FIRST DIVISION G.R. No. L-42805 August 31, 1987 THE TREASURER OF THE PHILIPPINES, petitioner, vs.

THE COURT OF APPEALS and SPOUSES EDUARDO OCSON and NORA E. OCSON respondents.

CRUZ, J.: The petitioner asks us to reverse a decision of the respondent court affirming that of the trial court holding the Assurance Fund subsidiarily liable for damages sustained by the private respondents under the following established facts. Sometime in 1965, a person Identifying himself as Lawaan Lopez offered to sell to the private respondents a parcel of land located in Quezon City and consisting of 1,316.8 square meters, which he claimed as his property. His asking price was P85.00 per square meter but after a month's haggling the parties agreed on the reduced price of P76.00 per square meter. The sale was deferred, however, because the prospective vendor said his certificate of title had been burned in his house in Divisoria, and he would have to file a petition with the court of first instance of Quezon City for a duplicate certificate of title. He did so and the petition was granted after hearing without any opposition. Following the issuance of the new duplicate certificate of title, the said person executed a deed of sale in favor of the private respondents, who paid him the stipulated purchase price of P98,700.00 in full. The corresponding transfer certificate of title was subsequently issued to them after cancellation of the duplicate certificate in the name of Lawaan Lopez. 1 Trouble began two years later when another person, this time a woman, appeared and, claiming to be the real Lawaan Lopez, filed a petition in the court of first instance of Quezon City to declare as null and void the transfer of her land in favor of the private respondents, on the ground that it had been made by an impostor. 2 After trial, the questioned deed of sale was annulled, (together with the duplicate certificate of title issued to the impostor and the transfer certificate of title in the name of the private respondents) and the real owner's duplicate certificate of title was revalidated. 3 Neither the Solicitor General nor the private respondents appealed the decision, but Lawaan Lopez did so, claiming that the defendants should have been required to pay damages to her and the costs. The appeal was dismissed, with the finding by Justices Jose Leuterio, Magno Gatmaitan and Luis B. Reyes of the Court of Appeals that there was no collusion between the private respondents and the impostor. 4 Subsequently the private respondents filed a complaint against the impostor Lawaan Lopez and the Treasurer of the Philippines as custodian of the Assurance Fund for damages sustained by the plaintiffs as above narrated. Both the trial court * ruled the respondent court ** ruled in their favor, holding the Assurance Fund subsidiarily liable for the sum of P138,264.00 with legal interest from the date of filing of the complaint, in case the judgment could not be enforced against the other defendant who had been defaulted and could not be located. 5 The petitioner, disclaiming liability, is now before us and prays for relief against the decision of the respondent court which he says is not in accord with law and jurisprudence. The applicable law is Section 101 of Act No. 496 (before its revision by P.D. No. 1529) providing as follows:

Sec. 101. Any person who without negligence on his part sustains loss or damage through any omission, mistake or misfeasance of the clerk, or register of deeds, or of any examiner of titles, or of any deputy or clerk or of the register of deeds in the performance of their respective duties under the provisions of this Act, and any person who is wrongfully deprived of any land or any interest therein, without negligence on his part, through the bringing of the same under the provisions of this Act or by the registration of any other person as owner of such land, or by any mistake, omission, or misdescription in any certificate or owner's duplicate, or in any entry or memorandum in the register or other official book, or by any cancellation and who by the provisions of this Act is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same, may bring in any court or competent jurisdiction an action against the Treasurer of the Philippine Archipelago for the recovery of damages to be paid out of the Assurance Fund. Commenting on this provision, Commissioner Antonio H. Noblejas, in his book on Land Titles and Deed 6 notes that recovery from the Assurance Fund could be demanded by: 1) Any person who sustains loss or damage under the following conditions: a) that there was no negligence on his part; and b) that the loss or damage was sustained through any omission, mistake, or misfeasance of the clerk of court, or the register of deeds, his deputy or clerk, in the performance of their respective duties under the provisions of the land Registration Act,' or 2) Any person who has been deprived of any land or any interest therein under the following conditions: a) that there was no negligence on his part; b) that he was deprived as a consequence of the bringing of his land or interest therein under the provisions of the Property Registration Decree; or by the registration by any other persons as owner of such land; or by mistake, omission or misdescription in any certificate or owner's duplicate, or in any entry or memorandum in the register or other official book, or by any cancellation; and c) that he is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same. A careful reading of the above provision will readily show that the private respondents do not come under either of the two situations above mentioned. The first situation is clearly inapplicable as we are not dealing here with any omission, mistake or malfeasance of the clerk of court or of the register of deeds or his personnel in the performance of their duties. The second situation is also inapplicable. The strongest obstacle to recovery thereunder is that the private respondents acquired no land or any interest therein as a result of the invalid sale made to them by the spurious Lawaan Lopez. The petition correctly points out that such sale conveyed no title or any interest at all to them for the simple reason that the supposed vendor had no title or interest to transfer. He was not the owner of the land. He had no right thereto he could convey. Manifestly, the deception imposed upon them by the impostor deprived the private respondents of the money they delivered to him as consideration for the sale. But there is no question that the subsequent cancellation of the sale did not deprive them of

the land subject thereof, or of any interest wherein, for they never acquired ownership over it in the first place. The private respondents argue that from the time the new transfer certificate of title was issued in their name on January 28, 1965, until it was cancelled on October 12, 1967, they were the true and exclusive owners of the disputed property. Hence, the cancellation of their title on the latter date had the effect of depriving them of the said land and so entitles them now to proceed against the Assurance Fund. The flaw in this posture is that the real Lawaan Lopez had her own genuine certificate of title all the time and it remained valid despite the issuance of the new certificate of title in the name of the private respondents. That new certificate, as the trial court correctly declared, was null and void ab initio, which means that it had no legal effect whatsoever and at any time. The private respondents were not for a single moment the owner of the property in question and so cannot claim to have been unlawfully deprived thereof when their certificate of title was found and declared to be a total nullity. Additionally, the Court observes that the private respondents were not exactly diligent in verifying the credentials of the impostor whom they had never met before he came to them with his bogus offer. The fact alone that he claimed to have lost his duplicate certificate of title in a fire, not to mention the amount of the consideration involved, would have put them on their guard and warned them to make a more thorough investigation of the seller's Identity. They did not. Oddly, they seemed to be satisfied that he had an Ilongo accent to establish his claim to be the Visayan owner of the property in question. They were apparently not concerned over the curious fact that for his residence certificate B the supposed owner had paid only P1.00 although the property he was selling was worth to him no less than P98,700.00. 7 Moreover, whereas address in that certificate was Mandaluyong, Rizal, whereas the address indicated in the records of the Register of Deeds of the owner of the land in question was Faraon Fabrics, Negros Occidental. 8 As for the proceedings for the issuance of a duplicate certificate of title, the private respondents themselves state in their complaint that the evidence of the petitioner therein was received by the clerk of court only, without any opposition, and his report was thereafter accepted by the trial judge who thereupon granted the relief sought by the impostor. 9 It is not likely, given the summary nature of these proceedings, that the necessary care was taken by the court to establish the real identity of the person who claimed to be the owner of the property in question. While we may agree that there was no collusion between the parties respondents and the vanished vendor, we are not prepared to rule under the circumstances of this case that they are entitled to even claim the status of innocent purchasers of the land. On the contrary, we find that for failure to exercise the necessary diligence in ascertaining the credentials and bona fides of the false Lawaan Lopez, and as a result of his deception, they never acquired any title to the said land or any interest therein covered by Section 101 of Act No. 496. As this Court held in La Urbana v. Bernardo 10 "it is a condition sine qua non that the person who brings an action for damages against the Assurance Fund be the registered owner and as the holders of transfer certificates of title, that they be innocent purchasers in good faith and for value." Being neither the registered owners nor innocent purchasers, the private respondents are not entitled to recover from the Assurance Fund. They are, of course, not entirely without recourse, for they may still proceed against the impostor in a civil action for recovery and damages or prosecute him under the Revised Penal Code, assuming he can be located and arrested. The problem is that he has completely disappeared. That difficulty alone, however,

should not make the Assurance Fund liable to the private respondents for the serious wrong they have sustained from the false Lawaan Lopez. The Government like all governments, and for obvious reasons is not an insurer of the unwary citizen's property against the chicanery of scoundrels. WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January 26, 1976 is set aside, and Civil Case No. 12426 of the then Court of First Instance of Rizal is dismissed. No costs. SO ORDERED. FIRST DIVISION G.R. No. L-63046 June 21, 1990 MARIANO TORRES Y CHAVARRIA, petitioner, vs. THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE FERNANDEZ, ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the NATIONAL TREASURER, as Custodian of the Assurance Fund,respondents. Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for petitioner. Albon, Serrano & Associates for private respondents. T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J.: This is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 62248-R entitled "Mariano Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.," which reversed the decision of the then Court of First Instance of Manila, Branch 7, by holding that it is the respondent Rosario Mota who is legally entitled to the disputed realties, being an innocent mortgagee and later the highest bidder when the properties were supposedly foreclosed, and not the petitioner Mariano Torres, the defrauded owner thereof; and of the resolution of that Court denying Torres' motion for reconsideration. The parcel of land located at the comer of Quezon Boulevard and Raon Street (now Gonzalo Street), and the building erected thereon known as "M. Torres Building" is owned by Mariano Torres, the herein petitioner, as evidenced by Transfer Certificate of Title No. 53628-Manila issued in his name. As far as the records show, Torres was and still is in possession of the realties, holding safely to his owner's duplicate certificate of title, and, at least until 1971, paying the real estate taxes due thereon, and collecting rentals from his tenants occupying the building. Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with the Court of First Instance of Manila, docketed as LRC GLRO Cad. Rec. No. 133, where he, misrepresenting to be the attorney-in-fact of Torres and falsely alleging that the a duplicate copy of TCT No. 53628 was lost, succeeded in obtaining a court order for the issuance of another copy of the certificate. Once in possession thereof, Fernandez forged a simulated deed of sale of the realties in his favor. Whereupon TCT No. 53628 in the name of Torres was canceled and TCT No. 86018 was issued in Fernandez' name.

On various dates from December, 1966 to November, 1967 Fernandez mortgaged the realties to Rosario Mota, wife of Ernesto Cue, and also to Angela Fermin, who later assigned her credit to the spouses Cue. The mortgages were annotated at the back of TCT No. 86018 and so was the deed of assignment. Torres, who up to this time still had possession of his owner's duplicate certificate of title and who was still collecting rentals from the occupants of the subject building, upon Teaming of the fraud committed by Fernandez, caused, on March 18, 1968, the annotation on the latter's TCT a notice of adverse claim. On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT No. 86018 as well as the proceedings in LRC GLRO Cad. Rec. No. 133. On April 2, 1968, a notice of lis pendens was annotated at the back of Fernandez' TCT. In the meantime, Fernandez failed to pay his various loans which prompted the Cues to institute an extrajudicial foreclosure of the mortgage. On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue for the annulment of the mortgage with preliminary injunction. After the foreclosure was enjoined, the parties entered into an amicable settlement, approved by the court whereby it was stipulated that Fernandez acknowledged and promised to pay his debt to the Cues for Five Hundred Sixty-Two Thousand Nine Hundred Fifty-Five and 28/100 (P562,955.28) Pesos on or before, March 30, 1970, while the spouses bound themselves to execute and deliver, within ten (10) days from receipt of the sum mentioned such documents as are necessary to release the mortgages in favor of defendants on plaintiffs' property. Before Fernandez could pay his obligation under the settlement agreement, a decision was rendered in Civil Case No. 72494 where it was declared that the proceedings held in LRC GLRO Cad. Rec, No. 133 was void and that TCT No. 86018, issued in the name of Fernandez, is without force and effect as TCT No. 53628 in the name of Torres is the true and legal evidence of ownership of the subject immovables. Fernandez appealed from this decision to the Court of Appeals where it was docketed as CA-G.R. No. 46386-R. The Court of Appeals, on April 20, 1979, affirmed the decision of the trial court. There being nothing on the records that would indicate that the judgment of the appellate court was elevated here, it would appear that it had become final and executory. But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez failed to comply with his obligation under the amicable settlement and whereupon the Cues applied for and were granted a writ of execution. The subject realties were then levied upon and sold at public auction where Rosario Mota was the highest bidder. On August 31, 1971, the redemption period for the subject immovables having lapsed without Fernandez nor Torres redeeming the properties, Rosario Mota was issued the Sheriffs Deed of Sale. Thereafter, TCT No. 86018 was canceled and TCT No. 105953 was issued in her name. On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M. Torres Building" that she is the new owner thereof and henceforth, payment of their rentals should be made to her. On December 17, 1971 Torres filed a complaint, which later gave rise to this petition, with the Court of First Instance of Manila, docketed as Civil Case No. 85753, against Fernandez and his spouse and the Cues to restrain the latter from collecting rentals and for the declaration as void TCT No. 105953. The Cues in turn filed a cross-claim against Fernandez spouses and a third party complaint against the National Treasurer as the custodian of the Assurance Fund.

During the proceeding, Mariano Torres, having died sometime in 1974, was substituted by his widow. On June 3, 1977, the trial court rendered its decision declaring TCT No. 105953 in the name of Rosario Mota nun and void as it upheld the validity of TCT No. 53628 in the name of Torres as the true evidence of title to the disputed realties, and at the same time dismissing the Cue's third party complaint and cross claim. The decision was reviewed by the respondent court at the instance of the Cues which, as aforementioned, reversed the trial court in its decision dated July 30, 1982 and the Resolution of January 14, 1983. Hence, this petition. There is nothing on the records which shows that Torres performed any act or omission which could have jeopardized his peaceful dominion over his realties. The decision under review, however, in considering Mota an innocent mortgagee protected under Section 55 of the Land Registration Law, held that Torres was bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the highest bidder, also bound Torres and concluded that the certificate of title issued in the name of Mota prevails over that of Torres'. As correctly pointed out by Torres, however, his properties were sold on execution, and not on foreclosure sale, and hence, the purchaser thereof was bound by his notice of adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the appellate court that a forged instrument may become the root of a valid title, cannot be applied where the owner still holds a valid and existing certificate of title covering the same interest in a realty. The doctrine would apply rather when, as in the cases for example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951, February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru insidious means obtains the owner's duplicate certificate of title, converts it in his name, and subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a case the new certificate is binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and existing certificate of title, his would be indefeasible as against the whole world, and not that of the innocent holder's. "Prior tempore potior jure"as We have said in Register of Deeds v. Philippine National Bank, No. L-17641, January 30, 1965, 13 SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil. 590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546,Reyes v. Borbon, 50 Phil. 791. in C.N. Hodges v. Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid down the doctrine that: The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist. The respondent had a valid title ... It never parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer certificate of title, it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely. If the petitioner's contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property. Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the Torrens system. Veronica Bareza perpetrated the fraud by making false representations in her petition and the title issued to her being the product of fraud could not vest in her valid and legal title to the parcel of land in litigation. As she had no title to the parcel of land, in the same way that a thief does not own or have title to the stolen goods, she could not transmit title which she did not have nor possess. We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra, where We noted that said ruling is "a mere affirmation of the recognized principle that a certificate is not conclusive evidence of title if it is shown that the same land had already been registered and an earlier certificate for the same land is in existence." Again in the case of Baltazar v. Court of Appeals, G.R. No. 78728, December 8,

1988, 168 SCRA 354, We held that as between two persons both of whom are in good faith and both innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the transfer of a vendor bereft of any transmissible rights. In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was an innocent mortgagee would be futile because, as above shown, no certificate of title covering the subject realties in derogation of Torres' certificate of title may validly be issued. Then it becomes evident that the remaining possible remedies of the Cues are to go against Fernandez or the Assurance Fund, as they in fact had done in the lower court by filing a cross claim and third party complaint. The lower court dismissed the Cues' cross-claim against Fernandez reasoning out that their remedy is to cause the final judgment (compromise agreement) in Civil Case No. 75643 executed. This, of course, is correct since the rights and obligations of both parties had been determined in that case. The trial court also dismissed the Cues' third party complaint against the Treasurer of the Philippines as custodian of the Assurance Fund after finding them negligent in protecting their interest. The trial court recognized the principle that a person dealing with registered lands need not go beyond the certificate of title but nevertheless pointed out that there are circumstances in this case which should have put the Cues on guard and prompted them to investigate the property being mortgaged to them, thus: The property in question is a very valuable property, in fact accepted by defendants Mota and Medina Cue as collateral for more than half a million pesos in loans granted by them to Fernandez. Its value lies principally in its income potential, in the form of substantial monthly rentals. Certainly, the registered title does not yield any information as to the amount of rentals due from the building, much less on who is collecting them, or who is recognized by the tenants as their landlord. Any prospective buyer or mortgagee of such a property, if prudent and in good faith, is normally expected to inquire into all these and related facts and circumstances. Besides, by the course of visible dimensions of the M. Torres Building, it should be readily obvious to any one that the area of the two lots ... covered by TCT No. 86018 cannot accommodate the building, as in fact it also rests upon a lot covered by TCT No. 56387, and partly upon a lot leased by (Torres) from the City of Manila. Had (the Cues) known of this fact would they have accepted the mortgage alone over TCT No. 86018? The answer is obvious. And yet, to all indications, they never bothered to look into this fact about the M. Torres Building. xxx xxx xxx Another thing that defendants Mota and Medina Cue must have investigated, as any prudent buyer or mortgagee should before consummating any transaction on real property, in the matter of payment of taxes on the property. After all, the big value of the property in question necessarily means that even real estate taxes on it alone would involve big amounts of money, and if there are tax arrearages, any buyer or subsequent owner of the property wig have to come face to face with the tax hen attaching to the property wherever its owner may be. ... (P. 257, Record on Appeal) We likewise take note of the manifestation of the Office of the Solicitor General that the Cues failed to contest the ruling of the trial court negating the liability of the Assurance Fund. For these reasons, We hold that the Cues' remedy merely is to go against Francisco Fernandez or rather his estate since record shows that he died sometime in 1983. ACCORDINGLY, the decision and resolution under review are REVERSED and the decision of the then Court of First Instance, Branch 7, Manila in Civil Case No. 85753 is REINSTATED.

SO ORDERED. THIRD DIVISION G.R. No. 81163 September 26, 1988 EDUARDO S. BARANDA and ALFONSO HITALIA, petitioners, vs. HONORABLE JUDGE TITO GUSTILO, ACTING REGISTER OF DEEDS AVITO SACLAUSO, HONORABLE COURT OF APPEALS, and ATTY. HECTOR P. TEODOSIO, respondents. Eduardo S. Baranda for petitioners. Rico & Associates for private respondents.

GUTIERREZ, JR., J.: Eduardo S. Baranda and Alfonso Hitalia were the petitioners in G.R. No. 64432 and the private respondents in G.R. No. 62042. The subject matter of these two (2) cases and the instant case is the same a parcel of land designated as Lot No. 4517 of the Cadastral Survey of Sta. Barbara, Iloilo covered by Original Certificate of Title No. 6406. The present petition arose from the same facts and events which triggered the filing of the earlier petitions. These facts and events are cited in our resolution dated December 29, 1983 in G.R. No. 64432, as follows: . . . This case has its origins in a petition for reconstitution of title filed with the Court of First Instance of Iloilo involving a parcel of land known as Lot No. 4517 of the Sta. Barbara Cadastre covered by Original Certificate of Title No. 6406 in the name of Romana Hitalia. Eventually, Original Certificate of Title No. 6406 was cancelled and Transfer Certificate of Title No. 106098 was issued in the names of Alfonso Hitalia and Eduardo S. Baranda The Court issued a writ of possession which Gregorio Perez, Maria P. Gotera and Susana Silao refused to honor on the ground that they also have TCT No. 25772 over the same Lot No. 4517. The Court, after considering the private respondents' opposition and finding TCT No. 25772 fraudulently acquired, ordered that the writ of possession be carried out. A motion for reconsideration having been denied, a writ of demolition was issued on March 29, 1982. Perez and Gotera filed a petition for certiorari and prohibition with the Court of Appeals. On August 6, 1982, the Court of Appeals denied the petition. Perez and Gotera filed the petition for review on certiorari denominated as G.R. No. 62042 before the Supreme Court. As earlier stated the petition was denied in a resolution dated January 7,1983. The motion for reconsideration was denied in another resolution dated March 25, 1983, which also stated that the denial is final. This decision in G.R. No. 62042, in accordance with the entry of judgment, became final on March 25, 1983. The petitioners in the instant case G.R. No. 64432--contend that the writs of possession and demolition issued in the respondent court should now be implemented; that Civil Case No. 00827 before the Intermediate Appellate Court was filed only to delay the implementation of the writ; that counsel for the respondent should be held in contempt of court for engaging in a concerted but futile effort to delay the execution of the writs of possession and demolition and that petitioners are entitled to damages because of prejudice caused by the filing of this petition before the Intermediate Appellate Court. On September 26, 1983, this Court issued a Temporary Restraining Order ' to maintain the status quo, both in the Intermediate Appellate Court and in the Regional Trial Court of Iloilo. Considering that (l)there is merit in the instant petition for indeed the issues

discussed in G.R. No. 64432 as raised in Civil Case No. 00827 before the respondent court have already been passed upon in G.R. No. 62042; and (2) the Temporary Restraining Order issued by the Intermediate Appellate Court was only intended not to render the petition moot and academic pending the Court's consideration of the issues, the Court RESOLVED to DIRECT the respondent Intermediate Appellate Court not to take cognizance of issues already resolved by this Court and accordingly DISMISS the petition in Civil Case No. 00827. Immediate implementation of the writs of possession and demolition is likewise ordered. (pp. 107-108, Rollo G.R. No. 64432) On May 9, 1984, the Court issued a resolution denying with finality a motion for reconsideration of the December 29, 1983 resolution in G.R. No. 64432. On this same date, another resolution was issued, this time in G.R. No. 62042, referring to the Regional Trial Court of Iloilo the ex-parte motion of the private respondents (Baranda and Hitalia) for execution of the judgment in the resolutions dated January 7, 1983 and March 9, 1983. In the meantime, the then Intermediate Appellate Court issued a resolution dated February 10, 1984, dismissing Civil Case No. 00827 which covered the same subject matter as the Resolutions above cited pursuant to our Resolution dated December 29, 1983. The resolution dated December 29, 1983 in G.R. No. 64432 became final on May 20, 1984. Upon motions of the petitioners, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito G. Gustilo issued the following order: Submitted are the following motions filed by movants Eduardo S. Baranda and Alfonso Hitalia through counsel dated August 28, 1984: (a) Reiterating Motion for Execution of Judgment of Resolutions dated January 7, 1983 and March 9, 1983 Promulgated by Honorable Supreme Court (First Division) in G.R. No. 62042; (b) Motion for Execution of Judgment of Resolution dated December 29, 1983 Promulgated by Honorable Supreme Court (First Division) in G.R. No. 64432; (c) The Duties of the Register of Deeds are purely ministerial under Act 496, therefore she must register all orders, judgment, resolutions of this Court and that of Honorable Supreme Court. Finding the said motions meritorious and there being no opposition thereto, the same is hereby GRANTED. WHEREFORE, Transfer Certificate of Title No. T-25772 is hereby declared null and void and Transfer Certificate of Title No. T-106098 is hereby declared valid and subsisting title concerning the ownership of Eduardo S. Baranda and Alfonso Hitalia, all of Sta. Barbara Cadastre. The Acting Register of Deeds of Iloilo is further ordered to register the Subdivision Agreement of Eduardo S. Baranda and Alfonso Hitalia as prayed for." (p. 466, Rollo--G.R. No. 64432) The above order was set aside on October 8, 1984 upon a motion for reconsideration and manifestation filed by the Acting Registrar of Deeds of Iloilo, Atty. Helen P. Sornito, on the ground that there was a pending case before this Court, an Action for Mandamus, Prohibition, Injunction under G.R. No. 67661 filed by Atty. Eduardo Baranda, against the former which remained unresolved. In view of this development, the petitioners filed in G.R. No. 62042 and G.R. No. 64432 ex-parte motions for issuance of an order directing the Regional Trial Court and Acting Register of Deeds to execute and implement the judgments of this Court. They prayed that an order be issued:

1. Ordering both the Regional Trial Court of Iloilo Branch XXIII, under Hon. Judge Tito G. Gustilo and the acting Register of Deeds Helen P. Sornito to register the Order dated September 5, 1984 of the lower court; 2. To cancel No.T-25772. Likewise to cancel No.T-106098 and once cancelled to issue new certificates of title to each of Eduardo S. Baranda and Alfonso Hitalia; Plus other relief and remedies equitable under the premises. (p. 473, 64432 Rollo) Acting on these motions, we issued on September 17,1986 a Resolution in G.R. No. 62042 and G.R. No. 64432 granting the motions as prayed for. Acting on another motion of the same nature filed by the petitioners, we issued another Resolution dated October 8, 1986 referring the same to the Court Administrator for implementation by the judge below. In compliance with our resolutions, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito G. Gustilo issued two (2) orders dated November 6,1986 and January 6,1987 respectively, to wit: ORDER This is an Ex-parte Motion and Manifestation submitted by the movants through counsel on October 20, 1986; the Manifestation of Atty. Helen Sornito, Register of Deeds of the City of Iloilo, and formerly acting register of deeds for the Province of Iloilo dated October 23, 1986 and the Manifestation of Atty. Avito S. Saclauso, Acting Register of Deeds, Province of Iloilo dated November 5, 1986. Considering that the motion of movants Atty. Eduardo S. Baranda and Alfonso Hitalia dated August 12, 1986 seeking the full implementation of the writ of possession was granted by the Honorable Supreme Court, Second Division per its Resolution dated September 17,1986, the present motion is hereby GRANTED. WHEREFORE, the Acting Register of Deeds, Province of Iloilo, is hereby ordered to register the Order of this Court dated September 5, 1984 as prayed for. xxx xxx xxx ORDER This is a Manifestation and Urgent Petition for the Surrender of Transfer Certificate of Title No. T-25772 submitted by the petitioners Atty. Eduardo S. Baranda and Alfonso Hitalia on December 2, 1986, in compliance with the order of this Court dated November 25, 1 986, a Motion for Extension of Time to File Opposition filed by Maria Provido Gotera through counsel on December 4, 1986 which was granted by the Court pursuant to its order dated December 15, 1986. Considering that no Opposition was filed within the thirty (30) days period granted by the Court finding the petition tenable, the same is hereby GRANTED. WHEREFORE, Maria Provido Gotera is hereby ordered to surrender Transfer Certificate of Title No. T25772 to this Court within ten (10) days from the date of this order, after which period, Transfer Certificate of Title No. T-25772 is hereby declared annulled and the Register of Deeds of Iloilo is ordered to issue a new Certificate of Title in lieu thereof in the name of petitioners Atty. Eduardo S. Baranda and Alfonso Hitalia, which certificate shall contain a memorandum of the annulment of the outstanding duplicate. (pp. 286-287, Rollo 64432)

On February 9, 1987, Atty. Hector Teodosio, the counsel of Gregorio Perez, private respondent in G.R. No. 64432 and petitioner in G.R. No. 62042, filed a motion for explanation in relation to the resolution dated September 17, 1986 and manifestation asking for clarification on the following points: a. As to the prayer of Atty. Eduardo Baranda for the cancellation of TCT T-25772, should the same be referred to the Court of Appeals (as mentioned in the Resolution of November 27, 1985) or is it already deemed granted by implication (by virtue of the Resolution dated September 17, 1986)? b. Does the Resolution dated September 17, 1986 include not only the implementation of the writ of possession but also the cancellation of TCT T-25772 and the subdivision of Lot 4517? (p. 536, Rollo 4432) Acting on this motion and the other motions filed by the parties, we issued a resolution dated May 25, 1987 noting all these motions and stating therein: xxx xxx xxx Since entry of judgment in G.R. No. 62042 was made on January 7, 1983 and in G.R. No. 64432 on May 30, 1984, and all that remains is the implementation of our resolutions, this COURT RESOLVED to refer the matters concerning the execution of the decisions to the Regional Trial Court of Iloilo City for appropriate action and to apply disciplinary sanctions upon whoever attempts to trifle with the implementation of the resolutions of this Court. No further motions in these cases will be entertained by this Court. (p. 615, Rollo-64432) In the meantime, in compliance with the Regional Trial Court's orders dated November 6, 1986 and January 6, 1987, Acting Register of Deeds AvitoSaclauso annotated the order declaring Transfer Certificate of Title No. T-25772 as null and void, cancelled the same and issued new certificates of titles numbers T-111560, T-111561 and T-111562 in the name of petitioners Eduardo S. Baranda and Alfonso Hitalia in lieu of Transfer Certificate of TItle No. T-106098. However, a notice of lis pendens "on account of or by reason of a separate case (Civil Case No. 15871) still pending in the Court of Appeals" was carried out and annotated in the new certificates of titles issued to the petitioners. This was upheld by the trial court after setting aside its earlier order dated February 12, 1987 ordering the cancellation of lis pendens. This prompted the petitioners to file another motion in G.R, No. 62042 and G.R. No. 64432 to order the trial court to reinstate its order dated February 12, 1987 directing the Acting Register of Deeds to cancel the notice of lis pendens in the new certificates of titles. In a resolution dated August 17, 1987, we resolved to refer the said motion to the Regional Trial Court of Iloilo City, Branch 23 for appropriate action. Since respondent Judge Tito Gustilo of the Regional Trial Court of Iloilo, Branch 23 denied the petitioners' motion to reinstate the February 12, 1987 order in another order dated September 17, 1987, the petitioners filed this petition for certiorari, prohibition and mandamus with preliminary injunction to compel the respondent judge to reinstate his order dated February l2, 1987 directing the Acting Register of Deeds to cancel the notice of lis pendens annotated in the new certificates of titles issued in the name of the petitioners.

