that equity still subsist? In order to determine that question it is necessary to pass upon defendants' special defense. 1. Anent the first special defense, appellant assigns as error the failure of the trial to hold that appellees should have made him a party in the foreclosure proceeding. It is intimated that by virtue of the sheriffs's sale of February 15, 1924, appellant became a junior encumbrancer and as such have been impleaded as crossdefendant in the cross-complaint of foreclosure of mortgage interposed by Hijos de I. de la Rama in case No. 2911, as required by section 255 of act No. 190. In this connection the trial court held that the levy on execution and the subsequent sale at public auction in favor of appellant, not having been noted on the certificate of title, could not serve as notice to the whole world of appellant's equity in the land in question; in other words, they were not binding against appellees. That holding of the trial court is also assigned as error by appellant. In Government of the Philippine Islands vs.. Aballe ([1934], 60 Phil., 986), this Court interpreting sections 51 and 56 of Act No. 496, held that the notation of a writ of attachment in the entry book of the register of deeds is

effective although no corresponding notation is made on the certificate of title. That doctrine was followed in Director of Lands vs.. Abad ([1935], 61 Phil., 479). In the last mentioned case, Levy Hermanos, Inc., attached the right, title, and interest of one Crecenciano M. Torres in a parcel of registered land situated in Bacolod, Occidental Negros. The notice of attachment was presented to the register of deeds on January 14, 1931, and noted in the entry book but not on the certificate of title. On August 14, 1931, Crecenciano M. Torres mortgaged the said parcel of land to La Urbana, which registered the mortgage and caused it to be noted on the certificate of title. On April 9, 1932, the register of deeds discovered his failure, through oversight, to annotate the attachment on the certificate of title, and petitioned the court for authority to do so and for an order to La Urbana surrender the said certificate of title. That motion was denied, but subsequently Levy Hermanos, Inc., renewed it after having bought the property at public auction, and the court granted the motion and ordered the annotation of the attachment with precedence over La Urbana's mortgage. Following the decision in the Aballe case, this Court affirmed that order declaring: When Levy Hermanos, Inc., delivered its notice of attachment to the register of deeds of Occidental Negros and paid the corresponding fees, it had a right to presume that official would perform his duty property. When its attachment was entered upon the entry book it was duly registered according to section 56. However, the Court also observed that when La Urbana presented its mortgage for registration, it had a right to rely upon the presumption that the official duty of the register of deeds of Occidental Negros, as set forth section 72 of Act No. 496, had been regularly performed. Continuing, the Court said: ... A person who in good faith acquires any right or title to land registered under the provisions of Act No. 496 would not need to go behind the certificate of title if the register of deeds of the province in which such land is situated performs his legal duty. If a certificate of title cannot be taken at its face value the owner of land registered under the Torrens system will be greatly handicapped in making sales thereof or borrowing money thereon. For instance, in the present case La Urbana would have had to examine over 29,000 day book entries before making the loan to Crecenciano M. Torres if it had been obliged to go behind the transfer certificate of title No. 13126. Quoting from Quimson vs.. Suarez (45 Phil., 901, 906 ), the Court further said: One of the principal features of the Torrens System of registration is that all incumbrances on the land or special estates therein shall be shown, or, at least, intimated upon the certificate of title and a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions, the existence of which is not there intimated. It seems to us that these observations of the Court militate against the soundness of the ruling laid own in the Aballe case above cited, and we deem it necessary now to reexamine it. The ratio decidendi in that case is as follows: Neither is his opposition with respect to lot No. 762 founded, notwithstanding the fact that the notice of attachment had not been noted on the original certificate of title to this lot in the name of Gervasio Ignalaga and Petra Maderazo or on the transfer certificate of title which was later issued in his name, inasmuch as this notice of attachment was duly inscribed in the books of the registry of deeds. According to section 51 of Act No. 496, the registration of the instrument in the books of the registry deeds is notice to all as regards such document. It does not provide that it is the notation thereof on the certificate of title. And section 56 of the same Act, in prescribing the form in which he registers of deeds should keep their entry books and directing the entry therein, in the order of their reception, of all deeds and other voluntary instruments and all copies of writs and other process filed with them relating to registered land, noting therein the year, month, day, hour and minute when they received them, provides the inscription or registration shall be regarded as made from the time so noted. According to this, the

notation of the attachment of this lot in the entry book of the register of deeds produces all the effects which the law gives to its registration or inscription. (60 Phil., 988.) Section 51 of Act No. 496 reads as follows: Every conveyance, mortgage, lease, lien, attachment, order, decree, instrument, or entry affecting registered land which would under existing laws, if recorded, filed, or entered in the office of the register of deeds, affect the real estate to which it relates shall, if registered, filed, or entered in the office of the register of deeds in the province on city where the real estate to which such instrument relates lies, be notice to all persons from the time of such registering, filing, or entering. This Court interpreted that section to mean that the mere entry in the day book of a document affecting registered land is sufficient to the whole world. That would make it unnecessary for the register of deeds to make a brief memorandum of said document on the certificate of title. We think such interpretation disregards the provisions of section 52 of the same Act, which reads as follows: No new certificate shall be entered or issued upon any transfer of registered land which does not divest the land in fee simple from the owner or from some one of the registered owners. All interests in registered land less than an estate in fee simple shall be instrument creating or transferring or claiming such interest and by a brief memorandum thereof made by the register of deeds upon the certificate of title, signed by him. A similar memorandum shall also be made on the owner's duplicate. The cancellation or extinguishment of such interest shall be registered in the same manner. It will be noted that section 51 declares the effect of registration, while section 52 specifies the manner of registration. The two sections are complementary to each other and should be interpreted together. To hold that the mere entry of a document in the day or entry book, without noting it on the certificate of title, is sufficient, would render section 52 nugatory and destroy of the principal features of the Torrens System of registration, namely, that all encumbrances on the land or special estates therein shall be shown or at least intimated upon the certificate of title so that a person dealing with the owner of the land need not go behind the certificate and inquire into transactions the existence of which is not there intimated. It will further be noted that section 114 of the Land Registration Act provides for separate fees for the entry of a document in the entry book and for the annotation thereof on the certificate of title. For each entry in the entry book, including indexing, a fee of only fifty centavos is provided; but for each registration on the certificate of title a fixed fee of one peso is charged plus an additional fee ranging from P3 to P100, depending upon the value of the property or right involved. If the mere entry of a document in the entry book were sufficient, no one would or should take the trouble of causing it to be annotated on the certificate of title and paying additional fees. But that is unavoidable because section 56 provides "that no registration, annotation, or memorandum on a certificate of title shall be made unless the fees prescribed therefor by this Act are paid within fifteen days' time after the date of the registration of the deed, instrument order, or document in the entry book or day book, and in case said fee is not paid within the time above mentioned, such entry shall be null and void." It seems clear, therefore, that the mere entry in the day book is not sufficient. It is true that the same section 56 also provides that the register of deeds shall note in the entry book the year, month, day, hour, and minute of reception of all instruments, in the order in which they are received, and that "they shall be regarded as registered from the time so noted, and the memorandum of each instrument when made on the certificate of title which it refers shall bear the same date. But this provision must be harmonized with the other provisions of the Act, particularly sections 52 and 114, which require the annotation of such instruments on the certificate of title as an indispensable requisite to accomplish registration. Only by so doing may the prime purpose of the Torrens System be fulfilled: to facilitate dealings on land by means of a certificate of title which shall show all encumbrances on the land or special estates therein so that a person dealing on the land need not go behind that certificate. As a matter of fact, we find no ambiguity in this statement of section 56: "They shall be regarded as registered from the time so noted, and the memorandum of each instrument when made on the certificate of title to which it refers shall bear the same date." The second clause of this sentence is explanatory of the first. It means that the effect of the annotation of an instrument on

