DIONISIO C. LADIGNON, petitioner, vs. COURT OF APPEALS and LUZVIMINDA C. DIMAUN, respondents.

The instant Petition for Review seeks to set aside the December 11, 1995 Decision of respondent Court of Appeals in CA-G.R. CV No. 38183 which reversed the May 20, 1992 Decision of the Regional Trial Court of Quezon City, Branch 85 in Civil Case No. Q-90-5871. The case originates from a Complaint for Declaration of Nullity of Conveyance and Recovery of Possession and Damages,[1] filed on May 12, 1990 by private respondent against petitioner, Richard C. Tong, Jose Porciuncula, Jr. and Litogo Company, Inc. In the Complaint, private respondent alleged that petitioner, a relative by affinity, offered his services as lawyer to mediate between her and the relatives of her adoptive mother with respect to inheritance she was expecting to receive from her adoptive parents. Private respondent claimed that petitioner made her sign a Petition[2] for the reconstitution of Transfer Certificate of Title No. 240724, covering an eight hundred fifty nine and seven/tenths (859.7) square meter parcel of land located in Talayan, Quezon City, registered under her name and that of her adoptive mother, Ligaya Flores Collantes. Said Petition was, however, dismissed on August 28, 1989 for her failure to appear at the scheduled hearing. Private respondent claims that she did not know of such dismissal, neither of the fact that Transfer Certificate of Title No. 240724 was superseded by Transfer Certificate of Title No. 383675 of the Registry of Deeds of Quezon City, in her name alone. Attached to private respondents Complaint was a copy of a Deed of Absolute Sale which appears to have been executed by her as vendor and by Litoco Co., Inc., represented by its President, Richard Tong, as vendee. Subject of the said sale was the Talayan property. Under the terms of the Deed, the purchase price of the sale was P800,000.00, receipt of which was therein specifically acknowledged by the vendor. The Deed, dated May 12, 1989, was duly notarized in Manila on the same date as Document No. 267, Page No. 55, Book No. VI, Series of 1989 of the notarial books of Notary Public Elsa R. Reblora. Private respondent denied having received the purchase price therefor, nor having signed the same, insisting that her alleged signatures thereon are falsified or forged. Thus, she prayed for the declaration of nullity of the said Deed of Absolute Sale and for the defendants therein to be ordered to surrender possession of the lot covered thereby as well as the owners duplicate copy of TCT No. 38365. Private respondent also sought P50,000.00 in moral damages, P30,000.00 as attorneys fees, exemplary and nominal damages, litigation expenses and costs of suit. During pre-trial, the parties agreed to limit the issues to the following

"1.....Whether the signatures of plaintiff on the Deed of Absolute Sale (Exhibit "F") conveying the inherited property to defendants are forged/falsified or not; 2.....Whether the failure of plaintiff to reconstitute TCT No. 240724 covering the property subject matter hereof affects the issuance of TCT No. 383675 or not; 3.....Whether defendants should be held liable for damages to plaintiff for their wanton acts of depriving plaintiff of her inherited property."[3] The trial court found the evidence submitted by private respondent as insufficient to overturn the public document sought to be annulled. Thus, a Decision was rendered on May 20, 1992, in favor of petitioner, to wit "WHEREFORE, in the light of the foregoing, judgment is hereby rendered DISMISSING the complaint and, on the counterclaim, ordering the plaintiff to pay defendant Dionisio Ladignon the sum of P50,000.00 by way of moral and exemplary damages, and P25,000.00 as attorneys fees, plus costs. The crossclaim of defendant Litogo Company, Inc. and Richard Tong against defendant Dionisio Ladignon is likewise DISMISSED. SO ORDERED."[4] Private respondent appealed the decision to the Court of Appeals which reversed the trial courts decision dated May 20, 1992. In reversing the said judgment, respondent Court of Appeals relied on the following findings: First, that the authenticity of TCT No. 383675, which was the subject of the questioned deed, was highly questionable; and second, that the private respondent was shown to have no participation in the questioned deed of sale. The dispositive portion of said Decision states: "WHEREFORE, premises considered, the appeal is GRANTED being meritorious. Judgment appealed from is hereby REVERSED and judgment is hereby rendered as follows: 1).....The deed of sale of the Talayan property is declared NULL and VOID. Consequently, the entry in what purports to be TCT No. 383675 re said sale is also ANNULLED and CANCELLED;

