Republic of the Philippines SUPREME COURT Manila 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. T-25772 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, T111560, T-111561 and T-111562 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. 68-69, 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 coowners. (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.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 129760 December 29, 1998 RICARDO CHENG, petitioner, vs. RAMON B. GENATO and ERNESTO R. DA JOSE & SOCORRO DA JOSE, respondents. MARTINEZ, J.: This petition for review on certiorari seeks to annul and set aside the Decision of the Court of Appeals (CA) 1dated July 7, 1997 in CA-G.R. No. CV No. 44706 entitled "Ricardo Cheng, plaintiff-appellee vs. Ramon B. Genato, defendant-appellant, Ernesto R. Da Jose & Socorro B. Da Jose, IntervenorsAppellants" which reversed the ruling of the Regional Trial Court, Branch 96 of Quezon City dated January 18, 1994. The dispositive portion of the CA Decision reads: WHEREFORE, based on the foregoing, appealed decision is hereby REVERSED and SET ASIDE and judgment is rendered ordering; 1. The dismissal of the complaint; 2. The cancellation of the annotations of the defendant-appellant's Affidavit to Annul Contract to Sell and plaintiff-appellee's Notice of Adverse Claim in the subject TCT's, namely, TCT No. T-76.196 (M) and TCT No. T-76.197 (M); 3. Payment by the intervenors-appellants of the remaining balance of the purchase price pursuant to their agreement with the defendant-appellant to suspend encashment of the three post-dated checks issued since 1989. 4. Ordering the execution by the defendant-appellant Genato of the Deed of Absolute Sale over the subject two lots covered by TCT No. T-76.196 (M) and TCT No. T-76.197 (M) in favor of intervenors-appellants Spouses Da Jose; 5. The return by defendant-appellant Genato of the P50,000.00 paid to him by the plaintiff-appellee Cheng, and 6. Payment by plaintiff-appellee Cheng of moral damages to herein intervenorsappellants Da Jose of P100,000.00, exemplary damages of P50,000.00, attorney's fees of P50,000.00, and costs of suit; and to defendant-appellant, of P100,000.00 in exemplary damages, P50,000.00 in attorney's fees. The amounts payable to the defendant-appellant may be compensated by plaintiff appellee with the amount ordered under the immediately foregoing paragraph which defendant-appellant has to pay the plaintiff-appellee. SO ORDERED. 2 The antecedents of the case are as follows: Respondent Ramon B. Genato (Genato) is the owner of two parcels of land located at Paradise Farms, San Jose del Monte, Bulacan covered by TCT No. T-76.196 (M) 3 and TCT No. T-76.197 (M) 4 with an aggregate area of 35,821square meters, more or less. On September 6, 1989, respondent Genato entered into an agreement with respondent-spouses Ernesto R. Da Jose and Socorro B. Da Jose (Da Jose spouses) over the above-mentioned two parcels of land. The agreement culminated in the execution of a contract to sell for which the purchase price was P80.00 per square meter. The contract was in a public instrument and was duly annotated at the back of the two certificates of title on the same day. Clauses 1and 3 thereof provide: 1. That the purchase price shall be EIGHTY (P80.00) PESOS, Philippine Currency per square meter, of which the amount of FIFTY THOUSAND (P50,000.00) PESOS shall be paid by the VENDEE to the VENDOR as partial down payment at the time of execution of this Contract to Sell. xxx xxx xxx

3. That the VENDEE, Thirty (30) DAYS after the execution of this contract, and only after having satisfactorily verified and confirmed the truth and authenticity of documents, and that no restrictions, limitations, and developments imposed on and/or affecting the property subject of this contract shall be detrimental to his interest, the VENDEE shall pay to the VENDOR, NINE HUNDRED FIFTY THOUSAND (P950,00.00) PESOS. Philippine Currency, representing the full payment of the agreed Down Payment, after which complete possession of the property shall be given to the VENDEE to enable him to prepare the premises and any development therein. On October 4, 1989, the Da Jose spouses, not having finished verifying the titles mentioned in clause 3 as aforequoted, asked for and was granted by respondent Genato an extension of another 30 days or until November 5, 1989. However, according to Genato, the extension was granted on condition that a new set of documents is made seven (7) days from October 4, 1989. 6 This was denied by the Da Jose spouses. Pending the effectivity of the aforesaid extension period, and without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell, 7 on October 13, 1989. Moreover, no annotation of the said affidavit at the back of his titles was made right away. The affidavit contained, inter alia, the following paragraphs; xxx xxx xxx That it was agreed between the parties that the agreed downpayment of P950,000.00 shall be paid thirty (30) days after the execution of the Contract, that is on or before October 6, 1989; The supposed VENDEES failed to pay the said full downpayment even up to this writing, a breach of contract; That this affidavit is being executed to Annul the aforesaid Contract to Sell for the vendee having committed a breach of contract for not having complied with the obligation as provided in the Contract to Sell; 8 On October 24, 1989, herein petitioner Ricardo Cheng (Cheng) went to Genato's residence and expressed interest in buying the subject properties. On that occasion, Genato showed to Ricardo Cheng copies of his transfer certificates of title and the annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato also showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been annotated at the back of the titles. Despite these, Cheng went ahead and issued a check for P50,000.00 upon the assurance by Genato that the previous contract with the Da Jose spouses will be annulled for which Genato issued a handwritten receipt (Exh. "D"), written in this wise: 10/24/89 Received from Ricardo Cheng the Sum of Fifty Thousand Only (P50.000-) as partial for T-76196 (M) T-76197 (M) area 35.821 Sq.m. Paradise Farm, Gaya-Gaya, San Jose Del Monte P70/m2 Bulacan plus C. G. T. etc. Check # 470393 (SGD.) Ramon B. Genato 10/24/89 9 On October 25, 1989, Genato deposited Cheng's check. On the same day, Cheng called up Genato reminding him to register the affidavit to annul the contract to sell. 10 The following day, or on October 26, 1989, acting on Cheng's request, Genato caused the registration of the Affidavit to Annul the Contract to Sell in the Registry of Deeds, Meycauayan, Bulacan as primary entry No. 262702. 11 While the Da Jose spouses were at the Office of the Registry of Deeds of Meycauayan, Bulacan on October 27, 1989, they met Genato by coincidence. It was only then that the Da Jose spouses