the certificate of title shall retroact to the moment of the entry of the same in the day book. (Fidelity and Surety Co. vs.. Conegero, 41 Phil., 396, 400.) In view of these considerations, we are constrained to abandon the ruling laid down in Government of the Philippine Islands vs.. Aballe, 60 Phil., 986, which was followed in Director of Lands vs.. Abad, 61 Phil., 479, and to hold that the entry of an instrument in the entry book of the of the register of deeds produces no legal effect unless a memorandum of such instrument is noted on the certificate of title. In the instant case the notice of levy on execution and the sheriff's sale in favor of appellant of Pedro Ferrer's participation in the land in question were never annotated on the certificate of title. Hence they were not binding against the mortgage Hijos de I. de la Rama and it was not necessary for the latter to implead appellant as junior encumbrancer in the foreclosure of its mortgage. As a result, the equity or right acquired by appellant in Pedro Ferrer's participation in the land in question was wiped out by the foreclosure of the pre-existing mortgage thereon. 2. Aside from the foregoing considerations, it also appears from paragraph V of plaintiff's complaint that the defendant Hijos de I. de la Rama, which appears now to be the registered owner of the land in question, has been in the adverse and exclusive possession of said land since January 5, 1929. Nevertheless plaintiff's commenced this action and filed notice of lis pendens only in April, 1939, that is to say, more than ten years after plaintiff's cause of action had accrued. Since, as we have shown, plaintiff's interest in said land has not been registered, he cannot invoke section 46 of the Land Registration Act in his favor. It is clear, therefore, that this action is barred by the statute of limitations. In connection with plaintiff's laches, it may further be noted that previous to his filing of a notice of lis pendens on the land in question the Philippine National Bank has recorded two mortgages on said land, the first amounting to P400,000 and the second, at least P1,000,000. These encumbrances appellant cannot ignore. Yet he makes no offer to satisfy them, nor even , for that matter, De las Ramas's original mortgage, which was anterior to appellant's notice of levy on execution. That only goes to emphasize how untenable is appellant's pretension. 3. We cannot close this decision without noting another phase of this case which affects the administration of justice. One of defendants' special defenses is that the plaintiff had no more right or interest in the land in question because he had transferred it to Gaspar Oliver. At the trial defendants presented Exhibit 8, a signed carbon copy of the deed of sale executed on April 11, 1924, by Joaquin V. Bass in favor of Gaspar Oliver before Notary Public Thos. Powell, of Iloilo, in the presence of two witnesses, L. G. Thomas and Pedro Sandoval. To rebut that proof, the plaintiff presented Joaquin V. Bass who swore in open court that he forged the signature of his uncle Joaquin V. Bass on Exhibit 8 because Gaspar Oliver gave him P400. He also swore that he copied his uncle's cedula number from another document, and that he did not appear before Notary Public Thos. N. Powell, nor did he sign his uncle's name on said document in the presence of said witnesses. On the other hand, Attorney Thos. N. Powell testified by deposition that Joaquin V. Bass signed said Exhibit 8 in his presence and personally showed him his (Joaquin's) cedula, the number of which Powell swore he copied on the corresponding blank space in the notarial acknowledgment in his own handwriting. It is not necessary for us to determine whether or not Exhibit 8 is a forgery, in view of the conclusions we have reached above; but we cannot overlook the glaring fact that crime was committed in connection with the trial of this case. If the witness Joaquin V. Bass really forged Exhibit 8, he committed the crime of forgery; and if he did not, he perjured himself when he testified that he did. In any event, this phase of the case should be investigated in the interest of the administration of justice. Wherefore, the judgment appealed from is affirmed with costs. Let copy of this decision be furnished the provincial fiscals of Iloilo and Occidental Negros, who are hereby directed to investigate Joaquin V. Bass in relation to Exhibit 8 and his testimony in this case and to take such action as the result of their investigation may warrant.

Yulo, C.J. and Moran, J., concur. G.R. No. L-7614 May 31, 1955

CONRADO POTENCIANO (deceased) substituted by LUIS, MILAGROS, VICTOR, and LOURDES, all surnamed POTENCIANO, plaintiffs-appellees, vs. NAPOLEON DINEROS and THE PROVINCIAL SHERIFF OF RIZAL, defendants-appellants. Tomas de Guzman and Policarpio Sangalang for appellees. Emilio M. Javier and Ozaeta, Lichauco and Picaso for appellants. REYES, A., J.: This is an appeal from a judgment of the Court of First Instance of Rizal, annuling an execution sale. The trial court made the following findings of fact: On November 3, 1944, the Plaintiff bought from Gregorio Alcabao the parcel of land and house object of this suit, as evidenced by a deed of sale. (Appendix "A" attached to the complaint). The following day, November 4, 1944, the plaintiff presented the deed of sale and owner's certificate of title to the Register of Deeds of Greater of Manila for registration. The entry was made in the day book and the plaintiff paid the corresponding fees, amounting to P72.50 and evidenced by official receipt. (Exh. C') In entering the transaction in the entry book, the clerk who made the entry committed an error in copying the number of the certificate of title. As appearing in the entry, it is numbered at (s) TCT No. 28436, when in fact the true number of the title is 18438. There is no doubt, however, that the property sold to the plaintiff is the same as that described and covered by TCT No. 28438. In the confusion arising from the bombing of Manila, the papers presented by the plaintiff were either lost or destroyed and were not among those salvaged. Up to this time, no certificate of title has been issued to the plaintiff. Sometime in April, 1946, the defendant sued Gregorio Alcabao and his son for damages and judgment was rendered in favor of the present defendant. When the complaint was filed against said Alcabao, a writ of attachment was issued and the property in question was attached, it appearing that the property was still in the name of Gregorio Alcabao. A third-party claim was filed by the plaintiff and the discrepancy in the numbers was explained, pointing out that the description of the property as contained in the deed of sale and TCT No. 38438 tallies in every respect. The plaintiff's claim was denied, and so was his claim during the execution sale. (Pp. 49-51, Record on Appeal.) And the record further shows that when the attachment was levied on the property in question Potenciano filed his third party claim thereto, whereupon the sheriff required Dineros to post a bond if he did not want the property released. Dineros posted a bond, but later succeeded in having the court order the sheriff to return it to him and to disregard the third party claims on the ground that Potenciano had no right to the property attached because it was not the one purchased by him from Alcabao. When the property was later ordered sold to satisfy the judgment rendered in favor of Dineros and against Alcabao in the main case, Potenciano renewed his third party claim but, at the instance of Dineros, the same was dismissed and the sheriff ordered to proceed with the sale without need of requiring a bond from Dineros. In compliance with this order the property was sold at public auction, and, Dineros having submitted the highest bid, the sheriff, on February 10, 1951, gave him his certificate of sale and this was noted on the corresponding certificate of title two days later. Potenciano tried twice to have the proceedings in the court below annulled thru certiorari but in both cases his petition was denied by this Court. The Rules of Court provide that a purchaser of real property at an execution sale "shall be substituted to and acquire all the right, title, interest, and claim of the judgment debtor thereto." (Rule 39, section 24.) In other