The records show that after the Acting Register of Deeds annotated a notice of is pendens on the new certificates of titles issued in the name of the petitioners, the petitioners filed in the reconstitution case an urgent ex-parte motion to immediately cancel notice of lis pendens annotated thereon. In his order dated February 12, 1987, respondent Judge Gustilo granted the motion and directed the Acting Register of Deeds of Iloilo to cancel the lis pendens found on Transfer Certificate of Title Nos. T106098; T-111560; T-111561 and T-111562. Respondent Acting Register of Deeds Avito Saclauso filed a motion for reconsideration of the February 12, 1987 order stating therein: That the undersigned hereby asks for a reconsideration of the said order based on the second paragraph of Section 77 of P.D. 1529, to wit: "At any time after final judgment in favor of the defendant or other disposition of the action such as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of Lis Pendens has been registered as provided in the preceding section, the notice of Lis Pendens shall be deemed cancelled upon the registration of a certificate of the clerk of court in which the action or proceeding was pending stating the manner of disposal thereof." That the lis pendens under Entry No. 427183 was annotated on T-106098, T-111560, T-111561 and T111562 by virtue of a case docketed as Civil Case No. 15871, now pending with the Intermediate Court of Appeals, entitled, "Calixta Provido, Ricardo Provido, Sr., Maria Provido and Perfecto Provido, Plaintiffs, versus Eduardo Baranda and Alfonso Hitalia, Respondents." That under the above-quoted provisions of P.D. 152, the cancellation of subject Notice of Lis Pendens can only be made or deemed cancelled upon the registration of the certificate of the Clerk of Court in which the action or proceeding was pending, stating the manner of disposal thereof. Considering that Civil Case No. 1587, upon which the Notice of Lis Pendens was based is still pending with the Intermediate Court of Appeals, only the Intermediate Court of Appeals and not this Honorable Court in a mere cadastral proceedings can order the cancellation of the Notice of Lis Pendens. (pp. 6869, Rollo) Adopting these arguments and on the ground that some if not all of the plaintiffs in Civil Case No. 15871 were not privies to the case affected by the Supreme Court resolutions, respondent Judge Tito Gustilo set aside his February 12, 1987 order and granted the Acting Register of Deeds' motion for reconsideration. The issue hinges on whether or not the pendency of the appeal in Civil Case No. 15871 with the Court of Appeals prevents the court from cancelling the notice of lis pendens in the certificates of titles of the petitioners which were earlier declared valid and subsisting by this Court in G.R. No. 62042 and G.R. No. 64432. A corollary issue is on the nature of the duty of a Register of Deeds to annotate or annul a notice of lis pendens in a torrens certificate of title. Civil Case No. 15871 was a complaint to seek recovery of Lot No. 4517 of Sta. Barbara Cadastre Iloilo, (the same subject matter of G.R. No 62042 and G.R. No. 64432) from petitioners Baranda and Hitalia filed by Calixta Provido, Ricardo Provido, Maxima Provido and Perfecta Provido before the Regional Trial Court of Iloilo, Branch 23. At the instance of Atty. Hector P. Teodosio, the Provides' counsel, a notice of is pendens was annotated on petitioners' Certificate of Title No. T-106098 covering Lot No. 4517, Sta. Barbara Cadastre.

Acting on a motion to dismiss filed by the petitioners, the court issued an order dated October 24, 1984 dismissing Civil Case No. 15871. The order was then appealed to the Court of Appeals. This appeal is the reason why respondent Judge Gustilo recalled the February 12, 1987 order directing the Acting Register of Deeds to cancel the notice of lis pendens annotated on the certificates of titles of the petitioners. This petition is impressed with merit. Maria Provido Gotera was one of the petitioners in G.R. No. 62042. Although Calixta Provido, Ricardo Provido, Maxima Provido and Perfecta Provido, the plaintiffs in Civil Case No. 15871 were not impleaded as parties, it is very clear in the petition that Maria Provido was acting on behalf of the Providos who allegedly are her co-owners in Lot No. 4517, Sta. Barbara Cadastre as shown by Transfer Certificate of Title No. T-25772 issued in her name and the names of the plaintiffs in Civil Case No. 15871, among others. (Annex "E" G.R. No. 62042, p. 51, Rollo) In fact, one of the issues raised by petitioners Maria Provido Gotera and Gregoria Perez in G.R. No. 62042 was as follows: xxx xxx xxx 2. Whether or not, in the same reconstitution proceedings, respondent Judge Midpantao L. Adil had the authority to declare as null and void the transfer certificate of title in the name of petitioner Maria Provido Gotera and her other co-owners. (p. 3, Rollo; Emphasis supplied) It thus appears that the plaintiffs in Civil Case No. 15871 were privies to G.R. No. 62042 contrary to the trial court's findings that they were not. G.R. No. 62042 affirmed the order of the then Court of First Instance of Iloilo in the reconstitution proceedings declaring TCT No. 25772 in the name of Providos over Lot No. 4517, Sta. Barbara Cadastre null and void for being fraudulently obtained and declaring TCT No. 106098 over the same parcel Lot No. 4517, Sta. Barbara Cadastre in the name of petitioners Eduardo Baranda and Alfonso Hitalia valid and subsisting. The decision in G.R. No. 62042 became final and executory on March 25,1983 long before Civil Case No. 15871 was filed. Under these circumstances, it is crystal clear that the Providos, private respondents herein, in filing Civil Case No. 15871 were trying to delay the full implementation of the final decisions in G.R. No. 62042 as well as G.R. No. 64432 wherein this Court ordered immediate implementation of the writs of possession and demolition in the reconstitution proceedings involving Lot No. 4517, Sta. Barbara Cadastre. The purpose of a notice of lis pendens is defined in the following manner: Lis pendens has been conceived to protect the real rights of the party causing the registration thereof With the lis pendens duly recorded, he could rest secure that he would not lose the property or any part of it. For, notice of lis pendens serves as a warning to a prospective purchaser or incumbrancer that the particular property is in litigation; and that he should keep his hands off the same, unless of course he intends to gamble on the results of the litigation. (Section 24, Rule 14, RuIes of Court; Jamora v. Duran, et al., 69 Phil. 3, 11; I Martin, Rules of Court, p. 415, footnote 3, citing cases.) (Natanov. Esteban, 18 SCRA 481, 485-486) The private respondents are not entitled to this protection. The facts obtaining in this case necessitate the application of the rule enunciated in the cases of Victoriano v. Rovila (55 Phil. 1000), Municipal Council of

Paranaque v. Court of First Instance of Rizal (70 Phil., 363) and Sarmiento v. Ortiz (10 SCRA 158), to the effect that: We have once held that while ordinarily a notice of pendency which has been filed in a proper case, cannot be cancelled while the action is pending and undetermined, the proper court has the discretionary power to cancel it under peculiar circumstances, as for instance, where the evidence so far presented by the plaintiff does not bear out the main allegations of his complaint, and where the continuances of the trial, for which the plaintiff is responsible, are unnecessarily delaying the determination of the case to the prejudice of the defendant. (Victoriano v. Rovira, supra; The Municipal Council of Paranaque v. Court of First Instance of Rizal, supra) The facts of this case in relation to the earlier cases brought all the way to the Supreme Court illustrate how the private respondents tried to block but unsuccessfuly the already final decisions in G.R. No. 62042 and G.R. No. 64432. Parenthetically, respondent Judge Tito Gustilo abused his discretion in sustaining the respondent Acting Register of Deeds' stand that, the notice of lis pendens in the certificates of titles of the petitioners over Lot No. 4571, Barbara Cadastre cannot be cancelled on the ground of pendency of Civil Case No. 15871 with the Court of Appeals. In upholding the position of the Acting Register of Deeds based on Section 77 of Presidential Decree No. 1529, he conveniently forgot the first paragraph thereof which provides: Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be cancelled upon Order of the Court after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified petition of the party who caused the registration thereof. This Court cannot understand how respondent Judge Gustilo could have been misled by the respondent Acting Register of Deeds on this matter when in fact he was the same Judge who issued the order dismissing Civil Case No. 15871 prompting the private respondents to appeal said order dated October 10, 1984 to the Court of Appeals. The records of the main case are still with the court below but based on the order, it can be safely assumed that the various pleadings filed by the parties subsequent to the motion to dismiss filed by the petitioners (the defendants therein) touched on the issue of the validity of TCT No. 25772 in the name of the Providos over Lot Number 4571, Sta. Barbara Cadastre in the light of the final decisions in G.R. No. 62042 and G.R. No. 64432. The next question to be determined is on the nature of the duty of the Register of Deeds to annotate and/or cancel the notice of lis pendens in a torrens certificate of title. Section 10, Presidential Decree No. 1529 states that "It shall be the duty of the Register of Deeds to immediately register an instrument presented for registration dealing with real or personal property which complies with all the requisites for registration. ... . If the instrument is not registrable, he shall forthwith deny registration thereof and inform the presentor of such denial in writing, stating the ground or reasons therefore, and advising him of his right to appeal by consulta in accordance with Section 117 of this Decree." Section 117 provides that "When the Register of Deeds is in doubt with regard to the proper step to be taken or memoranda to be made in pursuance of any deed, mortgage or other instrument presented to him for registration or where any party in interest does not agree with the action taken by the Register of Deeds with reference to any such instrument, the question shall be submitted to the Commission of Land Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds. ... ."

The elementary rule in statutory construction is that when the words and phrases of the statute are clear and unequivocal, their meaning must be determined from the language employed and the statute must be taken to mean exactly what it says. (Aparri v. Court of Appeals, 127 SCRA 231; Insular Bank of Asia and America Employees' Union [IBAAEU] v. Inciong, 132 SCRA 663) The statute concerning the function of the Register of Deeds to register instruments in a torrens certificate of title is clear and leaves no room for construction. According to Webster's Third International Dictionary of the English Language the word shall means "ought to, must, ...obligation used to express a command or exhortation, used in laws, regulations or directives to express what is mandatory." Hence, the function of a Register of Deeds with reference to the registration of deeds encumbrances, instruments and the like is ministerial in nature. The respondent Acting Register of Deeds did not have any legal standing to file a motion for reconsideration of the respondent Judge's Order directing him to cancel the notice oflis pendens annotated in the certificates of titles of the petitioners over the subject parcel of land. In case of doubt as to the proper step to be taken in pursuance of any deed ... or other instrument presented to him, he should have asked the opinion of the Commissioner of Land Registration now, the Administrator of the National Land Title and Deeds Registration Administration in accordance with Section 117 of Presidential Decree No. 1529. In the ultimate analysis, however, the responsibility for the delays in the full implementation of this Court's already final resolutions in G.R. No. 62042 and G.R. No. 64432 which includes the cancellation of the notice of lis pendensannotated in the certificates of titles of the petitioners over Lot No. 4517 of the Sta. Barbara Cadastre falls on the respondent Judge. He should never have allowed himself to become part of dilatory tactics, giving as excuse the wrong impression that Civil Case No. 15871 filed by the private respondents involves another set of parties claiming Lot No. 4517 under their own Torrens Certificate of Title. WHEREFORE, the instant petition is GRANTED. The February 12, 1987 order of the Regional Trial Court of Iloilo, Branch 23 is REINSTATED. All subsequent orders issued by the trial court which annulled the February 12, 1987 order are SET ASIDE. Costs against the private respondents. SO ORDERED. RICARDO CHENG VS RAMON GENATO, ERNESTO R. DA JOSE & SOCORRO B. DA JOSE, G.R. No. 129760 29 December 1998Martinez, J.: FACTS : Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise Farms,San Jose Del Monte, Bulacan who entered into a Contract to Sell with respondent-spouses Ernesto R. DaJose and Socorro B. Da Jose for which the purchase price was P80.00 per square; P50,000.00 shall be paid as partial down payment at the time of execution of this Contract to Sell; and that P950,000 as full payment shall be paid 30 days after the execution of the contract to sell after the buyer has satisfactorilyverified the

authenticity of the documents. The contract was in a public instrument and was dulyannotated at the back of the two certificates of title. Sps Da Jose asked for and was granted by respondentGenato an extension of another 30 days - until November 5, 1989. Without due notice to the Da Josespouses, Genato executed an Affidavit to Annul the Contract to Sell. Ricardo Cheng expressed his desireto buy Genatos property. Genato showed him the TCT with annotation of the contract with Sps Da Joseand the affidavit of cancelling such contract. Cheng paid him P50,000 upon the assurance that the pr evious contract will be annulled. When Genato was in Registry of Deeds in Meycauayan, Bulacan toregister the annulment of the contract with the Sps Da Jose, by coincidence, the two parties met and later on in the day, Genato decided to continue the Contract he had with them. Genato returned the P50,000 toCheng. Da Jose spouses paid Genato the complete down payment of P950,000.00. Cheng instituted acomplaint for specific performance to compel Genato to execute a deed of sale for check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnestmoney for which Genato acceded. RTC ruled in favor of Cheng which was reversed by the CA. ISSUE : 1. WON Article 1544 is applicable2. Who has a better right to the land, Cheng or Da Jose spouses? HELD :1. YES Although generally, rule on Double Sales does not apply in Contract to Sell, the governingprinciple of Article 1544: PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right)should apply . For not only was the contract between herein respondents first in time; it was alsoregistered long before petitioners intrusion as a second buyer. This principle only applies when thespecial rules provided in the aforcited article of Civil Code do not apply or fit the specific circumstancesmandated under said law or by jurisprudence interpreting the article.2. SPS DA JOSE -- The rule exacted by Article 1544 of the Civil Code for the second buyer to be able todisplace the first buyer are: (1) that the second buyer must show that he acted in good faith (i.e. inignorance of the first sale and of the first buyer's rights) from the time of acquisition until title istransferred to him by registration or failing registration, by delivery of possession; (2) the second buyermust show continuing good faith and innocence or lack of knowledge of the first sale until hiscontract ripens into full ownership through prior registration as provided by law.Although the Da Jose spouses, as first buyers, knew of the second transaction it will not bar them fromavailing of their

rights granted by law, among them, to register first their agreement as against the second buyer.In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genatodefeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith.

G.R. No. L-20075

November 27, 1968

DANAO COAL MINING SYNDICATE, LTD., applicant, SOUTHWESTERN UNIVERSITY, petitionerappellee, vs. CENON LAURENTE, oppositor-appellant. Deen Law Offices for petitioner-appellee. Ramon Duterte for oppositor-appellant. REYES, J.B.L., J.: Forwarded to us for review by the Court of Appeals1 is this appeal from two orders issued by the Court of First Instance of Cebu in the latter's capacity as land registration court.2 The first was a grant to a buyer's ex partepetition praying, inter alia, for cancellation of annotation of incumbrances on the transfer certificate of title covering a parcel of land it purchased from the heirs of registered owner. The second was a denial of a motion for reconsideration of the first order which was filed by a third person whose interest, purportedly, might have been prejudiced by the cancellation. The transfer certificate of title (TCT No. 7567) in question covered a parcel of land situated in Camansi, Danao, Cebu. The same was issued in 1928 by the Register of Deeds of Cebu in favor of H. M. H. Nemazee, the proprietor of the original applicant, Danao Coal Mining Syndicate, Ltd. On the face thereof were annotated the following incumbrances: (a) the condition that the applicant shall be required to produce from the mining claims referred to a minimum amount of coal equal to an average daily production of two hundred tons of twenty hundred and forty English pounds for every day exclusive of Sundays and holidays, and in the event of the failure of the said Coal Mining Syndicate to produce such amount of coal, to pay to the Government of the Philippine Islands a royalty at the rate of twenty centavos per ton upon each and every ton of the deficiency between the amount actually produced, and the minimum amount herein specified, (b) the use and occupancy of the surface of the said parcel of land in favor of Filomeno del Mar, as administrator of Roque del Mar, deceased; Lazaro Osmea, as administrator of Tomas Osmea, deceased; H. B. Walker, as administrator of Candelario Cuizon, deceased; Juan Medio, Eleno Hungug, Bernardo Cal, Faustino Batucan, Perfecto Lavador, Agustin Tito and Salvador Gonzalez in accordance with the agreement dated at Cebu, November 22, 1913. In a quitclaim deed, dated 14 January 1960, the heirs of Nemazee transferred and quitclaimed in favor of Southwestern University their rights, title, interest and participation in, including their mining and leasehold rights over, said land. Subsequently, Southwestern University petitioned the lower court to order (1) the cancellation of the aforequoted annotation of incumbrances on the ground that the condition and agreement constituting the same were cancelled and rendered inoperative by the outbreak of World War II as well as by the death of all the listed beneficiaries thereof; (2) the registration of the quitclaim deed; and (3) the cancellation of TCT No. 7567 itself, and issuance of a new certificate of title in its name.

The petition was immediately granted,3 with the lower court dispensing with the usual notice to interested parties. A new certificate of title (TCT No. RT-2164) was thereafter issued in favor of Southwestern University. On 12 September 1960, one Cenon Laurente moved the lower court to reconsider its order of cancellation, specifically of the second portion of the annotation of incumbrances in question. He alleged that Southwestern University had filed an ejectment suit4 before another branch of the same court against him and several other occupants of the land covered by TCT No. 7567, over which land, he claimed, he might possibly have an interest as a purchaser of a certain parcel of land situated also in Camansi, Danao, Cebu, from Filomeno del Mar, one of the persons in whose favor "the use of occupancy of the surface of the ... land" covered by said TCT No. 7567 was reserved. Laurente thus argued that the cancellation of the annotation of the incumbrance in favor of Filomeno del Mar and others should not have been ordered without giving notice, at least through publication, to the parties who, like him, being a successor-in-interest of said Filomeno del Mar, might thereby be adversely affected. Laurente's alleged interest was, however, never registered. The motion for reconsideration was denied, as previously intimated. Reasoned the lower court: The Court is in accord with his contention (that if there should be notice, it should be limited to the parties annotated in the certificate of title itself, and should not be extended to subsequent parties who, even granting that they acquired the interests of these persons annotated in the certificate of title, failed to have their rights accordingly annotated in said certificate of title) of petitioner Southwestern University, and maintains that inasmuch as the law specifically provides notice to parties in interest, such notice if any, should be limited to the parties listed or annotated on the certificate of title. Hence, if such parties are already dead, as had been alleged and substantiated by petitioner Southwestern University, then notice to said parties would be superfluous or notice would not be necessary. The Court acting within its limited jurisdiction as a Court of Land Registration, can only act on what appears on the face of the certificate of title, and cannot go beyond what appears therein as movant Cenon Laurente would now want this Court to believe. Notice by Publication is not necessary in connection with the this petition which has been duly filed in accordance with Section 112 of Act 496. Granting that the use and occupancy which was annotated in the certificate of title is a real right which could be transferred or disposed of by the person named in the certificate of title to a third person (in this caseCenon Laurente), the latter should have taken the precaution of having his right annotated on said (certificate of title). His failure to do so is therefore fatal, in the sense that this Court cannot consider him as a party in interest who is entitled to notice before the petition for cancellation of incumbrance could be acted upon ...5 We find no error in the order appealed from. Cancellation of registered interests that have terminated and ceased may be ordered by the land registration court under, and in conformity with, section 112 of Act No. 496, otherwise known as the Land Registration Act. The new owner, Southwestern University, of the land herein involved took the right step by petitioning the court under said section to have the registered interests the deceased persons' rights of use and occupancy of the surface of said land ordered cancelled on the ground that the same had terminated and ceased. Notice was no longer necessary for the court to acquire jurisdiction over the petition insofar as the second portion of the annotation of incumbrances was concerned. With the death of all the registered adverse claimants thereof, there were no more parties in interest to be notified.

Appelant Laurente was not and can not now be considered a party in interest entitled to notice. He was, as he is now, a stranger representing no adverse claim as to render the petition for cancellation controversial and, thereby, divest the lower court of its jurisdiction. For Laurente's claim avers that the cancellation of the right of the persons recorded as entitled to use and occupancy of the surface of the land could affect him adversely because the interest acquired by him from Filomeno del Mar "might be included in that which is referred to in the aforementioned annotation." (Record on Appeal, page 43) This is too vague and unsubstantial to give him standing to claim right to notice or to contest the order of cancellation. Before a claimant can be considered as possessing a genuine adverse interest that would deprive the Registration Court of jurisdiction to proceed under section 112 of Act 496 in the absence of notice to him, there must be a showing of the prima facie truth and validity of such adverse interest. Laurente has failed to make such a showing. His motion merely speaks of apossibility of being prejudiced. He has not produced and deed of conveyance from Filomeno del Mar, or secondary evidence thereof. A mere verbal agreement will not do here; there must be a public instrument in order to affect a stranger (such as the holder of the certificate of title or his successors in interest). For Article 1280, No. 1, of the Civil Code of 1889 (in force in 1920 when Laurente claims to have acquired title) prescribes: The following must be reduced to writing in a public instrument: 1. Acts or contracts whose object is the creation, transmission, modification or extinction of rights which affect immovable property. (Emphasis supplied) And to affect registered land, such as is covered by the Certificates of Title of appellee Southwestern University and its predecessor in interest (TCT No. 7567 and RT-2164), the public document above referred to must be recorded and annotated in the certificate, as pointed out in the appealed order; and admittedly, there is no record of any deed in favor of Laurente. It is elementary that, under the Torrens system, registration is the operative act that binds the parties thereto, without affecting the rights of strangers to such contract (Act 496, section 51) unless they have actual knowledge thereof,6 which is not alleged here. What is worse is that Laurente allowed more than 20 years to elapse without asserting the alleged conveyance in his favor, when a period of 10 years sufficed under Act 190 (then in force) to bar any claim to or over real property. Nor has Laurente adequately explained such laches on his part.. He avers that he could not cause the recording of the conveyance in his favor because the registered owner resided in Hongkong. This is no excuse, for the claimant could have asked the proper court to have the owner summoned by publication. Laurente also pleads that the records of the Cebu Register of Deeds were destroyed in the last war. But the war only broke out in 1941, and the enemy occupied Cebu in 1942, while Laurente's vendor, Filomeno delo Mar, ceased to be administrator of the Estate of Roque del Mar as far back as 1920, when the proceedings were closed (Record on Appeal, page 61). Thus, Laurente unaccountably permitted 21 years to elapse without attempting to record or enforce the alleged conveyance in his favor. All the foregoing circumstances cast a dense pall of doubt over the genuineness and validity of Laurente's adverse claim, and fully justify its rejection by the lower court. WHEREFORE, the orders appealed from are sustained and affirmed. Costs against appellant Cenon Laurente in all instances.