2).....Ordering Ladignon to pay appellant Dimaun P50,000.00 by way of moral damages; P30,000.00 by way of attorneys fees; and P30,000.00 by way of exemplary damages; 3).....Ordering Litogo to surrender possession of the Talayan property to appellant Dimaun; 4).....Ordering the Register of Deeds of Quezon City to cancel TCT No. 383675 which is hereby declared annulled and of no force and effect; 5).....Atty. Ladignon is ordered to return to Litogo Company the amount of P2,063,280.00 with interest at 6% per annum from May 12, 1989 until fully paid; and 6).....To pay the costs of suit. SO ORDERED."[5] Hence, the instant petition for review based on the following grounds: "I THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN GIVING CREDENCE TO THE THEORY OF THE PRIVATE RESPONDENT WHEN THERE IS NO EVIDENCE EVER ADDUCED TO SUBSTANTIATE THE ASSEVERATION. II THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO LACK OF JURISDICTION WHEN IT DISREGARDED JURISPRUDENTIAL EDICTS ON PRESUMPTIONS THAT PRIVATE TRANSACTIONS ARE FAIR AND REGULAR AND THAT DOCUMENTS EXECUTED BY THE PARTIES ARE VALID AND REGULAR. III THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE FACTUAL FINDINGS OF THE TRIAL COURT IN THE ABSENCE OF ANY SHOWING THAT THE LOWER

COURT ABUSED ITS DISCRETION IN APPRECIATING THE EVIDENCE ADDUCED BY THE PARTIES. IV THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF JURISDICTION WHEN IT ACCUSED PETITIONER OF COMMITTING AN INFRACTION WHEN THE EVIDENCE ON RECORD DOES NOT SUPPORT THE CONCLUSION AND NO LESS THAN THE PROSECUTORIAL ARM OF THE GOVERNMENT DISMISSED THE COMPLAINT FILED BY THE PRIVATE RESPONDENT FOR WANT OF PROBABLE CAUSE."[6] It is evident that the instant Petition calls for a review of the facts of the case. On this matter, well-settled is the rule that in the exercise of the power to review, the findings of fact of the Court of Appeals are conclusive and binding on this Court. However, there are recognized exceptions among which is when the factual findings of the trial court and the appellate court are conflicting.[7] The instant case falls within this exception and we are thus constrained to examine the arguments presented by petitioner. We note that the Deed of Absolute Sale being questioned is a public document, having been notarized by Atty. Elsa R. Reblora who appeared on the witness stand to testify on the due execution of the same.[8] As a public document, the subject Deed of Absolute Sale had in its favor the presumption of regularity, and to contradict the same, there must be evidence that is clear, convincing and more than merely preponderant; otherwise the document should be upheld.[9] It is also worth stressing that private respondent claim that her signature on the subject Deed of Absolute Sale is forged. As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof lies on the party alleging forgery.[10] Was the evidence presented by private respondent against the Deed of Absolute Sale clear, convincing and more than merely preponderant to overcome both the presumption of regularity attached to public documents and to meet the stringent requirements to prove forgery? Far from being clear and convincing, all private respondent had to offer by way of evidence was her mere denial that she had signed the same. Such mere denial will not suffice to overcome the positive value of the subject Deed, a notarized document. Indeed, even in cases where the alleged forged signature was compared to samples

of genuine signatures to show its variance therefrom, this Court still found such evidence insufficient, to wit -"Petitioner contends that his signature on the power of attorney was falsified. He also alleges that the same was not duly notarized for as testified by Atty. Tubig himself, he did not sign thereon nor was it ever recorded in his notarial register. To bolster his argument, petitioner had presented checks, marriage certificate and his residence certificate to prove his alleged genuine signature which when compared to the signature in the power of attorney, showed some difference. We found, however, that the basis presented by the petitioner was inadequate to sustain his allegation of forgery. Mere variance of the signatures cannot be considered as conclusive proof that the same were forged. Forgery cannot be presumed (TenioObsequio vs. Court of Appeals, G.R. 107967, March 1, 1994). Petitioner, however, failed to prove his allegation and simply relied on the apparent difference of the signatures. His denial had not established that the signature on the power of attorney was not his. x x x............................x x x............................x x x Documents acknowledged before a notary public have the evidentiary weight with respect to their due execution. The questioned power of attorney and deed of sale, were notarized and therefore, presumed to be valid and duly executed. Atty. Tubig denied having notarized the said documents and alleged that his signature had also been falsified. He presented samples of his signature to prove his contention. Forgery should be proved by clear and convincing evidence and whoever alleges it has the burden of proving the same. Just like the petitioner, witness Atty. Tubig merely pointed out that his signature was different from that in the power of attorney and deed of sale. There had never been an accurate examination of the signature, even that of the petitioner. To determine forgery, it was held in Cesar vs. Sandiganbayan (G.R. Nos. 54719-50, 17 January 1985, quoting Osborn, The Problem of Proof) that: "The process of identification, therefore, must include the determination of the extent, kind, and significance of this resemblance as well as of the variation. It then becomes necessary to determine whether the variation is due to the operation of a different personality, or is only the expected and inevitable variation found in the genuine