words, the purchaser acquires only such right or interest as the judgment debtor had on the property at the time of the sale. (Cruz vs. Sandoval, 69 Phil. 736; Barrido vs. Barreto, 72 Phil. 187.) It follows that it at that time the judgment debtor had no more right to or interest in the property because he had already sold it to another than the purchaser acquires nothing. Such appears to be the case here, for it is not disputed that years before the execution sale and even before the attachment the judgment debtor had already deeded the property and delivered his certificate of title to another, who on the following day presented the deed and certificate of title to the Register of Deeds. In other words, it was registered. And this act of registration operated to convey the property to the buyer. The judgment creditor contends that entry of the deed in the day book is not sufficient registration. Both upon law and authority this contention must be rejected. Section 56 of the Land Registration Act says that deeds relating to registered land shall, upon payment of the filing fee, be entered in the entry book also called day book in the same section with notation of the year, month, day, hour, and minute of their reception and that "they shall be regarded as registered from the moment so noted." And applying this provision in the cases of Levin vs. Bass* etc., G. R. Nos. L-4340 to 4346, decided on May 28, 1952, this Court held that "an innocent purchaser for value of registered land becomes the registered owner and in the contemplation of law the holder of a certificate thereof the moment he presents and files a duly notarized and lawful deed of sale and the same is entered on the day book and at the same time he surrenders or presents the owner's duplicate certificate of title to the property sold and pays the full amount of registration fees, because what remains to be done lies not within his power to perform." The judgment creditor may not, as purchaser at the auction sale, invoke the protection accorded by law to purchasers in good faith, because at the time of the auction he already had notice, thru the third party claim filed by Potenciano, that the property had already been acquired by the latter from the judgment debtor. We see no merit in the claim that the denial or dismissal of Potenciano's claim in the court below constitutes a bar to the present action. Potenciano, it is true, did not appeal from the disapproval of his claim. But it should be borne in mind that appeal is not proper in such cases. (Queblar vs. Garduo, 67 Phil., 316.) As was said in that case, the appeal that should be interposed "if the term 'appeal' may properly be employed, is a separate reivindicatory action against the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for damages to be charged against the bond filed by the judgment creditor in favor of the sheriff." Such reivindicatory action is resurged to the third party claimant by section 15 of Rule 39 despite disapproval of his claim by the court itself. (Planas vs. Madrigal, 94 Phil., 754; Lara vs. Bayona, G. R. No. L7920, decided May 10, 1955), and it is the action availed of by Potenciano in this case. In view of the foregoing, the decision appealed from is affirmed, with costs against the appellant. Bengzon, Montemayor, Bautista Angelo, Labrador, and Concepcion, JJ., concur. G.R. No. 132161 January 17, 2005

CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and HEIRS OF TEODORO DELA CRUZ, respondents. DECISION TINGA, J.: Petitioner Consolidated Rural Bank, Inc. of Cagayan Valley filed the instant Petition for Certiorari1 under Rule 45 of the Revised Rules of Court, seeking the review of the Decision2 of the Court of Appeals Twelfth Division in CA-G.R. CV No. 33662, promulgated on 27 May 1997, which reversed the judgment3 of the lower court in

favor of petitioner; and the Resolution4 of the Court of Appeals, promulgated on 5 January 1998, which reiterated its Decision insofar as respondents Heirs of Teodoro dela Cruz (the Heirs) are concerned. From the record, the following are the established facts: Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid (hereafter the Madrid brothers), were the registered owners of Lot No. 7036-A of plan Psd-10188, Cadastral Survey 211, situated in San Mateo, Isabela per Transfer Certificate of Title (TCT) No. T-8121 issued by the Register of Deeds of Isabela in September 1956.5 On 23 and 24 October 1956, Lot No. 7036-A was subdivided into several lots under subdivision plan Psd50390. One of the resulting subdivision lots was Lot No. 7036-A-7 with an area of Five Thousand Nine Hundred Fifty-Eight (5,958) square meters.6 On 15 August 1957, Rizal Madrid sold part of his share identified as Lot No. 7036-A-7, to Aleja Gamiao (hereafter Gamiao) and Felisa Dayag (hereafter, Dayag) by virtue of a Deed of Sale,7 to which his brothers Anselmo, Gregorio, Filomeno and Domingo offered no objection as evidenced by their Joint Affidavit dated 14 August 1957.8 The deed of sale was not registered with the Office of the Register of Deeds of Isabela. However, Gamiao and Dayag declared the property for taxation purposes in their names on March 1964 under Tax Declaration No. 7981.9 On 28 May 1964, Gamiao and Dayag sold the southern half of Lot No. 7036-A-7, denominated as Lot No. 7036-A-7-B, to Teodoro dela Cruz,10 and the northern half, identified as Lot No. 7036-A-7-A,11 to Restituto Hernandez.12 Thereupon, Teodoro dela Cruz and Restituto Hernandez took possession of and cultivated the portions of the property respectively sold to them.13 Later, on 28 December 1986, Restituto Hernandez donated the northern half to his daughter, Evangeline Hernandez-del Rosario.14 The children of Teodoro dela Cruz continued possession of the southern half after their fathers death on 7 June 1970. In a Deed of Sale15 dated 15 June 1976, the Madrid brothers conveyed all their rights and interests over Lot No. 7036-A-7 to Pacifico Marquez (hereafter, Marquez), which the former confirmed16 on 28 February 1983.17 The deed of sale was registered with the Office of the Register of Deeds of Isabela on 2 March 1982.18 Subsequently, Marquez subdivided Lot No. 7036-A-7 into eight (8) lots, namely: Lot Nos. 7036-A-7-A to 7036-A-7-H, for which TCT Nos. T-149375 to T-149382 were issued to him on 29 March 1984.19 On the same date, Marquez and his spouse, Mercedita Mariana, mortgaged Lots Nos. 7036-A-7-A to 7036-A-7-D to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan of One Hundred Thousand Pesos (P100,000.00).20 These deeds of real estate mortgage were registered with the Office of the Register of Deeds on 2 April 1984. On 6 February 1985, Marquez mortgaged Lot No. 7036-A-7-E likewise to the Rural Bank of Cauayan (RBC) to secure a loan of Ten Thousand Pesos (P10,000.00).21 As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the mortgages in its favor and the lots were sold to it as the highest bidder on 25 April 1986.22 On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto (Calixto).23 Claiming to be null and void the issuance of TCT Nos. T-149375 to T-149382; the foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-D; the mortgage to RBC; and the sale to Calixto, the Heirs-now respondents herein-