discovered about the affidavit to annul their contract. The latter were shocked at the disclosure and protested against the rescission of their contract. After being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day period to finish their verification of his titles, that the period was still in effect, and that they were willing and able to pay the balance of the agreed down payment, later on in the day, Genato decided to continue the Contract he had with them. The agreement to continue with their contract was formalized in a conforme letter dated October 27, 1989. Thereafter, Ramon Genato advised Ricardo Cheng of his decision to continue his contract with the Da Jose spouses and the return of Cheng's P50,000.00 check. Consequently, on October 30, 1989, Cheng's lawyer sent a letter 12 to Genato demanding compliance with their agreement to sell the property to him stating that the contract to sell between him and Genato was already perfected and threatening legal action. On November 2, 1989, Genato sent a letter 13 to Cheng (Exh. "6") enclosing a BPI Cashier's Check for P50,000.00 and expressed regret for his inability to "consummate his transaction" with him. After having received the letter of Genato on November 4, 1989, Cheng, however, returned the said check to the former via RCPI telegram 14 dated November 6, 1989, reiterating that "our contract to sell your property had already been perfected." Meanwhile, also on November 2, 1989, Cheng executed an affidavit of adverse claim 15 and had it annotated on the subject TCT's. On the same day, consistent with the decision of Genato and the Da Jose spouses to continue with their Contract to Sell of September 6, 1989, the Da Jose spouses paid Genato the complete down payment of P950,000.00 and delivered to him three (3) postdated checks (all dated May 6, 1990, the stipulated due date) in the total amount of P1,865,680.00 to cover full payment of the balance of the agreed purchase price. However, due to the filing of the pendency of this case, the three (3) postdated checks have not been encashed. On December 8, 1989, Cheng instituted a complaint 16 for specific performance to compel Genato to execute a deed of sale to him of the subject properties plus damages and prayer for preliminary attachment. In his complaint, Cheng averred that the P50,000.00 check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded. Thus, their contract was already perfected. In Answer 17 thereto, Genato alleged that the agreement was only a simple receipt of an option-bid deposit, and never stated that it was a partial payment, nor is it an earnest money and that it was subject to condition that the prior contract with the Da Jose spouses be first cancelled. The Da Jose spouses, in their Answer in Intervention, 18 asserted that they have a superior right to the property as first buyers. They alleged that the unilateral cancellation of the Contract to Sell was without effect and void. They also cited Cheng's bad faith as a buyer being duly informed by Genato of the existing annotated Contract to Sell on the titles. After trial on the merits, the lower court ruled that the receipt issued by Genato to Cheng unerringly meant a sale and not just a priority or an option to buy. It cannot be true that the transaction was subjected to some condition or reservation, like the priority in favor of the Da Jose spouses as first buyer because, if it were otherwise, the receipt would have provided such material condition or reservation, especially as it was Genato himself who had made the receipt in his own hand. It also opined that there was a valid rescission of the Contract to Sell by virtue of the Affidavit to Annul the Contract to Sell. Time was of the essence in the execution of the agreement between Genato and Cheng, under this circumstance demand, extrajudicial or judicial, is not necessary. It falls under the exception to the rule provided in Article 1169 19 of the Civil Code. The right of Genato to unilaterally rescind the contract is said to be under Article 1191 20 of the Civil Code. Additionally, after reference was made to the substance of the agreement between Genato and the Da Jose spouses, the lower court also concluded that Cheng should be preferred over the intervenors-Da Jose spouses in the purchase of the subject properties. Thus, on January 18, 1994 the trial court rendered its decision the decretal portion of which reads: WHEREFORE, judgment is hereby rendered:

1. Declaring the contract to sell dated September 6, 1989 executed between defendant Ramon Genato, as vendor, and intervenors Spouses Ernesto and Socorro Da Jose, as vendees, resolved and rescinded in accordance with Art. 1191, Civil Code, by virtue of defendant's affidavit to annul contract to sell dated October 13, 1989 and as the consequence of intervenors' failure to execute within seven (7) days from October 4, 1989 another contract to sell pursuant to their mutual agreement with defendant; 2. Ordering defendant to return to the intervenors the sum of P1,000,000.00, plus interest at the legal rate from November 2, 1989 until full payment; 3. Directing defendant to return to the intervenors the three (3) postdated checks immediately upon finality of this judgment; 4. Commanding defendant to execute with and in favor of the plaintiff Ricardo Cheng, as vendee, a deed of conveyance and sale of the real properties described and covered in Transfer Certificates of Title No. T-76-196 (M) and T76.197 (M) of the Registry of Deeds of Bulacan, Meycauayan Branch, at the rate of P70.000/square meter, less the amount of P50,000.00 alreaddy paid to defendant, which is considered as part of the purchase price, with the plaintiff being liable for payment of the capital gains taxes and other expenses of the transfer pursuant to the agreement to sell dated October 24, 1989; and 5 Ordering defendant to pay the plaintiff and the intervenors as follows: a/ P50,000.00, as nominal damages, to plaintiff; b/ P50,000.00, as nominal damages, to intervenors; c/ P20,000.00, as and for attorney's fees, to plaintiff; d/ P20,000.00, as and for attorney's fees, to intervenors; and e/ Cost of the suit. xxx xxx xxx Not satisfied with the aforesaid decision, herein respondents Ramon Genato and Da Jose spouses appealed to the court a quo which reversed such judgment and ruled that the prior contract to sell in favor of the Da Jose spouses was not validly rescinded; that the subsequent contract to sell between Genato and Cheng, embodied in the handwritten receipt, was without force and effect due to the failure to rescind the prior contract; and that Cheng should pay damages to the respondents herein being found to be in bad faith. Hence this petition. 21 This petition for review, assails the Court of Appeals' Decision on the following grounds: (1) that the Da Jose spouses' Contract to Sell has been validly rescinded or resolved; (2) that Ricardo Cheng's own contract with Genato was not just a contract to sell but one of conditional contract of sale which gave him better rights, thus precluding the application of the rule on double sales under Article 1544, Civil Code; and (3) that, in any case, it was error to hold him liable for damages. The petition must be denied for failure to show that the Court of Appeals committed a reversible error which would warrant a contrary ruling. No reversible error can be ascribed to the ruling of the Court of Appeals that there was no valid and effective rescission or resolution of the Da Jose spouses Contract to Sell, contrary to petitioner's contentions and the trial court's erroneous ruling. In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. 22 It is one where the happening of the event gives rise to an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance, there

can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred as yet. 23 Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is the obligor's failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. 24 Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired. The Da Jose spouses' contention that no further condition was agreed when they were granted the 30-days extension period from October 7, 1989 in connection with clause 3 of their contract to sell dated September 6, 1989 should be upheld for the following reason, to wit; firstly, If this were not true, Genato could not have been persuaded to continue his contract with them and later on agree to accept the full settlement of the purchase price knowing fully well that he himself imposed such sine qua non condition in order for the extension to be valid; secondly, Genato could have immediately annotated his affidavit to annul the contract to sell on his title when it was executed on October 13, 1989 and not only on October 26, 1989 after Cheng reminded him of the annotation; thirdly, Genato could have sent at least a notice of such fact, there being no stipulation authorizing him for automatic rescission, so as to finally clear the encumbrance on his titles and make it available to other would be buyers. It likewise settles the holding of the trial court that Genato "needed money urgently." Even assuming in gratia argumenti that the Da Jose spouses defaulted, as claimed by Genato, in their Contract to Sell, the execution by Genato of the affidavit to annul the contract is not even called for. For with or without the aforesaid affidavit their non-payment to complete the full downpayment of the purchase price ipso facto avoids their contract to sell, it being subjected to a suspensive condition. When a contract is subject to a suspensive condition, its birth or effectivity can take place only if and when the event which constitutes the condition happens or is fulfilled. 25 If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. 26 Nevertheless, this being so Genato is not relieved from the giving of a notice, verbal or written, to the Da Jose spouses for his decision to rescind their contract. In many cases, 27 even though we upheld the validity of a stipulation in a contract to sell authorizing automatic rescission for a violation of its terms and conditions, at least a written notice must be sent to the defaulter informing him of the same. The act of a party in treating a contract as cancelled should be made known to the other. 28 For such act is always provisional. It is always subject to scrutiny and review by the courts in case the alleged defaulter brings the matter to the proper courts. In University of the Philippines vs. De Los Angeles, 29 this Court stressed and we quote: In other words, the party who deems the contract violated may consider it resolved or rescinded, and act accordingly, without previous court action, but it proceeds at its own risk. For it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law. But the law definitely does not require that the contracting party who believes itself injured must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the party injured by the other's breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is rendered when the law itself requires that he should exercise due diligence to minimize its own damages (Civil Code, Article 2203). This rule validates, both in equity and justice, contracts such as the one at bat, in order to avoid and prevent the defaulting party from assuming the offer as still in effect due to the obligee's tolerance for such non-fulfillment. Resultantly, litigations of this sort shall be prevented and the relations among would-be parties may be preserved. Thus, Ricardo Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case. Anent the issue on the nature of the agreement between Cheng and Genato, the records of this case are replete with admissions 30 that Cheng believed it to be one of a Contract to Sell and not one of