writing of the same writer. It is also necessary to decide whether the resemblance is the result of a more or less skillful imitation, or is the habitual and characteristic resemblance which naturally appears in a genuine writing. When these two questions are correctly answered the whole problem of identification is solved."[11] In American Express International, Inc. v. Court of Appeals,[12] the means to prove the genuineness of a handwriting were laid down, as follows -"Licartes testimony likewise failed to demonstrate the existence of forgery. He only stated that the cardholders denied having made the transactions as they were allegedly not in the Philippines. Forgery cannot be deduced therefrom. As stated in Tenio-Obsequio v. Court of Appeals (G.R. No. 107967, 1 March 1994, 230 SCRA 550), forgery cannot be presumed; it must be proved by clear, positive and convincing evidence. In imputing discrepancy in the signatures appearing in the charge forms and those appearing on the credit cards as well as in its records, AMEXCO should have conducted an examination of the signatures before the court (Sec. 22. How genuineness of handwriting proved. The handwriting of a person may be proved by any witness who believes it to be the handwriting of such person because he has seen the person write, or has seen writing purporting to be his upon which the witness has acted or been charged, and has thus acquired knowledge of the handwriting of such person. Evidence respecting the handwriting may also be given by a comparison, made by the witness or the court, with writings admitted or treated as genuine by the party against whom the evidence is offered, or proved to be genuine to the satisfaction of the judge [Rule 132, Rules of Court]). A comparison of both the differences and similarities in the questioned signatures should have been made to satisfy the demands of evidence. Failing to introduce ample proof to substantiate its claim of forgery, petitioners case has no leg to stand on." In the case at bar, we cannot accept the claim of forgery where no comparison of private respondents signatures was made, no witness (save for private respondent herself) was presented to testify on the same, much less an expert witness called, and all that was presented was private respondents testimony that her signature on the questioned Deed was forged. Indeed, even when the evidence is conflicting, the public document must still be upheld.[13] Neither was private respondent able to prove that contrary to the recital in the acknowledgment, she never appeared before the notary public and acknowledged the deed to be her voluntary act, a burden which was hers to discharge.[14] Instead, the

notary public even directly testified that private respondent had acknowledged to her that she had the signed the questioned Deed, to wit "Q:....Atty. Reblora, on May 12, 1989, you were the duly commissioned Notary Public for the City of Manila, is that correct? A:....Yes sir. Q:....And do you know one of the defendants in this case Richard Tong? A:....Yes sir. Q:....And why do you know him? A:....I know him because aside from the fact that he is holding office on the same building that I work, on May 12, 1989, he together with or accompanied by a woman who introduced herself as Luzviminda Collantes, then asked me to notarize a deed of sale. (sic) Q:....I am showing to you a deed of sale, previously marked as Exh. 4 for Ladignon and another deed of sale which was marked as Exh. F for the plaintiff, will you please tell the Honorable Court, what is the relation of this document to the document that you notarized on May 12, 1989? A:....These are the same. This is the same deed of sale that I notarized on that day. Q:....And appearing at the end of the same are the signature, document number 267, page no. 55, book no. 6, series of 1989 which is marked as Exh. 4-Ladignon and Exh. F for the plaintiff is the document no. 267, page no. 55, book 6, series of 1989, will you please state what are the relation of these 2 documents as per numbers and identification of the same? A:....These are the same and one sir. Q:....Now, after presented (sic) to you this document for notarization, what did you do when the same was presented to you?

A:....When they came to my office, I asked them if the parties to the transaction were present. Q:....Now, you asked the parties, were Luzviminda the plaintiff and Richard Tong present at that time? A:....Yes sir. Q:....After you were satisfied of their presence, what did you do next in relation to your job as a Notary Public? A:....After that, I verified whether their signature on the deed of sale are their signature. After verifying to be their signature (sic) and the same to have been acknowledged by the same, I notarized the document. Q:....When you said that you have verified, that these signatures appearing on Exh. F for Ladignon are their signature, to whom are you referring to? A:....These parties namely: Richard Tong and Luzviminda Collantes. Q:....And when you asked whether they are their signatures, did they confirm the same? A:....Yes, they answered yes."[15] All told, we find that private respondent, who has filed the Complaint for nullity of conveyance below has not sufficiently met the burden of proof to sustain her case and for such reason, we must reinstate the dismissal of her complaint as ordered by the court a quo. In upholding private respondents position, respondent Court of Appeals gave much importance to the claim by private respondent that there was no valid reconstitution of Transfer Certificate of Title No. 240724 upon which Transfer Certificate of Title No. 383675 (subject of the questioned Deed of Absolute Sale) was derived. Respondent Court of Appeals posited that Transfer Certificate of Title No. 383675 was "highly questionable for the simple reason that no basis for its issuance has been shown." And as such, it went on to conclude that "no Deed of Sale between plaintiff-appellant Dimaun and Litogo had ever been executed." Aside from being an obvious stretch of reasoning, this conclusion finds no basis in the case before us, which is simply one for nullity of conveyance. What is worse, in ordering the cancellation of Transfer Certificate of Title No. 383675, respondent Court of Appeals acted without jurisdiction. After all, it is hornbook law that a torrens title cannot be collaterally attacked. The