represented by Edronel dela Cruz, filed a case24 for reconveyance and damages the southern portion of Lot No. 7036-A (hereafter, the subject property) against Marquez, Calixto, RBC and CRB in December 1986. Evangeline del Rosario, the successor-in-interest of Restituto Hernandez, filed with leave of court a Complaint in Intervention25 wherein she claimed the northern portion of Lot No. 7036-A-7. In the Answer to the Amended Complaint,26 Marquez, as defendant, alleged that apart from being the first registrant, he was a buyer in good faith and for value. He also argued that the sale executed by Rizal Madrid to Gamiao and Dayag was not binding upon him, it being unregistered. For his part, Calixto manifested that he had no interest in the subject property as he ceased to be the owner thereof, the same having been reacquired by defendant Marquez.27 CRB, as defendant, and co-defendant RBC insisted that they were mortgagees in good faith and that they had the right to rely on the titles of Marquez which were free from any lien or encumbrance.28 After trial, the Regional Trial Court, Branch 19 of Cauayan, Isabela (hereafter, RTC) handed down a decision in favor of the defendants, disposing as follows: WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered: 1. Dismissing the amended complaint and the complaint in intervention; 2. Declaring Pacifico V. Marquez the lawful owner of Lots 7036-A-7 now Lots 7036-A-7-A to 7036-A7-H, inclusive, covered by TCT Nos. T-149375 to T-149382, inclusive; 3. Declaring the mortgage of Lots 7036-A-7-A, 7036-A-7-B, 7036-A-7-C and 7036-A-7-D in favor of the defendant Consolidated Rural Bank (Cagayan Valley) and of Lot 7036-A-7-E in favor of defendant Rural Bank of Cauayan by Pacifico V. Marquez valid; 4. Dismissing the counterclaim of Pacifico V. Marquez; and 5. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the lots covered by TCT Nos. T33119, T-33220 and T-7583. No pronouncement as to costs. SO ORDERED.29 In support of its decision, the RTC made the following findings: With respect to issues numbers 1-3, the Court therefore holds that the sale of Lot 7036-A-7 made by Rizal Madrid to Aleja Gamiao and Felisa Dayag and the subsequent conveyances to the plaintiffs and intervenors are all valid and the Madrid brothers are bound by said contracts by virtue of the confirmation made by them on August 14, 1957 (Exh. B). Are the defendants Pacifico V. Marquez and Romeo B. Calixto buyers in good faith and for value of Lot 7036A-7? It must be borne in mind that good faith is always presumed and he who imputes bad faith has the burden of proving the same (Art. 527, Civil Code). The Court has carefully scrutinized the evidence presented but finds nothing to show that Marquez was aware of the plaintiffs and intervenors claim of ownership over this lot.

TCT No. T-8121 covering said property, before the issuance of Marquez title, reveals nothing about the plaintiffs and intervenors right thereto for it is an admitted fact that the conveyances in their favor are not registered. The Court is therefore confronted with two sales over the same property. Article 1544 of the Civil Code provides: "ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. x x x " (Underscoring supplied). From the foregoing provisions and in the absence of proof that Marquez has actual or constructive knowledge of plaintiffs and intervenors claim, the Court has to rule that as the vendee who first registered his sale, Marquez ownership over Lot 7036-A-7 must be upheld.30 The Heirs interposed an appeal with the Court of Appeals. In their Appellants Brief,31 they ascribed the following errors to the RTC: (1) it erred in finding that Marquez was a buyer in good faith; (2) it erred in validating the mortgage of the properties to RBC and CRB; and (3) it erred in not reconveying Lot No. 7036-A7-B to them.32 Intervenor Evangeline del Rosario filed a separate appeal with the Court of Appeals. It was, however, dismissed in a Resolution dated 20 September 1993 for her failure to pay docket fees. Thus, she lost her standing as an appellant.33 On 27 May 1997, the Court of Appeals rendered its assailed Decision34 reversing the RTCs judgment. The dispositive portion reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Accordingly, judgment is hereby rendered as follows: 1. Declaring the heirs of Teodoro dela Cruz the lawful owners of the southern half portion and Evangeline Hernandez-del Rosario the northern half portion of Lot No. 7036-A-7, now covered by TCT Nos. T-149375 to T-149382, inclusive; 2. Declaring null and void the deed of sale dated June 15, 1976 between Pacifico V. Marquez and the Madrid brothers covering said Lot 7036-A-7; 3. Declaring null and void the mortgage made by defendant Pacifico V. Marquez of Lot Nos. 7036-A-7A, 7036-A-7-B, 7036-A-7-C and 7036-A-7-D in favor of the defendant Consolidated Rural Bank and of Lot 7036-A-7-E in favor of defendant Rural Bank of Cauayan; and 4. Ordering Pacifico V. Marquez to reconvey Lot 7036-A-7 to the heirs of Teodoro dela Cruz and Evangeline Hernandez-del Rosario. No pronouncement as to costs. SO ORDERED.35

In upholding the claim of the Heirs, the Court of Appeals held that Marquez failed to prove that he was a purchaser in good faith and for value. It noted that while Marquez was the first registrant, there was no showing that the registration of the deed of sale in his favor was coupled with good faith. Marquez admitted having knowledge that the subject property was "being taken" by the Heirs at the time of the sale.36 The Heirs were also in possession of the land at the time. According to the Decision, these circumstances along with the subject propertys attractive locationit was situated along the National Highway and was across a gasoline station should have put Marquez on inquiry as to its status. Instead, Marquez closed his eyes to these matters and failed to exercise the ordinary care expected of a buyer of real estate.37 Anent the mortgagees RBC and CRB, the Court of Appeals found that they merely relied on the certificates of title of the mortgaged properties. They did not ascertain the status and condition thereof according to standard banking practice. For failure to observe the ordinary banking procedure, the Court of Appeals considered them to have acted in bad faith and on that basis declared null and void the mortgages made by Marquez in their favor.38 Dissatisfied, CRB filed a Motion for Reconsideration39 pointing out, among others, that the Decision promulgated on 27 May 1997 failed to establish good faith on the part of the Heirs. Absent proof of possession in good faith, CRB avers, the Heirs cannot claim ownership over the subject property. In a Resolution40 dated 5 January 1998, the Court of Appeals stressed its disbelief in CRBs allegation that it did not merely rely on the certificates of title of the properties and that it conducted credit investigation and standard ocular inspection. But recalling that intervenor Evangeline del Rosario had lost her standing as an appellant, the Court of Appeals accordingly modified its previous Decision, as follows: WHEREFORE, the decision dated May 27, 1997, is hereby MODIFIED to read as follows: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE insofar as plaintiffsappellants are concerned. Accordingly, judgment is hereby rendered as follows: 1. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the southern half portion of Lot No. 7036-A-7; 2. Declaring null and void the deed of sale dated June 15, 1976 between Pacifico V. Marquez and the Madrid brothers insofar as the southern half portion of Lot NO. (sic) 7036-A-7 is concerned; 3. Declaring the mortgage made by defendant Pacifico V. Marquez in favor of defendant Consolidated Rural Bank (Cagayan Valley) and defendant Rural Bank of Cauayan as null and void insofar as the southern half portion of Lot No. 7036-A-7 is concerned; 4. Ordering defendant Pacifico V. Marquez to reconvey the southern portion of Lot No. 7036-A-7 to the Heirs of Teodoro dela Cruz. No pronouncement as to costs. SO ORDERED.41 Hence, the instant CRB petition. However, both Marquez and RBC elected not to challenge the Decision of the appellate court. Petitioner CRB, in essence, alleges that the Court of Appeals committed serious error of law in upholding the Heirs ownership claim over the subject property considering that there was no finding that they acted in good