Conditional Contract of Sale which he, in a transparent turn-around, now pleads in this Petition. This ambivalent stance of Cheng is even noted by the appellate court, thus: At the outset, this Court notes that plaintiff-appellee was inconsistent in characterizing the contract he allegedly entered into. In his complaint. 31 Cheng alleged that the P50,000.00 down payment was earnest money. And next, his testimony 32 was offered to prove that the transaction between him and Genato on October 24, 1989 was actually a perfected contract to sell. 33 Settled is the rule that an issue which was not raised during the trial in the court below cannot be raised for the first time on appeal. 34 Issues of fact and arguments not adequately brought to the attention of the trial court need not be and ordinarily will not be considered by a reviewing court as they cannot be raised for the first time on appeal. 35 In fact, both courts below correctly held that the receipt which was the result of their agreement, is a contract to sell. This was, in fact Cheng's contention in his pleadings before said courts. This patent twist only operates against Cheng's posture which is indicative of the weakness of his claim. But even if we are to assume that the receipt, Exh. "D," is to be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded a condition never met, as Genato, to his credit, upon realizing his error, redeemed himself by respecting and maintaining his earlier contract with the Da Jose spouses. In fact, a careful reading of the receipt, Exh. "D," alone would not even show that a conditional contract of sale has been entered by Genato and Cheng. When the requisites of a valid contract of sale are lacking in said receipt, therefore the "sale" is neither valid or enfoceable. 36 To support his now new theory that the transaction was a conditional contract of sale, petitioner invokes the case of Coronel vs. Court of Appeals 37 as the law that should govern their Petition. We do not agree. Apparently, the factual milieu in Coronel is not on all fours with those in the case at bar. In Coronel, this Court found that the petitioners therein clearly intended to transfer title to the buyer which petitioner themselves admitted in their pleading. The agreement of the parties therein was definitively outlined in the "Receipt of Down Payment" both as to property, the purchase price, the delivery of the seller of the property and the manner of the transfer of title subject to the specific condition that upon the transfer in their names of the subject property the Coronels will execute the deed of absolute sale. Whereas, in the instant case, even by a careful perusal of the receipt, Exh. "D," alone such kind of circumstances cannot be ascertained without however resorting to the exceptions of the Rule on Parol Evidence. To our mind, the trial court and the appellate court correctly held that the agreement between Genato and Cheng is a contract to sell, which was, in fact, petitioner connection in his pleadings before the said courts. Consequently, both to mind, which read: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and in the absence thereof, to the person who presents he oldest title, provided there is good faith. However, a meticulous reading of the aforequoted provision shows that said law is not apropos to the instant case. This provision connotes that the following circumstances must concur: (a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales transactions. (b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller. These situations obviously are lacking in a contract to sell for neither a transfer of ownership nor a sales transaction has been consummated. The contract to be binding upon the obligee or the vendor depends upon the fulfillment or non-fulfillment of an event. Notwithstanding this contrary finding with the appellate court, we are of the view that the governing principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence 38 teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer. This principle only applies when the special rules provided in the aforcited article of the Civil Code do not apply or fit the specific circumstances mandated under said law or by jurisprudence interpreting the article. The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to displace the first buyer are: (1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession; 39 (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law. 40 Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the new agreement between Cheng and Genato will not defeat their rights as first buyers except where Cheng, as second buyer, registers or annotates his transaction or agreement on the title of the subject properties in good faith ahead of the Da Jose spouses. Moreover, although the Da Jose spouses, as first buyers, knew of the second transaction it will not bar them from availing 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 Genato defeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith. "Registration", as defined by Soler and Castillo, means any entry made in the books of the registry, including both registration in its ordinary and strict sense, and cancellation, annotation, and even marginal notes. 41 In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights. 42 We have ruled 43 before that when a Deed of Sale is inscribed in the registry of property on the original document itself, what was done with respect to said entries or annotations and marginal notes amounted to a registration of the sale. In this light, we see no reason why we should not give priority in right the annotation made by the Da Jose spouses with respect to their Contract to Sell dated September 6, 1989. Moreover, registration alone in such cases without good faith is not sufficient. Good faith must concur with registration for such prior right to be enforceable. In the instant case, the annotation made by the Da Jose spouses on the titles of Genato of their "Contract To Sell" more than satisfies this requirement. Whereas in the case of Genato's agreement with Cheng such is unavailing. For even before the receipt, Exh. "D," was issued to Cheng information of such pre-existing agreement has been brought to his knowledge which did not deter him from pursuing his agreement with Genato. We give credence to the factual finding of the appellate court that "Cheng himself admitted that it was he who sought Genato in order to inquire about the property and offered to buy the same. 44 And since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement. As we have held in Leung Yee vs. F.L. Strong Machinery Co.: 45 One who purchases real estate with knowledge of a defect . . . of title in his vendor cannot claim that he has acquired title thereto in good faith as against . . . . an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be

necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. Good faith, or lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may with safety, be determined. So it is that "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of the proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judge of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt. 504, 505; Cf. Cardenas vs. Miller, 108 Cal., 250; Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromely, 119 Mich., 8, 10, 17.) (Emphasis ours) Damages were awarded by the appellate court on the basis of its finding that petitioner "was in bad faith when he filed the suit for specific performance knowing fully well that his agreement with Genato did not push through. 46Such bad faith, coupled with his wrongful interference with the contractual relations between Genato and the Da Jose spouses, which culminated in his filing of the present suit and thereby creating what the counsel for the respondents describes as "a prolonged and economically unhealthy gridlock 47 on both the land itself and the respondents' rights provides ample basis for the damages awarded. Based on these overwhelming evidence of bad faith on the part of herein petitioner Ricardo Cheng, we find that the award of damages made by the appellate court is in order. WHEREFORE, premises considered, the instant petition for review is DENIED and the assailed decision is hereby AFFIRMED EN TOTO. SO ORDERED.