Egao v CA, 174 SCRA 484 G.R. No. 79787, 29 June 1989
Facts:

The respondents filed a motion for quieting the title and recovery of possession and ownership against the petitioners. Apparently, they claim they are the owners of the parcel of land by virtue of the deed of sale they entered into with Roberto Marfori to whom the petitioners allegedly sold their land to. The Egaos acquired their land title by virtue of a free patent and transferred their ownership in favor of Marfori by virtue of a deed of sale. However, the Certificate of Title was not transferred in Marforis favor. Upon purchase of the land from Marfori, the respondents introduced improvements thereon and paid taxes for the property. However, the petitioners illegally occupied portions of the land. Petitioner answers that they are the true owner of the landby virtue of the Certificate of Title issued by the Register of Deeds pursuant to their Free Patent. The lower court ruled in favor of Egao. Upon appeal, the CA reversed the decision of the lower court on grounds that the main issue should be whether Egao can validly sell the land to Marfori who subsequently transferred the ownership to the respondents. The CA holds both Egao and Marfori to be in pari delicto for violating the 5-year restriction provided by Commonwealth 141 against encumbrance and alienation of public lands acquired thrufree patent or homestead patent. They cannot therefore obtain affirmative relief. It also declares the respondents as innocent purchasers for value who the obtained the duplicate of the OCT still in the name of the Egaos from Marfori and ownership was transferred to them by physical possession of the property. It thus promulgated judgment holding the respondents the absolute owners of the land in dispute, to cancel the OCT of the petitioner and its transfer thereof to the respondents and to surrender peaceful possession of the land to the respondents. Issue: Whether or not the petitioners validly transferred their ownership to Marfori to resolve the rights of the respondents over the land in dispute? Ruling: The SC holds that based on the adduced evidence, the Egaos sold the lot to Marfori within the 5-year restriction period provided by law on Free Patent based on the Deed of Sale entered into by the parties. Although the petitioners denied the validity of the Deed of Sale the court held that it was notarized and a notarial document has in its favor the presumption of regularity. When the land was sold to the respondents, they know that the OCT is still registered under the name of the petitioners. Thus, they are not considered to be innocent purchaser as contrary to the ruling of the CA. Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility of the existence of a defect in his vendor's title, and relying on the belief that there was no defect in the title of the vendor, purchases the property without making any further investigation, he cannot claim that he is a purchaser in good faith for value. A private individual cannot bring an action for reversion or any action which would have an effect of canceling a free patent and the certificate of title issued on the basis thereof since the land covered will form part again of the public domain. Sec. 124 of the Public Land Act provides that deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void thus the Egaos have no title to pass to Marfori and nobody can dispose that which does not belong to him. The respondents are not innocent purchasers for value with no standing to question the rights of the petitioners over the land and to file an action to quiet the title. The petitioners remained to be the registered owners and entitled to remain in physical possession of the disputed property. Respondents are ordered to deliver the OCT to the petitioners without prejudice to an action for reversion of the land to be instituted by the Solicitor General for the State.

GARCIA VS CA

11

FEB

L 48971 |January 22, 1980 | J. Aquino Facts: This case is about the issuance of two or more transfer certificates of title to different persons for the same lot, or subdivisions thereof, due to the fact that the original title was allegedly not cancelled when the first transfer certificates of title were issued to replace the original title.

A deed of sale for lots E and G of Hacienda Maysilo and covered by OCT No. 983 was executed in favor of Ismael Lapus, a bona fide occupant thereof. The deed of sale was presented for registration and contained entries showing that it was annotated on the back of the OCT. Contrary to SOP however, the deed of sale was not annotated on the OCT and that consequently, that title was apparently not cancelled. As a result of the registration of the deed of sale, TCT No. 4910 (Lapus Title) was issued to Lapus. Upon his death, the two lots were inherited by his daughter Carolina Lapuz-Gozon, who had the land subdivided into 55 lots and sold some to her now co-respondents. Lapus and successors-in-interest have been in possession of the lands even before 1910 of more than 70 years. In 1962, the Riveras, alleged heirs of the late Maria de la Concepcion Vidal filed a motion in land registration cases, alleging that they were deprived of their participation in the Hacienda Maysilo. Since per the OCT the land seemed unencumbered, the court adjudicated the land in their favor. The OCT was then cancelled and TCT No. 112235 (Rivera Title) was issued to the Riveras. Lots 5 and 7 (E and G) were then assigned to Bartolome Rivera to Sergio Cruz and Pacifico Garcia, and subsequent TCTs were issued in their behalf. Garcia had Lot 7 (G) subdivided into lots A and B, retained lot A and assigned B to Antonio Munoz. Munoz mortgaged lot B to Associated Banking Corp. On the other hand, Cruz sold Lot 5 (E) to Santiago Go. Go mortgaged Lot 5 to Philippine National Bank. Both Munoz and Go did not pay their mortgage debts, hence the two banks foreclosed the properties. PNB bought the mortgaged Lot 5 at the auction, but notice of lis pendens was already annotated on the title. Riveras and their successors-in-interest have never set foot on the disputed lots. Gozon finally learned about the Riveras and others acquiring the land, had her adverse claims registered on the titles of lots 5 and 7 and filed an action to quiet title and damages. The trial court ruled in favor of Gozon and co-plaintiffs and voided the TCTs issued to the Riveras, others. CA affirmed the decision. Garcia and PNB appealed.

Issue: W/N the 1920 Lapus title prevails over the 1963 Rivera title and subsequent titles derived from it?

Held: Yes, Lapus title prevails. Lapus was an innocent purchaser for value who validly transmitted to his successors-in-interest his indefeasible title or ownership over the disputed lots. That title could not be nullified or defeated by the issuance 43 years later to other persons of another title over the

same lots due to the failure of the register of deeds to cancel the title preceding the title issued to Lapus. This must be so considering that Lapus and his successors-in-interest remained in possession of the disputed lots and the rival claimants never possessed the same. The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails. It is settled that in this jurisdiction the maxim prior est in tempore, potior est in jure (he who is first in time is preferred in right) is followed in land resgistration matters. The contention of PNB that it was a buyer in good faith has no merit because the deed of sale in favor of Lapus and the titles issued to him and his successors-in-interest are all a matter of public record in the registry of deeds. When a conveyance has been properly recorded, such record is a constructive notice of its contents and all interests, legal and equitable, included therein. Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. This presumption cannot be overcome by proof of innocence and good faith otherwise the very purpose of the law requiring a record would be destroyed. The bank should have made an on-the-spot investigation of the lot mortgaged. Decision affirmed.

G.R. Nos. 74226-27 July 27, 1989 PEOPLE OF THE PHILIPPINES, petitioner, vs. MIZPAH R. REYES, respondent. Pacianito B. Cabaron for respondent. Celso C. Dimayuga co-counsel for respondent.

CORTES, J.: The crime of falsification of a public document carries with it an imposable penalty of prision correccional in its medium and maximum periods and a fine of not more than P5,000.00 [Art. 172, Revised Penal Code (RPC)]. Being punishable by a correctional penalty, this crime prescribes in ten (10) years [Art. 90, par. 3 (RPC)]. The ten (10) year prescriptive period commences to run "from the day on which the crime is discovered by the offended party, the authorities, or their agents . . ." [Art. 91, (RCP)]. In the instant case, the public document allegedly falsified was a notarized deed of sale registered on May 26, 1961 with the Register of Deeds in the name of the accused, private respondent herein, Mizpah R. Reyes. The two informations for falsification of a public document subject matter of the controversy were, however, filed only on October 18, 1984. The complainants claim that they discovered the falsified notarized deed of sale in June 1983. The Court is tasked with determining whether the crime has prescribed which hinges on whether or not its discovery may be deemed to have taken place from the time the document was registered with the Register of Deeds, consistent with the rule on constructive notice.

The antecedent facts are as follows: The spouses Julio Rizare and Patricia Pampo owned a parcel of land located in Lipa City registered in their names under TCT No. T-7471. Both are now deceased, the husband having died on September 6, 1970 and his wife on August 7, 1977. They were survived by the following children: the accused Mizpah R. Reyes and the complainants Cristina R. Masikat, Julieta R. Vergara and Aurora Rizare Vda. de Ebueza. In June 1983, the complainants allegedly discovered from the records of the Register of Deeds of Lipa City that the abovementioned property had already been transferred in the name of Mizpah Reyes, single, of legal age, Filipino and resident of the City of Lipa, Philippines" under TCT No. T9885. They further allegedly discovered that the conveyance was effected through a notarized deed of sale executed and signed on May 19, 1961 by their parents Julio Rizare and Patricia Pampo. The deed of sale was registered with the Register of Deeds of Lipa City on May 26, 1961. Upon examination of the document, they found that the signature of their parents were allegedly falsified and that accused also made an untruthful statement that she was single although she was married to one Benjamin Reyes on May 2, 1950. The document was referred by the complainants to the National Bureau of Investigation (N.B.I.) for examination of the signatures of their parents and a report was returned with the finding that the signature of Julio Rizare was genuine but that of Patricia Pampo was forged. Upon complaint by the sisters of the accused and after conducting an investigation, the fiscal filed with the Regional Trial Court of Batangas, Branch XIII, Lipa City on October 18, 1984 two (2) informations both for falsification of public document, the first in Criminal Case No. V-1163, for allegedly making it appear in the notarized deed of sale that Patricia Pampo, the mother of the accused, participated in the sale of a parcel of land by falsifying Pampo's signature, and the second in Criminal Case No. V-1164, for allegedly making an untruthful statement of fact in the deed of sale, more specifically, by stating that accused was single. Before arraignment, accused filed a motion to quash both informations on grounds that: (1) "The criminal action or liability has been extinguished by prescription of the crime in the light of Cabral v. Puno, 70 SCRA 606;" and (2) "The trial court had no jurisdiction over the offense charged and the person of accused because of non-compliance with the pre-conciliation requirement of P.D. No. 1508." [Rollo, p. 33]. The trial court granted the motion and quashed the informations in the two (2) cases stating that: xxx ...The title, once registered, is a notice to the world. All Persons must take notice. No one can plead ignorance of registration. The essence, therefore, of registration is to serve notice to the whole world of the legal status and the dealing therewith. If registration is a notice to the whole world, then registration is in itself a notice and therefore, the prescriptive period of registered document must start to run from the date the same was annotated in the Register of Deeds. In these two cases in question, prescriptive period of ten (10) years should have started from May 26, 1960 (sic).

Considering the lapse of more than twenty (20) years before the two informations were filed, the crimes for which the accused, Mizpah Reyes, are charged have already prescribed. WHEREFORE, and as prayed for, Criminal Cases Nos. V-1163 and V-1164 are quashed. [Rollo, pp. 33-34]. From the trial court's order quashing the two (2) informations, the People, petitioner herein, filed an appeal with the Court of Appeals (then designated as the Intermediate Appellate Court). In a decision ** promulgated on April 3, 1986, the Court of Appeals affirmed the trial court's order. The Court of Appeals rejected the theory of petitioner that the prescriptive period should commence on June 1983, when the complainants actually discovered the fraudulent deed of sale. The appellate court sustained the trial court's ruling that the prescriptive period started on May 26, 1961, when the deed of sale was registered with the Register of Deeds of Lipa City. Hence, this petition for review on certiorari of the decision of the Court of Appeals, filed by the People, through the SolicitorGeneral. Among the authorities relied upon by the Court of Appeals in dismissing petitioner's appeal is the case of Cabral v. Puno, G.R. No. L-41692, April 30, 1976, 70 SCRA 606, where the Supreme Court made a statement to the effect that in the crime of falsification of a public document, the prescriptive period commences from the time the offended party had constructive notice of the alleged forgery after the document was registered with the Register of Deeds. However, petitioner contends that this particular statement is not doctrine but merely an obiter dictum. The Cabral case stemmed from the filing on September 24, 1974 of an information accusing Eugenio Cabral of the crime of falsification of public document for allegedly falsifying on August 14, 1948 the signature of the complainant Silvino San Andres in a deed of sale of a parcel of land. Before arraignment, petitioner moved to quash the information on the ground of prescription of the crime, as the notarized deed of sale was registered with the Register of Deeds on August 26, 1948. After hearing the motion, the judge issued a resolution granting the motion to quash and dismissing the information on the ground of prescription. Private prosecutor filed a motion for the reconsideration of the resolution. Acting on said motion, the trial court ordered the fiscal to make known his position. The fiscal filed a comment stating that the crime has not prescribed as the complainant San Diego claimed that he only discovered the crime in October 1970. Thereafter, the trial court set aside its resolution granting the accused's motion to quash and reinstated the information. The accused brought the case to the Supreme Court questioning the trial court's authority to set aside its resolution granting his motion to quash. The Supreme Court ruled in favor of the accused by holding that the aforementioned resolution has already become final and executory for failure of the fiscal to file a motion for reconsideration within the reglementary period. The motion for reconsideration filed by the private prosecutor was disregarded because of the latter's lack of legal standing. Another reason given by the Court for its decision is the following: . . .The Rules of Court is explicit that an order sustaining a motion to quash based on prescription is a bar to another prosecution for the same offense [Secs. 2(f) and 8, Rule 117, Revised Rules of Court]. Article 89 of the Revised Penal Code also provides that "prescription of the crime is one of the grounds for "total extinction of criminal liability." Petitioner was charged with the crime of falsification under Article 172, sub-paragraphs (1) and (2) of the Revised Penal Code, which carries an imposable penalty of prision correccional in its medium and maximum periods and a fine of not more than P5,000.00. This crime prescribes in ten (10) years [Article 90, Revised Penal Code]. Here, San Diego had actual if not constructive notice of the

alleged forgery after the document was registered in the Register of Deeds on August 26, 1948. xxx [Cabral v. Puno, supra at p. 609]. Although the prescription of the crime was not squarely in issue in Cabral, it is apparent that the statement of the Court on prescription and constructive notice was not totally irrelevant to the disposition of the case. Moreover, it is not without any legal basis. The rule is well-established that registration in a public registry is a notice to the whole world. The record is constructive notice of its contents as well as all interests, legal and equitable, included therein. All persons are charged with knowledge of what it contains [Legarda and Prieto v. Saleeby, 31 Phil. 590 (1915); Garcia v. Court of Appeals, G.R. Nos. L-48971 and 49011, January 22, 1980, 95 SCRA 380; Hongkong and Shanghai Banking Corporation v. Pauli, et al., G.R. No. L-38303, May 30, 1988,161 SCRA 634; See also Sec. 52, Pres. Decree No. 1529 (1978)]. Pursuant to this rule, it has been held that a purchaser of registered land is presumed to be charged with notice of every fact shown by the record. The Court, in explaining the nature of the rule on constructive notice and the presumption arising therefrom stated in Gatioan v. Gaffud, G.R. No. L21953, March 28 1969, 27 SCRA 706, 712-713, that: xxx When a conveyance has been properly recorded such record is constructive notice of its contents and all interests, legal and equitable, included therein ... Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is presumed to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of innocence or good faith. Otherwise the very purpose and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless confusion and useless litigation. xxx It has also been ruled that when an extrajudicial partition of the property of the deceased was executed by some of his heirs, the registration of the instrument of partition with the Register of Deeds is constructive notice that said heirs have repudiated the fiduciary relationship between them and the other heirs vis-a-vis the property in question. The heirs who were not included in the deed of partition are deemed to have notice of its existence from the time it was registered with the Register of Deeds [De la Cerna v. De la Cerna, G.R. No. L-28838, August 31, 1976, 72 SCRA 514]. Likewise, the rule on constructive notice has been applied in the interpretation of a provision in the Civil Code on the prescription of actions for annulment of contracts which is parallel to Art. 91 of the Revised Penal Code. The Civil Code provision states:

Art. 391. The action for annulment shall be brought within four years. This period shall begin: xxx In case of mistake or fraud, from the time of the discovery of the same [Emphasis supplied]. In Armentia v. Patriarca, G.R. No. L-18210, December 29, 1966,18 SCRA 1253, where a notarial document recorded with the Registry of Deeds was sought to be annulled, the Court, interpreting the phrase "from the time of the discovery" found in the aforequoted provision of the Civil Code, ruled that "in legal contemplation, discovery must be reckoned to have taken place from the time the document was registered in the Register of Deeds, for the familiar rule is that registration is a notice to the whole world . . ." [See also Avecilla v. Yatco, 103 Phil. 666 (1958); Gerona v. De Guzman, G.R. No. L-19060, May 29, 1964, 11 SCRA 153; Carantes v. Court of Appeals, G.R. No. L-33360, April 25, 1977, 76 SCRA 514; Cultura v. Tupacar, G.R. No. L-48430, December 3, 1985,140 SCRA 311; Cimafranco v. IAC, G.R. No. L-68687, January 31, 1987, 147 SCRA 611; Hongkong and Shanghai Banking Corporation v. Pauli, et al., supra.] However, petitioner contends that Art. 91 of the Revised Penal Code which states that "the period of prescription shall commence to run from the day the crime is discovered by the offended party,the authorities, or their agents. . cannot be construed in the same manner because the rule on constructive notice is limited in application to land registration cases. It is argued that haste should be avoided in applying civil law presumptions to criminal suits. Although caution should be observed in applying the rules of construction in civil cases in the interpretation of criminal statutes, the Court will not hesitate to do so if the factual and legal circumstances so warrant. Hence, inMercado v. Santos, 66 Phil. 215 (1938), the Court applied the presumption arising from the allowance of a will to bar a criminal action. In theft particular case, the petitioner filed a petition for the probate of the will of his deceased wife. The will was duly probated. Sixteen (16) months thereafter, a criminal complaint was filed against petitioner for falsification or forgery of the will. Petitioner filed a motion to dismiss the case claiming that the order probating the will is conclusive as to its authenticity and due execution. The motion having been denied, the petitioner filed a petition for certiorari with the Court of Appeals (CA) which ruled that "the judgment admitting the will to probate is binding upon the whole world as to the due execution and genuineness of the will insofar as civil rights and liabilities are concerned, but not for the purpose of punishment of a crime." But the Supreme Court reversed the CA decision by ruling that, in accordance with See. 625 of the then Code of Civil Procedure which provides that "the allowance by the court of a will of real and personal estate shall be conclusive as to its due execution," *** a criminal action will not lie in this jurisdiction against the forger of a will which had been duly admitted to probate by a court of competent jurisdiction. It is, however, insisted in this case that the rule on constructive notice applies only in civil cases. It is argued that the law on prescription of crimes is founded on a principle different from that of the law on prescription in civil actions. The difference, it is claimed, precludes the application of the rule on constructive notice in criminal actions. The statute of limitations of civil actions was explained in Penales v. Intermediate Appellate Court, G.R. No. 73611, October 27, 1986, 115 SCRA 223, 228 in the following manner: Prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent and stale claims from springing up at great distances of time and

surprising the parties or their representatives when the facts have become obscure from the lapse of time or death or removal of witnesses . . . On the other hand, the Court in People v. Moran, 44 Phil. 389, 405-406 (1923), discussed the nature of the statute of limitations in criminal cases as follows: xxx . . . The statute is not a statute of process, to be scantily and grudgingly applied, but an amnesty, declaring that after a certain time oblivion shall be cast over the offense; that the offender shall be at liberty to return to his country; and resume his immunities as a citizen; and that from henceforth he may cease to preserve the proofs of his innocence, for the proofs of his guilt are blotted out. Hence it is that statutes of limitation are to be liberally construed in favor of the defendant, not only because such liberality of construction belongs to all acts of amnesty and grace, but because the very existence of the statute is a recognition and notification by the legislature of the fact that time, while it gradually wears out proofs of innocence, has assigned to it fixed and positive periods in which it destroys proofs of guilt. Independently of these views, it must be remembered that delay in instituting prosecutions is not only productive of expense to the State, but of peril to public justice in the attenuation and distortion, even by mere natural lapse of memory, of testimony. It is the policy of the law that prosecutions should be prompt, and that statutes enforcing such promptitude should be vigorously maintained. They are not merely acts of grace, but checks imposed by the State upon itself, to exact vigilant activity from its subalterns, and to secure for criminal trials the best evidence that can be obtained. xxx It is evident that there is merit in petitioner's claim that the law on prescription of civil suits is founded on different policy considerations from that of the law on prescription of criminal actions. However, the Court does not subscribe to the conclusion that the presumptions and rules of interpretation used in the law on prescription of civil suits, including the rule on constructive notice, can not be applied in criminal actions. The considerations in providing for prescription of civil suits are based mainly on practical and equitable grounds. The lapse of a considerably long period of time obscures the surrounding circumstances of a particular claim or right and erodes the integrity of whatever evidence may be presented in support of an action to enforce or contest such claim or right. Moreover, where a particular right has accrued in favor of a party, the enjoyment of such right cannot forever be left on a precarious balance, always susceptible to possible challenge by an adverse party. After a certain period of time fixed by law, the right enjoyed by a party must be accorded respect by prohibiting adverse claims the factual basis of which can no longer be verified with certainty. Hence, the law on prescription of civil suits is properly called a statute of repose. The practical factor of securing for civil suits the best evidence that can be obtained is also a major consideration in criminal trials. However, the law on prescription of crimes rests on a more fundamental principle. Being more than a statute of repose, it is an act of grace whereby the state, after the lapse of a certain period of time, surrenders its sovereign power to prosecute the criminal act. While the law on prescription of civil suits is interposed by the legislature as an impartial arbiter between two contending parties, the law on prescription of crimes is an act of amnesty and liberality on the part of the state in favor of the offender [People v. Moran, supra, at p. 405]. Hence, in the

interpretation of the law on prescription of crimes, that which is most favorable to the accused is to be adopted [People v. Moran, supra; People v. Parel, 44 Phil. 437 (1923); People v. Yu Hai, 99 Phil. 725 (1956)]. The application of the rule on constructive notice in the construction of Art. 91 of the Revised Penal Code would most certainly be favorable to the accused since the prescriptive period of the crime shall have to be reckoned with earlier, i.e., from the time the notarized deed of sale was recorded in the Registry of Deeds. In the instant case, the notarized deed of sale was registered on May 26, 1961. The criminal informations for falsification of a public document having been filed only on October 18, 1984, or more than ten (10) years from May 26, 1961, the crime for which the accused was charged has prescribed. The Court of Appeals, therefore, committed no reversible error in affirming the trial court's order quashing the two informations on the ground of prescription. WHEREFORE, in view of the foregoing, the petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED. SO ORDERED. G.R. No. L-42278 January 20, 1989 GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. HON. COURT OF APPEALS and RENE KNECHT, respondents. Cesar R. Vidal for petitioner. Norberto J. Quisumbing for private respondent.

MEDIALDEA, J.: This is a petition for review on certiorari filed by the Government Service Insurance System (GSIS) seeking the reversal of the decision of the respondent Court of Appeals dated October 13, 1975, in the special civil action for certiorari docketed as CA-G.R. No. SP-04300, entitled "Rene Knecht vs. Hon. Pedro JL. Bautista, etc., et. al.," and its resolution dated December 18, 1975, denying petitioner's motion for reconsideration. Per Resolution dated May 4, 1976, however, We treated this case as a special civil action (p. 217, Rollo). The assailed decision set aside, "as having been issued in grave abuse of discretion," the Orders of the Court of First Instance (now Regional Trial Court) of Rizal, Branch III, Pasay City, dated May 26, 1975 and May 27, 1976, which respectively denied private respondent Knecht's "Urgent Motion for Intervention" and granted GSIS' "Ex-parte Motion for Issuance of Writ of Possession" in GLRO Record No. 317 and 1356, or CFI Case No. 1104. The antecedent facts in the instant case are as follows: Mariano R. Dulay Enterprises (hereinafter referred to as Dulay) obtained on various occassions, real estate loans from the Government Service Insurance System (GSIS for short) all amounting to P9,535,000.00 (p. 3, Rollo). These loans were secured by a real estate mortgage of a certain parcel of land (which included Hotel Frederick), then covered by Transfer Certificate of Title No. 17638 of the Registry of Deeds of Pasay City, under Act No. 3135, as amended by Act No. 4118.

As of September 10, 1974, DULAY had incurred arrearages in the payment of its loans all amounting to P3,335,878.81. In view thereof, the GSIS instituted extrajudicial foreclosure proceedings on the mortgaged property and on November 5, 1974, the said property was sold at public auction by the Sheriff of Pasay City to the GSIS as the highest bidder for P13,426,382.00. A Certificate of Sale was subsequently issued on November 22, 1974, and the same was duly registered on December 13, 1974 (p. 4, Rollo). On January 7, 1975, the GSIS filed with the Court of First Instance (now Regional Trial Court) of Rizal, with station at Pasay City, an "Ex-Parte Petition for Issuance of a Writ of Possession" in the original registration proceedings (therein docketed as GLRO Record No. 317 and 1356, or CPI Case No. 1104), conformably with Section 4 of P.D. 385 (p. 355, Rollo). On January 16, 1975, private respondent Rene C. Knecht (Knecht for short), filed with the aforesaid court, an "Urgent Motion for Intervention" claiming that DULAY had sold the property to him on May 4, 1974 and assigned to him on November 5, 1974, the right to redeem the same. The GSIS opposed the motion alleging that "intervention will not lie when there is no pending litigation; when it impairs substantial rights of the adverse party; when the intervenor is guilty of laches; and that the intervenor has no legal interest in the property subject of a writ of possession" (p. 5, Rollo). On May 26, 1975, the Court of First Instance of Rizal, with Judge Pedro JL. Bautista presiding, denied Knecht's motion for intervention citing Section 7 of Act No. 3135 and Section 4 of PD No. 385, and, on May 27, 1975, directed the issuance of a writ of possession in favor of the GSIS upon the latter's posting a bond in the amount of P2,000,000.00 (p. 6, Rollo). On June 11, 1975, Knecht filed a special civil action for certiorari with the Court of Appeals wherein he assailed the said Orders of the Court of First Instance of Rizal as having been issued in grave abuse of discretion amounting to lack of jurisdiction (p. 4, Rollo). The Court of Appeals immediately, and without any prior hearing, issued a writ of preliminary injunction, upon Knecht's filing of a bond in the sum of Pl,000.00, enjoying the Court of First Instance of Rizal from issuing the writ of possession and the Sheriff of Pasay City from executing the same, if already issued (p. 642, Rollo). On October 13, 1975, respondent Court of Appeals rendered a decision (p. 78, Rollo) (after GSIS had filed its Answer to the Petition but therefore the parties could file their respective Memoranda) upholding Knecht's right to intervene in the proceedings for the issuance of a writ of possession, as a successor-in-interest of the Dulays, and standing "on better footing than a necessary or an indispensable party" (p. 89, Rollo). Respondent Court of Appeals likewise set aside, "as having been issued in grave abuse of discretion," the Orders of the CFI of Rizal, dated May 26, 1975 (denying the motion for intervention) and May 27, 1975 (granting the writ of possession), and making permanent the injunction it had earlier issued. The motion for reconsideration filed by GSIS (p. 102, Rollo) was denied per Resolution dated December 18, 1975 (p. 108, Rollo). On January 7, 1976, the GSIS filed the present "Petition for Review on Certiorari" praying for the reversal of respondent Court of Appeals' Decision. Meantime, title to the subject property was consolidated in the name of the GSIS on January 15, 1976. Transfer Certificate of Title No. 17638, in the name of Manuel R. Dulay Enterprises, Inc. was cancelled and Transfer Certificate of Title No. 19836 of the Register of Deeds of Pasay City was issued in the name of the GSIS.