issue of validity of a torrens title, whether fraudulently issued or not, may be posed only in an action brought to impugn or annul it. Unmistakable, and cannot be ignored, is the germane provision of Section 48 of Presidential Decree No. 1529, that a certificate of title can never be the subject of a collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding instituted in accordance with law.[16] Clearly, the action below for nullity of conveyance is hardly the direct proceeding required by law to attack a Torrens Certificate of Title. WHEREFORE, the instant Petition for Review is hereby GRANTED. The challenged Decision of the Court of Appeals is REVERSED and SETASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 85, dismissing Civil Case No. Q-90-5871 is REINSTATED in its totality. No pronouncement as to costs. G.R. No. 142313. March 1, 2001 SPOUSES MANUEL CHU, SR. and CATALINA B. CHU, the former substituted by THEANLYN B. CHU, THEAN CHING LEE B. CHU, THEAN LEEWN B. CHU and MARTIN LAWRENCE B. CHU, the latter represented by his mother and guardian ad litem, petitioner CATALINA B. CHU, Petitioners, v. BENELDA ESTATE DEVELOPMENT CORPORATION, respondent. Facts: The petitioners spouses Manuel Chu, Sr. and Catalina Chu were the registered owners of five (5) parcels of land situated in Barrio Saguin, San Fernando, Pampanga. They executed a deed of sale on Sept. 30, 1986 with assumption of mortgage in favor of Trinidad N. Cunanan. It was made to appear in the deed of sale that the total consideration had been fully paid to enable Cunanan to have the parcels of land registered in her name so that she could mortgage the same to secure a loan and thereupon pay from the proceeds of the loan. Their agreement, however, was that the ownership of the properties shall remain with the petitioners until full payment of the balance of the total purchase price. Cunanan failed to pay the balance of the total purchase price to the petitioners. Without the knowledge of the petitioners, Cunanan sold the three (3) parcels of land to Cool Town Realty and Development Corporation, and the two (2) other parcels of land to the spouses Amado and Gloria Carlos. The spouses Carlos, in turn, sold these two (2) properties to the respondent Benelda Estate Development Corporation. Petitioners commenced civil case before the Regional Trial Court of Pampanga against Trinidad N. Cunanan, Cool Town Realty and Development Corporation and the Register of Deeds of Pampanga. The petitioners amended their complaint to include respondent Benelda Estate Development Corporation as a defendant. The respondent filed its answer with a motion to dismiss on the ground that the amended complaint states no cause of action against respondent. It alleged that respondent corporation, through its officers, acted in good faith in buying the properties inasmuch as it exerted all efforts to verify the authenticity of the titles and

that no defect was found. After the petitioner filed an opposition to the motion to dismiss, the trial court rendered a decision denying the motion to dismiss. The respondent filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals alleging that the trial court committed grave abuse of discretion in denying its motion to dismiss the amended complaint. The Court of Appeals reversed the order of the trial court and dismissed the case as against the respondent on the ground of lack of cause of action and for failure of the petitioners to include the spouses Carlos as indispensable parties in the complaint. Issues: a) Whether the spouses Amado E. Carlos and Gloria A. Carlos (sellers of the subject titled parcels of land to respondent) are real and indispensable parties in the case at bar. b) Whether or not the respondent corporation is an innocent purchaser for value. Held: A cause of action is defined as an act or omission by which a party violates a right of another. The test of the sufficiency of the facts found in a petition as constituting a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer thereof. In land title cases, the court held that a person dealing with registered land may safely rely on the correctness of the certificate of title issued and the law will in no way oblige him to go behind the certificate to determine the condition of the property. A person is considered in law as an innocent purchaser for value who is defined as one who buys the property of another, without notice that some other person has a right or interest in such property and pays a full 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. In this connection, Section 53 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides that: The production of the owners duplicate certificate, whenever any voluntary instrument is presented for registration, shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith. Thus, a title procured through fraud and misrepresentation can still be the source of a completely legal and valid title if the same is in the hands of an innocent purchaser for value. In a case for annulment of title, therefore, the complaint must allege that the purchaser