SECOND DIVISION G.R. No. L-79787 June 29, 1989 APOLONIO EGAO AND BEATRIZ EGAO, Petitioners, vs. THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO BONTILAO,Respondents. Eliud J. Pailagao for petitioners.chanrobles virtual law library Guerrero A. Adaza for private respondents. PADILLA, J.: This is a land dispute which culminated in the filing by private respondents Severo Dignos and Severo Bontilao of a verified complaint for Quieting of Title and/or Recovery of Possession and Ownership before the RTC of Manolo Fortich, Bukidnon, * against petitioners Apolonio and Beatriz Egao.chanroblesvirtualawlibrary chanrobles virtual law library Private respondents' complaint alleged that they are the legitimate owners and possessors of two (2) parcels of land situated at Lonocan, Manolo Fortich, Bukidnon, per deed of absolute sale dated 21 December 1979 which, among others, recited thus: WHEREAS, the abovementioned Parcels of land Lot No. 662 is covered by Original Certificate of Title No. P-3559 Free Patent No. 298112 registered in the name of APOLONIO EGAO married to Beatriz Menosa and Lot No. 661 is covered by Original Certificate of Title No. P-3558 Free Patent No. 303249 registered in the name of RAULITA CONEJOS married to Pedro Conejos, all transcribed in the Registration Book in the Register of Deeds for the Province of Bukidnon; chanrobles virtual law library WHEREAS, Lot No. 662 has been transferred in ownership from BEATRIZ MENOSA EGAO, married to Apolonio Egao in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed before Tommy C. Pacana, Notary Public of Cagayan de Oro City entered in his Notarial Registry under Doc. No. 75; Page No. 15; Book V Series of 1965; and Lot No. 661 likewise has been transferred in ownership from RAULITA R. CONEJOS in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed before Tommy C. Pacana, Notary Public of Cagayan de Oro City, dated June 3, 1965, entered in his Notarial Registry under Doc. No. 20; Page 4; Book V; Series of 1965.chanroblesvirtualawlibrary chanrobles virtual law library WHEREAS, the VENDEES herein is [sic] aware of the fact that the Certificate of Title over the abovementioned parcels of land have not yet been transferred in favor of ROBERTO N. MARFORI except for the tax declarations but that the VENDOR herein is in actual, physical, continuous, uninterrupted, and adverse possession of the above described parcels of land free from all liens and encumbrances whatsoever; 1chanrobles virtual law library Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxes paid by private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegally portions of the land. 2 chanrobles virtual law library Petitioners' answer to the complaint asserted that Apolonio Egao is the registered owner of the parcel of land known as Lot No. 662, Pls 854 with an area of 3,451 sq. meters evidenced by OCT No. P-3559 issued by the Register of Deeds of Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965; that he (Apolonio Egao) and his family have been in actual, physical, adverse, open and continuous possession thereof even before the issuance to him of the free patent; that the land has never been sold by reason of the prohibition against alienation under Commonwealth Act No. 141 (Public Land Law); and that the instant case was the fourth in a series filed against the Egaos and is part of respondents' scheme to grab said parcel of land from the petitioners.chanroblesvirtualawlibrary chanrobles virtual law library Judge Felicidario M. Batoy ruled in favor of the Egaos, herein petitioners (defendants in the court a quo), ordering respondent Severo Bontilao (plaintiff in the court a quo) to immediately deliver to the Egaos the owner's duplicate copy of Original Certificate of Title No. P-3559. Said trial judge held: In the instant case, granting arguendo, that defendants executed the 2 documents in favor of Marfori (Exhs. A & B) after the filing of the application for free patent but before the issuance of the latter, without the approval of the Director of Lands, upon issuance of Free Patent No. 29811 2 on August 12, 1965, the said deeds of sale (Exhs. A & B) were ipso facto cancelled or superseded by said free patent. Moreover, it appears from the evidence that defendants never vacated or abandoned their possession of

Lot No. 662 as they have continuously lived on said lot since 1950, a fact admitted by the plaintiffs themselves. And as long as Original Certificate of Title No. P-3559 remains in the name of defendant Apolonio Egao, married to Beatriz Menoza Egao, this is the ultimate and best evidence of title granted by the government which must be honored and respected by the courts. In a nutshell, the plaintiffs miserably failed to present or show any title to Lot No. 662, PLS-854 which should be quieted or freed from any cloud of doubt as prayed for in their complaint and they further failed to show that they are entitled to the ownership and possession to Lot No. 662, PLS-854. 3 Private respondents went to the Court of Appeals in CA-G.R. No. 09539. Setting aside the RTC decision, the appellate court ** held, in part, thusThat the land is titled in the name of defendant Apolonio Egao is not in question. The main point in issue is whether defendants could validly sell the land to Marfori who in turn transferred ownership thereof to the plaintiff. 4 Marfori and Egao were both held by the Court of Appeals in pari delicto for violating the five (5) year restriction under Sec. 118, Commonwealth Act No. 141 as amended by Act No. 496 against encumbrance or alienation of lands acquired under a free patent or homestead; hence, they cannot, according to the appellate court, seek affirmative relief, but respondents on the other hand were declared innocent purchasers for value who obtained the owner's duplicate copy of the OCT (still in the name of the Egaos) from Marfori who transferred to them (respondents) physical possession of the property. Finally, the Court of Appeals held: WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is rendered: 1. Declaring the plaintiffs as the absolute owners of the land known as Lot No. 662, Pls-854 of the Land Registry of Bukidnon; chanrobles virtual law library 2. Ordering the Register of Deeds of Bukidnon to effect the cancellation of Original Certificate of Title No. P-3559 in the name of Apolonio Egao and in lieu thereof, another one be issued in the names of plaintiffs, after payment of the proper fees; chanrobles virtual law library 3. Ordering the defendants to surrender peaceful possession of the land to plaintiffs and to desist from further disturbing the possession over the land of plaintiffs; chanrobles virtual law library 4. Ordering the defendants to pay the costs. SO ORDERED. 5chanrobles virtual law library Petitioners turn to this Court for relief, assailing the appellate court for allegedly committing grave abuse of discretion amounting to lack of jurisdiction in holding that: a. Petitioners sold Lot 662 to Roberto Marfori; chanrobles virtual law library b. It was only in 1983 when Petitioners wrested possession over the land from private respondents; chanrobles virtual law library c. Petitioners never denied the sales made in favor of Marfori, in their answer; chanrobles virtual law library d. Private Respondents are "innocent purchasers for value. 6 and/or for allegedly deciding questions of substance not in accordance with law and/or applicable decisions of this Court.chanroblesvirtualawlibrary chanrobles virtual law library Without giving due course to the petition, the Court required respondents to comment. 7After comment, the Court resolved to require petitioners to file a reply, which they did. Respondents filed a rejoinder. Considering the allegations, issues and arguments adduced, the Court resolved to give due course to the petition. Upon submission by the parties of their respective memorandum, the petition was submitted for decision. 8 chanrobles virtual law library Validity of the Deeds of Sale executed between Marfori (as purchaser) and the petitioners (as sellers) is the main issue to be resolved, in determining respondents' right over the disputed land, the respondents being the transferees of Marfori.chanroblesvirtualawlibrary chanrobles virtual law library It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on 12 August, 1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation or encumbrance, within a period of five (5) years from the date of issuance of the patent, of lands acquired under free patent or homestead. Assuming, arguendo, the authenticity of the Deeds of Sale executed by the Egaos in favor of Marfori over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14