On August 11, 1976, upon motion of GSIS, We issued a Writ of Preliminary Mandatory and Prohibitory Injunction enjoining the Court of Appeals from enforcing its final injunction issued against the GSIS, and directing Knecht: (1) to turn over to the GSIS the possession of the subject property; (2) to submit an accounting of all revenues derived from his hotel operations as of November 5, 1974; (3) to deposit with this court all such revenues on hand as of turn-over of premises to GSIS. Knecht moved to dissolve the preliminary injunction. In a Resolution dated August 18, 1976 (p. 399,Rollo), We upheld said preliminary injunction but suspended the portion regarding deposit of revenues, and declared the case submitted for decision. Knecht refused to comply with the preliminary injunction, prompting the GSIS to move to declare him in contempt of court for which We issued a Show-Cause Order on November 15, 1976 (p. 425, Rollo). On January 24, 1977, however, the day set for the hearing of the contempt charge, the parties filed a Joint Manifestation and Motion praying for the cancellation of the hearing in view of possible amicable settlement. This Rollo was granted per Our Resolution dated January 28, 1977 (p. 517, Rollo). However, the parties failed to reach an amicable settlement, prompting the GSIS to move for immediate compliance (by Knecht) with the Resolution of August 11, 1976, and upon his failure to do so, the immediate implementation of the Writ of Preliminary Mandatory and Prohibitory Injunction issued by Us on August 11, 1976. Petitioner GSIS seeks the reversal and setting aside of the decision of respondent Court of Appeals, on the following grounds: 1. Subject orders are predicated on Sec. 7 of Act 3135 and Sec. 4 of PD 385; hence respondent Court of Appeals could not have possibly found the CFI of Rizal guilty of capricious, arbitrary, whimsical or despotic exercise of judgment; 2. Respondent Court of Appeals failed to support its conclusion of grave abuse of discretion with a finding of capricious, arbitrary, whimsical, or despotic exercise of judgment in issuing Orders; 3. The Extraordinary writ of certiorari is available only to correct or rectify jurisdictional errors. It cannot be used where the error assigned is one of judgment, nothing more; 4. Other procedural infirmities suggest bias or prejudice against the lawful interest of petitioner: a.) the issuance of a preliminary injunction without prior hearing b.) the bond of Pl,000.00 required of Knecht, as against the P2 M posted by GSIS c.) promulgation of the decision prior to the expiration of the period granted by the Court of Appeals for the parties to submit their respective memoranda (p. 693, Rollo).

On the other hand, respondent Knecht claims that: 1. as a purchaser of the mortgaged property, and subsequent assignee of the redemption rights of mortgagor, (per Deed of Assignment), dated November 7, 1974, he has pecuniary interest in the mortgaged property which would warrant his right to intervene in the petition for issuance of the writ of possession. 2. the extrajudicial foreclosure is null and void. The petition is impressed with merit. Respondent Court of Appeals gravely erred in setting aside the Orders of the Court of First Instance (now Regional Trial Court) of Rizal, dated May 26, 1975 and May 27, 1975, which respectively denied Knecht's "Urgent Motion for Intervention" and granted GSIS' Ex-Parte Motion for Issuance of Writ of Possession. The CFI orders denying the motion for intervention and granting the writ of possession upon an ex-parte motion of petitioner GSIS were premised on Section 7 of Act No. 3135 and Sec. 4 of P.D. No. 385. Section 7 provides as follows: SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue,addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. (Emphasis ours) It has been held: Sections 7 and 8 of Act 3135, expressly authorize the purchaser at the public auction in an extrajudicial foreclosure of mortgage to petition for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property with Torrens title; and upon the filing of such motion and the approval of the corresponding bond, the law, also in express terms,

directs the court to issue the order for a writ of possession. Under said sections, the order for a writ of possession issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The judge issuing the order following these express provisions of law cannot be charged with having acted without jurisdiction or with grave abuse of discretion (Emphasis ours) (Eugenio S. de Garcia vs. Hon. Ramon R. San Jose, et. al. (94 Phil 623)). Likewise in the case of Marcelo Steel Corp. vs. Court of Appeals, G.R. Nos. L-34317 and L34335, November 28, 1973, 54 SCRA 891), We stated that the issuance of the writ is a legal mandate, and the judge may not be charged with grave abuse of discretion, for complying with, and implementing said legal mandate: Having merely followed an express provision of law, whose validity is not questioned, the Judge cannot be charged with having acted without jurisdiction or with grave abuse of discretion. The rule that the purchaser at a judicial public auction is not entitled to possession during the period of redemption is not applicable to a sale under Act No. 3135where the granting of said possession is expressly authorized (p. 18, Rollo) (Emphasis supplied). On the other hand, Sec. 4 of P.D. 385, issued on January 13, 1974 provides: SECTION 4. As a result of foreclosure or any other legal proceedings wherein the properties of the debtor which are foreclosed, attached, or levied upon in satisfaction of a judgment are sold to a government financial institution, the said properties shall be placed in the possession and control of the financial institution concerned, with the assistance of the Armed Forces of the Philippines whenever necessary. The Petition for Writ of Possession shall be acted upon by the court within fifteen (15) days from the date of filing. (Emphasis ours) In PNB vs. M. Adil, et al. (G.R. No. 52823, November 2,1982, 118 SCRA 110) We stated that P.D. No. 385 makes it mandatory for the court to place a financial institution in possession of the property: The right of the purchaser to be placed in the possession of the property is bolstered by Section 8 of the aforecited Act which provides that if the judge finds the complaint assailing the legality of the foreclosure sale justified, it shall not transfer the possession of the property, even on appeal, but will only proceed against the bond posted by the purchaser. Based on the foregoing, the order for the issuance of the writ was clearly within the power, competence and jurisdiction of the court a quo to issue. As to the wisdom or soundness of the challenged order granting such writ of possession, it is a matter of judgment in connection with which the remedy is ordinary appeal. (Toribia Lamagan vs. Hon. Rafael de la Cruz and Cosme O. Follosco, G.R. No. L-27950, July 29, 1971; 40 SCRA 101; Salvador E. Bimeda vs. Arcadio Perez and Hon. Jose T. Surtida, 93 Phil. 636). There being no showing that the court a quoacted whimsically or capriciously as to amount to excess or lack of jurisdiction in issuing the questioned orders, but acted precisely in compliance with the mandatory provisions of Sec. 7, Act 3135 and PD 385, the respondent Court of Appeals erred in acting on the petition for certiorari, which is intended to correct

defects of jurisdiction solely and not to correct errors of procedure or matters in the court a quo's findings or conclusions (Ilacad vs. Court of Appeals, 79 SCRA 301). Is Knecht a proper intervenor? In allowing Knecht to intervene in the proceedings for the issuance of the writ, respondent Court of Appeals premised its ruling on his being the purchaser of the mortgaged property, whose rights allegedly would be adversely affected by the foreclosure (CA decision, p. 85, Rollo). This ruling, unfortunately, admits the validity of the Deed of Sale with Assumption of Mortgage, executed between the Dulays and Knecht as against petitioner GSIS. There is, however, no evidence that this sale was registered. It is well-settled that in case of a piece of land titled under the Torrens system, it is the act of registration that transfers the ownership of the land sold (Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1982, 115 Phil. 797; Sec. 50, Land Registration Act, Act No. 496, now Sec. 51, Property Registration Decree, P.D. No. 1529). Moreover, this sale was made without the prior consent of GSIS, in violation of condition No. 7 of the Mortgage Contract (p. 149, Rollo) Annex "A", Comment). Well settled is the rule that the consent of the creditor is indispensable for a valid novation consisting of a change of debtor (Garcia vs. Khu Yeh Chiong, 38 OG 926). In the absence of such registration and GSIS consent, Knecht was not validly substituted as debtor (Mc Collough and Co., Inc. vs. Velasco, 46 Phil. 1), on the basis of which he could assail and/or intervene in the proceedings for the issuance of the writ of possession. The sale therefore did not in any manner bind GSIS which is obliged to recognize only the Dulays as mortgagor. (Thus, the GSIS notice of arrearages was directed solely to the Dulays. Neither is there any GSIS board resolution officially recognizing Knecht as substitute debtor). To rule otherwise would be to defeat the statutory remedy of foreclosure. A wily mortgagor could easily avoid and/or delay the transfer of possession of the foreclosed property to the purchaser by secretly conveying the same to third persons, who would then assert ownership rights/pecuniary interests thereon to the prejudice of the legitimate purchaser. Foregoing considered, Knecht therefore acquired no legal right over the mortgaged property as against the GSIS, and consequently is not a proper intervenor. Assuming the validity of the sale, then Knecht would hold the title and possess the property as the Dulays' transferee, i.e., any right he has to the property cannot be better than that of the transferor Dulays. Thus, in the instant case, considering that the property has already been sold at public auction, pursuant to an extrajudicial foreclosure, and the Dulays have not contested the validity either of the foreclosure proceedings instituted against the mortgaged properties, or the ex parte motion for the issuance of a writ of possession (p. 34, Rollo), the only right transferrable to Knecht is the right to redeem the mortgaged properties within the period prescribed by law. Knecht subscribed to this view, when he asserted a right to redeem the foreclosed property, based on an alleged "deed of assignment of redemption rights, dated November, 1974" (p. 134, Rollo). (See Alberto C. Roxas and Nenita de Guia vs. Mariano Buan, et. al., G.R. No. 53798, November 8, 1988). However, as there is likewise no evidence on record of the assignment, nor was it duly annotated on TCT No. 17638, (covering the mortgaged property) Knecht is not validly substituted as debtor, and the assignment is not effective against GSIS, which is again obliged to recognize the redemption rights of the Dulays only: There is no right conferred by law in favor of a buyer of mortgaged property to redeem the same where the sale to such third party was not with the consent

of the mortgaged creditor' (R. Bonnevie vs. CA, G.R. No. L-4910, October 24, 1983, 125 SCRA 122, at p. 125). Aside from the lack of legal interest, We also agree with petitioner that intervention is not proper when there is no pending litigation. The proceedings in which respondent Knecht sought to intervene is an ex-parte proceeding pursuant to Sec. 7 of Act No. 3135, and, as pointed out by petitioner, is a "judicial proceeding brought for the benefit of one party only, and without notice to, or consent by any person adversely interested (Stella vs. Mosele, 19 N.E., 2d. 433,435, 299 III. App. 53; Imbrought v. Parker, 83 N.E. 2d 42, 43, 336 III App. 124; City Nat. Bank & Trust Co. v. Aavis Hotel Corporation, 280 III. App. 247), ... or a proceeding wherein relief is granted without an opportunity for the person against whom the relief is sought to be heard" (Restatement, Torts, S 674, p. 365, Rollo). On the other hand, Rule 12, Sec. 2 of the Revised Rules of Court on Intervention provides: SEC. 2. Intervention. - Any person may, before or during a trial be permitted by the court, in its discretion, to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof' (emphasis supplied). Intervention is defined as "a proceeding in a suit or action by which a third person is permitted by the court to make himself a party, either joining plaintiff in claiming what is sought by the complaint, or uniting with defendant in resisting the claims of plaintiff, or demanding something adversely to both of them; the act or proceeding by which a third person becomes a party in a suit pending between others; the admission, by leave of court, of a person not an original party to pending legal proceedings, by which such person becomes a party thereto for the protection of some right of interest alleged by him to be affected by such proceedings' (33 C.J., 477, cited in Eulalio Garcia, et. al. vs. Sinforoso David, et. al., 67 Phil. 279, at p. 282). Action, under Rule 2, Sec. 1, is defined as an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong. From the aforesaid definitions, it is clear that intervention contemplates a suit, and is therefore exercisable during a trial and, as pointed out by petitioner is one which envisions the introduction of evidence by the parties, leading to the rendition of the decision in the case (p. 363, Rollo). Very clearly, this concept is not that contemplated by Sec. 7 of Act No. 3135, whereby, under settled jurisprudence, the Judge has to order the immediate issuance of a writ of possession 1) upon the filing of the proper motion and 2) the approval of the corresponding bond. The rationale for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such possession being founded on his right of ownership. A trial which entails delay is obviously out of the question. Knecht's remedy, as correctly pointed out by petitioner GSIS, is a separate, distinct, and independent suit, provided for in Section 8 of Act No. 3135:

And any question regarding the regularity and validity of the sale is left to be determined in a subsequent proceeding as outlined in section 8. Such question is not to be raised as a justification for opposing the issuance of the writ of possession, since, under the Act, the proceeding for this is ex parte (De Gracia v. San Jose, et al., 94 Phil. 623, p. 12, Rollo). Respondent Court of Appeals also enjoined the Court a quo from implementing the writ of possession issued on May 27, 1975, ultimately depriving petitioner GSIS of its property rights for over a decade, and effectively barring its right to dispose of and/or sell subject property in order to generate much needed funds. Section 2 of PD 385 makes it mandatory for the Court to place a government financial institution in possession of the property. The injunction against the petitioner from taking possession of the property rendered nugatory the provisions of the decree: SECTION 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof, whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages has been paid after the filing of foreclosure proceedings. x x x. (See T. Lamagan vs. Hon. R. de la Cruz and C. O. Follosco, supra; and S. E. Bimeda vs. A. Perez and Hon. J. T. Surtida, supra) likewise specially noting the provisions of the 13th Whereas Clause, which state: WHEREAS, it has been shown by the experience of government financial institutions that in instances where extrajudicial foreclosure on large loans is successfully pursued, the assets, aside from land, that form part of the foreclosed collaterals, including buildings, machinery, equipment, materials, furniture and fixtures, are usually pilfered or lost rendering it necessary that the foreclosing government creditor have a writ of possession issued in its favor without delay after the foreclosure auction sale. (Emphasis ours) As regards the validity of the foreclosure sale, this matter has been resolved in the decision of the Court of Appeals in CA-G.R. No. Civil Case No. 08858, (promulgated March 15, 1988) (P. 695, Rollo) which affirmed the decision of the lower court dismissing the action for annulment of foreclosure, separately filed by Knecht: There was no fraudulent inducement committed by the GSIS on the appellant and the foreclosure sale was valid. Contrary to appellant's narrow view, Manuel Dulay himself, in Annex Q of the basic complaint, requested for the deferment of the payment of the principal and the interests of his loan and this alone is indicative that Dulay was then in arrears. To demonstrate the infirmity of the sale with assumption of mortgage, it is at once flagrant and obvious from the records that Rene Knecht and Dulay Enterprises entered into the assumption of mortgage in derogation of the original mortgage contract between GSIS and

Dulay Enterprises to the effect that any disposition, transfer or encumbrance of the properties must be made with the prior written consent of the mortgagee (Annex F, Complaint, p. 116, Record). Now, had not the appellant and conformity of the mortgagee GSIS, the course of events and proceedings would have necessarily taken an entirely different path. Foreclosure was clearly in order and the GSIS had a perfect right to protect its investment it appearing that the first loan granted to the Dulay spouses was granted in 1968 yet and the auction sale was conducted more than six (6) years thereafter, or on November 5, 1974. The presumption of regularity of the foreclosure proceedings and subsequent proceedings as well as the consolidation of ownership by the GSIS over the property has not been overturned by appellant. x x x (pp. 9-10). ACCORDINGLY, the petition is hereby granted, and the assailed decision of the respondent Court of Appeals, dated October 13, 1975, as well as its Resolution, dated December 8, 1975 are hereby reversed and set aside. Further, private respondent Rene Knecht is directed: 1.) to immediately turn over to the petitioner GSIS the possession of the property covered by TCT No. 19836 (formerly TCT No. 17638). The Armed Forces of the Philippines is hereby directed to place petitioner in possession and control of the properties, without any further delay, pursuant to Sec. 4 of PD No. 385, 2.) to render an accounting of all the revenues derived from the operations thereof, from November 5, 1974, the date when petitioner extrajudicial foreclosure sale and 3.) to deliver to petitioner all revenues on hand as of turn-over of premises to GSIS. This decision is immediately executory. SO ORDERED.
SAJONAS VS. CA G.R. No. 102377 July 5, 1996 FACTS: The Sajonas couple are before us, on a Petition for Review on Certiorari, praying inter alia to set aside the CAs decision, and to reinstate that of the RTC On September 22, 1983, spouses Uychocde agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Sajonas on installment basis as evidenced by a Contract to Sell dated September 22, 1983. The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017. Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute sale was registered almost a year after, or onAugust 28, 1985.

Meanwhile, it appears that Pilares (defendant-appellant) filed a Civil Case for collection of sum of money against Ernesto Uychocde. On June 1980, a Compromise Agreement was entered into by the parties in the said case under which Uychocde acknowledged his monetary obligation to Pilares amounting to P27,800 and agreed to pay the same in two years. When Uychocde failed to comply with his undertaking in the compromise agreement,Pilares moved for the issuance of a writ of execution to enforce the decision based on the compromise agreement, which the court granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City. Pursuant to the order of execution a notice of levy on execution was issued on February 12, 1985. On the same date, defendant sheriff Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was annotated at the back of the TCT of the subject land. When the deed of absolute sale dated September 4, 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was issued in the name of the Sajonas couple. The notice of levy on execution annotated by defendant sheriff was carried over to the new title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon City, hence the auction sale of the subject property did not push through as scheduled. On January 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon Pilares, through a letter to their lawyer. Despite said demand, defendant-appellant Pilares refused to cause the cancellation of said annotation. In view thereof, plaintiffs-appellees filed a complaint in the RTC of Rizal, against Pilares, the judgment creditor of the Uychocdes. The trial court rendered its decision in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from TCT No. N-109417. The court a quo stated, thus: It is a well settled rule in this jurisdiction that actual notice of an adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not have any legal effect in any respect on account of prior inscription of the adverse claim annotated on the title of the Uychocdes. On the issue of whether or not plaintiffs (Sajonas) are buyers in good faith of the property of the spouses Uychocde even notwithstanding the claim of the defendant that said sale executed by the spouses was made in fraud of creditors, the Court finds that the evidence in this instance is bare of any indication that said plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the same is involved in a litigation between said spouses and the defendant. Good faith is the opposite of fraud and bad faith, and the existence of any bad faith must be established by competent proof. Dissatisfied, Pilares appealed to the CA assigning errors on the part of the lower court. The appellate court reversed the lower courts decision, and upheld the annotation of the levy on execution on the certificate of title. The respondent appellate court upheld private respondents theory when it ruled: The above staled conclusion of the lower court is based on the premise that the adverse claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the date of registration. However, under the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective only for a period of 30 days from the date of its registration. Hence this petition. ISSUE: 1. THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSISTENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.

HELD: ACCORDINGLY, the assailed decision of the respondent CA dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the RTC finding for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-109417 is hereby REINSTATED. The inscription of the notice of levy on execution on TCT No. N-109417 is hereby CANCELLED. The question may be posed, was the adverse claim inscribed in the TCT still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated ? (Pilares argues that the adverse claim ceases to have any legal force and effect (30) days after August 27, 1984 pursuant to Section 70 of P.D. 1529) In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated. In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides: The adverse claim shall be effective for a period of thirty days from the date of registration. At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads: After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest. If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim. In sum, the disputed inscription of an adverse claim on the TCT No. N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on execution thereto. Consequently, he is charged with knowledge that the property sought to be levied upon the execution was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners NOTES: 1. Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof. Such notice is

registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together with other dates pertinent thereto. 2. Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien 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 certificate of title, but nevertheless he is bound by the liens and encumbrances annotated thereon. One who buys without checking the vendors title takes all the risks and losses consequent to such failure 3. A subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale. 4. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect 1. As to whether or not the petitioners are buyers in good faith of the subject property, the same should be made to rest on the findings of the trial court. As pointedly observed by the appellate court, there is no question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor . This was clearly elicited from the testimony of Conchita Sajonas, wife of plaintiff, during cross-examination A purchaser in good faith and for value is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property. Good faith consists in an honest intention to abstain from taking an unconscientious advantage of another, Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uychocdes in favor of the private respondent, nor of any claim by the latter over the Uychocdes properties or that the same was involved in any litigation between said spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same. Sans such proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not be disturbed. 6. At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens an encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been reserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory.

Land Titles: Sajonas vs. Court of Appeals; July 5, 1996 Facts:

The case is for cancellation of the inscription of a Notice of Levy on Execution from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses Uychocde, and was later carried over to and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of the spouses Sajonas, who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case. The subject property was bought by Sajonas spouses on September 1983 and caused the annotation of their adverse claim on August 1984. The Deed of Sale was executed upon the full payment of the purchase price and the same was registered only on August 1985. Meanwhile, without the petitioners' knowledge, there has been a compromise agreement between the spouses Uychocde and Pilares (Uychocde's judgment creditor), and a notice of levy on execution was issued on February 12, 1985. On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was annotated at the back of TCT No. 79073 as Entry No. 123283. Issue: Which should be preferred between the notice of levy on execution and the deed of absolute sale. The Deed of Absolute Sale was executed on September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution was annotated six (6) months prior to the registration of the sale on February 12, 1985. Decision: The annotation of the adverse claim is equivalent to notice to third persons of the interest of the claimant. The provision of the law (PD 1529) that the adverse claim is only valid for 30 days cannot be upheld. Clearly, the intention of the law is otherwise as may be gleaned on the following discussion: Sec. 70 Adverse Claim- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place at which all notices may be served upon him. This statement shall

be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony. To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the registered owner thereof. Petition was granted. The inscription of the notice of levy on execution on TCT No. N109417 is ordered CANCELLED.
G.R. No. L-26699 March 16, 1976 BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO ALCURIZA, ARTURO ALCURIZA, OSCAR ALCURIZA and ANITA ALCURIZA, the latter two being minors are represented by guardian ad litem, ARTURO ALCURIZA, plaintiffs-appellants, vs.

JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the Intestate of JUAN S. SALAO; now MERCEDES P. VDA. DE SALAO, ROBERTO P. SALAO, MARIA SALAO VDA. DE SANTOS, LUCIANA P. SALAO, ISABEL SALAO DE SANTOS, and PABLO P. SALAO, as successors-in-interest of the late JUAN S. SALAO, together with PABLO P. SALAO, Administrator, defendants-appellants. Eusebio V. Navarro for plaintiffs-appellants. Nicolas Belmonte & Benjamin T. de Peralta for defendants-appellants.

AQUINO, J.:
This litigation regarding a forty-seven-hectare fishpond located at Sitio Calunuran, Hermosa, Bataan involves the law of trusts and prescription. The facts are as follows: The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot four children named Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel Salao died in 1885. His eldest son, Patricio, died in 1886 survived by his only child. Valentin Salao. There is no documentary evidence as to what, properties formed part of Manuel Salao's estate, if any. His widow died on May 28, 1914. After her death, her estate was administered by her daughter Ambrosia. It was partitioned extrajudicially in a deed dated December 29, 1918 but notarized on May 22, 1919 (Exh. 21). The deed was signed by her four legal heirs, namely, her three children, Alejandra, Juan and Ambrosia, and her grandson, Valentin Salao, in representation of his deceased father, Patricio. The lands left by Valentina Ignacio, all located at Barrio Dampalit were as follows: Nature of Land

(1) One-half interest in a fishpond which she had inherited from her parents, Feliciano Ignacio and Damiana Mendoza, and the other half of which was owned by her co-owner, Josefa Sta. Ana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700 (2) Fishpond inherited from her parents . . . . . . . . . . . . 7,418 (3) Fishpond inherited from her parents . . . . . . . . . . . . . 6,989 (4) Fishpond with a bodega for salt . . . . . . . . . . . . . . . . 50,469 (5) Fishpond with an area of one hectare, 12 ares and 5 centares purchased from Bernabe and Honorata Ignacio by Valentina Ignacio on November 9, 1895 with a bodega for salt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,205 (6) Fishpond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 (7) One-half interest in a fishpond with a total area of 10,424 square meters, the other half was owned by A. Aguinaldo . . . . . . . . . . . . . . . . . . . . . . . 5,217 (8) Riceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,454 (9) Riceland purchased by Valentina Ignacio from Eduardo Salao on January 27, 1890 with a house and two camarins thereon . . . . . . . . . . . . . . . . . . 8,065 (10) Riceland in the name of Ambrosia Salao, with an area of 11,678 square meters, of which 2,173 square meters were sold to Justa Yongco . . . . . . . . . .9,505 TOTAL . . . . . . . . . . . . .. 179,022 square

To each of the legal heirs of Valentina Ignacio was adjudicated a distributive share valued at P8,135.25. In satisfaction of his distributive share, Valentin Salao (who was then already forty-eight years old) was given the biggest fishpond with an area of 50,469 square meters, a smaller fishpond with an area of 6,989 square meters and the riceland with a net area of 9,905 square meters. Those parcels of land had an aggregate appraised value of P13,501 which exceeded Valentin's distributive share. So in the deed of partition he was directed to pay to his co-heirs the sum of P5,365.75. That arrangement, which was obviously intended to avoid the fragmentation of the lands, was beneficial to Valentin. In that deed of partition (Exh. 21) it was noted that "desde la muerte de Valentina Ignacio y Mendoza, ha venido administrando sus bienes la referida Ambrosia Salao" "cuya administracion lo

ha sido a satisfaccion de todos los herederos y por designacion los mismos". It was expressly stipulated that Ambrosia Salao was not obligated to render any accounting of her administration "en consideracion al resultado satisfactorio de sus gestiones, mejoradas los bienes y pagodas por ella las contribusiones (pages 2 and 11, Exh. 21). By virtue of the partition the heirs became "dueos absolutos de sus respectivas propiedadas, y podran inmediatamente tomar posesion de sus bienes, en la forma como se han distribuido y llevado a cabo las adjudicaciones" (page 20, Exh. 21). The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio her two children, Juan Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, OCT No. 185 of the Registry of Deeds of Pampanga, in their names for a forty-seven-hectare fishpond located at Sitio Calunuran, Lubao, Pampanga (Exh. 14). It is also known as Lot No. 540 of the Hermosa cadastre because that part of Lubao later became a part of Bataan. The Calunuran fishpond is the bone of contention in this case. Plaintiffs' theory is that Juan Y. Salao, Sr. and his sister Ambrosia had engaged in the fishpond business. Where they obtained the capital is not shown in any documentary evidence. Plaintiffs' version is that Valentin Salao and Alejandra Salao were included in that joint venture, that the funds used were the earnings of the properties supposedly inherited from Manuel Salao, and that those earnings were used in the acquisition of the Calunuran fishpond. There is no documentary evidence to support that theory. On the other hand, the defendants contend that the Calunuran fishpond consisted of lands purchased by Juan Y. Salao, Sr. and Ambrosia Salao in 1905, 1906, 1907 and 1908 as, shown in their Exhibits 8, 9, 10 and 13. But this point is disputed by the plaintiffs. However, there can be no controversy as to the fact that after Juan Y. Salao, Sr. and Ambrosia Salao secured a Torrens title for the Calunuran fishpond in 1911 they exercised dominical rights over it to the exclusion of their nephew, Valentin Salao. Thus, on December 1, 1911 Ambrosia Salao sold under pacto de retro for P800 the Calunuran fishpond to Vicente Villongco. The period of redemption was one year. In the deed of sale (Exh19) Ambrosia confirmed that she and her brother Juan were the dueos proindivisos of the said pesqueria. On December 7, 1911 Villongco, the vendee a retro, conveyed the same fishpond to Ambrosia by way of lease for an anual canon of P128 (Exh. 19-a). After the fishpond was redeemed from Villongco or on June 8, 1914 Ambrosia and Juan sold it under pacto de retro to Eligio Naval for the sum of P3,360. The period of redemption was also one year (Exh. 20). The fishpond was later redeemed and Naval reconveyed it to the vendors a retro in a document dated October 5, 1916 (Exh. 20-a). The 1930 survey shown in the computation sheets of the Bureau of Lands reveals that the Calunuran fishpond has an area of 479,205 square meters and that it was claimed by Juan Salao and Ambrosia Salao, while the Pinanganacan fishpond (subsequently acquired by Juan and Ambrosia) has an area of 975,952 square meters (Exh. 22). Likewise, there is no controversy as to the fact that on May 27, 1911 Ambrosia Salao bought for four thousand pesos from the heirs of Engracio Santiago a parcel of swampland planted to bacawan and nipa with an area of 96 hectares, 57 ares and 73 centares located at Sitio Lewa, Barrio Pinanganacan, Lubao, Pampanga (Exh. 17-d).