faith in taking possession thereof nor was there proof that the first buyers, Gamiao and Dayag, ever took possession of the subject property. CRB also makes issue of the fact that the sale to Gamiao and Dayag was confirmed a day ahead of the actual sale, clearly evincing bad faith, it adds. Further, CRB asserts Marquezs right over the property being its registered owner. The petition is devoid of merit. However, the dismissal of the petition is justified by reasons different from those employed by the Court of Appeals. Like the lower court, the appellate court resolved the present controversy by applying the rule on double sale provided in Article 1544 of the Civil Code. They, however, arrived at different conclusions. The RTC made CRB and the other defendants win, while the Court of Appeals decided the case in favor of the Heirs. Article 1544 of the Civil Code reads, thus: ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. The provision is not applicable in the present case. It contemplates a case of double or multiple sales by a single vendor. More specifically, it covers a situation where a single vendor sold one and the same immovable property to two or more buyers.42 According to a noted civil law author, it is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose of it.43 It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold.44 And even if the sale was made by the same person, if the second sale was made when such person was no longer the owner of the property, because it had been acquired by the first purchaser in full dominion, the second purchaser cannot acquire any right.45 In the case at bar, the subject property was not transferred to several purchasers by a single vendor. In the first deed of sale, the vendors were Gamiao and Dayag whose right to the subject property originated from their acquisition thereof from Rizal Madrid with the conformity of all the other Madrid brothers in 1957, followed by their declaration of the property in its entirety for taxation purposes in their names. On the other hand, the vendors in the other or later deed were the Madrid brothers but at that time they were no longer the owners since they had long before disposed of the property in favor of Gamiao and Dayag. Citing Manresa, the Court of Appeals in 1936 had occasion to explain the proper application of Article 1473 of the Old Civil Code (now Article 1544 of the New Civil Code) in the case of Carpio v. Exevea,46 thus: In order that tradition may be considered performed, it is necessary that the requisites which it implies must have been fulfilled, and one of the indispensable requisites, according to the most exact Roman concept, is that the conveyor had the right and the will to convey the thing. The intention to transfer is not sufficient; it only constitutes the will. It is, furthermore, necessary that the conveyor could juridically perform that act; that he had the right to do so, since a right which he did not possess could not be vested by him in the transferee. This is what Article 1473 has failed to express: the necessity for the preexistence of the right on the part of the conveyor. But even if the article does not express it, it would be understood, in our opinion, that that circumstance constitutes one of the assumptions upon which the article is based.

This construction is not repugnant to the text of Article 1473, and not only is it not contrary to it, but it explains and justifies the same. (Vol. 10, 4th ed., p. 159)47 In that case, the property was transferred to the first purchaser in 1908 by its original owner, Juan Millante. Thereafter, it was sold to plaintiff Carpio in June 1929. Both conveyances were unregistered. On the same date that the property was sold to the plaintiff, Juan Millante sold the same to defendant Exevea. This time, the sale was registered in the Registry of Deeds. But despite the fact of registration in defendants favor, the Court of Appeals found for the plaintiff and refused to apply the provisions of Art. 1473 of the Old Civil Code, reasoning that "on the date of the execution of the document, Exhibit 1, Juan Millante did not and could not have any right whatsoever to the parcel of land in question."48 Citing a portion of a judgment dated 24 November 1894 of the Supreme Court of Spain, the Court of Appeals elucidated further: Article 1473 of the Civil Code presupposes the right of the vendor to dispose of the thing sold, and does not limit or alter in this respect the provisions of the Mortgage Law in force, which upholds the principle that registration does not validate acts or contracts which are void, and that although acts and contracts executed by persons who, in the Registry, appear to be entitled to do so are not invalidated once recorded, even if afterwards the right of such vendor is annulled or resolved by virtue of a previous unrecorded title, nevertheless this refers only to third parties.49 In a situation where not all the requisites are present which would warrant the application of Art. 1544, the principle of prior tempore, potior jure or simply "he who is first in time is preferred in right,"50 should apply.51 The only essential requisite of this rule is priority in time; in other words, the only one who can invoke this is the first vendee. Undisputedly, he is a purchaser in good faith because at the time he bought the real property, there was still no sale to a second vendee.52 In the instant case, the sale to the Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the sale by the Madrid brothers to Marquez. The Heirs also had possessed the subject property first in time. Thus, applying the principle, the Heirs, without a scintilla of doubt, have a superior right to the subject property. Moreover, it is an established principle that no one can give what one does not havenemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.53 In this case, since the Madrid brothers were no longer the owners of the subject property at the time of the sale to Marquez, the latter did not acquire any right to it. In any event, assuming arguendo that Article 1544 applies to the present case, the claim of Marquez still cannot prevail over the right of the Heirs since according to the evidence he was not a purchaser and registrant in good faith. Following Article 1544, in the double sale of an immovable, the rules of preference are: (a) the first registrant in good faith; (b) should there be no entry, the first in possession in good faith; and (c) in the absence thereof, the buyer who presents the oldest title in good faith. 54 Prior registration of the subject property does not by itself confer ownership or a better right over the property. Article 1544 requires that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e., in ignorance of the first sale and of the first buyers rights)from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.55

In the instant case, the actions of Marquez have not satisfied the requirement of good faith from the time of the purchase of the subject property to the time of registration. Found by the Court of Appeals, Marquez knew at the time of the sale that the subject property was being claimed or "taken" by the Heirs. This was a detail which could indicate a defect in the vendors title which he failed to inquire into. Marquez also admitted that he did not take possession of the property and at the time he testified he did not even know who was in possession. Thus, he testified on direct examination in the RTC as follows: ATTY. CALIXTO Q Can you tell us the circumstances to your buying the land in question? A In 1976 the Madrid brothers confessed to me their problems about their lots in San Mateo that they were being taken by Teodoro dela Cruz and Atty. Teofilo A. Leonin; that they have to pay the lawyers fee of P10,000.00 otherwise Atty. Leonin will confiscate the land. So they begged me to buy their properties, some of it. So that on June 3, 1976, they came to Cabagan where I was and gave them P14,000.00, I think. We have talked that they will execute the deed of sale. Q Why is it, doctor, that you have already this deed of sale, Exh. 14, why did you find it necessary to have this Deed of Confirmation of a Prior Sale, Exh. 15? A Because as I said a while ago that the first deed of sale was submitted to the Register of Deeds by Romeo Badua so that I said that because when I became a Municipal Health Officer in San Mateo, Isabela, I heard so many rumors, so many things about the land and so I requested them to execute a deed of confirmation.56 ... ATTY. CALIXTOQ At present, who is in possession on the Riceland portion of the lot in question? A I can not say because the people working on that are changing from time to time. Q Why, have you not taken over the cultivation of the land in question? A Well, the Dela Cruzes are prohibiting that we will occupy the place. Q So, you do not have any possession? A None, sir.57 One who purchases real property which is in actual possession of others should, at least, make some inquiry concerning the rights of those in possession. The actual possession by people other than the vendor should, at least, put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessions.58 The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendors title takes all the risks and losses consequent to such failure.59 It is further perplexing that Marquez did not fight for the possession of the property if it were true that he had a better right to it. In our opinion, there were circumstances at the time of the sale, and even at the time of registration, which would reasonably require a purchaser of real property to investigate to determine whether