January and 6 October 1965, it clearly appears that all deeds were executed within the prohibited period of five (5) years. As correctly found by the appellate courtSection 124 of the Public Land Act provided [sic] that any acquisition, conveyance, abenation, transfer or other contract made or executed inviolation of any of the provisions of Sections 118,121,120,122 and 123 of this Act shall be unlawful, null and void from its execution and shall produce the effect of annulling and cancelling the grant, title, patent or permit originally issued, recognized or confirmed, actually or prescriptively, and cause the reversion of the property and its improvements to the state. 9chanrobles virtual law library Petitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori, asserting continued ownership over the land by virtue of a Torrens Certificate of Title issued in their name. While the Court is not satisfied with respondents' explanation of their failure to present the notaries public (who were residents of a neighboring province) to affirm their participation in the preparation of the Deeds, the Court also finds as insufficient the mere denials by petitioners as to due execution and authenticity of said Deeds of Sale. A notarial document is evidence of the facts in clear unequivocal mariner therein expressed. It has in its favor the presumption of regularity To contradict all these there must be evidence that is clear, convincing and more than merely preponderant. 10 The question of authenticity being one of fact, the Court will not disturb the conclusions of the Court of Appeals on the matter.chanroblesvirtualawlibrary chanrobles virtual law library Original Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a few months after the execution by the Egaos of the last Deed of Sale in favor of Marfori. 11 The OCT is registered in the name of the Egaos, herein petitioners.chanroblesvirtualawlibrary chanrobles virtual law library A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A registered title under the Torrens system cannot be defeated by prescription. The title, once registered, is notice to the world. All persons must take notice. No one can plead ignorance of the registration. 12 chanrobles virtual law library Contrary to the appellate court's conclusion, respondents are not innocent purchasers for value. 13 An "innocent purchaser for value" is deemed, under the Torrens system, to include an innocent lessee, mortgagee or other encumbrancer for value. 14 Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility of the existence of a defect in his vendor's title, and relying on the belief that there was no defect in the title of the vendor, purchases the property without making any further investigation, he cannot claim that he is a purchaser in good faith for value. 15 chanrobles virtual law library Furthermore, a private individual may not bring an action for reversion or any action which would have the effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the result that the land covered thereby will again form part of the public domain, as only the Solicitor General or the officer acting in his stead may do so. 16 chanrobles virtual law library The rule of pari delicto non oritur actio (where two persons are equally at fault neither party may be entitled to relief under the law), admits of exceptions and does not apply to an inexistent contract, such as, a sale void ab initio under the Public Land Act, when its enforcement or application runs counter to the public policy of preserving the grantee's right to the land under the homestead law. 17 chanrobles virtual law library Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration Act (Act No. 496) expressly provides that the registration of the Deed is the operative act that binds or affects the land insofar as third persons are concerned. The law requires a higher degree of prudence from one who buys from a person who is not the registered owner, when the land object of the transaction is registered land. While one who buys from the registered owner need not look behind the certificate of title, one who buys from another who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land. Failing to exercise caution of any kind whatsoever is tantamount to bad faith. 18 chanrobles virtual law library

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void (Sec. 124, Public Land Act). No title passed from the Egaos to Marfori which could be validly transferred to herein respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of that which does not belong to him). 19chanrobles virtual law library While the government has not taken steps to assert its title, by reversion, to a homestead sold in violation of the Public Land Act, the vendor or his heirs is better entitled to the possession of the said, the vendee being in no better situation than any intruder. 20 chanrobles virtual law library Accordingly, respondents who are not innocent purchasers for value have no standing to question petitioners' right to the land and to file an action for quieting of title.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSED and SET ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physical possession of the disputed property. Respondents are ordered to deliver the owner's duplicate copy of the OCT (No. P-3559) to petitioners, without prejudice to an action for reversion of the land, which may be instituted by the Solicitor General for the State.chanroblesvirtualawlibrary chanrobles virtual law library Let a copy of this decision be furnished the Solicitor General.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. L-48971 & 49011 January 22, 1980 PACIFICO GARCIA, petitioner-appellant, vs. BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees; PHILIPPINE NATIONAL BANK, petitioner-appellant, vs. COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by her husband BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees. Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico Garcia Laurel Law Office and Flores Ocampo, Dizon & Domingo for private appellees. AQUINO, J.: This case is about the issuance of two or more transfer certificates of title to different persons for the same lots, 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. The factual background is as follows: 1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a total area of more than seven hectares) of the Hacienda Maysilo, located in Malabon, Rizal and covered by Original Certificate of Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. The deed was executed pursuant to an order of the Court of First Instance of Rizal in Civil Case No. 391, Negao vs. Vidal, a partition proceeding involving the said hacienda (See Bustamante vs. Tuason, 47 Phil. 433, 434). 2. The deed of sale was presented for registration at two-twenty five in the afternoon of January 15, 1920 and was recorded as Primary Entry No. 7710. That deed of sale itself contains the following entries showing that it was annotated on the back of OCT NO. 983: Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el Asiento No. 7710 de tomo 10 del Libro Diario, Pasig, Rizal, Enero 15, 1920. Register of Deeds (Exh. B-12) Inscrito el documento que precede al dorso del certificado de Titulo Original No. 983 del Tomo A-9, de inscritor en las paginas 113 y 114 ambos del libro T-25 de registro como certificados de titulo Nos. 4910 y 4911, archivado en el legajo T#4910. Pasig, Rizal, Enero 15, 1920.: Register of Deeds (Exh. B-1). However, it seemed that, contrary to the foregoing entry and the official routine or standard operating procedure, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title was apparently not cancelled. Why that annotation did not appear in OCT No. 983 and why there was no notation of the cancellation of that title, as it appeared in 1962, is a mystifying circumstance in this case. 3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issued to Lapus for the two parcels of land, E and G, and I Transfer Certificate of Title No. 4911 was issued for the remaining five lots covered by OCT No. 983 (which embrace an area of more than two hundred fiftyeight hectares registered in the names of more than twenty-six-co-owners). TCT Nos. 4910 and 4911 contain the following entries: "Transfer from No. 983. Originally registered on the 29th day of January, in the year 1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant to a decree entered in Case No. 3850." 4. Lapus on different occasions mortgaged the two parcels of land to secure his obligations to the Philippine National Bank, the Government and the Philippine Trust Company. He died in 1951. The two