was aware of the defect in the title so that the cause of action against him will be sufficient. Failure to do so, as in the case at bar, is fatal for the reason that the court cannot render a valid judgment against the purchaser who is presumed to be in good faith in acquiring the said property. Failure to prove, much less impute, bad faith on said purchaser who has acquired a title in his favor would make it impossible for the court to render a valid judgment thereon due to the indefeasibility and conclusiveness of his title. What is important is that when respondent bought the subject properties, it was not aware of any defect in the covering certificates of title thereto at the time of such purchase. There is no allegation to the contrary in the amended complaint. Therefore, the title of respondent, being that of an innocent purchaser for value, remains valid. By allowing the cancellation of their certificates of title and the issuance of new ones in lieu thereof in the name of Trinidad N. Cunanan despite alleged non-payment of the full purchase price for their subject two (2) parcels of land, the petitioners took the risk of losing their titles on the said properties inasmuch as the subject deed of sale with assumption of mortgage constitutes their consent and announcement to the whole world that Cunanan was indeed the legal owner of the properties by virtue of the said deed which is a public document. The appellate court therefore was correct in entertaining the petition for the reason that the trial court committed a grave abuse of discretion when it refused to dismiss the case against the respondent, despite the obvious insufficiency of the amended complaint against the corporation respondent. To implead the respondent in the case at bar, absent an allegation of bad faith on its part, is to undermine a well-settled rule protecting innocent purchasers for value and the indefeasibility and conclusiveness of certificates of title issued under the Torrens System. The petition is DENIED for lack of cause of action. ALEJANDRO AGASEN and FORTUNATA CALONGE-AGASEN, petitioners, vs. THE HON. COURT OF APPEALS and PETRA BILOG, assisted by her husband FELIPE BILOG, respondents. On April 7, 1980, private respondent Petra Bilog, assisted by her husband Felipe Bilog, filed a complaint for Recovery of Possession and Ownership[1] with the Regional Trial Court of Agoo, La Union, involving an Eight Thousand Four Hundred Seventy Four (8,474) square meter parcel of land registered in her name under Transfer Certificate of Title No. T-16109 of the Registry of Deeds of La Union. She alleged that sometime in 1964 or 1965, petitioners took possession and assumed ownership of the said property, appropriating the fruits therefrom. She alleged that despite demands on them to vacate the land, petitioners refused to do so and even filed a case for Annulment of TCT and/or Reconveyance with Damages before the same court, which case was, however, dismissed on February 12, 1980. Thus, in her complaint, private respondent prayed that she be declared the true and absolute owner of the subject land and petitioners be ordered to turn over possession thereof to her. Additionally,

private respondent prayed for P300,000.00 as attorneys fees, P2,000.00 as expenses of litigation as well as P60,000.00 representing the value of the lands produce from 1965 to the time of the filing of the case and P4,000.00 annually until the case is terminated. In their Answer,[2] petitioners Alejandro Agasen and Fortunata Calonge-Agasen asserted that the subject land used to form part of Lot No. 2192, a forty two thousand three hundred seventy two (42,372) square meter parcel of land owned in common by the five (5) Bilog siblings, private respondent Petra Bilog being one of them. Petitioners claimed that they became the owners of the portion of the subject land which belonged to private respondent as her share therein, by virtue of: (1) the sale in their favor of 1,785 square meters thereof by Leonora Calonge, sister of Fortunata Calonge-Agasen, and (2) the sale in their favor by private respondent of the remaining 6,717.50 square meters on June 24, 1968, by virtue of a notarized Partition with Sale. Petitioners also affirmed that they had been in possession of the subject land since the time of the above-mentioned sale transactions, with a house of strong materials built thereon. By way of counterclaim, petitioners charged private respondent with having fraudulently caused title to the subject land to be issued in her name, following the subdivision of the original land between her and her co-heirs/owners, in violation of their (petitioners) rights over the subject land. Thus, petitioners prayed for the annulment of title in private respondents name and for the dismissal of the complaint, as well as for the award of P10,000.00 as exemplary damages, P25,000.00 as moral damages, P5,000.00 as litigation expenses and P7,000.00 as attorneys fees and costs. On November 19, 1984, the Regional Trial Court of Agoo, La Union, Branch 3, rendered judgment in favor of petitioners, dismissing the complaint and declaring Transfer Certificate of Title No. 16109 in the name of private respondent null and void.[3] On appeal, the Court of Appeals reversed the decision of the lower court and private respondent was declared the true and absolute owner of the subject land.[4] Accordingly, petitioners were ordered to turn over the subject land to private respondent. With the denial of petitioners Motion for Reconsideration on May 20, 1994, [5] the instant Petition was filed, anchored upon the following grounds I. THE DECISION (ANNEX A) ERRED IN DECLARING THE DEED OF PARTITION WITH SALE (EXH. 1) AND THE DEED OF ABSOLUTE SALE (EXH. 2) NOT AUTHENTIC AND VALID; II. THE DECISION ERRED IN HOLDING THAT DEFENDANTS FAILED TO SUBSTANTIATE THEIR CLAIM OF OWNERSHIP AND IN GIVING MORE CREDENCE TO PLAINTIFFS TESTIMONIAL EVIDENCE AND TAX DECLARATION NO. 21460 (EXH. B) AND CERTIFICATION OF TAX PAYMENTS (EXH. C);