The record of Civil Case No. 136, General Land Registration Office Record No. 12144, Court of First Instance of Pampanga shows that Ambrosia Salao and Juan Salao filed an application for the registration of that land in their names on January 15, 1916. They alleged in their petition that "han adquirido dicho terreno por partes iguales y por la compra a los herederos del finado, Don Engracio Santiago" (Exh. 17-a). At the hearing on October 26, 1916 before Judge Percy M. Moir, Ambrosia testified for the applicants. On that same day Judge Moir rendered a decision, stating, inter alia, that the heirs of Engracio Santiago had sold the land to Ambrosia Salao and Juan Salao. Judge Moir "ordena la adjudicacion y registro del terreno solicitado a nombre de Juan Salao, mayor de edad y de estado casado y de su esposa Diega Santiago y Ambrosia Salao, de estado soltera y mayor de edad, en participaciones iguales" (Exh. 17-e). On November 28, 1916 Judge Moir ordered the issuance of a decree for the said land. The decree was issued on February 21, 1917. On March 12, 1917 Original Certificate of Title No. 472 of the Registry of Deeds of Pampanga was issued in the names of Juan Salao and Ambrosia Salao. That Pinanganacan or Lewa fishpond later became Cadastral Lot No. 544 of the Hermosa cadastre (Exh. 23). It adjoins the Calunuran fishpond (See sketch, Exh. 1). Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years (Exh. C). His nephew, Valentin Salao, died on February 9, 1933 at the age of sixty years according to the death certificate (Exh. A. However, if according to Exhibit 21, he was forty-eight years old in 1918, he would be sixtythree years old in 1933). The intestate estate of Valentin Salao was partitioned extrajudicially on December 28, 1934 between his two daughters, Benita Salao-Marcelo and Victorina Salao-Alcuriza (Exh. 32). His estate consisted of the two fishponds which he had inherited in 1918 from his grandmother, Valentina Ignacio. If it were true that he had a one-third interest in the Calunuran and Lewa fishponds with a total area of 145 hectares registered in 1911 and 1917 in the names of his aunt and uncle, Ambrosia Salao and Juan Y. Salao, Sr., respectively, it is strange that no mention of such interest was made in the extrajudicial partition of his estate in 1934. It is relevant to mention that on April 8, 1940 Ambrosia Salao donated to her grandniece, plaintiff Benita Salao, three lots located at Barrio Dampalit with a total area of 5,832 square meters (Exit. L). As donee Benita Salao signed the deed of donation. On that occasion she could have asked Ambrosia Salao to deliver to her and to the children of her sister, Victorina, the Calunuran fishpond if it were true that it was held in trust by Ambrosia as the share of Benita's father in the alleged joint venture. But she did not make any such demand. It was only after Ambrosia Salao's death that she thought of filing an action for the reconveyance of the Calunuran fishpond which was allegedly held in trust and which had become the sole property of Juan Salao y Santiago (Juani). On September 30, 1944 or during the Japanese occupation and about a year before Ambrosia Salao's death on September 14, 1945 due to senility (she was allegedly eighty-five years old when she died), she donated her one-half proindiviso share in the two fishponds in question to her nephew, Juan S. Salao, Jr. (Juani) At that time she was living with Juani's family. He was already the owner of the the other half of the said fishponds, having inherited it from his father, Juan Y. Salao,

Sr. (Banli) The deed of denotion included other pieces of real property owned by Ambrosia. She reserved for herself the usufruct over the said properties during her lifetime (Exh. 2 or M). The said deed of donation was registered only on April 5, 1950 (page 39, Defendants' Record on Appeal). The lawyer of Benita Salao and the Children of Victorina Salao in a letter dated January 26, 1951 informed Juan S. Salao, Jr. that his clients had a one-third share in the two fishponds and that when Juani took possession thereof in 1945, he refused to give Benita and Victorina's children their onethird share of the net fruits which allegedly amounted to P200,000 (Exh. K). Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated that Valentin Salao did not have any interest in the two fishponds and that the sole owners thereof his father Banli and his aunt Ambrosia, as shown in the Torrens titles issued in 1911 and 1917, and that he Juani was the donee of Ambrosia's one-half share (Exh. K-1). Benita Salao and her nephews and niece filed their original complaint against Juan S. Salao, Jr. on January 9, 1952 in the Court of First Instance of Bataan (Exh. 36). They amended their complaint on January 28, 1955. They asked for the annulment of the donation to Juan S. Salao, Jr. and for the reconveyance to them of the Calunuran fishpond as Valentin Salao's supposed one-third share in the 145 hectares of fishpond registered in the names of Juan Y. Salao, Sr. and Ambrosia Salao. Juan S. Salao, Jr. in his answer pleaded as a defense the indefeasibility of the Torrens title secured by his father and aunt. He also invoked the Statute of Frauds, prescription and laches. As counterclaims, he asked for moral damages amounting to P200,000, attorney's fees and litigation expenses of not less than P22,000 and reimbursement of the premiums which he has been paying on his bond for the lifting of the receivership Juan S. Salao, Jr. died in 1958 at the age of seventy-one. He was substituted by his widow, Mercedes Pascual and his six children and by the administrator of his estate. In the intestate proceedings for the settlement of his estate the two fishponds in question were adjudicated to his seven legal heirs in equal shares with the condition that the properties would remain under administration during the pendency of this case (page 181, Defendants' Record on Appeal). After trial the trial court in its decision consisting of one hundred ten printed pages dismissed the amended complaint and the counter-claim. In sixty-seven printed pages it made a laborious recital of the testimonies of plaintiffs' fourteen witnesses, Gregorio Marcelo, Norberto Crisostomo, Leonardo Mangali Fidel de la Cruz, Dionisio Manalili, Ambrosio Manalili, Policarpio Sapno, Elias Manies Basilio Atienza, Benita Salao, Emilio Cagui Damaso de la Pea, Arturo Alcuriza and Francisco Buensuceso, and the testimonies of defendants' six witnesses, Marcos Galicia, Juan Galicia, Tiburcio Lingad, Doctor Wenceslao Pascual, Ciriaco Ramirez and Pablo P. Salao. (Plaintiffs presented Regino Nicodemus as a fifteenth witness, a rebuttal witness). The trial court found that there was no community of property among Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao when the Calunuran and Pinanganacan (Lewa) lands were acquired; that a co-ownership over the real properties of Valentina Ignacio existed among her heirr after her death in 1914; that the co-ownership was administered by Ambrosia Salao and that it subsisted up to 1918 when her estate was partitioned among her three children and her grandson, Valentin Salao. The trial court surmised that the co-ownership which existed from 1914 to 1918 misled the plaintiffs and their witnesses and caused them to believe erroneously that there was a co-ownership in 1905

or thereabouts. The trial court speculated that if valentin had a hand in the conversion into fishponds of the Calunuran and Lewa lands, he must have done so on a salary or profit- sharing basis. It conjectured that Valentin's children and grandchildren were given by Ambrosia Salao a portion of the earnings of the fishponds as a reward for his services or because of Ambrosia's affection for her grandnieces. The trial court rationalized that Valentin's omission during his lifetime to assail the Torrens titles of Juan and Ambrosia signified that "he was not a co-owner" of the fishponds. It did not give credence to the testimonies of plaintiffs' witnesses because their memories could not be trusted and because no strong documentary evidence supported the declarations. Moreover, the parties involved in the alleged trust were already dead. It also held that the donation was validly executed and that even if it were void Juan S. Salao, Jr., the donee, would nevertheless be the sole legal heir of the donor, Ambrosia Salao, and would inherit the properties donated to him. Both parties appealed. The plaintiffs appealed because their action for reconveyance was dismissed. The defendants appealed because their counterclaim for damages was dismissed. The appeals, which deal with factual and legal issues, were made to the Court of Appeals. However, as the amounts involved exceed two hundred thousand pesos, the Court of Appeals elevated the case to this Court in its resolution of Octoter 3, 1966 (CA-G.R. No. 30014-R). Plaintiffs' appeal. An appellant's brief should contain "a subject index index of the matter in the brief with a digest of the argument and page references" to the contents of the brief (Sec. 16 [a], Rule 46, 1964 Rules of Court; Sec. 17, Rule 48, 1940 Rules of Court). The plaintiffs in their appellants' brief consisting of 302 pages did not comply with that requirement. Their statements of the case and the facts do not contain "page references to the record" as required in section 16[c] and [d] of Rule 46, formerly section 17, Rule 48 of the 1940 Rules of Court. Lawyers for appellants, when they prepare their briefs, would do well to read and re-read section 16 of Rule 46. If they comply strictly with the formal requirements prescribed in section 16, they might make a competent and luminous presentation of their clients' case and lighten the burden of the Court. What Justice Fisher said in 1918 is still true now: "The pressure of work upon this Court is so great that we cannot, in justice to other litigants, undertake to make an examination of the voluminous transcript of the testimony (1,553 pages in this case, twenty-one witnesses having testified), unless the attorneys who desire us to make such examination have themselves taken the trouble to read the record and brief it in accordance with our rules" (Palara vs. Baguisi 38 Phil. 177, 181). As noted in an old case, this Court decides hundreds of cases every year and in addition resolves in minute orders an exceptionally considerable number of petitions, motions and interlocutory matters (Alzua and Arnalot vs. Johnson, 21 Phil. 308, 395; See In re Almacen, L-27654, February 18, 1970, 31 SCRA 562, 573). Plaintiffs' first assignment of error raised a procedural issue. In paragraphs 1 to 14 of their first cause of action they made certain averments to establish their theory that Valentin Salao had a one-third interest in the two fishponds which were registrered in the names of Juan Y. Salao, Sr. (Banli) and Ambrosia Salao.

Juan S. Salao, Jr. (Juani) in his answer "specifically" denied each and all the allegations" in paragraphs I to 10 and 12 of the first cause of action with the qualification that Original certificates of Title Nos. 185 and 472 were issued "more than 37 years ago" in the names of Juan (Banli) and Ambrosia under the circumstances set forth in Juan S. Salao, Jr.'s "positive defenses" and "not under the circumstances stated in the in the amended complaint". The plaintiffs contend that the answer of Juan S. Salao, Jr. was in effect tin admission of the allegations in their first cause of action that there was a co-ownership among Ambrosia, Juan, AIejandra and Valentin, all surnamed Salao, regarding the Dampalit property as early as 1904 or 1905; that the common funds were invested the acquisition of the two fishponds; that the 47-hectare Calunuran fishpond was verbally adjudicated to Valentin Salao in the l919 partition and that there was a verbal stipulation to to register "said lands in the name only of Juan Y. Salao". That contention is unfounded. Under section 6, Rule 9 of the 1940 of Rules of Court the answer should "contain either a specific dinial a statement of matters in accordance of the cause or causes of action asserted in the complaint". Section 7 of the same rule requires the defendant to "deal specificaly with each material allegation of fact the truth of wihich he does not admit and, whenever practicable shall set forth the substance of the matters which he will rely upon to support his denial". "Material averments in the complaint, other than those as to the amount damage, shall be deemed admitted when specifically denied" (Sec. 8). "The defendant may set forth set forth by answer as many affirmative defenses as he may have. All grounds of defenses as would raise issues of fact not arising upon the preceding pleading must be specifically pleaded" (Sec. 9). What defendant Juan S. Salao, Jr. did in his answer was to set forth in his "positive defenses" the matters in avoidance of plaintiffs' first cause of action which which supported his denials of paragraphs 4 to 10 and 12 of the first cause of action. Obviously, he did so because he found it impracticable to state pierceneal his own version as to the acquisition of the two fishponds or to make a tedious and repetitious recital of the ultimate facts contradicting allegations of the first cause of action. We hold that in doing so he substantially complied with Rule 9 of the 1940 Rules of Court. It may be noted that under the present Rules of Court a "negative defense is the specific denial of t the material fact or facts alleged in the complaint essential to plaintiff's cause of causes of action". On the other hand, "an affirmative defense is an allegation of new matter which, while admitting the material allegations of the complaint, expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff." Affirmative defenses include all matters set up "by of confession and avoidance". (Sec. 5, Rule 6, Rules of Court). The case of El Hogar Filipino vs. Santos Investments, 74 Phil. 79 and similar cases are distinguishable from the instant case. In the El Hogar case the defendant filed a laconic answer containing the statement that it denied "generally ans specifically each and every allegation contained in each and every paragraph of the complaint". It did not set forth in its answer any matters by way of confession and avoidance. It did not interpose any matters by way of confession and avoidance. It did not interpose any affirmative defenses. Under those circumstances, it was held that defendant's specific denial was really a general denial which was tantamount to an admission of the allegations of the complaint and which justified judgment on the pleadings. That is not the situation in this case. The other nine assignments of error of the plaintiffs may be reduced to the decisive issue of whether the Calunuran fishpond was held in trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia

Salao. That issue is tied up with the question of whether plaintiffs' action for reconveyance had already prescribed. The plaintiffs contend that their action is "to enforce a trust which defendant" Juan S. Salao, Jr. allegedly violated. The existence of a trust was not definitely alleged in plaintiffs' complaint. They mentioned trust for the first time on page 2 of their appelants' brief. To determine if the plaintiffs have a cause of action for the enforcement of a trust, it is necessary to maek some exegesis on the nature of trusts (fideicomosis). Trusts in Anglo-American jurisprudence were derived from thefideicommissa of the Roman law (Government of the Philippine Islands vs. Abadilla, 46 Phil. 642, 646). "In its technical legal sense, a trust is defined as the right, enforceable solely in equity, to the beneficial enjoyment of property, the legal title to which is vested in another, but the word 'trust' is frequently employed to indicate duties, relations, and responsibilities which are not strictly technical trusts" (89 C.J.S. 712). A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary" (Art. 1440, Civil Code). There is a fiduciary relation between the trustee and thecestui que trust as regards certain property, real, personal, money or choses in action (Pacheco vs. Arro, 85 Phil. 505). "Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties. Implied trusts come into being by operation of law" (Art. 1441, Civil Code). "No express trusts concerning an immovable or any interest therein may be proven by parol evidence. An implied trust may be proven by oral evidence" (Ibid, Arts. 1443 and 1457). "No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended" (Ibid, Art. 1444; Tuason de Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L19012, October 30, 1967, 21 SCRA 543, 546). "Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust" (89 C.J.S. 72). "Implied trusts are those which, without being expressed, are deducible from the nature of the transaction asmatters of intent, or which are superinduced on the transaction by operation of law as matter of equity,independently of the particular intention of the parties" (89 C.J.S. 724). They are ordinarily subdivided into resulting and constructive trusts (89 C.J.S. 722). "A resulting trust. is broadly defined as a trust which is raised or created by the act or construction of law, but in its more restricted sense it is a trust raised by implication of law and presumed to have been contemplated by the parties, the intention as to which is to be found in the nature of their transaction, but not expressed in the deed or instrument of conveyance (89 C.J.S. 725). Examples of resulting trusts are found in articles 1448 to 1455 of the Civil Code. (See Padilla vs. Court of Appeals, L-31569, September 28, 1973, 53 SCRA 168, 179; Martinez vs. Grao 42 Phil. 35). On the other hand, a constructive trust is -a trust "raised by construction of law, or arising by operation of law". In a more restricted sense and as contra-distinguished from a resulting trust, a constructive trust is "a trust not created by any words, either expressly or impliedly evincing a direct intension to create a trust, but by the construction of equity in order to satisfy the demands of justice." It does not arise "by agreement or intention, but by operation of law." (89 C.J.S. 726-727).

Thus, "if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes" (Art. 1456, Civil Code). Or "if a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party". Such a constructive trust is not a trust in the technical sense. (Gayondato vs. Treasurer of the P. I., 49 Phil. 244). Not a scintilla of documentary evidence was presented by the plaintiffs to prove that there was an express trust over the Calunuran fishpond in favor of Valentin Salao. Purely parol evidence was offered by them to prove the alleged trust. Their claim that in the oral partition in 1919 of the two fishponds the Calunuran fishpond was assigned to Valentin Salao is legally untenable. It is legally indefensible because the terms of article 1443 of the Civil Code (already in force when the action herein was instituted) are peremptory and unmistakable: parol evidence cannot be used to prove an express trust concerning realty. Is plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or constructive, regarding the two fishponds? Plaintiffs' pleadings and evidence cannot be relied upon to prove an implied trust. The trial court's firm conclusion that there was no community of property during the lifetime of Valentina; Ignacio or before 1914 is substantiated by defendants' documentary evidence. The existence of the alleged coownership over the lands supposedly inherited from Manuel Salao in 1885 is the basis of plaintiffs' contention that the Calunuran fishpond was held in trust for Valentin Salao. But that co-ownership was not proven by any competent evidence. It is quite improbable because the alleged estate of Manuel Salao was likewise not satisfactorily proven. The plaintiffs alleged in their original complaint that there was a co-ownership over two hectares of land left by Manuel Salao. In their amended complaint, they alleged that the co-ownership was over seven hectares of fishponds located in Barrio Dampalit, Malabon, Rizal. In their brief they alleged that the fishponds, ricelands and saltbeds owned in common in Barrio Dampalit had an area oftwenty-eight hectares, of which sixteen hectares pertained to Valentina Ignacio and eleven hectares represented Manuel Salao's estate. They theorized that the eleven hectares "were, and necessarily, the nucleus, nay the very root, of the property now in litigation (page 6, plaintiffs-appellants' brief). But the eleven hectares were not proven by any trustworthy evidence. Benita Salao's testimony that in 1918 or 1919 Juan, Ambrosia, Alejandra and Valentin partitioned twenty-eight hectares of lands located in Barrio Dampalit is not credible. As noted by the defendants, Manuel Salao was not even mentioned in plaintiffs' complaints. The 1919 partition of Valentina Ignacio's estate covered about seventeen hectares of fishponds and ricelands (Exh. 21). If at the time that partition was made there were eleven hectares of land in Barrio Dampalit belonging to Manuel Salao, who died in 1885, those eleven hectares would have been partitioned in writing as in the case of the seventeen hectares belonging to Valentina Ignacio's estate. It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to Valentin Salao mere by by word of mouth. Incredible because for the partition of the seventeen hectares of land left by Valentina Ignacio an elaborate "Escritura de Particion" consisting of twenty-two pages had to be executed by the four Salao heirs. Surely, for the partition of one hundred forty-five

hectares of fishponds among three of the same Salao heirs an oral adjudication would not have sufficed. The improbability of the alleged oral partition becomes more evident when it is borne in mind that the two fishponds were registered land and "the act of registration" is "the operative act" that conveys and affects the land (Sec. 50, Act No. 496). That means that any transaction affecting the registered land should be evidenced by a registerable deed. The fact that Valentin Salao and his successorsin-interest, the plaintiffs, never bothered for a period of nearly forty years to procure any documentary evidence to establish his supposed interest ox participation in the two fishponds is very suggestive of the absence of such interest. The matter may be viewed from another angle. As already stated, the deed of partition for Valentina Ignacio's estate wag notarized in 1919 (Exh. 21). The plaintiffs assert that the two fishponds were verbally partitioned also in 1919 and that the Calunuran fishpond was assigned to Valentin Salao as his share. Now in the partition of Valentina Ignacio's estate, Valentin was obligated to pay P3,355.25 to Ambrosia Salao. If, according to the plaintiffs, Ambrosia administered the two fishponds and was the custodian of its earnings, then it could have been easily stipulated in the deed partitioning Valentina Ignacio's estate that the amount due from Valentin would just be deducted by Ambrosia from his share of the earnings of the two fishponds. There was no such stipulation. Not a shred of documentary evidence shows Valentin's participation in the two fishponds. The plaintiffs utterly failed to measure up to the yardstick that a trust must be proven by clear, satisfactory and convincing evidence. It cannot rest on vague and uncertain evidence or on loose, equivocal or indefinite declarations (De Leon vs. Molo-Peckson, 116 Phil. 1267, 1273). Trust and trustee; establishment of trust by parol evidence; certainty of proof. Where a trust is to be established by oral proof, the testimony supporting it must be sufficiently strong to prove the right of the alleged beneficiary with as much certainty as if a document proving the trust were shown. A trust cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof. (Syllabus, Suarez vs. Tirambulo, 59 Phil. 303). Trusts; evidence needed to establish trust on parol testimony. In order to establish a trust in real property by parol evidence, the proof should be as fully convincing as if the act giving rise to the trust obligation were proven by an authentic document. Such a trust cannot be established upon testimony consisting in large part of insecure surmises based on ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110). The foregoing rulings are good under article 1457 of the Civil Code which, as already noted, allows an implied trust to be proven by oral evidence. Trustworthy oral evidence is required to prove an implied trust because, oral evidence can be easily fabricated. On the other hand, a Torrens title is generally a conclusive of the ownership of the land referred to therein (Sec. 47, Act 496). A strong presumption exists. that Torrens titles were regularly issued and that they are valid. In order to maintain an action for reconveyance, proof as to the fiduciary relation of the parties must be clear and convincing (Yumul vs. Rivera and Dizon, 64 Phil. 13, 17-18). The real purpose of the Torrens system is, to quiet title to land. "Once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the mirador

de su casa, to avoid the possibility of losing his land" (Legarda and Prieto vs. Saleeby, 31 Phil. 590, 593). There was no resulting trust in this case because there never was any intention on the part of Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There was no constructive trust because the registration of the two fishponds in the names of Juan and Ambrosia was not vitiated by fraud or mistake. This is not a case where to satisfy the demands of justice it is necessary to consider the Calunuran fishpond " being held in trust by the heirs of Juan Y. Salao, Sr. for the heirs of Valentin Salao. And even assuming that there was an implied trust, plaintiffs' action is clearly barred by prescription or laches (Ramos vs. Ramos, L-19872, December 3, 1974, 61 SCRA 284; Quiniano vs. Court of Appeals, L-23024, May 31, 1971, 39 SCRA 221; Varsity Hills, Inc. vs. Navarro, 9, February 29, 1972, 43 SCRA 503; Alzona vs. Capunitan and Reyes, 114 Phil. 377). Under Act No. 190, whose statute of limitation would apply if there were an implied trust in this case, the longest period of extinctive prescription was only ten year (Sec. 40; Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266). The Calunuran fishpond was registered in 1911. The written extrajudicial demand for its reconveyance was made by the plaintiffs in 1951. Their action was filed in 1952 or after the lapse of more than forty years from the date of registration. The plaintiffs and their predecessor-in-interest, Valentin Salao, slept on their rights if they had any rights at all. Vigilanti prospiciunt jura or the law protects him who is watchful of his rights (92 C.J.S. 1011, citing Esguerra vs. Tecson, 21 Phil. 518, 521). "Undue delay in the enforcement of a right is strongly persuasive of a lack of merit in the claim, since it is human nature for a person to assert his rights most strongly when they are threatened or invaded". "Laches or unreasonable delay on the part of a plaintiff in seeking to enforce a right is not only persuasive of a want of merit but may, according to the circumstances, be destructive of the right itself." (Buenaventura vs. David, 37 Phil. 435, 440-441). Having reached the conclusion that the plaintiffs are not entitled to the reconveyance of the Calunuran fishpond, it is no longer n to Pass upon the validity of the donation made by Ambrosia Salao to Juan S. Salao, Jr. of her one-half share in the two fishponds The plaintiffs have no right and personality to assil that donation. Even if the donation were declared void, the plaintiffs would not have any successional rights to Ambrosia's share. The sole legal heir of Ambrosia was her nephew, Juan, Jr., her nearest relative within the third degree. Valentin Salao, if living in 1945 when Ambrosia died, would have been also her legal heir, together with his first cousin, Juan, Jr. (Juani). Benita Salao, the daughter of Valentin, could not represent him in the succession to the estate of Ambrosia since in the collateral line, representation takes place only in favor of the children of brothers or sisters whether they be of the full or half blood is (Art 972, Civil Code). The nephew excludes a grandniece like Benita Salao or great-gandnephews like the plaintiffs Alcuriza (Pavia vs. Iturralde 5 Phil. 176). The trial court did not err in dismissing plaintiffs' complaint. Defendants' appeal. The defendants dispute the lower court's finding that the plaintiffs filed their action in good faith. The defendants contend that they are entitled to damages because the plaintiffs acted maliciously or in bad faith in suing them. They ask for P25,000 attorneys fees and litigation expenses and, in addition, moral damages.