parcels of land were inherited by his daughter, Carolina Lapuz-Gozon. She became the registered owner of the two lots. She subdivided them into fifty-five lots. She sold some of the subdivision lots to her corespondents-appellees herein. Lapus and his successors-in-interest have been in possession of the two parcels even before 1910 or for more than seventy years. 5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria de la Concepcion Vidal filed a motion in Land Registration Cases Nos. 4429 and 4496 of the Court of First Instance of Rizal, alleging that they were deprived of their participation in the Hacienda Maysilo covered by OCT No. 983 and for other titles and that, since only OCT No. 983 was supposedly unencumbered, all the land covered by that title should be adjudicated to them. The court granted the motion. It should be stressed that OCT No. 983 appears to have remained uncancelled notwithstanding the sale to Lapus of two parcels covered by it and the fact that it had been replaced by TCT Nos. 4910 and 4911. 6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate of Title No. 112236 was issued to the Riveras. Later, Lots 5 and 7 of the said title (corresponding to parcels E and G which were sold to Ismael Lapus in 1918 as stated earlier) were assigned by Bartolome Rivera to Sergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were issued to Cruz and Garcia, respectively. Thus, two sets of transfer certificates of title for Lots E and G or 5 and 7, originally covered by OCT No. 983, were issued, one to the heir of Ismael Lapus and another set to the successors-ininterest of the Riveras. 7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B. Garcia retained Lot A and obtained TCT No. 134958 for it. He assigned Lot B to Antonio Muoz on November 5, 1964. As a consequence of the assignment, TCT No. 112742 was cancelled and TCT No. 134957 was issued to Muoz. In 1965, he mortgaged Lot B to the Associated Banking Corporation to secure a loan of P200,000. 8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E) covered by TCT No. 112743. TCT No. 131329 was issued to Go on August 25,1964. On December 23, 1964, Go mortgaged Lot 6 to the Philippine National Bank (PNB) to secure a loan of P50,000 which was later increased to P60,000. 9. Muoz and Go did not pay their mortgage debts. The two banks foreclosed the mortgages. The PNB bought the mortgaged lot at the auction sale held on May 4. 1967. The sheriff issued to it a certificate of sale dated May 19, 1967 but at that time there was already a notice of lis pendens annotated on the title of the mortgaged lot. TCT Nos. 212163 and 236881 for the mortgaged lots were issued to the Associated Banking Corporation and the Philippine National Bank, respectively. 10. The Riveras and their successors-in-interest have never set foot on the disputed lots. 11. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land (more than two hundred fifty-eight hectares) covered by OCT No. 983. Her lawyer and a surveyor informed her that parcels E and G, which she inherited from her father, were identical to Lots 5 and 7 which were conveyed to Cruz and Garcia. She registered adverse claims on the titles covering Lots 5 and 7. On December 27, 1965 she and the persons to whom she had transferred portions of parcels E and G filed with the Court of First Instance of Rizal at Caloocan City against the Riveras, Cruz, Muoz, Garcia, Associated Banking Corporation, PNB and others an action to quiet title and for damages. 12. A notice of lis pendens was annotated on January 25, 1966 on the titles of Garcia, Muoz and Go. The notice of lis pendens was annotated on the title of the PNB when the sale in its favor was registered on December 13, 1969. 13. The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to 141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs. It voided TCT No. 112235 issued to the Riveras and all titles and transactions emanating therefrom insofar as those titles covered the lots embraced in plaintiffs' titles. The Riveras were ordered to pay the plaintiffs twenty thousand pesos as attorney's fees. 14. The trial court also ordered Muoz to pay the Associated Banking Corporation, in the event that the bank would be evicted from the lot covered by TCT No. 212153, two hundred sixty-five thousand seventy-two pesos and fifteen centavos with twelve percent interest per annum from the date of the eviction plus ten thousand pesos as attorney's fees.

15. Santiago Go was ordered to pay the PNB, should it be evicted from the lot covered by TCT No. 236881, the sum of sixty thousand pesos plus nine percent interest per annum from the date of the eviction and six thousand pesos as attorney's fees. 16. That judgment of the trial court was affirmed by the Court of Appeals in its decision of May 25, 1978. Garcia and the PNB appealed from that decision. The Associated Banking Corporation, now the Associated Citizens Bank, tried to appeal but it was not able to file its petition for review (L-49010). Garcia contends that the Court of Appeals erred in not holding that his title is valid and that the titles of Ismael Lapus and his successors-in-interest lost their right to the disputed lots due to their negligence or inaction. The issue is whether the 1920 title issued to Lapus and the titles derived therefrom should prevail over the 1963title issued to the Riveras and the subsequent titles derived from it. Should Lapus' title prevail even if it was not annotated by the register of deeds on the anterior or parent title which was not cancelled before 1963? It was that noncancellation which led to the issuance of the duplicative title to the Riveras and eventually to the execution of the controversial mortgages and foreclosure sales to the two banks. We hold that the two appeals have no merit. The title of Lapus and the titles derived therefrom should be given effect. The title of the Riveras and the titles springing from it are void. There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to his successors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land. That title could not be nullified or defeated by the issuance forty-three 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 Lapuz. This must be so considering that Lapus and his interest remained in possession of the disputed successors in 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 prevail, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate" (Hogg, Australian Torrens System 823, citing cases and cited in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 595). "Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... In successive registrations, where more than once certificate is issued in respect of a party estate or interest in land, the Person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under theprior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof " (Niblack, Analysis of the Torrens System page 237, cited in Legarda and Prieto vs. Saleeby, supra, pages 595-6). And the rule that in case of double registration the owner of the earlier certificate is the owner of the land applies to the successive vendees of the owners of such certificates . "The vendee of the earlier certificate would be the owner as against the vendee of the owner of the later certificate" (Legarda and Prieto vs. Saleeby, supra, pages 597-9). It is settled that is 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 registration matters (La Urbana vs. Bernardo, 62 Phil. 790, 806). Appellant Garcia invokes the ruling that the mere entry of a document in the day or entry book without noting it on the certificate of title is not a sufficient registration (Bass vs. De la Rama, 73 Phil. 682, 685). That ruling was superseded by the holding in the later six cases of Levin vs. Bass, 91 Phil. 420, where a distinction was made between voluntary and involuntary registration, such as the registration of an attachment, levy upon execution, notice of his pendens, and the like. In cases of involuntary registration, an entry thereof in the day book is a sufficient notice to all persons even if the owner's duplicate certificate of title is not presented to the register of deeds. On the other hand, according to the said cases of Levin vs. Bass, in case of voluntary registration of documents an innocent purchaser for value of registered land becomes the registered owner, and, in contemplation of law the holder of a certificate of title, the moment he presents and files a duly notarized and valid deed of sale and the same is entered in the day book and at the same time he surrenders or presents the owner's duplicate certificate of title covering the land sold and pays the registration fees,

because what remains to be done lies not within his power to perform. The register of deeds is duty bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.) The instant case is not Identical to the Bass cases. Here the deed of sale in favor of Lapus, which was judicially authorized, was entered in the entry book and a new title was issued to him. As already stated, and this point should be underscored, the deed of sale in favor of Lapus contains the notation that it was annotated on the back of OCT No. 983 (presumably, the original and owner's duplicate thereof). But why in 1962 it appeared that no such annotation was found on the back of OCT No. 983, contrary to what was stated in the 1918 deed of sale, is a mystery that the trill court and the plaintiffs failed to unravel during the trial. Moreover, the title issued to Lapus contains the usual notation that it was a transfer from a previous title which in this case was OCT No. 983. It should be further observed that the deed of sale in favor of Lapus and the titles issued to him and his successors interest together with his mortgage in 1929 of the disputed lots to the PNB itself, are all a matter of public record in the registry of deeds. As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is notice to all the world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact shown by the record and is presumed to know every fact which the record discloses. "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 irrefutable. 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" (Legarda and Prieto vs. Saleeby, supra, page 600). As Justice Johnson says, "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" (Legarda and Prieto vs. Saleeby, supra, pp. 600-601). As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value, the Appellate Court held that the bank should have made an on-the-spot investigation of the lot mortgaged by Go to ascertain whether he was in possession of it or it was claimed by other persons. Its failure to do so precludes the bank from being considered as a mortgagee in good faith and for value (Gatioan vs. Gaffud, L-21953, March 28, 1969, 27 SCRA 706). On the other hand, the trial court held that the PNB was not a buyer in good faith when it bought Go's lot at the auction sale because there was already a notice of his pendens annotated on his title. In the Gatioan case, it appears that in 1935 Rufina Permison secured a Torrens title for a parcel of land on the basis of a free patent. The land was sold to Encarnacion Gatioan and Transfer Certificate of Title No. T-1212 was issued to her. She mortgaged the land three times to the PNB In 1956, the spouses Sixto Gaffud and Villamora Logan were able to secure a Torrens title for the same lot also on the basis of a free patent. They mortgaged the land also to the PNB. The Secretary of Agriculture and Natural Resources, on discovering that two Torrens titles were issued for the same land, recommended the cancellation of the later title issued to the Gaffud spouses. As the PNB refused to cancel the mortgaged executed by Gatioan, in spite of the fact that she had made full payment of the mortgage debt, she filed against the Gaffud spouses and the PNB an action to quiet title. It was held that Gatioan's title should prevail over that of the Gaffud spouses and that the mortgage executed by them in favor of the PNB was void. The Gaffud spouse were ordered to pay damages to Gatioan. Since the applicable rule in the instant case is that the earlier certificate of title should be recognized as superior and controlling there is no justification for relying on the doctrine laid down by Justice Holmes in Eliason vs. Wilborn 281 U.S. 457, that "as between two innocent persons, one of whom must suffer