defects existed in his vendors title. Instead, Marquez willfully closed his eyes to the possibility of the existence of these flaws. For failure to exercise the measure of precaution which may be required of a prudent man in a like situation, he cannot be called a purchaser in good faith.60 As this Court explained in the case of Spouses Mathay v. Court of Appeals:61 Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is, of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land en concepto de dueo, in concept of owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to verify the extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a "purchaser in good faith."62 This rule equally applies to mortgagees of real property. In the case of Crisostomo v. Court of Appeals,63 the Court held: It is a well-settled rule that a purchaser or mortgagee 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 or mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the vendors or mortgagors title, will not make him an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with the measure of a prudent man in a like situation.64 Banks, their business being impressed with public interest, are expected to exercise more care and prudence than private individuals in their dealings, even those involving registered lands. Hence, for merely relying on the certificates of title and for its failure to ascertain the status of the mortgaged properties as is the standard procedure in its operations, we agree with the Court of Appeals that CRB is a mortgagee in bad faith. In this connection, Marquezs obstention of title to the property and the subsequent transfer thereof to CRB cannot help the latters cause. In a situation where a party has actual knowledge of the claimants actual, open and notorious possession of the disputed property at the time of registration, as in this case, the actual notice and knowledge are equivalent to registration, because to hold otherwise would be to tolerate fraud and the Torrens system cannot be used to shield fraud. 65 While certificates of title are indefeasible, unassailable and binding against the whole world, they merely confirm or record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used for the perpetration of fraud; neither do they permit one to enrich himself at the expense of others.66 We also find that the Court of Appeals did not err in awarding the subject property to the Heirs absent proof of good faith in their possession of the subject property and without any showing of possession thereof by Gamiao and Dayag. As correctly argued by the Heirs in their Comment,67 the requirement of good faith in the possession of the property finds no application in cases where there is no second sale.68 In the case at bar, Teodoro dela Cruz took possession of the property in 1964 long before the sale to Marquez transpired in 1976 and a considerable length

of timeeighteen (18) years in factbefore the Heirs had knowledge of the registration of said sale in 1982. As Article 526 of the Civil Code aptly provides, "(H)e is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it." Thus, there was no need for the appellate court to consider the issue of good faith or bad faith with regard to Teodoro dela Cruzs possession of the subject property. Likewise, we are of the opinion that it is not necessary that there should be any finding of possession by Gamiao and Dayag of the subject property. It should be recalled that the regularity of the sale to Gamiao and Dayag was never contested by Marquez.69 In fact the RTC upheld the validity of this sale, holding that the Madrid brothers are bound by the sale by virtue of their confirmation thereof in the Joint Affidavit dated 14 August 1957. That this was executed a day ahead of the actual sale on 15 August 1957 does not diminish its integrity as it was made before there was even any shadow of controversy regarding the ownership of the subject property. Moreover, as this Court declared in the case of Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago ,70 tax declarations "are good indicia of possession in the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession."71 WHEREFORE, the Petition is DENIED. The dispositive portion of the Court of Appeals Decision, as modified by its Resolution dated 5 January 1998, is AFFIRMED. Costs against petitioner. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur. G.R. No. L-45742 April 12, 1939

TIBURCIO MAMUYAC, petitioner-appellant, vs. PEDRO ABENA (alias Indong), respondent-appellee. Nicanor Tavora for petitioner. Pedro C. Quinto for respondent. LAUREL, J.: This is a petition for writ of certiorari to review the decision of the Court of Appeals promulgated on July 30, 1937 in CA-G. R. No. 43446. Gregoria Pimentel was the owner of the two parcels of land which she sold and conveyed on June 1, 1926, to Pedro Abena, the respondent-appellee herein. On January 27, 1927, Gregoria Pimentel again sold and conveyed the same parcels to Tiburcio Mamuyac, the petitioner-appellant herein. The document of sale, Exhibit 1, in favor of Abena was duly inscribed in the registry of property of the province on January 31, 1927, and from April, 1927, said parcels of land were declared for taxation in the name said Abena. The document executed in favor of the petitioner on January 27, 1927, was neither inscribed in the registry of property nor were the parcels of the land declared for taxation in the name of the latter. To determine the conflict, petitioner-appellant instituted an action in the Court of First Instance of La Union against the respondent-appellee for the recovery of the two controverted parcels of land. After hearing, the trial court rendered judgment in favor of the defendant, respondent-appellee here. From this judgment, the petitioner-appellant appealed to the Court of Appeals. This latter court, with one member dissenting, affirmed

the decision of the Court of First Instance of La Union. The dispositive part of the majority decision of the appellate court is: De cualquier modo que se considere la cuestion, ya bajo la teoria de la parte demandante sobre la posesion, ya bajo el articulo 1473 del Codigo Civil que tiene exacta aplicacion al caso de autos, el juzgado no incurrio en ningun error al dictar sentencia a favor del demandado, la cual confirmamos en todas sus partes, con las costas en esta instancia al apelante. Plaintiff, petitioner-appellant here, elevated the case to this court by writ of certiorari as adverted to in the beginning of this opinion. The first assignment of error of the petitioner-appellant challenges the findings of fact of the Court of Appeals. This cannot be done. The appellate jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors of law incurred by the latter, the findings of fact of said Court of Appeals being final as to the former. (Guico vs. Mayuga and Heirs of Mayuga [1936], 35 Off. Gaz., 861.) Review of judgments and decrees of the Court of Appeals is limited to "cases in which only errors or questions of law are involved." (Sec 2, Commonwealth Act No. 3, amending section 138 of the Administrative Code, in relation to sec. 2, Art. VIII, Constitution of the Philippines.) (Mateo vs. Collector of Customs and Court of Appeals [1936], 35 Off. Gaz., 915.) The petitioner-appellant under his under his second and third assignments of error contends that he has a better right over the two parcels of land involved because of possession claimed by him in virtue of an alleged private contract of mortgaged executed in his favor on January 4, 1935 (Exhibit B.) It is sufficient answer to this contention that "in order that a mortgage may be deemed to be legally constituted, it is undispensable that the instrument in which it appears be a public document and be recorded in the property register. Therefore, a mortgage in legal form was not constituted by said private document." (Tuason vs. Goduco, 23 Phil., 342, 347.) Even were we to accord validity to the mortgage, Exhibit B, article 1473 of the Civil Code, invoked by him, applies only to the determination of presence between sale and sale: El precepto que acaba de consignarse viene a determinar los casos de preferencia cuando una misma cosa hubiere sido vendida a dos o mas personas, casos de los que ya se ocupo la ley 15, tit. 32, lib. 3. del Codigo Romano, y la ley 50, tit. 5. part. 5. a (4 Bonel, Codigo Civil, p 483) and the same cannot be availed of in case of conflict between a sale and a mortgage. Es aplicable el precepto del articulo 1473 del Codigo Civil para resolver el resolver el pleito entre el comprador de un inmueble y el acreedor del vendedor, con hipoteca sobre el mismo inmueble vendido? El Tribunal Supremo declaro no haber lugar al recurso. Considerando que es inaplicable al caso el articulo 1473 del Codigo Civil, que se supone infringido en el primer motivo del recurso, porque no se ha tratado en este pleito del caso a que se refiere dicho articulo, ni el recurrente tenia inscrita la propiedad de la finca de que se trata cuando se instruyo el expediente posesorio, ni poseia con la buena fe que exige el ultimo parrafo del articulo citado, siendo, como era, conocedor de que la Godinez y de los gravamenes que sobre esta pesaban, lo cual le coloca en condiciones que n son las del tercero a que hace referencia el articulo 606 del citado Codigo, cuya infraccion se invoca en el segundo motivo, por no haberlo aplicado, cuando realmente no lo es este caso. (Sentencia de 7 de julio 1896, 15 Codigo Civil, Martinez Ruiz 2. a ed., 330, 332.)