We hold that defemdamts' appeal is not meritorious. The record shows that the plaintiffs presented fifteen witnesses during the protracted trial of this case which lasted from 1954 to 1959. They fought tenaciously. They obviously incurred considerable expenses in prosecuting their case. Although their causes of action turned out to be unfounded, yet the pertinacity and vigor with which they pressed their claim indicate their sincerity and good faith. There is the further consideration that the parties were descendants of common ancestors, the spouses Manuel Salao and Valentina Ignacio, and that plaintiffs' action was based on their honest supposition that the funds used in the acquisition of the lands in litigation were earnings of the properties allegedly inherited from Manuel Salao. Considering those circumstances, it cannot be concluded with certitude that plaintiffs' action was manifestly frivolous or was primarily intended to harass the defendants. An award for damages to the defendants does not appear to be just and proper. The worries and anxiety of a defendant in a litigation that was not maliciously instituted are not the moral damages contemplated in the law (Solis & Yarisantos vs. Salvador, L-17022, August 14, 1965, 14 SCRA 887; Ramos vs. Ramos, supra). The instant case is not among the cases mentioned in articles 2219 and 2220 of the Civil Code wherein moral damages may be recovered. Nor can it be regarded as analogous to any of the cases mentioned in those articles. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be charged on those who may exercise it erroneously. (Barreto vs. Arevalo, 99 Phil. 771. 779). The defendants invoke article 2208 (4) (11) of the Civil Code which provides that attorney's fees may be recovered "in case of a clearly unfounded civil action or proceeding against the plaintiff" (defendant is a plaintiff in his counterclaim) or "in any other case where the court deems it just and equitable" that attorney's fees should he awarded. But once it is conceded that the plaintiffs acted in good faith in filing their action there would be no basis for adjudging them liable to the defendants for attorney's fees and litigation expenses (See Rizal Surety & Insurance Co., Inc. vs. Court of Appeals, L-23729, May 16, 1967, 20 SCRA 61). It is not sound public policy to set a premium on the right to litigate. An adverse decision does not ipso facto justify the award of attorney's fees to the winning party (Herrera vs. Luy Kim Guan, 110 Phil. 1020, 1028; Heirs of Justiva vs. Gustilo, 61 O. G. 6959). The trial court's judgment is affirmed. No pronouncement as to costs. SO ORDERED.
Almirol v. Register of Deeds of Agusan G.R. No. L-22486 March 20, 1968

FACTS: On June 28, 1961 Teodoro Almirol purchased from Arcenio Abalo a parcel of land situated in the municipality of Esperanza, province of Agusan, and covered by original certificate of title P-1237 in the name of "Arcenio Abalo, married to Nicolasa M. Abalo." Sometime in May, 1962 Almirol went to the office

of the Register of Deeds of Agusan in Butuan City to register the deed of sale and to secure in his name a transfer certificate of title. Registration was refused by the Register of Deeds upon the following grounds: 1. That Original Certificate of Title No. P-1237 is registered in the name of Arcenio Abalo, married to Nicolasa M. Abalo, and by legal presumption, is considered conjugal property; 2. That in the sale of a conjugal property acquired after the effectivity of the New Civil Code it is necessary that both spouses sign the document; but 3. Since, as in this case, the wife has already died when the sale was made, the surviving husband cannot dispose of the whole property without violating the existing law. In view of such refusal, Almirol went to the Court of First Instance of Agusan on a petition for mandamus to compel the Register of Deeds to register the deed of sale and to issue to him the corresponding transfer certificate of title. In its resolution of October 16, 1963 the lower court, declaring that the Mandamus does not lie because the adequate remedy is that provided by Section 4 of Rep. Act 1151 dismissed the petition, with costs against the petitioner. Hence, this present appeal.

ISSUE: Whether or not the Register of Deeds was justified in refusing to register the transaction appealed to by the petitioner.

HELD: No. Although the reasons relied upon by the respondent show a sincere desire on his part to maintain inviolate the law on succession and transmission of rights over real properties, these do not constitute legal grounds for his refusal to register the deed. Whether a document is valid or not, is not for the register of deeds to determine; this function belongs properly to a court of competent jurisdiction. A register of deeds is entirely precluded by section 4 of Republic Act 1151 from exercising his personal judgment and discretion when confronted with the problem of whether to register a deed or instrument on the ground that it is invalid. For under the said section, when he is in doubt as to the proper step to be taken with respect to any deed or other instrument presented to him for registration all that he is supposed to do is to submit and certify the question to the Commissioner of Land Registration who shall, after notice and hearing, enter an order prescribing the step to be taken on the doubtful question.

G.R. No. 51457 June 27, 1994 LUCIA EMBRADO and ORESTE TORREGIANI, petitioners, vs. COURT OF APPEALS, PACIFICO CIMAFRANCA, MARCOS SALIMBAGAT, EDA JIMENEZ and SANTIAGO JIMENEZ, respondents. Alerio P. Acosta for petitioner. Roseller L. Barinaga & Venancio M. Carpio for respondents Santiago and Eda Jimenez. Pacifico Cimafranca for and in his own behalf.

BELLOSILLO, J.: LUCIA EMBRADO and ORESTE TORREGIANI, spouses, filed this petition for review on certiorari from the decision of respondent Court of Appeals 1 upholding the validity of the Deed of Sale over Lot No. 564 executed by petitioner Lucia Embrado in favor of private respondent Eda Jimenez. Lot No. 564 is a 366-square meter lot situated in Dipolog City originally owned by Juan, Pastor and Matias Carpitanos. On 2 July 1946, a Venta Definitiva, a notarized document written entirely in Spanish, was executed by the Carpitanos whereby they sold Lot No. 564 to "Srta. LUCIA C. EMBRADO . . . soltera, con residencia y direccion postal Municipio de Dipolog, Provincia de Zamboanga." 2 The document provided that even though the deed was prepared and signed on 2 July 1946, the effects of the document would retroact to the 15th day of April 1941, the date the lot and its improvements were actually sold to Lucia C. Embrado. The sale was registered and Transfer Certificate of Title No. T-99 3 was issued on 13 February 1948 in the name of Lucia Embrado alone, who was by then already married to petitioner Oreste Torregiani since 1943. However, by virtue of a court order in Misc. Sp. Proc. No. 2330 of the then Court of First Instance of Zamboanga del Norte, the word "single" appearing in TCT No. T-99 was canceled and replaced on 19 October 1970 by the phrase "married to Oreste Torregiani." The Torregianis then made their conjugal abode on the lot and in 1958 constructed a residential/commercial building thereon. 4 As appearing from a document entitled Absolute Deed of Sale dated 1 May 1971 5, Lucia Embrado Torregiani sold Lot No. 564, described as her "own paraphernal property," to her adopted daughter, herein private respondent Eda Jimenez, for the sum of P1,000.00. Transfer Certificate of Title No. T99 was canceled to give way to TCT No. T-17103 6 in the name of Eda Jimenez, married to Santiago Jimenez. On 6 March 1972, Eda Jimenez sold sixty-five (65) square meters of Lot 564 to Marcos Salimbagat for P6,500.00, and on 1 August 1972, conveyed 301 square meters of the same lot to Pacifico Cimafranca 8 for P30,000. Both sales were duly annotated on TCT No. T-17103. On 25 September 1972, the Torregianis instituted in the Court of First Instance, now Regional Trial Court, of Zamboanga del Norte an action for declaration of nullity of contract, annulment of sales, reconveyance and damages 9 against the spouses Santiago and Eda Jimenez, Marcos Salimbagat and Pacifico Cimafranca alleging that the sale of Lot 564 by Lucia Embrado to Eda Jimenez was void not only for lack of consideration but also because Oreste Torregiani did not consent to the sale, which consent was necessary because Lot 564 was conjugal property. In addition, the petitioners claim that Lucia was misled into signing the deed of sale marked as Exh. "D" on the belief that Lot 564 was merely intended as security for a loan that the Jimenez spouses were then negotiating with the First Insular Bank of Cebu. Since the Jimenez spouses did not acquire valid title to the land, the subsequent sales in favor of Salimbagat and Cimafranca were without legal effect. The Torregianis were sustained by the CFI of Zamboanga del Norte 10 which held that the sale of Lot 564 to Eda Jimenez and its subsequent transfers to Marcos Salimbagat and Pacifico Cimafranca, who were declared buyers in bad faith, were void and of no effect. More specifically, the judgment (a) declared Exhs. "D," "G" and "H" as well as TCT No. 17103 null and void and of no force and effect; (b) ordered defendants jointly and severally to pay plaintiffs the sum of P2,000.00 as actual damages and P1,500.00 for attorneys fees; (c) ordered the Register of Deeds of Dipolog City to

cancel TCT No. 17103 in the name of Eda Jimenez and issue another one in favor of plaintiff Lucia Embrado, married to Oreste Torregiani, and to cancel all the annotations thereon emanating from the void transfers in favor of Marcos Salimbagat and Pacifico Cimafranca; (d) ordered defendants Eda and Santiago Jimenez to return to defendant Pacifico Cimafranca the sum of P30,000.00 paid by him for the 301 square meters and the house in question, and to defendant Marcos Salimbagat the P6,500.00 paid by him for the 65 square meters occupied by Comendador Clinic with legal interest of six percent (6%) until fully paid; and, (e) ordered defendant Cimafranca to pay plaintiffs all the rents he has been collecting from the lessees of the first floor of the house with legal interest thereon from the time he started collecting them until fully paid, with costs against defendants. 11 The foregoing judgment was reversed by the Court of Appeals which held that since Lucia Embrado actually agreed with Juan, Pastor and Matias Carpitanos, the original owners, to the purchase of Lot 564 on 15 April 194112 when she was not yet married, then the lot was her paraphernal property since a sale is considered perfected the moment the parties agree on the object and cause of the contract. In addition, the respondent court declared Salimbagat and Cimafranca buyers in good faith since the contrary was not proved. Consequently, the complaint in the trial court was ordered dismissed by respondent Court of Appeals. Three (3) issues are herein involved: (a) whether Lot 564 was paraphernal property of Lucia Embrado or conjugal with her husband Oreste Torregiani; (b) whether the sale in favor of Eda Jimenez was valid; and, (c) whether vendees Marcos Salimbagat and Pacifico Cimafranca were buyers in good faith so that the sale to them was valid, hence, would bar reconveyance. We sustain petitioners. While we agree with respondent court that Lot 564 was originally the paraphernal property of Lucia, we cannot adopt its conclusion that because Lucia and the original owners agreed in 1941 for its purchase and sale, ownership was already acquired by Lucia at that moment. Under Art. 1496 of the Civil Code, "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," and under Art. 1498, "(w)hen 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." In the case at bar, the Venta Definitiva over Lot 564 in favor of Lucia Embrado was executed by the Carpitanoses on 2 July 1946 when her marriage to petitioner Oreste Torregiani was already subsisting. Although ownership was acquired during the marriage and hence presumed conjugal, the presumption of conjugality 13 was successfully overcome by the terms of the Venta Definitiva which contains a positive assertion of exclusive ownership, which was duly supported by the testimony of Matias Carpitanos, one of the original sellers of the lot. 14 However, a decisive fact appears which prevents us from ultimately affirming the validity of her sale of Lot 564 to private respondent Eda Jimenez. The trial court found as a fact the construction in 1958 of a residential/commercial building 15 on said lot a part of which was leased to third persons and another part serving as the Torregianis conjugal dwelling. Although no evidence was presented on the source of funds used in the construction to determine whether the same was conjugal or paraphernal, other than the testimony of Torregiani, 16 petitioners nevertheless enjoy in their favor the presumption that the funds used were conjugal. 17 The second paragraph of Art. 158 of the Civil Code provides that "[b]uildings constructed, at the expense of the partnership, during the marriage on land belonging to one of the spouses, also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the

same." Under this article, the land becomes conjugal upon the construction of the building without awaiting reimbursement before or at the liquidation of the partnership upon the concurrence of two conditions, to wit: (a) the construction of the building at the expense of the partnership; and, (b) the ownership of the land by one of the spouses. 18 The conditions have been fully met in the case at bench. Thus, even if Lot 564 was originally the paraphernal property of Lucia as evident from the "Venta Definitiva", the same became conjugal upon the construction of the residential/commercial building in 1958. Lucia claims that she was misled by her daughter and son-in-law into signing a deed of absolute sale in their favor thinking that she would be helping them obtain a loan from a bank if they could mortgage the property as security for their loan; that although she signed the deed of sale, she did not consent to the sale nor did she intend to convey or transfer her title to Eda Jimenez; and, that she never received the alleged amount of P1,000.00 as consideration for the sale of the property. While it is true that a notarized document is admissible in evidence without proof of its due execution and is conclusive as to the truthfulness of its contents, this rule is not absolute and may be rebutted by evidence to the contrary. 19 In this case, it was clearly shown that Eda and Santiago Jimenez had no sufficient means of livelihood and that they were totally dependent on their mother Lucia for the support of their family. This fact strengthens the claim of Lucia that the price of the property was fictitious and that Eda Jimenez could not have paid the price of the property as she was financially incapable to do so. In fact, Eda Jimenez did not prove as to how she obtained the money to pay for the property she supposedly bought from Lucia. When the source of the purchase price is "intriguing" and is not convincingly shown to have been given by the "buyer" to the "seller," the claim of the latter that she signed the deed of sale without her consent may be upheld. 20 Even assuming in gratia argumenti that Lucia signed the document knowing that it was a deed of sale of the property, the sale thereof by Lucia to Eda Jimenez without her husbands conformity should be considered void ab initio being contrary to law. 21 Since "(t)he wife cannot bind the conjugal partnership without the husbands consent, except in cases provided by law," 22 it follows that Lucia Embrado Torregiani could not, by herself, validly dispose of Lot 564 without her husbands consent. Consequently, Eda Jimenez likewise could not have acquired ownership over the land. The issuance of a certificate of title in favor of Eda Jimenez did not vest upon her ownership over the property. Neither did it validate the alleged purchase thereof which is null and void.Registration does not vest title. It is merely evidence of such title. Our land registration laws do not give the holder any better title than what he actually has. 23 Being null and void, the sale to Eda Jimenez and the transfer of the property she made to Salimbagat and Cimafranca produced no legal effects whatsoever. Quod nullum est, nullum producit effectum. There being no valid title to the land that Eda Jimenez acquired from Lucia, it follows that no title to the same land could be conveyed by the former to Salimbagat and Cimafranca. 24 It is worthy to note that Salimbagat and Cimafranca, as buyers of Eda Jimenez, have not proved their status as purchasers in good faith and for value of the land which, in the first place, Eda Jimenez had no right to sell. The burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that status. In discharging the burden, it is not enough to invoke the ordinary presumption of good faith, i.e., that everyone is presumed to act in good faith. The good faith that is here essential is integral with the very status which must be proved. 25 We agree with the trial court when it found that Salimbagat and Cimafranca purchased the disputed lot from Eda and Santiago Jimenez with knowledge of facts and circumstances which should have put them upon such inquiry and investigation as might be necessary to acquaint them with the defects in the title of their vendor. A purchaser cannot close his eyes to facts which should put a

reasonable man on 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 the vendors title will not make him an innocent purchaser for value if afterwards it develops that the title is 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 the measure of precaution which may reasonably be required of a prudent man in like situation. 26 Cimafranca is a close relative of Santiago Jimenez and at the same time godfather to one of his children. As such, there can be no doubt that Cimafranca was aware of the personal circumstances and financial standing of the Jimenez spouses, including their financial ability to acquire any property. It would be impossible for Cimafranca not to know that Santiago Jimenez was only twentytwo years old, a working student earning six pesos per day 27 with a wife and three children to support. 28 With these facts, there is every reason for him to inquire further as to how Eda Jimenez came up with the sum of P1,000.00 to buy the property. When there is a clear showing that Eda Jimenez, being the transferee of a registered property, is not gainfully employed or did not have an independent source of income or is financially incapable of paying the price of the property she bought, this is sufficient to engender doubt as to whether Eda validly bought the property from Lucia. 29 On the part of Salimbagat, he has been a resident of Dipolog for about thirty (30) years. He has a daughter renting a portion of the building with her husband for more than a year prior to the sale by Eda Jimenez to Salimbagat on 6 March 1972. 30 This means that the lease of the building by Salimbagats daughter already commenced while Lucia Torregiani was still the registered owner and this was prior to the alleged sale by Lucia Torregiani of the property to Eda Jimenez on 1 May 1971. There can be no doubt that Salimbagats daughter was aware of the factual background of the property and the personal circumstances of the owners thereof especially that they are all occupying the same building. During the time that Salimbagat was already interested in buying the property, it would have been usual and part of ordinary human nature for him to inquire about the property from his daughter who was living very near the supposed owners. Considering that the Torregiani and Jimenez families are not total strangers to Salimbagat, it is safe to conclude that Salimbagat had some knowledge of the financial status of the supposed vendors which should have put him on guard before buying the property. Moreover, the records show that this would not have escaped the notice of Salimbagat and Cimafranca that at the time of the sale to them petitioners were in actual possession of the property with Salimbagats daughter renting a portion thereof. For that matter, at the time of the sale to Salimbagat and Cimafranca, petitioners had already been in continuous possession of the property for fourteen (14) years, or since 1958. Santiago Jimenez admitted that after his marriage he and his wife Eda lived and stayed with her parents, herein petitioners, and dependent on them for support. 31 Before buying the property, Salimbagat and Cimafranca allegedly inquired from the office of the Register of Deeds concerning the genuineness of the certificate of title of Eda Jimenez, and from the Clerk of Court of the Court of First Instance of Dipolog City as to whether the property was involved in any litigation. 32 However, they failed to inquire from petitioners as to why they were the ones in actual possession of the property. The rule is settled that a buyer of real property which is in the possession of persons other than the seller must be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as a buyer in good faith. 33 When a man proposes to buy or deal with realty, his first duty is to read the public manuscript, i.e., to look and see who is there upon it, and what are his rights. A want of caution and diligence which an honest man of ordinary prudence is accustomed to exercise in making purchases is, in contemplation of law, a want

of good faith. The buyer who has failed to know or discover that the land sold to him is in the adverse possession of another, is a buyer in bad faith. 34 The fact that Lucia Embrado resides in the premises, coupled with the relatively young age and meager financial standing of the Jimenez spouses, should have been sufficient for Cimafranca to hesitate accepting Edas transfer certificate of title at its face value. Cimafranca, after deliberately closing his eyes to such a vital information, is now claiming good faith. For obvious reasons, we cannot accept his contention. We thus declare him, together with Marcos Salimbagat, to be purchasers in bad faith hence not entitled to protection under the Torrens system of registration. Lot 564 is now registered in the name of Eda Jimenez "married to Santiago Jimenez" under Transfer Certificate of Title No. T-17103 which was issued pursuant to the "Absolute Deed of Sale" executed in her favor by petitioner Lucia Embrado. We have already declared said deed of sale as null and void since its object, Lot 564, is conjugal property which was sold by Lucia Embrado without her husbands conformity. The present vendees, Marcos Salimbagat and Pacifico Cimafranca, who bought the property from Eda Jimenez have failed to persuade us that they acquired the property in good faith. WHEREFORE, the decision of respondent Court of Appeals dated 26 April 1979 is REVERSED and SET ASIDE and the Decision of the then Court of First Instance (now Regional Trial Court) of Zamboanga del Norte dated 14 June 1976 is REINSTATED and ADOPTED herein as the decision in this case. SO ORDERED. G.R. No. L-18861 June 30, 1964

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant, vs. LAZARO MANGAWANG, ET AL., defendants-appellees. Jesus A. Avancea for plaintiff-appellant. Pablo Q. Ilaya for defendants-appellees. BAUTISTA ANGELO, J.: This is an appeal from a decision of the Court Of First instance of Bataan declaring the Mangawang brothers owners of Lot No. 1633 of the Balanga cadastre. It appears that Gavino Amposta applied with the Director of Lands for the issuance of a homestead patent over a parcel of land situated at Balanga, Bataan. Pending action on his application, cadastral proceedings were instituted by the government in said municipality wherein Amposta filed an answer praying for the adjudication of the same land in his favor which was designated therein as Lot No. 1633. On March 8, 1920, the cadastral court rendered decision awarding the land to Amposta. Since no advice on this matter was given either to the Bureau of Lands or to the Governor General, the latter, on November 2, 1920, issued in favor of Amposta Homestead Patent No. 2388 covering the same land, and on November 29, 1920, Original Certificate of Title No. 100 was issued to him by the Governor-General.

On December 20, 1922, the cadastral court issued a decree of registration of the land in favor of Amposta pursuant to the decision rendered in the cadastral case, and or, July 5, 1924, Original Certificate of Title No. 2668 was issued to him covering the same property. On November 24, 1941, Amposta sold the land to Santos Camacho surrendering to him Original Certificate of Title No. 100, and because of this transfer said title was cancelled and transfer Certificate of Title No. 5506 was issued in the name of Camacho. On November 18, 1946, SantosCamacho sold the land to Bonifacio Camacho as a result of which Transfer Certificate of Title No. 248 was issued to the latter. On April 28, 1948, Bonifacio Camacho mortgaged the land to the Rehabilitation Finance Corporation (now Development Bank of the Philippines), and having failed to pay the loan as agreed upon the land was sold at public auction to said bank as the highest bidder. The period of redemption having elapsed without Camacho being able to redeem the property, a final deed of sale was executed in favor of the bank, and Transfer Certificate of Title No. 6961 was issued in its name on June 29, 1957. Meanwhile, or on June 11, 1947, Gavino Amposta again sold the same property to Lazaro and Arsenio Mangawang for the sum of P2,000.00, the vendees executing a mortgage on the land to secure the payment of the balance. On March 17, 1948, the vendees paid the balance of the purchase price, and an absolute deed of sale was executed in their favor. In connection with this transaction, Amposta surrendered to the vendees the title that was issued to him in the cadastral case, which was later substituted by Transfer Certificate of Title No. 1098 issued in the name of the vendees.
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As a consequence of their purchase of the land, the Mangawang brothers took possession thereof, and upon learning of this transfer, the Development Bank of the Philippines, which as already stated became the owner of the property, commenced the present action against them in the Court of First Instance of Bataan to recover its possession and damages. In this case, the parties submitted a stipulation of facts, and on the strength thereof, the court a quo rendered decision awarding the land to the Mangawang brothers. Seasonably, the bank appealed to this Court. Appellees contend that their right over the property in litigation should be restored because the certificate of title they are holding is derived from that issued pursuant to a decision rendered by a cadastral court, while the title being held by appellant was merely based on the title issued in an administrative proceeding, upon the theory that a judicial title is deemed preferred to one issued administratively. They further contend that since the decision which gave rise to their title was rendered on March 8, 1920, which became final thirty days thereafter, their right over the land must be deemed vested on said date, whereas the title of appellant is merely a deprivation of the one issued to Amposta on November 29, 1920, or seven months after the decision rendered in the cadastral case. There is no doubt that if the two original certificates of title were issued on different occasions to two different persons the contention of appellees would be correct it being in line with the several decisions rendered by this Court.1 But the case at bar is different. Here two certificates of title were issued to Gavino Amposta over the same parcel of land, one under the Homestead Law and another under the Cadastral Act. Said titles were regularly issued and on their face both appear to be valid, and under such predicament it behooves Amposta to choose which of them he would prefer, as he could not validly make use of both of them. But this Amposta did not do. On the contrary, he took advantage of the situation by selling the land to two different persons surrendering to each purchaser the pertinent certificate of title. The question then that arises is: Who of the two buyers should be considered as the rightful owner of the land?

On this score, it is important to consider the facts that led to the sale of the land to the parties herein. Note that Amposta first sold the land to Santos Camacho on November 24, 1941, who registered it in his name on the same date. And seven years thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang brother, who also registered it in their name on the same date. Since both purchasers apparently have acted in good faith, as there is nothing in the evidence to show that they did otherwise, we cannot but conclude that the sale made by Amposta to Santos Camacho is the valid one considering that when Amposta sold the same land to the Mangawang brothers he had nothing more to sell even if the title he surrendered to them is one issued covering the same property. In legal contemplation, therefore, Amposta sold a property he no longer owned, and hence the transaction is legally ineffective. On the other hand, the case under consideration can also be viewed under a different angle. It can also be treated as one of double sale, where a person sells the same land to two different persons who are unaware of the flaw that lies in its title, and where the law adjudicates the property to the purchaser who first registers the transaction in his name in the registry of property.2 And applying this principle, we cannot conclude that the title should likewise be adjudicated to appellant whose predecessor-in-interest acquired and registered the property much ahead in point of time than the appellees. Verily, the title acquired by the latter is invalid and ineffective, contrary to the finding of the court a quo. WHEREFORE, the decision appealed from is reversed. We hereby declare appellant owner of Lot No. 1633 of the Balanga cadastre and uphold the validity of Transfer Certificate of Title No. 6961 issued in its favor. Transfer Certificate of Title No. 1098 issued in the name of appellees is hereby ordered cancelled. No pronouncement as to costs. G.R. No. L-17955 May 31, 1962

PILAR LAZARO VDA. DE JACINTO, ET AL., petitioners, vs. SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., respondents. ----------------------------G.R. No. L-17957 May 31, 1962

SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., petitioners, vs. PILAR LAZARO VDA. DE JACINTO, ET AL., respondents. Antonio Barredo for petitioners. Alfredo V. Granados and Edmundo R. Jacinto for respondents. DIZON, J.: The present action filed in the Court of First Instance of Bulacan by Pilar Lazaro Vda. de Jacinto and her son, Melchor Jacinto, Jr., against Salud del Rosario Vda. de Jacinto and her children, is for the reconveyance to them of a parcel of land located in barrio Sto. Rosario, Paombong, Bulacan, with an area of 5.4574 hectares, covered originally by OCT No. 12515 and at present by TCT No. 5380 issued by the Register of Deeds of Bulacan in the name of the now deceased Pedro Jacinto.