III. THE DECISION ERRED IN FINDING/HOLDING THAT THE NONREGISTRATION OF THE DEED OF PARTITION WITH SALE AND THE DEED OF ABSOLUTE SALE WITH THE REGISTER OF DEEDS MADE THE PURCHASES THEREUNDER "DENTED" AND DID NOT AUTOMATICALLY VEST TITLE OR OWNERSHIP OVER THE SUBJECT PROPERTY TO THE BUYERS; IV. THE DECISION ERRED IN HOLDING THAT THE DAILY NOTEBOOK (EXH. 3) CONTAINING THE MEMORANDUM OF INSTALLMENT SALE BY LEONORA CALONGE TO DEFENDANT-APPELLEE FORTUNATA AGASEN (EXH. 3-a TO 3-c) OVER THE PARCEL OF LAND DESCRIBED IN EXH. 2 WAS NOT A VALID OR CREDIBLE DOCUMENT OF TRANSFER; V. THE DECISION GRAVELY ERRED IN HOLDING THAT TCT NO. 16109 (EXH. A) CANNOT BE COLLATERALLY ATTACKED ON THE GROUND THAT IT IS BARRED BY THE RULE ON INDEFEASIBILITY OF A TORRENS TITLE AFTER THE LAPSE OF ONE YEAR FROM THE DECREE OF REGISTRATION.[6] Although the instant case is a petition for review under Rule 45 which, as a general rule, is limited to reviewing errors of law, findings of fact being conclusive as a matter of general principle, however, considering the conflict between the factual findings of the trial court and the respondent Court of Appeals, there is a need to review the factual issues as an exception to the general rule.[7] As correctly stated by the lower court, the crucial question in the instant controversy is whether or not the two (2) documents, relied upon by petitioners as basis for their claim of ownership, are valid. Overthrowing the lower courts finding of validity, the Court of Appeals ruled that private respondents testimonial and documentary evidence "junked" petitioners documents (Exhibits "1" and "2"). We disagree. To begin with, it is not denied that the two subject documents are notarized documents and, as such, are considered public documents which enjoy the presumption of validity as to authenticity and due execution. [8] One of the documents, the Deed of Absolute Sale, was identified by Assistant Provincial Fiscal Maximo Quero, the administering officer who had notarized it. The legal presumption of validity of petitioners duly notarized public documents has not been overcome by preponderant evidence by private respondent, upon whom the burden of proof rests, having alleged the contrary.[9] The subject documents were also attached by petitioners to their Answer where they were alleged as part of the counterclaim. As such, private respondent should have specifically denied under oath their genuineness and due execution.[10] After all, a counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff. It stands on the same footing and is to be tested by the same rules as if it were an independent action.[11] Having failed to specifically deny under

oath the genuineness and due execution of the said documents, private respondent is deemed to have admitted the same. And while private respondent denied having signed any document selling the subject parcels of land, the trial court found her signature on the subject documents to be genuine, after a comparison thereof with her own documentary evidence on record (Exh. "B"). Indeed, it has been held that where a comparison is permissible, it may be made by the court, with or without the aid of expert witnesses;[12] and evidence respecting handwriting may be given by a comparison made by the court with writings admitted or treated as genuine by the party against whom the evidence is offered.[13] In the case at bar, the lower court compared private respondents signatures on the subject documents with that appearing on her own evidence (Exh. "B") and found the same identical. The following circumstances all indicate the genuineness and due execution of the subject documents: (1) The subject documents were duly notarized public documents; (2) The documents enjoy the legal presumption of validity; (3) Their genuineness and due execution were not specifically denied under oath by private respondent; (4) Private respondents signature thereon were found genuine by the lower court upon a comparison of her signature thereon with that in her own documentary evidence; (5) The actual identification and positive testimony of petitioner; and (6) The testimony of the lawyer who had notarized one of the subject documents. Private respondents bare denial of the same cannot, by any measure, overcome the above-mentioned evidence and legal presumptions in petitioners favor. As for the sale in petitioners favor by the original vendee thereof, Leonora Calonge, the Court of Appeals accepted private respondents charges that there was no valid document of transfer and that the notebook with memorandum of sale and record of installment payments, relied upon by petitioners, was worse than the two subject documents. Again, we disagree. The memorandum of sale appearing in Exhibit "3" is sufficient to prove the sale between petitioner Fortunata Calonge Agasen and her late sister, the previous vendee of the land subject of the Deed of Absolute Sale from private respondent. After all, contracts are obligatory in whatever form they may have been entered into provided all essential requisites are present.[14] The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument.[15] It was likewise error for the Court of Appeals to rule that the transactions were "dented by the failure to register/annotate the same with the Register of Deeds" and that due to such failure, the documents "did not automatically bind the subject property." First, one of the subject documents, the Deed of Absolute Sale, was in fact registered. Second, as elucidated in Fule vs. Court of Appeals[16]