Upon the other hand, even if we were to accept the contention of the petitioner-appellant that he had been in possession of said properties by reason of the alleged contract of mortgage executed in his favor, on January 4, 1925, and were to accord legal effect to the document of sale of January 27, 1927, which was not recorded in the registry of property, still his right cannot prevail over that of Abena who had duly registered his deed of sale. (Exhibit 1.) The contention of the appellant that respondent's ownership and preference over the property over the property in question is not complete because of lack of material delivery of the possession to him by the vendor is not well taken, for the reason that the execution of the public document of sale in favor of the respondent-appellee is equivalent to the delivery of the realty sold. (Sanchez vs. Ramos, 40, Phil., 614, 616.). The petitioner is hereby dismissed with costs against the petitioner. So ordered. Avancea, C.J., Villa-Real, Imperial, Concepcion and Moran, JJ., concur. G.R. No. L-19545 April 18, 1975 PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION, petitioner, vs. THE AUDITOR GENERAL, PEDRO M. GIMENEZ, respondent. Magno L. Dajao for petitioner. First Assistant Solicitor General Esmeraldo Umali and Solicitor Sumilang V. Bernardo for respondent.

ANTONIO, J.:+.wph!1 Appeal by certiorari from the decision dated December 11, 1961, of then Auditor General Pedro M. Gimenez, disallowing the request of petitioner for the refund of real estate tax in the amount of P30,460.90 paid to the Provincial Treasurer of Bulacan. The facts of the case are as follows: On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs, and of the Social Welfare Administrator together with the recommendation of the Manager of the Government Service Insurance System, approved in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan for relocating the squatters who desire to settle north of Manila, and of another area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. The project was to be financed through the flotation of bonds under the charter of the PHHC in the amount of P4.5 million, the same to be absorbed by the Government Service Insurance System. The President, through the Executive Secretary, informed the PHHC of such approval by letter bearing the same date (Annex "B"). On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700 (Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter "subject to the following conditions precedent: t.hqw

1. That the confirmation by the OEC and the President of the purchase price of P0.45 per sq. m. shall first be secured, pursuant to OEC Memorandum Circular No. 114, dated May 6, 1957. 2. That the portion of the estate to be acquired shall first be defined and delineated. 3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS. 4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959. 5. The vendor shall agree to the dismissal with prejudice of Civil Case No. Q-3332 C.F.I. Quezon City, entitled "Phil. Suburban Dev. Corp. V. Ortiz, et al."

On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter. On December 29,1960, after an exchange of communications, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the Sapang Palay Estate (specifically two parcels covered by TCT Nos. T-23807 and T-23808), and the People's Homesite and Housing Corporation, entered into a contract embodied in a public instrument entitled "Deed of Absolute Sale" (Annex "F") whereby the former conveyed unto the latter the two parcels of land abovementioned, under the following terms and conditions, among others: t.hqw
1. That for and in consideration of the sum of THREE MILLION THREE HUNDRED EIGHTY-SIX THOUSAND TWO HUNDRED TWENTY THREE (P3,386,223.00) PESOS, Philippine currency, to be paid by the VENDEE to the herein VENDOR in the manner outlined hereinbelow, the VENDOR by these presents does hereby sell, transfer and convey by way of absolute sale unto the VENDEE, its successors, administrators or assigns, the above described two (2) parcels of land, together with all the improvements existing thereon; 2. That the payment of the consideration mentioned in paragraph 1 above shall be made as follows: (a) The vendee is presently negotiating or securing from the GOVERNMENT SERVICE INSURANCE SYSTEM, by virtue of a directive of the President of the Philippines, a loan for the purchase of the above described two (2) parcels of land in anticipation of the purchase by the said GOVERNMENT SERVICE INSURANCE SYSTEM of the bonds to be floated by the National Government to enable the VENDEE to make this purchase, and from whatever amount may be granted as loan by the GOVERNMENT SERVICE INSURANCE SYSTEM to the VENDEE, ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS shall be retained by the said VENDEE for the purpose of paying and clearing the existing lien annotated at the back of the aforesaid Transfer Certificates of Title Nos. T-23807 and T23808, said payment to be made directly to the MORTGAGEES and the difference shall be paid to the VENDOR, provided that this first payment shall not be less than ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS and the VENDOR is hereby constituted as Attorney-in-fact and authorized to receive from, and the GOVERNMENT SERVICE INSURANCE SYSTEM is directed to pay the balance of the loan direct to the herein VENDOR chargeable against VENDEE's loan from the GOVERNMENT SERVICE INSURANCE SYSTEM; provided, however, That should this amount be more than sufficient to cover the said mortgage lien, the VENDEE shall pay the difference to the VENDOR; and provided, further, That the VENDOR shall take charge of the preparation and registration of the documents necessary in clearing the above referred to mortgage lien, with the understanding that the expenses for preparation, notarization, registration, including documentary stamps, and other expenses for the cancellation of said mortgage lien shall be for the account of the VENDOR and shall be advanced by the VENDEE to the VENDOR; (b) That out of the sum of P1,710,000.00 to be retained by the VENDEE mentioned in the immediately preceding paragraph 2(a) for the purpose of discharging the said mortgage lien, the VENDEE shall