the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss." There was no breach of trust in this case. What is note. worthy in this case is that after it was recited in the registered deed of sale that sale was annotated at the back of the title covering the lots sold, it turned out that the title did not contain such an annotation and that the title was not cancelled. For that anomaly, the purchaser, Ismael Lapus, the how" of the earlier title, was not culpable or blameworthy. WHEREFORE, the judgment of the Court of Appeals, affirming the decision of the trial court, should stand. Costs against the appellants. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION 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. T-9885. 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 Solicitor-General. 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. L-21953, 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.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION 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-ininterest 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 Twentyeight 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 L-34335, 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.

SECOND DIVISION [G. R. No. 102377. July 5, 1996] ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners, vs. THE COURT OF APPEALS, DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON CITY and REGISTER OF DEEDS OF MARIKINA, respondents. DECISION TORRES, JR., J.: A word or group of words conveys intentions. When used truncatedly, its meaning disappears and breeds conflict. Thus, it is written - By thy words shalt thou be justified, and by thy words shalt thou be condemned. (Matthew, 12:37) Construing the new words of a statute separately is the raison detre of this appeal. Essentially, the case before us 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 Ernesto B. Uychocde and Lucita Jarin, 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 Alfredo Sajonas and Conchita R. Sajonas, who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case. The facts are not disputed, and are hereby reproduced as follows: On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. 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 on August 28, 1985. Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in two years from June 25, 1980. When Uychocde failed to comply with his undertaking in the compromise agreement, defendant-appellant 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 where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, 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. 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 ssued 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 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand, defendant-appellant Pilares refused to cause the cancellation of said annotation. In view thereof, plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986.[1] The Sajonases filed their complaint[2] in the Regional Trial Court of Rizal, Branch 71, against Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges:

7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of the defendant, have already transferred, conveyed and assigned all their title, rights and interests to the plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon; 8. That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by the plaintiffs on the corresponding title of the Uychocde spouses; 9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause the cancellation of the said notice of levy but the latter, without justifiable reason and with the sole purpose of harassing and embarrassing the plaintiffs ignored and refused plaintiffs demand; 10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of the notice of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned counsel, to protect their rights and interests, for which they agreed to pay attorneys fees in the amount of P10,000 and appearance fees of P500 per day in court.[3] Pilares filed his answer with compulsory counterclaim[4] on March 8, 1986, raising special and affirmative defenses, the relevant portions of which are as follows: 10. Plaintiff has no cause of action against herein defendants; 11. Assuming, without however admitting that they filed an adverse claim against the property covered by TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529; 12. The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon City proceeding from a decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto Uychocde, is undoubtedly proper and appropriate because the property is registered in the name of the judgment debtor and is not among those exempted from execution; 13. Assuming without admitting that the property subject matter of this case was in fact sold by the registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and without any legal force and effect because it was done in fraud of a judgment creditor, the defendant Pilares.[5] Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses. The parties appeared at pre-trial proceedings on January 21, 1987,[6]after which, trial on the merits ensued. The trial court rendered its decision on February 15, 1989. [7] It found in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N109417. The court a quo stated, thus: After going over the evidence presented by the parties, the court finds that although the title of the subject matter of the Notice of Levy on Execution was still in the name of the Spouses Uychocde when the same was annotated on the said title, an earlier Affidavit of Adverse Claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uychocdes. It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) 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. xxx xxx xxx On the issue of whether or not plaintiffs 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.[8] (Cai vs. Henson, 51 Phil 606) xxx xxx xxx

In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant Pilares, as follows: 1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certificate of Title No. N-109417. 2. Ordering said defendant to pay the amount of P5,000 as attorneys fees. 3. Dismissing the Counterclaim interposed by said defendant. Said defendant is likewise ordered to pay the costs. Dissatisfied, Pilares appealed to the Court of Appeals[9], 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, thus: WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this complaint is dismissed. Costs against the plaintiffs-appellees."[10] The Sajonas couple are now before us, on a Petition for Review on Certiorari[11], praying inter alia to set aside the Court of Appeals decision, and to reinstate that of the Regional Trial Court. Private respondent filed his Comment[12] on March 5, 1992, after which, the parties were ordered to file their respective Memoranda. Private respondent complied thereto on April 27, 1994 [13], while petitioners were able to submit their Memorandum on September 29, 1992.[14] Petitioner assigns the following as errors of the appellate court, to wit: I 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. II THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS SUBSTANTIAL RIGHT TO DUE PROCESS. Primarily, we are being asked to ascertain who among the parties in suit has a better right over the property in question. The petitioners derive their claim from the right of ownership arising from a perfected contract of absolute sale between them and the registered owners of the property, such right being attested to by the notice of adverse claim[15]annotated on TCT No. N-79073 as early as August 27, 1984. Private respondent on the other hand, claims the right to levy on the property, and have it sold on execution to satisfy his judgment credit, arising from Civil Case No. Q-28850[16] against the Uychocdes, from whose title, petitioners derived their own. 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 is 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.[17] The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529.* Noting the changes made in the terminology of the provisions of the law, private respondent interpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its annotation, and does not automatically lose its force afterwards. Private respondent further maintains that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70 of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the payment of their obligation based on a compromise agreement.[18] The respondent appellate court upheld private respondents theory when it ruled:

The above stated 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. The provision of this Decree is clear and specific. xxx xxx xxx It should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496) does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however, now specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the period of effectivity would not have been inserted in the law. Since the adverse claim was annotated On August 27, 1984, it was effective only until September 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985, said adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the existence of the adverse claim on the Uychocdes title is equivalent to registration inasmuch as the adverse claim was already ineffective when the notice of levy on execution was annotated. Thus, the act of defendant sheriff in annotating the notice of levy on execution was proper and justified. The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction.[19] Perforce, the appellate court stated, the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its registration, after which it shall be without force and effect. Continuing, the court further stated; . . . clearly, the issue now has been reduced to one of preference- 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. In the case of Landig vs. U.S. Commercial Co., 89 Phil 638 it was held that where a sale is recorded later than an attachment, although the former is of an earlier date, the sale must give way to the attachment on the ground that the act of registration is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court of Appeals (129 SCRA 513). xxx xxx xxx The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property Registration Decree, which provides as follows: Section 51. Conveyance and other dealings by the registered owner.- An owner of registered land may convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned, and in all cases under the Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Italics supplied by the lower court.) 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.[20] Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale. [21] While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the