"The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Being consensual, a contract of sale has the force of law between the contracting parties and they are expected to abide in good faith by their respective contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public instrument, is only for convenience, and registration of the instrument only adversely affects third parties. Formal requirements are, therefore, for the benefit of third parties. Non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder." In the light of the foregoing, we reverse the Court of Appealss ruling that the failure of petitioners to register the Partition with Sale was fatal. The Court of Appeals also found petitioners claim of ownership to be unsubstantiated, in contrast to that of private respondent who presented tax declarations and certification of tax payments in her favor. As pointed out by petitioners, however, the tax declarations in the name of private respondent for the year 1978 were issued only in 1977, and only after she had secured title to the property in her name. Such a belated declaration has been held to be indicative of an absence of a real claim of ownership over the subject land prior to the declaration.[17] On the other hand, the real estate tax payments certified as paid by the Municipal Treasurer refers to the entire mother Lot No. 2192 before it was subdivided or partitioned into five (5) equal lots. Private respondent cannot be said to have paid taxes on the subject property during the period when petitioners claimed that the property had already been sold to them. We also note that, far from being unsubstantiated, petitioners claim of ownership is backed by their long years of possession of the subject parcels of land. There is no dispute that petitioners had occupied the subject land since the sale in their favor, i.e., since 1964 in the case of the Deed of Absolute Sale and since 1968 in the case of the Partition with Sale. They have also built a concrete house which has long been standing thereon. Then, too, petitioners have adequately explained why they have not pursued their action for annulment of title against private respondent, which the Court of Appeals viewed as having "further darkened the cloud of suspicion which hovered over the questioned documents." Private respondent herself admits that petitioners were the first to assert their right, by filing an action for annulment of title and/or for reconveyance with damages against private respondent[18] which complaint was, however, dismissed without prejudice.[19] On the other hand, the complaint of private respondent was filed two months after the dismissal of their complaint, prompting them to merely interpose their cause of action as a compulsory counterclaim in the lower court.

Finally, the Court of Appeals is likewise in error in holding that private respondents title was "vested with the garment of indefeasibility." The rule on indefeasibility of torrens title --- i.e., that torrens title can be attacked only for fraud, within one year after the date of the issuance of the decree of registration --- applies only to original titles and not to subsequent registration. An action for annulment of title and/or reconveyance which was previously filed by petitioners and interposed in their counterclaim is an action open to them to attack private respondents fraudulently acquired title. Neither may the compulsory counterclaim of petitioners challenging the title of private respondent be brushed aside as merely a collateral attack which would bar a ruling on the validity of the said title.[20] WHEREFORE, premises considered, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals dated January 11, 1994 in CA-G.R. CV No. 10309 is SET ASIDE. The decision of the Regional Trial Court of Agoo, La Union, Branch 32, dismissing Civil Case No. A-713, annulling Transfer Certificate of Title No. 16109 in the name of private respondent and finding petitioners to be the lawful owners of the land covered by the same, is REINSTATED. No pronouncement as to costs. SPOUSES FRANCISCO and AMPARO DE GUZMAN, JR., petitioners, vs. THE NATIONAL TREASURER OF THE REPUBLIC OF THE PHILIPPINES and THE REGISTER OF DEEDS OF MARIKINA CITY, respondents. RESOLUTION KAPUNAN, J.: Petitioners De Guzman spouses seek the reversal of the decision of the Court of Appeals holding that the Assurance Fund established under the Property Registration Decree is not liable for the losses allegedly sustained by petitioners. The facts that led to the present proceedings are succinctly set forth by the Court of Appeals as follows: On 01 July 1985, Urlan Milambiling and Asuncion Velarde purchased a parcel of land situated in Antipolo, Rizal from Sta. Lucia Realty and Development, Inc. Although they were already civilly married, Asuncion used her maiden name in the Deed of Sale because, being conservative, she did not want to use her married name until she was married in church. After their church wedding on 05 July 1985, Urlan and Asuncion Milambiling left for Europe on their honeymoon and from there, they proceeded to Saudi Arabia where they were working as accountant and nurse, respectively. Before leaving for abroad, the spouses Milambiling entrusted the Deed of Sale of the parcel of land they bought from Sta. Lucia Realty and the corresponding Certificate of