deduct and further retain or keep as a trust fund the amount of FORTY THOUSAND (P40,000) PESOS, Philippine Currency, to answer for the remaining Notice of Lis Pendens annotated at the back of Transfer Certificate of Title Nos. T-23807 and T-23808 until such lien shall have been discharged or cancelled, the VENDEE binding itself to deliver forthwith the said amount of P40,000.00 unto the successful party involved in said Notice of Lis Pendens; (c) The remaining balance of the total consideration in the amount of ONE MILLION SIX HUNDRED SEVENTY-SIX THOUSAND TWO HUNDRED TWENTY-THREE PESOS (P1,676,223.00), Philippine Currency, or whatever amount is not paid by virtue of the first payment mentioned in paragraph (a) above, shall be paid by the VENDEE unto the VENDOR immediately upon the VENDEE's obtaining sufficient funds from proceeds of bonds floated by the VENDEE or the Government for the purchase of the properties subject of this transaction; provided, however, That full and complete payment of the balance mentioned in this particular paragraph 2(c) shall be made or paid by the VENDEE within a period of sixty (60) days from date of delivery of title by the VENDOR in the name of the VENDEE; and provided, further, That this sixty (60) days period may be extended for another period of sixty (60) days upon written request by the VENDEE at least five (5) days prior to the expiration of the said sixty (60) days period. Should there be instituted any legal action, however, for the collection of any amounts due from the VENDEE in favor of the VENDOR, the VENDEE binds itself to pay unto the VENDOR a sum equivalent to twenty-five (25%) per centum of the total balance due from the, VENDEE in favor of the VENDOR as and by way of attorney's fees, and the costs of suit; 3. That the VENDOR hereby warrants to defend the title and ownership of the VENDEE to the two (2) parcels of land above described from any claim or claims of third parties whomsoever; (4.) That all expenses for the preparation and notarization of this document shall be for the account of the VENDOR; provided, however, That registration and issuance of certificates of title in the name of the VENDEE shall be for the account of the VENDEE." (Annex "F")

The above document was not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once advance the money needed for registration expenses. In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly increased amount of P4,898,110.00. Said objections were embodied in a letter to the President, dated January 9, 1961, but this notwithstanding, the President, through the Executive Secretary, approved the Deed of Absolute Sale on February 1, 1961. It appears that as early as the first week of June, 1960, prior to the signing of the deed by the parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the lots which they were then occupying (Annexes "D" and "D-1"). On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due on the property involved for the calendar year 1961 (Annex "G"). Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on December 29, 1960. Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied by the Secretary of Finance in a letter-decision dated August 22, 1961. Pertinent portions of this decision are quoted hereunder: t.hqw

.... the records show that the deed of sale executed on December 29, 1960 ... was approved by the President upon favorable recommendation of the Cabinet and the Committee created for the purpose of surveying suitable lots which may be acquired for relocating squatters in Manila on February 1, 1961 only and that said instrument of sale was registered with the Register of Deeds on March 14, 1961. That Corporation, as vendor, maintains that in view of the execution of the deed of sale on December 29, 1960 it ceased to be the owner of the property involved and that consequently it was under no obligation to pay the real property tax thereon effective January 1, 1961. In support of its stand, that Corporation cites Article 1498 of the New Civil Code of the Philippines which provides that "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred" and Article 1496 of the same Code which states that "the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee." On the other hand, the Provincial Treasurer contends that, as under the Land Registration Act (Act No. 496) the Philippine Suburban Development Corporation is still the owner of the property until the deed of sale covering the same has been actually registered, the vendor is still liable to the payment of real property tax for the calendar year 1961.

It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real property tax for the year 1961. Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive Order dated February 3, 1959 and later by the President, and that the petitioner should register the deed and secure a new title in the name of the vendee before the government can be compelled to pay the balance of P1,676,223.00 of the purchase price. Respondent further contends that since the property involved is a land registered under the Land Registration Act (Act No. 496), until the deed of sale has been actually registered, the vendor remains as the owner of the said property, and, therefore, liable for the payment of real property tax. We find the petition meritorious. I. It cannot be denied that the President of the Philippines, on June 8, 1960, at his Cabinet meeting, approved and authorized the purchase by the national government, through the PHHC, of the unoccupied portion of the property of petitioner; that on June 10, 1960, the PHHC, acting pursuant to the aforecited approval of the President, passed its Resolution No. 700 approving and authorizing the purchase of the unoccupied portion of said property; and that after the PHHC took possession of the aforementioned property on the first week of June, 1960 to use it as a resettlement area for squatters and flood victims from Manila and suburbs, the President of the Philippines at his Cabinet meeting on June 13, 1960, approved and authorized the purchase by the PHHC of the entire property consisting of 752.4940 hectares, instead of only the unoccupied portion thereof as was previously authorized. Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question, and the fact that the contract here involved which is for a special purpose to meet a special situation was entered into precisely to implement the Presidential

directive, the prior approval by the Auditor General envisioned by Administrative Order No. 290, dated February 3, 1959, would therefore, not be necessary. As We held in Federation of the United NAMARCO Distributors v. National Marketing Corporation, 1 the approval by the Auditor General contemplated by Administrative Order No. 290 dated February 3, 1959, refers to contracts in general, ordinarily entered into by government offices and governmentowned or controlled corporations, and not to a contract for a special purpose, to meet a special situation and entered into in implementation of a Presidential directive to solve and emergency. In other words, where the contract already bears the approval of the President, the action of the Auditor General would no longer be necessary because under the said Administrative Order, the President has, at any rate, the final say. II Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive (constructive tradition). 2 When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. 3 In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the case, for instance, when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance, or where, in case of sale by installments, it is stipulated that until the last installment is made, the title to the property should remain with the vendor, or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops, 4 or where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have been made. 5 In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold, even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the payment of the purchase price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the goods. 6 III . We fail to see the merit in respondent's insistence that, although possession was transferred to the vendee and the deed of sale was executed in a public instrument on December 29, l960, the vendor still remains as owner of the property until the deed of sale is actually registered with the Office of the Register of Deeds, because the land sold is registered under the Torrens System. In a long line of cases already decided by this Court, the constant doctrine has been that, as between the parties to a contract of sale, registration is not necessary to make it valid and effective, for actual notice is equivalent to registration. 7 Indeed, Section 50 of the Land Registration Act provides that, even without the act of registration, a deed purporting to convey or affect registered land shall operate as a contract between the parties. The registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary to give effect to the deed of sale, as between the parties to the contract. 8 The case of Vargas v. Tancioco, 9 cited by respondent, refers to a case involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. It is, therefore, not relevant to the case at bar.

In the case at bar, no rights of third persons are involved, much less is there any subsequent alienation of the same property. It is undisputed that the property is in the possession of the vendee, even as early as the first week of June, 1960, or six (6) months prior to the execution of the Deed of Absolute Sale on December 29, 1960. Since the delivery of possession, coupled with the execution of the Deed of Absolute Sale, had consummated the sale and transferred the title to the purchaser, 10 We, therefore, hold that the payment of the real estate tax after such transfer is the responsibility of the purchaser. However, in the case at bar, the purchaser PHHC is a government entity not subject to real property tax. 11 WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under protest to the Provincial Treasurer of Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of P30,460,90, is hereby ordered refunded. Without any pronouncement as to costs. Makalintal, C.J., Fernando, Barredo and Aquino, JJ., concur.1wph1.t