system, or any interest therein only take effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule is not absolute. Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon. One who buys without checking the vendors title takes all the risks and losses consequent to such failure.[22] In PNB vs. Court of Appeals, we held that the subsequent sale of the property to the De Castro spouses cannot prevail over the adverse claim of Perez, which was inscribed on the banks certificate of title on October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right over and above that of Perez. The TCT issued in the spouses names on July, 1959 also carried the said annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid for the property.[23] Then again, in Gardner vs. Court of Appeals, we said that the statement of respondent court in its resolution of reversal that until the validity of an adverse claim is determined judicially, it cannot be considered a flaw in the vendors title contradicts the very object of adverse claims. As stated earlier, the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over the property.[24] The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 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? This is a decisive factor in the resolution of this instant case. If the adverse claim was still in effect, then respondents are charged with knowledge of preexisting interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy attached to the certificate of title. For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land Registration Act reads: Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title 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 designate a place at which all notices may be served upon him. The statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion. The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides: 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. (Italics ours) 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.[25] 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. [26] 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. A statutes clauses and phrases must not be taken separately, but in its relation to the statutes totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction.[27] An eminent authority on the subject matter states the rule candidly: A statute is passed as a whole and not in parts or sections, and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part or section so as to produce a harmonious whole. It is not proper to confine its intention to the one section construed. It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the context.[28] 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.[29]

It should be noted that the law employs the phrase may be cancelled, which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not.[30] 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.[31] The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following: Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant. Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground. It was held that validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties.[32] In sum, the disputed inscription of adverse claim on the Transfer Certificate of Title 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 on 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. This can be deduced from the pertinent provision of the Rules of Court, to wit: Section 16. Effect of levy on execution as to third persons- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing. (Italics supplied) 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. As lucidly observed by the trial court in the challenged decision: True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the property in question? Stated in another, did the lapse of the thirty day period automatically nullify the contract to sell between the plaintiffs and the Uychocdes thereby depriving the former of their vested right over the property? It is respectfully submitted that it did not.[33] 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 on April 21, 1988.[34] ATTY. REYES Q - Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the property subject matter of this case, they showed you the owners transfer certificate, is it not? A - Yes, sir. Q - That was shown to you the very first time that this lot was offered to you for sale? A - Yes. Q - After you were shown a copy of the title and after you were informed that they are desirous in selling the same, did you and your husband decide to buy the same? A - No, we did not decide right after seeing the title. Of course, we visited... Q - No, you just answer my question. You did not immediately decide? A - Yes. Q - When did you finally decide to buy the same? A - After seeing the site and after verifying from the Register of Deeds in Marikina that it is free from encumbrances, that was the time we decided. Q - How soon after you were offered this lot did you verify the exact location and the genuineness of the title, as soon after this was offered to you? A - I think its one week after they were offered.[35] 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.[36] Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another.[37] 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 respondents, 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. 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 and encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been preserved 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.[38] ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989 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. Costs against private respondent. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION 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). m Likewise, there is no controversy as to the fact that on May e 27, 1911 Ambrosia Salao bought for four thousand pesos from the heirs of Engracio Santiago a parcel t 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 sixty-three 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 one-third 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 counter-claims, 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 coownership 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 co-ownership 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 successors-in-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.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-22486 March 20, 1968 TEODORO ALMIROL, petitioner-appellant, vs. THE REGISTER OF DEEDS OF AGUSAN, respondent-appellee. Tranquilino O. Calo, Jr. for petitioner-appellant. Office of the Solicitor General for respondent-appellee. CASTRO, J.: 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, inter alia, stated in his letter of May 21, 1962: 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 can not dispose of the whole property without violating the existing law (LRC Consulta No. 46 dated June 10, 1958). To effect the registration of the aforesaid deed of absolute Sale, it is necessary that the property be first liquidated and transferred in the name of the surviving spouse and the heirs of the deceased wife by means of extrajudicial settlement or partition and that the consent of such other heir or heirs must be procured by means of another document ratifying this sale executed by their father. In view of such refusal, Almirol went to the Court of First Instance of Agusan on a petition for mandamus (sp. civ. case 151), to compel the Register of Deeds to register the deed of sale and to issue to him the corresponding transfer certificate of title, and to recover P5,000 in moral damages and P1,000 attorney's fees and expenses of litigation. It is Almirol's assertion that it is but a ministerial duty of the respondent to perform the acts required of him, and that he (Almirol) has no other plain, speedy and adequate remedy in the ordinary course of law. In his answer with counterclaim for P10,000 damages, the respondent reiterated the grounds stated in his letter of May 21, 1962, averred that the petitioner has "other legal, plain, speedy and adequate remedy at law by appealing the decision of the respondent to the Honorable Commissioner of Land Registration," and prayed for dismissal of the petition. In its resolution of October 16, 1963 the lower court, declaring that "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 the present appeal by Almirol. The only question of law tendered for resolution is whether mandamus will lie to compel the respondent to register the deed of sale in question. Although the reasons relied upon by the respondent evince a sincere desire on his part to maintain inviolate the law on succession and transmission of rights over real properties, these do not constitute legal grounds for his refusal to register the deed. Whether a document is valid or not, is not for the register of deeds to determine; this function belongs properly to a court of competent jurisdiction.1 Whether the document is invalid, frivolous or intended to harass, is not the duty of a Register of Deeds to decide, but a court of competent jurisdiction. (Gabriel vs. Register of Deeds of Rizal, et al., L-17956, Sept. 30, 1953).

. . . the supposed invalidity of the contracts of lease is no valid objection to their registration, because invalidity is no proof of their non-existence or a valid excuse for denying their registration. The law on registration does not require that only valid instruments shall be registered. How can parties affected thereby be supposed to know their invalidity before they become aware, actually or constructively, of their existence or of their provisions? If the purpose of registration is merely to give notice, then questions regarding the effect or invalidity of instruments are expected to be decided after, not before, registration. It must follow as a necessary consequence that registration must first be allowed, and validity or effect litigated afterwards. (Gurbax Singh Pablo & Co. vs. Reyes and Tantoco, 92 Phil. 182183). Indeed, 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. Section 4 of R.A. 1151 reads as follows: Reference of doubtful matters to Commissioner of Land Registration. When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum 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 Register of Deeds with reference to any such matter, the question shall be submitted to the Commissioner of Land Registration either upon the certification of the Register of Deeds, stating the question upon which he is in doubt, or upon the suggestion in writing by the party in interest; and thereupon the Commissioner, after consideration of the matter shown by the records certified to him, and in case of registered lands, after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made. His decision in such cases shall be conclusive and binding upon all Registers of Deeds: Provided, further, That when a party in interest disagrees with the ruling or resolution of the Commissioner and the issue involves a question of law, said decision may be appealed to the Supreme Court within thirty days from and after receipt of the notice thereof. The foregoing notwithstanding, the court a quo correctly dismissed the petition for mandamus. Section 4 abovequoted provides that "where any party in interest does not agree with the Register of Deeds . . . the question shall be submitted to the Commissioner of Land Registration," who thereafter shall "enter an order prescribing the step to be taken or memorandum to be made," which shall be "conclusive and binding upon all Registers of Deeds." This administrative remedy must be resorted to by the petitioner before he can have recourse to the courts. ACCORDINGLY, the Resolution of the lower court of October 16, 1969, is affirmed, at petitioner's cost.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION 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. T-99 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 twenty-two 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.

Republic of the Philippines SUPREME COURT Manila EN BANC 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-inlaw 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.1wph1.t 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.