Their complaint alleged, in substance that the land subject matter thereof was a portion of a bigger parcel allotted to their predecessor-in-interest, Melchor Jacinto, Sr., when the estate of the deceased spouses Andres Jacinto and Maria C. Santos was partitioned, and that Melchor's surviving brother, Pedro, predecessor-in-interest of the defendants, had succeeded in registering it in his name through fraud and with breach of trust, to their prejudice. The defendants denied the allegations of the complaint and further alleged that their predecessor-ininterest had acquired ownership of the property in litigation by virtue of the provisions of Act 496 and/or by prescription. After due trial the action was dismissed. On appeal to the Court of Appeals, however, the latter reversed the decision and rendered judgment as follows: IN VIEW OF ALL THE FOREGOING, we find that the errors assigned are well taken. The decision appealed from, not being in conformity with the evidence and the law on the matter, should be, as it is hereby reversed and another entered declaring the plaintiffs-appellants owners of the land described in their complaint and designated as Lot No. 5, plan S.C. No. 11075 (under TCT No. 5830) of the Register of Deeds of Bulacan, and ordering the defendants-appellees, upon finality of this decision, to reconvey the same to said plaintiffsappellants. We find that appellants' claim for damages are abandoned by them in their appeal, and that appellees' counterclaim, is unmeritorious. Costs is taxed against the defendant-appellees, proportionately. From the above decision both parties appealed by certiorari. The appeal of Pilar Lazaro and her son is now G.R. No. L-17955, and that Salud del Rosario and children is G.R. No. L-17957. There is no dispute and the Court of Appeals so found that the land in question originally belonged to the now deceased spouses Andres Jacinto and Maria C. Santos, both of whom died intestate survived by their children named Melchor, Sr., (husband of Pilar Lazaro and father of Melchor, Jr.,) and Pedro (husband of Salud del Rosario and father of her co-parties). Melchor, Sr. also died intestate before the estate of his parents could be partitioned. After the estate was partitioned (Exhibit A), their surviving son, Pedro, besides receiving his share, continued administering the property which corresponded to the heirs of his deceased brother. Among them was a richland located in barrio Sto. Rosario, Paombong, with an area of 11 hectares, 34 ares and 3 centiares, Pedro Jacinto himself, according to Exhibit A, received as part of his share a richland in the same barrio, but with an area of 3 hectares, 57 ares and 69 centiares only. In the year 1926 Pedro Jacinto delivered to the widow of his deceased brother the properties that corresponded to the latter. This delivery, according to the Court of Appeals, was made only "in paper" because Pedro did not make an actual delivery of the properties but limited himself to telling his sister-in-law that there were "kasamas" working for her. One year thereafter, although the properties composing the estate of his deceased parents had already been surveyed since June 10, 1913, as shown by Exhibit B, Pedro caused them to be resurveyed, this resulting in the drawing of Exhibit C. The practical result of the resurvey as found by the Court of Appeals was that a portion of lot 2 described in Exhibit B, which was subsequently one of the properties allotted to the heirs of Melchor, was segregated therefrom and was designated as lot 5 in Exh. C. After the resurvey, Pedro applied to register, and succeeded in having lot 5 and other properties registered in his name, for which reason OCT No. 12515 was issued covering three lots numbered 2, 4 and 5. Lot 2 was subsequently sold, so the original certificate of title was cancelled and TCT No. 583 was issued.
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From all the evidence of record the Court of Appeals found that Pilar Lazaro and her son "were always of the belief, until the latter part of 1953, that he (Pedro) delivered to them all that which were rightfully theirs"; that they discovered the shortage only when Pilar less than one year before the action was filed decided to sell the parcel of more than 11 hectares that she was supposed to have received from her brother-in-law; that it was only then that she realized for the first time that the parcel delivered to her had only an area of 5.8829 hectares. The Court further found that the land in question was not the same parcel allotted to Pedro Jacinto, and located in the same barrio, which had an area of a little over three hectares only. On the basis of the facts stated above which are now final and beyond review the Court of Appeals made the following considerations: It is not also controverted that upon a survey of the property (item No. 1 of Exhibit "A", which should have an area of 11.3403 hectares), when appellant Pilar Lazaro Vda. de Jacinto decided to sell four (4) hectares of the supposed 11.3403 hectares, there was lacking 54,574 square meters therefrom which incidentally corresponded exactly to Lot No. 5, item No. 2 of TCT No. 5830, in the name of Pedro Jacinto. Appellees claim, however, that the supposed 11,3403 hectares appearing in Exhibit "A", could have been short of 54,574 square meters and that the 3.5769 hectares appearing in the receipt Exhibit "1", item No. 3 thereof, could have been really 5.5474 hectares, which is not the lot in question. The striking coincidence in the area disputed and that registered in the name of appellees' predecessor-in-interest, more than catches the eye. Under the partition, the appellants were to receive as one of the properties, 11.3403 hectares of riceland. This being the case, there are no reasons discernible in the records why, after an actual survey of the said property, 54,574 meters should be lacking therefrom. It could not be said that the area was just a product of a calculation. When Exhibit "A" was executed, the boundaries were plainly indicated thereon. As a matter of fact, Exhibit "A" designated the number of hectares, ares and centiares, which is indicative of the preciseness of the area to be delivered to the respective heirs. The fact that the lacking measurement fits exactly with Lot No. 5 of Pedro Jacinto under TCT No. 5830, warrants the conclusion that Pedro Jacinto to had deprived the appellants herein of their just share. . . . There are sufficient proofs to show that fraud was practiced by Pedro Jacinto against the appellants herein. When Pedro supposedly delivered the property, he did it only in paper, without bringing plaintiff Pilar Lazaro to the premises, although he told her that there were "kasamas" working for her. On December 15, 1927, Pedro Jacinto caused that the properties be resurveyed, which resulted in the drawing of Exhibit "C", which in effect amended Exhibit "B". Part of Lot 2 was segregated and had been designed as lot 5 in Exhibits "C". And this Lot 5 has an area exactly equal to the area which was found lacking in the 11.3403 hectares belonging to the plaintiffs-appellants. (pp. 6-7 & 9, decision) As a result of the foregoing, the Court of Appeals held that Pedro Jacinto must be deemed to have registered the land in question as a trustee for and in behalf of the widow and son of his deceased brother. The pertinent portion of its decision reads as follows: Implied Trusts have been said to be those which are raised by legal implication from the facts and circumstances of the case, to effect the presumed intention of the parties or to satisfy demands of justice or to protect against fraud (65 C.J. 222), or those enforced by equity because morality, justice, conscience, and fair dealing demand that the relation be established (supra). The new Civil Code provides that, "If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes" (Art. 1456). That there was

fraud on the part of Pedro Jacinto in registering the property in his name to the prejudice of the appellants is revealed by the records. It will be seen that on Exhibit "C", the amended survey of the properties which Pedro Jacinto and Melchor Jacinto, Sr. inherited from their parents, changes were made. This resurvey was done at the instance of Pedro Jacinto, in spite of the fact that on June 10, 1913, the same, properties were already surveyed, divided and delineated (Exhibit "B"). The boundaries of Lot 5 as appearing in Exhibit "G" (the amended plan) are the same as those appearing in Exhibit "B" minus the designation as Lot 5 and its segregation from the greater mass of Lot 2. In Exhibit "E" or "I", a receipt of the properties inherited by Pedro Jacinto from his father Andres, no property coincide in boundaries with the properties given to Pedro. Under the above set of facts, it is quite evident that the property in question rightfully belonged to the plaintiffs and that an implied trust was created between the plaintiffs and the appellees' father Pedro Jacinto. (pp. 9-10, decision) The heirs of Pedro Jacinto now contend that the Court of Appeals erred in applying to this case the law of implied or constructive trusts, and, in holding that, under the facts of the case, the right of the heirs of Melchor Jacinto to recover the property in question is imprescriptible. We find these contentions to be without merit. The following findings of fact made by the Court of Appeals cannot now be questioned: (1) after the partition of the estate of the deceased spouses Andres Jacinto and Maria C. Santos, Pedro Jacinto, their surviving son, continuedadministering the properties allotted to the heirs of his deceased brother; (2) when he delivered the share of the latter, he withheld delivery of the parcel of more than 11 hectares allotted, among others, to his aforesaid co-heirs; (3) one year thereafter he caused the portion withheld from co-heirs to be registered in his name; (4) the widow and son of his deceased brother did not know that the parcel of land delivered to them by their co-heir was short of 5 hectares, 45 ares and 74 centiares, and said parties "were always of the belief, until the latter part of 1953, that he (Pedro) delivered to them all that which were rightfully theirs". In view of these facts, it would be against reason and good conscience not to hold that Pedro Jacinto committed a breach of trust which enabled him to secure registration of the land in question to the prejudice of his co-heirs. Therefore, in an lotion like the present, he may be ordered to make reconveyance of the property to the person rightfully entitled to it. In fact, it has been held that even in the absence of fraud in obtaining registration, or even after the lapse of one year after the issuance of a decree of registration, a co-owner of land who applied for and secured its adjudication and registration in his name knowing that it had not been allotted to him in the partition, may be compelled to convey the same to whoever received it in the apportionment, so long as no innocent third party had acquired rights therein, in the meantime, for a valuable consideration (Palet vs. Tejedor, 55 Phil. 790-798). Indeed, any rule to the contrary would sanction one's enrichment at the expense of another. Public policy demands that a person guilty of fraud or, it least, of breach of trust, should not be allowed to use a Torrens title as a shield against the consequences of his wrongdoing (Cabanos vs. Register of Deeds, etc., 40 Phil. 620; Severino vs. Severino, 41 Phil. 343). Lastly, the claim of the heirs of Pedro Jacinto that the latter had acquired ownership of the property in litigation by prescription, is likewise untenable. As we have recently held in Juan, et al. vs. Zuiga, G.R. No. L-17044, April 28, 1962, an action to enforce a trust is imprescriptible. Consequently, a cohier who, through fraud, succeeds in obtaining a certificate of title in his name to the prejudice of his co-heirs, is deemed to hold the land in trust for the latter, and the action by them to recover the property does not prescribe. On the other hand, in their appeal Pilar Lazaro and her son contend that the Court of Appeals erred in holding that they had abandoned their claim for damages. We also find this to be without merit.

As stated heretofore, the Court of First Instance of Bulacan, after the trial, dismissed this case and the plaintiffs (Pilar Lazaro Vda. de Jacinto and her son) appealed to the Court of Appeals. In rendering judgment the latter court held that said appellants had abandoned their claim for damages, presumably because of their failure to make in their brief in assignment of error to the effect that the Court of First Instance had erred in not awarding them damages. It is now their contention that having appealed from the dismissal, they were no longer in duty bound to make a separate specific assignment of error regarding the court's failure to award damages, because their right to them was entirely dependent upon the favorable resolution of the assignment of errors made in their brief assailing the dismissal. This argument loses force upon consideration of the fact that their right to have the reconveyance was one thing, and their right to damage, another. There could be reconveyance in their favor, without this necessarily entitling them to damages, as for instance, if they produced no evidence to prove them, or that produced does not sufficiently prove the claim. It seems clear, therefore, that it was their duty as appellants to bring up before the Court of Appeals, by specific assignment of error, this particular question. WHEREFORE, the decision appealed from being in accordance with law, the same is hereby affirmed, with costs.

[G.R. No. 129401. February 2, 2001]

FELIPE SEVILLE in his capacity as judicial administrator of the estate of JOAQUIN ORTEGA and/or FELIPE SEVILLE, EMILIA ESTRADA, MARIA S. TELLDER, MA. ISABEL SEVILLE, MA. TERESITA LICARDO, FRANCISCO SEVILLE, RAMON O. SEVILLE, JOSE MARIE SEVILLE, GEMMA ALVAREZ-ASAYAS, ANNABELLE ALVAREZ-GONZALES, SYLVIA ALVAREZ-LIOK, ADOLFO O. ALVAREZ JR., DIANA ALVAREZ-DABON, MARIA SALVADOR O. POLANCOS and JOAQUIN ORTEGA II as successors-in-interest of JOAQUIN ORTEGA and his estate, petitioners, vs. NATIONAL DEVELOPMENT COMPANY, LEYTE SAB-A BASIN DEVELOPMENT AUTHORITY, PHILIPPINE ASSOCIATED SMELTING AND REFINING CORPORATION, LEPANTO CONSOLIDATED MINING CO., PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, CALIXTRA YAP and REGISTER OF DEEDS OF LEYTE, respondents. DECISION
PANGANIBAN, J.:

Unless a public land is shown to have been reclassified as alienable or actually alienated by the State to a private person, that piece of land remains part of the public domain. Hence, occupation thereof, however long, cannot ripen into ownership.

The Case

Before us is a Petition for Review on Certiorari assailing the November 29, 1996 Decision of the Court of Appeals[1] (CA), as well as the May 19, 1997 CA Resolution[2] denying the Motion for Reconsideration. The dispositive part of the CA Decision reads as follows: WHEREFORE, the appealed decision is REVERSED and SET ASIDE. Another judgment is hereby rendered dismissing the complaint. The counterclaims of appellants are denied. Costs against plaintiffs-appellees.[3]
The Facts

The appellate court narrated the undisputed facts in this manner: 1. By virtue of Presidential Decree No. 625, Leyte Sab-A Basin Development Authority (LSBDA) was created to integrate government and private sector efforts for a planned development and balanced growth of the Sab-a Basin in the [P]rovince of Leyte, empowered to acquire real property in the successful prosecution of its business. Letter of Instruction No. 962 authorized LSBDA to acquire privatelyowned lands circumscribed in the Leyte Industrial Development Estate (LIDE) by way of negotiated sales with the landowners. 2. On June 14, 1980, [Respondent] Calixtra Yap sold to LSBDA Lot No. 057 SWO 08-000047 consisting of 464,920 square meters, located at Barangay Sto. Rosario, Isabel, Leyte, covered under Tax Declarations Nos. 3181, 3579, 3425, 1292 and 4251 under the name of said vendor. 3. On June 1, 1982, appellant LSBDA filed a Miscellaneous Sales Application with the Bureau of Lands covering said lot together with other lots acquired by LSBDA with an aggregate area of 442, 7508 square meters. 4. After due notice and investigation conducted by the Bureau of Lands, Miscellaneous Sales Patent No. 9353 was issued in the name of [Respondent] LSBDA on the basis of which Original Certificate of Title No. P-28131 was transcribed in the Registration Book for the [P]rovince of Leyte on August 12, 1983 in the name of [Respondent] LSBDA. On December 14, 1989, LSBDA assigned all its rights over the subject property to its [Co-respondent] National Development Company (NDC) as a result of which a new Transfer Certificate of Title was issued on March 2, 1990 by the Registry of Deeds for the province of Northern Leyte in the name of NDC. The

subject property was leased to [Respondents] Philippine Associated Smelting & Refining Corporation (PASAR), Philippine Phosphate Fertilizer Corporation (PHILPHOS) and Lepanto Consolidated Mining Co., Inc. (LEPANTO). 5. On November 29, 1988, the Estate of Joaquin Ortega represented by judicial administrator Felipe Seville filed with the Regional Trial Court (Branch 12) of Ormoc City, a complaint for recovery of real property, rentals and damages against the above-named [respondents] which complaint was later on amended on May 11, 1990. [Respondents] filed their respective Answers. After trial, the trial court rendered judgment the dispositive portion of which reads as follows: WHEREFORE, [a] decision is hereby rendered for [petitioners] and against [respondents]. 1. The Deed of Sale executed by Calixtra Yap on June 14, 1980 in favor of LSBDA, (Exhibit PP and 25) conveying the subject property to said LSBDA is declared NULL and VOID ab initio; 2. The intestate estate of JOAQUIN ORTEGA is declared the owner in fee simple of the 735,333 square meters real property subject of the present action and defendant NDC is ordered to segregate the same area from OCT P-28131 and CONVEY the same to the Estate of Joaquin Ortega; 3. Upon the segregation of the 735,333 square meters from OCT No. P-28131 the Register of Deeds of the Province of Leyte is ordered to issue a new title to the said portion in the name of the Intestate Estate of Joaquin Ortega; 4. [Respondents] LSBDA, NDC, PASAR, are ordered to pay jointly and severally to [petitioners] the sum of FOUR MILLION SEVEN HUNDRED EIGHTY FOUR THOUSAND EIGHT HUNDRED FORTY SIX PESOS (P4,784,846.00) as rentals due from 1979 to the present, plus accrued interest pursuant to par. 2 of the Lease Contract between NDC and PASAR. (Exhibit 54) 5. [Respondents] LSBDA, NDC, and PHILPHOS are also ordered to pay jointly and severally [petitioners] the sum of TWO MILLION EIGHTY SIX THOUSAND THREE HUNDRED NINETY EIGHT PESOS AND SIXTY CENTAVOS (P2,086,398.60) as accrued rentals of PHILPHOS from 1979 to present, plus the accrued interest for non-payment pursuant to paragraph 2 of the same Lease Contract cited above; 6. [Respondents] are ordered to pay jointly and severally [petitioners] P200,000.00 as indemnity for the value of the ancestral home;

7. [Respondents] are also ordered to pay jointly and severally [petitioners] the sum of P250,000.00 as reimbursement for attorneys fees and the further sum of P50,000.00 as expenses for litigation; 8. Finally, [petitioners] and [respondents] are ordered to sit down together and discuss the possibility of a compromise agreement on how the improvements introduced on the landholding subject of the present suit should be disposed of and for the parties to submit to this Court a joint manifestation relative thereto. In the absence of any such compromise agreement, such improvements shall be disposed of pursuant to Article 449 of the New Civil Code. Costs against [respondents]. SO ORDERED.[4]
Ruling of the Court of Appeals

Citing the Regalian doctrine that lands not appearing to be privately owned are presumed to be part of the public domain, the CA held that, first, there was no competent evidence to prove that the property in question was private in character. Second, possession thereof, no matter how long, would not ripen into ownership, absent any showing that the land had been classified as alienable. Third, the property had been untitled before the issuance of the Miscellaneous Sales Patent in favor of the LSBDA. Fourth, petitioners were guilty of laches, because they had failed to apply for the judicial confirmation of their title, if they had any. Fifth, there was no evidence of bad faith on the part of LSBDA in dealing with Yap regarding the property. Hence, this Petition.[5]
The Issues

In their Memorandum, petitioners submit the following issues for the consideration of the Court:[6] A. Whether or not the sale by Calixtra Yap of the Estate of the Late Joaquin Ortega in favor of LSBDA was null and void. B. Whether or not the issuance of a Miscellaneous Sales Patent and an Original Certificate of Title in favor of LSBDA was valid.

C. Whether or not petitioners are guilty of laches. D. Whether or not petitioners are entitled to the remedy of reconveyance and the damages awarded by the trial court. In the main, the Court is called upon to determine the validity of LSBDAs title. In resolving this issue, it will also ascertain whether, before the issuance of the title, the land was private or public.
The Courts Ruling

The Petition has no merit.

Main Issue: Validity of LSBDAs Title

Petitioners argue that LSBDAs title to 73 hectares of the 402-hectare Leyte Industrial Development Estate was void, having allegedly been obtained from Calixtra Yap who had no right to it. They maintain that they acquired title to the disputed property by acquisitive prescription, because they and their predecessors in interest had been in possession of it for more than thirty years. [7] Although it was the subject of settlement proceedings, petitioners further claim that Yap sold the same to LSBDA without the permission of the trial court. Disputing these contentions, respondents and the appellate court maintain that petitioners have not shown that the land had previously been classified as alienable and disposable. Absent such classification, they argue that possession of it, no matter how long, could not ripen into ownership. We agree with respondents and the appellate court. First. There was no showing that the land had been classified as alienable before the title was issued to LSBDA; hence, petitioners could not have become owners thereof through acquisitive prescription. Second, petitioners challenge to LSBDAs title cannot be granted, because it is based on a wrong premise and amounts to a collateral attack, which is not allowed by law.
Public Character of the Land

Under the Regalian doctrine, all the lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.[8] In Menguito v. Republic,[9] the court held that [u]nless public land is shown to have been reclassified or alienated to a private person by the State, it remains part of the inalienable public domain. Indeed, occupation thereof in the concept of owner, no matter how long, cannot ripen into ownership and be registered as a title. To overcome such presumption, incontrovertible evidence must be shown by the applicant. Absent such evidence, the land sought to be registered remains inalienable. A person in open, continuous, exclusive an notorious possession of a public land for more than thirty years acquires an imperfect title thereto. That title may be the subject of judicial confirmation, pursuant to Section 48 of the Public Land Act, which provides: SECTION 48. The following described citizens of the Philippines, occupying lands of public domain or claiming to own any such lands or an interest thereon, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims, and the issuance of a certificate of title therefore, under the Land Registration Act, to wit: xxx xxx xxx

(b) those who by themselves or through their predecessor in-interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. They shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall he entitled to a certificate of title under the provisions of this Chapter. Under Section 4 of Presidential Decree (PD) No. 1073, [10] paragraph b of the aforecited provision applies only to alienable and disposable lands of the public domain. The provision reads: SEC. 4. The provisions of Section 48 (b) and Section 48 (c), Chapter VIII, of the Public Land Act, are hereby amended in the sense that these provisions shall apply only to alienable and disposable lands of the public domain which have been in open, continuous, exclusive and notorious possession and occupation by the applicant himself or thru his predecessor-in-interest, under a bona fide claim of acquisition of ownership, since June 12, 1945.

It should be stressed that petitioners had no certificate of title over the disputed property. Although they claim that their title was based on acquisitive prescription, they fail to present incontrovertible proof that the land had previously been classified as alienable. They simply brush aside the conclusion of the CA on this crucial point by saying that it was without factual basis.[11] Instead, they maintain that the private character of the land was evidenced by various tax declarations, Deeds of Sale, and Decisions of the trial court and even the Supreme Court.[12] Petitioners arguments are not convincing. Tax declarations are not conclusive proofs of ownership, let alone of the private character of the land. At best, they are merely indicia of a claim of ownership.[13] In Spouses Palomo v. CA,[14] the Court also rejected tax declarations as proof of private ownership, absent any showing that the forest land in question had been reclassified as alienable. Moreover, the Deeds of Sale of portions of the disputed property, which Joaquin Ortega and several vendors executed, do not prove that the land was private in character. The question remains: What was the character of the land when Ortega purchased it? Indeed, a vendee acquires only those rights belonging to the vendor. But petitioners failed to show that, at the time, the vendors were already its owners, or that the land was already classified as alienable. Also misplaced is petitioners reliance on Ortega v. CA,[15] in which the Supreme Court allegedly recognized the private character of the disputed property. In that case, the sole issue was whether the respondent judge xxx acted in excess of jurisdiction when he converted Civil Case No. 1184-O, an action for quieting of title, declaration of nullity of sale, and annulment of tax declaration of a parcel of land, into an action for the declaration of who is the legal wife, who are the legitimate children, if any, and who are the compulsory heirs of the deceased Joaquin Ortega. [16] The Court did not all make any ruling that the property had been classified as alienable. In any event, Ortega arose from a suit for quieting of title, an action quasi in rem that was binding only between the parties.[17] The present respondents as well as the Bureau of Lands, which subsequently declared that the land was public, are not bound by that ruling, because they were not impleaded therein. While petitioners refer to the trial court proceedings supposedly recognizing the private character of the disputed property, they make no claim that these cases directly involve the classification of the land, or that the Bureau of Lands is a party thereto. Clearly, the burden of proof that the land has been classified as alienable is on the claimant.[18] In the present case, petitioners failed to discharge this burden. Hence, their possession of the disputed property, however long, cannot ripen into ownership.
LSBDAs Title

Equally unmeritous is the argument of petitioners that the title of LSBDA is void. As earlier stated, they claim that such title was derived from Calixtra Yap, who was allegedly not the owner of the property. Petitioners assume that LSBDA, having acquired the rights of Yap, resorted to a confirmation of her imperfect title under Section 48 of the Public Land Act. This argument is devoid of factual or legal basis. Petitioners fail to consider that the title of LSBDA was based, not on the conveyance made by Yap, but on Miscellaneous Sales Patent No. 9353 issued by the director of the Bureau of Lands. In fact, after LSBDA had filed an application for patent, the Bureau of Lands conducted an investigation and found that the land was part of the public domain. After compliance with the notice and publication requirements, LSBDA acquired the property in a public auction conducted by the Bureau of Lands.[19] Petitioners insist, however, that LSBDA was estopped from claiming that the land was public, because the Deed of Sale executed by Yap in its favor stipulated that the seller is the absolute owner in fee simple of the xxx described property. [20] It is scarcely necessary to address this point. To begin with, the power to classify a land as alienable belongs to the State, not to private entities. Hence, the pronouncements of Yap or LSBDA cannot effect the reclassification of the property. Moreover, the assailed misrepresentation was made by Yap as seller. Hence, objections thereto should be raised not by petitioners but by LSBDA, the contracting party obviously aggrieved. In any case, the actions of LSBDA after Yaps conveyance demonstrated its position that the disputed land was part of the public domain. That this was so can be inferred from LSBDAs subsequent application for a Miscellaneous Sales Patent and, in a public auction, its purchase of the property from the Bureau of Lands. Indeed, Yap merely conveyed a claim, not a title which she did not have.
Collateral Attack

There is another reason for denying the present Petition. Petitioners insist that they are not seeking the re-opening of a decree under the Torrens system. Supposedly, they are only praying for the segregation of 735,333 square meters of land, or 73 hectares more or less from the OCT No. P-28131 issued to LSBDA.[21] This disputation is mere quibbling over the words, plain and simple. Semantics aside, petitioners are effectively seeking the modification of LSBDAs OCT, which allegedly encompassed even a parcel of land allegedly belonging to them. Hence, the present suit, purportedly filed for the recovery of real property and

damages, is tantamount to a collateral attack not sanctioned by law. Section 48 of PD 1529, the Property Registration Decree, expressly provides: SEC. 48. Certificate not subject to collateral attack. -- A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. It has been held that a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in a direct proceeding permitted by law. Otherwise, the reliance on registered titles would be lost.[22] Moreover, the title became indefeasible and incontrovertible after the lapse of one year from the time of its registration and issuance.[23] Section 32 of PD 1529 provides that [u]pon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible. Any person aggrieved buy such decree of registration in any case may pursue his remedy by action for damages against the applicant or other persons responsible for the fraud. Although LSBDAs title was registered in 1983, petitioners filed the amended Complaint only in 1990.
Reconveyance

Petitioners also claim that the disputed property should be reconveyed to them. This cannot be allowed. Considering that the land was public before the Miscellaneous Sales Patent was issued to LSBDA, petitioners have no standing to ask for the reconveyance of the property to them. The proper remedy is an action for reversion, which may be instituted only by the Office of the Solicitor General, pursuant to section 101 of the Public Land Act, which reads as follows: SEC. 101. All actions for the reversion to the Government of lands of the public domain or improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the name of the [Republic] of the Philippines. Verily, the prayer for reconveyance and, for that matter, the entire case of petitioners rest on the theory that they have acquired the property by acquisitive prescription; and that Yap, without any right or authority, sold the same to LSBDA.
Conclusion

In the light of our earlier disquisition, the theory has no leg to stand on. Absent any showing that the land has been classified as alienable, their possession thereof, no matter how lengthy, cannot ripen into ownership. In other words, they have not become owners of the disputed property. Moreover, LSBDAs title was derived from a Miscellaneous Sales Patent, not from Yap. Finally, petitioners cannot, by a collateral attack, challenge a certificate of title that has already become indefeasible and incontrovertible. If petitioners believe that they have been defrauded by Yap, they should seek redress, not in these proceedings, but in a proper action in accordance with law. WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.
THE DIRECTOR OF LANDS vs. ABANILLA G.R. No. L-26324 August 31, 1983 FACTS: The Director of Lands in his complaint alleged that Abanilla had, through fraudulent means, secured a free patent and an OCT over a public land situated in Roxas, Isabela; that the said free patent and OCT included portions of land occupied by Esquivel and Nuesa; and that the portion occupied by Nuesa was sold to him by Cullanan who also earlier bought the same from Abanilla herself (by virtue of a public document) Abanilla in her answer alleged that her application for a free patent over the parcel of public land was lawful since the occupancy of Esquivel of the portion claimed by him was merely tolerated by her and was never adverse, and Nuesas occupancy never her right over the portion he claims, because the sale made by her to Cullanan was void ab initio because the lot she sold to him is public land. Maria Abanilla filed an action with the trial court against Esquivel and Nuesa and three other for the recovery of possession of the portions of land involved in the administrative case between them in the land department. The trial court entered a judgment, declaring the Free Patent null and void, ordering the Director of Lands to cancel said patent and issue another patent in favor of Abanilla excluding the respective portions of land by Esquivel and Nuesa and ordering Abanilla to surrender to the RD of Isabela the OCT who was thereby ordered to cancel the same. ISSUE: WON the patent and original certificate of title issued by virtue of the said patent can still be cancelled despite the of six (6) years and six (6) months from their is issuance. HELD: WHEREFORE, FINDING THAT THE DECISION APPEALED FROM IS IN CONFORMITY WITH THE FACTS AND THE LAW, THE SAME IS HEREBY AFFIRMED 1. YES. Defendant-appellant clings to the legal fiction of indefeasibility of a Torrens Title. She claimed that the lower court erred in not dismissing the action considering that a period of six years and six months had already elapsed when the present action was instituted, in view of the line of decisions of this Court sustaining the indefeasibility of a certificate of title issued in pursuance of a public land patent. The doctrine regarding the indefeasibility of title issued pursuant to a free patent one year after its issuance does not apply to a grant tainted with fraud and secured through misrepresentation, such as the free patent invoked in this case, since said grant is null and void and of no effect

whatsoever. Abanilla cannot use her title as a shield to perpetuate fraud. No amount of legal technicality may serve as a solid foundation for the enjoyment of the fruits of fraud. Fraus et jus numquam co-habitant

Furthermore, appellant Maria Abanilla cannot pretend that her title has become indefeasible because no petition for review thereof was filed within one year from its issuance, since proceedings for the review of her patent was actually pending before and after the issuance of appellants torrens title.

It should be noted that, pursuant to explicit and repeated averments in the complaint Abanilla had acted in bad faith, with full knowledge of the factual background of the case, particularly of the public, continuous and adverse possession of Esquivel at the time she applied for patent over the land in question, and up to the time she secured the issuance of an OCT over the said land. The fact that Abanilla acted fraudulently in securing the patent and OCT was clearly and definitely established in the decision of the Director of Lands.[while an administrative case was pending investigation by the Fact Finding Commitee composed of representatives of the Bureau of Lands and the Land Settlement and Development Corporation (LASEDECO) Abanillasecured the issuance of Free Patent in her name covering the entire Lot; that by virtue of the said patent, an OCT was issued in her name] This Court held in the case of Eusebio vs. Sociedad Agricola de Balarin that the factual findings of the Director of Lands, approved by the Secretary of Agriculture and Natural Resources, are conclusive in the absence of proof of fraud, imposition, error or abuse of discretion. We do not believe that appellant has any lawful claim against appellee Nuesa. The Portion of land here involved was sold by appellant herself as her own private property. She cannot now turn back and say that said portion is public land. Here, the matter is exclusively between her and Wilson Nuesa, her vendees successor-in interest. The government is not involved. As against appellee Wilson Nuesa, therefore, appellant is in estoppel. Also, this Court held that prescription of action to review a title after the lapse of one year from its issuance under Section 38 of Act 496, cannot be invoked against the State, since under paragraph 4 of Article 1108 of the Civil Code, prescription does not run against the State. Furthermore, Abanilla is now estopped from claiming that this action had already prescribed for the simple reason that she can be considered an instrumental party in the delay in the flung of the instant action.

NOTES: 1. Section 91 of the C.A. No. 141, as amended, expressly provides that any false statement in the application, which is an essential condition of the patent or title, shall ipso facto produce the cancellation of the concession, title, or permit granted. 2. In Cebedo vs. Director of Lands (2 SCRA 25), this Honorable Court held that it is not only the right but the duty of the Director of Lands to conduct investigation to determine whether steps should be taken in the proper court for the annulment of the title or titles theretofore issued, and to file the corresponding court action for the reversion of the properties to the State, if the facts disclosed in the course of the investigation so warrant.

G.R. No. 129471

April 28, 2000

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and CARLOS CAJES, respondents.

MENDOZA, J.: This is a petition for certiorari seeking to reverse the decision1 and resolution2 of the Court of Appeals dated August 30, 1996 and April 23, 1997, respectively, declaring private respondent Carlos Cajes the owner of 19.4 hectares of land embraced in TCT No. 10101 and ordering the segregation and reconveyance of said portion to him. The antecedent facts are as follows: The land in dispute, consisting of 19.4 hectares located in San Miguel, Province of Bohol, was originally owned by Ulpiano Mumar, whose ownership since 1917 was evidenced by Tax Declaration No. 3840.3 In 1950,4 Mumar sold the land to private respondent who was issued Tax Declaration No. R-1475 that same year.5 The tax declaration was later superseded by Tax Declaration Nos. R-799 issued in 19616 and D-2247 issued in 1974.7 Private respondent occupied and cultivated the said land,8 planting cassava and camote in certain portions of the land.9 In 1969, unknown to private respondent, Jose Alvarez succeeded in obtaining the registration of a parcel of land with an area of 1,512,468.00 square meters, 10 in his name for which he was issued OCT No. 546 on June 16, 1969. 11 The parcel of land included the 19.4 hectares occupied by private respondent. Alvarez never occupied nor introduced improvements on said land. 12 In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom TCT No. 10101 was issued. 13 That same year, the spouses Beduya obtained a loan from petitioner Development Bank of the Philippines for P526,000.00 and, as security, mortgaged the land covered by TCT No. 10101 to the bank. 14 In 1978, the SAAD Investment Corp., and the SAAD AgroIndustries, Inc., represented by Gaudencio Beduya, and the spouses Beduya personally executed another mortgage over the land in favor of petitioner to secure a loan of P1,430,000.00. 15 The spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the property was foreclosed. 16 In the resulting foreclosure sale held on January 31, 1985, petitioner was the highest bidder. 17 As the spouses Beduya failed to redeem the property, petitioner consolidated its ownership. 18 It appears that private respondent had also applied for a loan from petitioner in 1978, offering his 19.4 hectare property under Tax Declaration No. D-2247 as security for the loan. As part of the processing of the application, a representative of petitioner, Patton R. Olano, inspected the land and appraised its value. Private respondent's loan application was later approved by petitioner. 19 However after releasing the amount of the loan to private respondent, petitioner found that the land mortgaged by private respondent was included in the land covered by TCT No. 10101 in the name of the spouses Beduya.

Petitioner, therefore, cancelled the loan and demanded immediate payment of the amount. 20 Private respondent paid the loan to petitioner for which the former was issued a Cancellation of Mortgage, dated March 18, 1981, releasing the property in question from encumbrance. 21 Sometime in April of 1986, more than a year after the foreclosure sale, a re-appraisal of the property covered by TCT No. 10101 was conducted by petitioner's representatives. It was then discovered that private respondent was occupying a portion of said land. Private respondent was informed that petitioner had become the owner of the land he was occupying, and he was asked to vacate the property. As private respondent refused to do so, 22petitioner filed a complaint for recovery of possession with damages against him. The case was assigned to Branch 1 of the Regional Trial Court, Tagbilaran City, 23 which after trial, rendered a decision, dated August 22, 1989, declaring petitioner the lawful owner of the entire land covered by TCT No. 10101 on the ground that the decree of registration was binding upon the land. 24 The dispositive portion of the decision reads: WHEREFORE, foregoing considered, the court renders judgment: 1 Declaring plaintiff bank Development Bank of the Philippines the true and legal owner of the land in question covered by TCT No. 10101 farm of Gaudencio Beduya; 2 Dismissing defendant's counterclaim; 3 Ordering defendant to vacate from the land in question; the portion of which he claims to belong to him for without basis in fact and law; 4 Ordering defendant, his agents or any person representing him or those who may claim substantial rights on the land to vacate therefrom, cease and desist from disturbing, molesting and interfering plaintiff's possession of the land in question, and from committing any such act as would tend to mitigate, deny or deprive plaintiff of its ownership and possession over said land. SO ORDERED. On appeal, the Court of Appeals reversed and gave judgment for private respondent, declaring him the owner of the 19.4 hectares of land erroneously included in TCT No. 10101. The dispositive portion of the appellate court's decision reads: WHEREFORE, the appealed decision is hereby REVERSED AND SET ASIDE. A new decision is hereby rendered: 1. Dismissing the complaint. 2. Declaring the disputed 19.4000 hectares of land embraced in TCT 10101 as exclusively belonging to defendant-appellant, ordering its segregation from plaintiffappellee's title and its reconveyance to appellant. No pronouncement as to costs. SO ORDERED. 25 Petitioner moved for a reconsideration but its motion was denied in a resolution dated April 23, 1997. 26 Hence this petition.

Petitioner contends that: I. THE DECISION OF THE RESPONDENT COURT IS NOT IN ACCORD WITH THE APPLICABLE PROVISIONS OF LAW (Sections 38 and 46 of ACT 496) AND THE APPLICABLE DECISIONS OF THE SUPREME COURT, PARTICULARLY IN THE CASE OF BENIN VS. TUASON, 57 SCRA 531. II. THE RESPONDENT COURT OVERLOOKED THE ISSUES ABOUT THE DBP BEING AN INNOCENT MORTGAGEE FOR VALUE OF THE LAND IN QUESTION AND OF HAVING PURCHASED LATER THE SAME DURING A PUBLIC AUCTION SALE. III. THE RESPONDENT COURT'S RULING DECLARING DBP IN ESTOPPEL IS ILLOGICAL. 27 First. Petitioner invokes the ruling of this Court in Benin v. Tuason 28 in support of its claim that its predecessor-in-interest, Jose Alvarez, became the owner of the land by virtue of the decree of registration issued in his name. In Benin, three sets of plaintiffs filed separate complaints against Mariano Severo Tuason and J.M. Tuason & Co., Inc., praying for the cancellation of OCT No. 735 covering two parcels of land called the Sta. Mesa Estate, or Parcel 1, with an area of 8,798,617.00 square meters, and the Diliman Estate, or Parcel 2, with an area of 15,961,246.00 square meters. They asked that they be declared the owners and lawful possessors of said lands. Benin is distinguished from this case. In the first place, Benin involved vast tracts of lands which had already been subdivided and bought by innocent purchasers for value and in good faith at the time the claimants obtained registration. Secondly, when the claimants' ancestors occupied the lands in question and declared them for tax purposes in 1944, the lands were already covered by the tax declarations in the name of J. M. Tuason & Co., Inc. In 1914, OCT No. 735 was issued in the name of Tuason so that, from that time on, no possession could defeat the title of the registered owners of the land. Thirdly, the validity of OCT No. 735 had already been recognized by this Court in several cases 29 and, as a result thereof, the transfer certificates of title acquired by the innocent purchasers for value were also declared valid. It was held that neither could the claimants file an action to annul these titles for not only had these actions prescribed, but the fact was that the claimants were also barred from doing so by laches, having filed the complaint only in 1955, or 41 years after the issuance of OCT No. 735 to J.M. Tuason & Co., Inc. Thus, it was not solely the decree of registration which was considered in resolving the Benin case. What was considered decisive was the valid title or right of ownership of J. M. Tuason & Co., Inc. and that of the other innocent purchasers for value and in good faith compared to the failure of the claimants to show their right to own or possess the questioned properties.
1wphi 1.nt

Petitioner maintains that the possession by private respondent and his predecessor-in-interest of the 19.4 hectares of land for more than 30 years cannot overcome the decree of registration issued in favor of its predecessor-in-interest Jose Alvarez. Petitioner quotes the following statement in the Benin case: It follows also that the allegation of prescriptive title in favor of plaintiffs does not suffice to establish a cause of action. If such prescription was completed before the registration of the land in favor of the Tuasons, the resulting prescriptive title was cut off and extinguished by the decree of registration. If, on the contrary, the prescription was either begun or completed after the decree of registration, it conferred no title because, by express provision of law, prescription can not operate against the registered owner (Act 496). 30

Petitioner would thus insist that, by virtue of the decree of registration, Jose Alvarez and those claiming title from him (i.e., the spouses Beduya) acquired ownership of the 19.4 hectares of land, despite the fact that they neither possessed nor occupied these lands. This view is mistaken. A consideration of the cases shows that a decree of registration cut off or extinguished a right acquired by a person when such right refers to a lien or encumbrance on the land not to the right of ownership thereof which was not annotated on the certificate of title issued thereon. Thus, Act No. 496 provides: Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free of all encumbrances except those noted on said certificate, and any of the following encumbrances which may be subsisting, namely: First. Liens, claims, or rights arising or existing under the laws of Constitution of the United States or of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the Registry. Second. Taxes within two years after the same became due and payable. Third. Any public highway, way, private way established by law, or any Government irrigation canal or lateral thereof, where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof, have been determined. But if there are easements or other rights appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner. Hence, in Cid v. Javier, 31 it was held: . . . Consequently, even conceding arguendo that such an easement has been acquired, it had been cut off and extinguished by the registration of the servient estate under the Torrens system without the easement being annotated on the corresponding certificate of title, pursuant to Section 39 of the Land Registration Act. This principle was reiterated in Purugganan v. Paredes 32 which also involved an easement of light and view that was not annotated on the certificate of title of the servient estate. But to make this principle applicable to a situation wherein title acquired by a person through acquisitive prescription would be considered cut off and extinguished by a decree of registration would run counter to established jurisprudence before and after the ruling in Benin. Indeed, registration has never been a mode of acquiring ownership over immovable property. As early as 1911, in the case of City of Manila v. Lack, 33 the Court already ruled on the purpose of registration of lands, viz.: The Court of Land Registration was created for a single purpose. The Act is entitled "An Act to provide for the adjudication and registration of titles to lands in the Philippine Islands." The sole purpose of the Legislature in its creation was to bring the land titles of the Philippine Islands under one comprehensive and harmonious system, the cardinal features of which are indefeasibility of title and the intervention of the State as a prerequisite to the creation

and transfer of titles and interest, with the resultant increase in the use of land as a business asset by reason of the greater certainty and security of title. It does not create a title nor vest one. It simply confirms a title already created and already vested, rendering it forever indefeasible. . . Again, in the case of Angeles v. Samia 34 where land was erroneously registered in favor of persons who neither possessed nor occupied the same, to the prejudice of the actual occupant, the Court held: . . . The purpose of the Land Registration Act, as this court has had occasion to so state more than once, is not to create or vest title, but to confirm and register title already created and already vested, and of course, said original certificate of title No. 8995 could not have vested in the defendant more title than what was rightfully due her and her coowners. It appearing that said certificate granted her much more than she expected, naturally to the prejudice of another, it is but just that the error, which gave rise to said anomaly, be corrected (City of Manila vs. Lack, 19 Phil., 324). The defendant and her coowners knew or, at least, came to know that it was through error that the original certificate of title in question was issued by the court which heard cadastral case No. 11 of Bacolor, not only in or prior to March, 1933, but from the time said certificate was issued in their favor, that is, from December 15, 1921. This is evidenced by the fact that, ever since, they remained passive without even attempting to make the least showing of ownership over the land in question until after the lapse of more than eleven years. The Land Registration Act as well as the Cadastral Act protects only the holders of a title in good faith and does not permit its provisions to be used as a shield for the commission of fraud, or that one should enrich himself at the expense of another (Gustilo vs. Maravilla, 48 Phil., 442; Angelo vs. Director of Lands, 49 Phil., 838). The above-stated Acts do not give anybody, who resorts to the provisions thereof, a better title than he really and lawfully has. If he happened to obtain it by mistake or to secure, to the prejudice of his neighbor, more land than he really owns, with or without bad faith on his part, the certificate of title, which may have been issued to him under the circumstances, may and should be cancelled or corrected (Legarda and Prieto vs. Saleeby, 31 Phil., 590). This is permitted by section 112 of Act No. 496, which is applicable to the Cadastral Act because it is so provided expressly by the provisions of section 11 of the latter Act. It cannot be otherwise because, as stated in the case of Domingo vs. Santos, Ongsiako, Lim y Cia. (55 Phil., 361), errors in the plans of lands sought to be registered in the registry and reproduced in the certificate of title issued later, do not annul the decree of registration on the ground that it is not the plan but the land itself which is registered in the registry. In other words, if the plan of an applicant for registration or claimant in a cadastral case alleges that the land referred to in said plan is 100 or 1,000 hectares, and the land which he really owns and desires to register in the registry is only 80 ares, he cannot claim to be the owner of the existing difference if afterwards he is issued a certificate of title granting him said area of 100 or 1,000 hectares. 35 The principle laid down in this 1938 case remains the prevailing doctrine, its latest application being in the case ofReyes v. Court of Appeals 36 wherein we ruled that the fact that a party was able to secure a title in his favor did not operate to vest ownership upon her of the property. In the present case, private respondent has been in actual, open, peaceful and continuous possession of the property since 1950. This fact was corroborated by the testimony of Eleuterio Cambangay who personally knew that Ulpiano Mumar transferred the land covered by Tax Declaration No. 3840 37 in favor of private respondent in 1950. 38 Private respondent's claim based on actual occupation of the land is bolstered by Tax Declaration Nos. R-1475, R-799 and D2247 39 which were issued in his name in 1950, 1961 and 1974, respectively. Together with his

actual possession of the land, these tax declarations constitute strong evidence of ownership of the land occupied by him. As we said in the case of Republic vs. Court of Appeals: 40 Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one's bona fide claim of acquisition of ownership. More importantly, it was established that private respondent, having been in possession of the land since 1950, was the owner of the property when it was registered by Jose Alvarez in 1969, his possession tacked to that of his predecessor-in-interest, Ulpiano Mumar, which dates back to 1917. 41 Clearly, more than 30 years had elapsed before a decree of registration was issued in favor of Jose Alvarez. This uninterrupted adverse possession of the land for more than 30 years could only ripen into ownership of the land through acquisitive prescription which is a mode of acquiring ownership and other real rights over immovable property. Prescription requires public, peaceful, uninterrupted and adverse possession of the property in the concept of an owner for ten (10) years, in case the possession is in good faith and with a just title. Such prescription is called ordinary prescription, as distinguished from extraordinary prescription which requires possession for 30 years in case possession is without just title or is not in good faith. 42 In contrast to private respondent, it has been shown that neither Jose Alvarez nor the spouses Beduya were at any time in possession of the property in question. In fact, despite knowledge by Gaudencio Beduya that private respondent occupied this 19.4 hectares included in the area covered by TCT No. 10101, 43 he never instituted any action to eject or recover possession from the latter. Hence, it can be concluded that neither Jose Alvarez nor the spouses Beduya ever exercised any right of ownership over the land. The fact of registration in their favor never vested in them the ownership of the land in dispute. "If a person obtains a title under the Torrens system, which includes by mistake or oversight land which can no longer be registered under the system, he does not, by virtue of the said certificate alone, become the owner of the lands illegally included." 44 Considering the circumstances pertaining in this case, therefore, we hold that ownership of the 19.4 hectares of land presently occupied by private respondent was already vested in him and that its inclusion in OCT No. 546 and, subsequently, in TCT No. 10101, was erroneous. Accordingly, the land in question must be reconveyed in favor of private respondent, the true and actual owner thereof, reconveyance being clearly the proper remedy in this case. The true owner may bring an action to have the ownership or title to the land judicially settled and the Court in the exercise of its equity jurisdiction, without ordering the cancellation of the Torrens title issued upon the patent, may direct the defendants, the registered owner to reconvey the parcel of land to the plaintiff who has been found to be the true owner thereof." (Vital vs. Amore, 90 Phil. 955) "The reconveyance is just and proper in order to terminate the intolerable anomaly that the patentees should have a torrens title for the land which they and their predecessors never possessed which has been possessed by Novo in the concept of owner." (Bustarga v. Novo, 129 SCRA 125). 45 Second. Generally, an action for reconveyance based on an implied or constructive trust, such as the instant case, prescribes in 10 years from the date of issuance of decree of

registration. 46 However, this rule does not apply when the plaintiff is in actual possession of the land. Thus, it has been held: . . . [A]n action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property, but this rule applies only when the plaintiff or the person enforcing the trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property, as the defendants are in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession. 47 Having been the sole occupant of the land in question, private respondent may seek reconveyance of his property despite the lapse of more than 10 years. Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that the indefeasibility of torrens titles cannot be collaterally attacked. In the instant case, the original complaint is for recovery of possession filed by petitioner against private respondent, not an original action filed by the latter to question the validity of TCT No. 10101 on which petitioner bases its right. To rule on the issue of validity in a case for recovery of possession is tantamount to a collateral attack. However, it should not be overlooked that private respondent filed a counterclaim against petitioner, claiming ownership over the land and seeking damages. Hence, we could rule on the question of the validity of TCT No. 10101 for the counterclaim can be considered a direct attack on the same. "A counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff. . . . It stands on the same footing and is to be tested by the same rules as if it were an independent action." 48 In an analogous case, 49 we ruled on the validity of a certificate of title despite the fact that the original action instituted before the lower court was a case for recovery of possession. The Court reasoned that since all the facts of the case are before it, to direct the party to institute cancellation proceedings would be needlessly circuitous and would unnecessarily delay the termination of the controversy which has already dragged on for 20 years. Third. Petitioner nonetheless contends that an action for reconveyance does not lie against it, because it is an innocent purchaser for value in the foreclosure sale held in 1985. This contention has no merit. Sec. 38 of Act No. 496, the Land Registration Act, provides: If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or adverse claim and proper for registration, a decree of confirmation and registration shall be entered. Every decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated in the following section. It shall be conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree, provided no innocent purchaser for value has acquired an interest. Upon

the expiration of said term of one year, every decree or certificate of title issued in accordance with this section shall be incontrovertible. If there is any such purchaser, the decree of registration shall not be opened, but shall remain in full force and effect forever, subject only to the right of appeal hereinbefore provided: Provided, however, That no decree or certificate of title issued to persons not parties to the appeal shall be cancelled or annulled. But any person aggrieved by such decree in any case may pursue his remedy by action for damages against the applicant or any other person for fraud in procuring the decree. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Act, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value. (As amended by Sec. 3, Act 3621; and Sec. 1, Act No. 3630.) Succinctly put, 38 provides that a certificate of title is conclusive and binding upon the whole world. Consequently, a buyer need not look behind the certificate of title in order to determine who is the actual owner of the land. However, this is subject to the right of a person deprived of land through fraud to bring an action for reconveyance, provided that it does not prejudice the rights of an innocent purchaser for value and in good faith. "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." 50 The same rule applies to mortgagees, like petitioner. Thus, we held: Where the certificate of title is in the name of the mortgagor when the land is mortgaged, the innocent mortgagee for value has the right to rely on what appears on the certificate of title. In the absence of anything to excite suspicion, said mortgagee is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate. Although Article 2085 of the Civil Code provides that absolute ownership of the mortgaged property by the mortgagor is essential, the subsequent declaration of a title as null and void is not a ground for nullifying the mortgage right of a mortgagee in good faith.51 The evidence before us, however, indicates that petitioner is not a mortgagee in good faith. To be sure, an innocent mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagor's title. Nonetheless, especially in the case of a banking institution, a mortgagee must exercise due diligence before entering into said contract. Judicial notice is taken of the standard practice for banks, before approving a loan, to send representatives to the premises of the land offered as collateral and to investigate who are the real owners thereof. 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. 52 In this case, petitioner's representative, Patton R. Olano, admitted that he came to know of the property for the first time in 1979 when he inspected it to determine whether the portion occupied by private respondent and mortgaged by the latter to petitioner was included in TCT No. 10101. This means that when the land was mortgaged by the spouses Beduya in 1972, no investigation had been made by petitioner. It is clear, therefore, that petitioner failed to exercise due care and diligence in establishing the condition of the land as regards its actual owners and possessors before it entered into the mortgage contract in 1972 with the Beduyas. Had it done so, it would not have failed to discover that private respondent was occupying the disputed portion of 19.4 hectares. For this reason, petitioner cannot be considered an innocent purchaser for value when it bought the land covered by TCT No. 10101 in 1985 at the foreclosure sale. Indeed, two circumstances negate petitioner's claim that it was an innocent purchaser for value when it bought the land in question, including the portion occupied by private respondent: (1) petitioner was already informed by Gaudencio Beduya that private respondent occupied a portion of the property covered by TCT No. 10101; and (2) petitioner's representative conducted an investigation of the property in 1979 to ascertain whether the land mortgaged by private respondent

was included in TCT No. 10101. In other words, petitioner was already aware that a person other than the registered owner was in actual possession of the land when it bought the same at the foreclosure sale. A person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value. "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." 53 Petitioner deliberately disregarded both the fact that private respondent already occupied the property and that he was claiming ownership over the same. It cannot feign ignorance of private respondent's claim to the land since the latter mortgaged the same land to petitioner as security for the loan he contracted in 1978 on the strength of the tax declarations issued under his name. Instead of inquiring into private respondent's occupation over the land, petitioner simply proceeded with the foreclosure sale, pretending that no doubts surround the ownership of the land covered by TCT No. 10101. Considering these circumstances, petitioner cannot be deemed an innocent mortgagee/purchaser for value. As we ruled: 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 where, 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 certificates of title and ma[k]e inquiries concerning the rights of the actual possessor. (Citations omitted.) 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 abona fide purchaser as against such possessors. 54 Fourth. From the foregoing, we find that the resolution of the issue of estoppel will not affect the outcome of this case. Petitioner claims that the fact that it approved a loan in favor of private respondent and executed a mortgage contract covering the 19.4 hectares covered by tax declarations issued under private respondent's name does not mean that it is estopped from questioning the latter's title. Petitioner accuses private respondent of having made misrepresentations which led it to believe in his valid title and ownership. The claim has no basis. Private respondent made no misrepresentation with regard to the land occupied by him as he is actually the real owner thereof. Moreover, when private respondent entered into a mortgage contract with petitioner, his claim of ownership was supported not only by the tax declarations but also by a certification of the Clerk of Court of the Court of First Instance of Bohol that no civil, land registration or cadastral case has been filed or instituted before the court affecting the validity of Tax Declaration No. D-2247 covering the land located in Bugang, San Miguel, Bohol and declared in the name of Carlos Cajes. 55 These documents were relied upon by private respondent in support of his claim of ownership. We cannot consider the submission of these documents as misrepresentations by private respondent as to the actual ownership of the land.

Rather, private respondent believed in good faith and with good reason that he was the owner of the 19.4 hectares occupied by him. As to the question of estoppel, we do not find petitioner to be estopped from questioning private respondent's title. "Estoppel in pais arises when one, by his acts, representations or admission, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts." 56 In the case at bar, upon learning that the land occupied by private respondent was also covered by TCT No. 10101, petitioner immediately demanded full payment of the loan and thereafter cancelled the mortgage contract, a fact that is admitted by private respondent himself. 57 Indeed, nothing in record indicates that petitioner impliedly acquiesced to the validity of private respondent's title when it found out that the latter was occupying a portion of the land covered by TCT No. 10101.
1wphi1 1wphi1.nt

However, for reasons aforestated, we uphold private respondent's ownership of 19.4 hectares occupied by him. As a necessary consequence thereof, such portion of land included in TCT No. 10101 must be segregated and reconveyed in his favor. WHEREFORE, the decision of the Court of Appeals is AFFIRMED in toto. SO ORDERED.