Title still in the name of Sta. Lucia Realty to a long-time friend and one of their principal wedding sponsors, Marilyn Belgica, who volunteered to register the sale and transfer the title in their names. Later, the spouses Milambiling learned from Belgica through an overseas telephone call that a transfer certificate of title of the said parcel of land had already been issued in their names. Belgica committed to the Milambiling spouses that she will personally deliver the title to them in Saudi Arabia. Sometime in May 1986, Belgica arrived in Saudi Arabia but the title was not with her. Belgica said that she left it in their house in the Philippines and forgot to bring it with her. Urlan Milambiling was angry and immediately called up his relatives in the Philippines and asked them to find out from the Office of the Register of Deeds of Rizal what happened to their title. He was informed that the Certificate of Title covering the said parcel of land had indeed been transferred in their names but was subsequently cancelled and title transferred in the names of x x x the spouses De Guzman. Milambiling was also told about the circumstances that led to the cancellation of their title. It appears that while the spouses Milambiling were in Saudi Arabia, a couple identifying themselves as the spouses Urlan and Asuncion Milambiling went to the house of a certain Natividad Javiniar, a real estate broker, inquiring if the latter could find a buyer for their lot located in Vermont Subdivision, Antipolo, Rizal. Javiniar accompanied the said couple to the house of [the] spouses De Guzman. Having somehow obtained possession of the owners duplicate copy of the certificate of title in the name of the spouses Milambiling, the impostor-couple were able to convince the de Guzmans to buy the property. On 20 November 1985, the impostor-couple, posing as the spouses Milambiling, executed a Deed of Absolute Sale in favor of [the] spouses de Guzman who paid the stipulated purchase price of P99,200.00. On 30 April 1986, [the De Guzmans] registered the said sale with the Register of Deeds of Marikina who cancelled the certificate of title in the name of the Milambilings and issued TCT No. N-117249 in the names of [the] De Guzman[s]. Upon learning of the above, Urlan Milambiling quickly returned to the Philippines. On 24 July 1986, the spouses Milambiling filed an action against [the spouses De Guzman] before the Regional Trial Court of Antipolo, Rizal, Branch 73, for declaration of nullity of sale and title with damages. xxx [The] spouses De Guzman appealed the decision of the trial court to the Court of Appeals. On 18 July 1991, [the Court of Appeals] rendered its decision affirming the decision of the court a quo. [The] spouses De Guzman then went to the Supreme Court on a petition for review on certiorari. On 01 July 1992, the High Tribunal issued a resolution denying the petition on the ground that no reversible error was committed by the Court of Appeals.

On 11 February 1993, [the] spouses De Guzman filed [an] action for damages against the Assurance Fund before the Regional Trial Court of Pasig, Branch 153[,] [impleading the National Treasurer of the Republic of the Philippines and the Register of Deeds of Marikina City.][1] On January 20, 1995, the RTC rendered its decision finding in favor of the De Guzman spouses, thus: IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiffs and against the defendants adjudging the Assurance Fund liable to the amount actually paid by the plaintiffs which is in the amount of P99,200.00 and ordering the defendants Treasurer and/or Registrar to pay or cause the payment of the said amount to herein plaintiffs. SO ORDERED.[2] The National Treasurer and the Marikina Registrar of Deeds appealed from the above decision. The Court of Appeals found merit in the appeal and reversed the decision of the RTC. We affirm the decision of the Court of Appeals. Section 95 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides: SEC. 95. Action for compensation from funds. A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system or arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damage to be paid out of the Assurance Fund. The precursor of Section 95, Section 101 of the Land Registration Act (Act No. 496), similarly states: SEC. 101. Any person who without negligence on his part sustains loss or damage through any omission, mistake or misfeasance of the clerk, or register of deeds, or of any examiner of titles, or of any deputy or clerk of the register of deeds in the performance of their respective duties under the provisions of this Act, and any person who is wrongfully deprived of any land or any interest therein, without negligence on his part, through the bringing of the same under the provisions of this Act or by the registration of any other persons as owner of such land, or by any mistake, omission,

or misdescription in any certificate or owners duplicate, or in any entry or memorandum in the register or other official book, or by any cancellation, and who by the provisions of this Act is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same, may bring in any court of competent jurisdiction an action against the Treasurer of the Philippine Archipelago for the recovery of damages to be paid out of the Assurance Fund. It may be discerned from the foregoing provisions that the persons who may recover from the Assurance Fund are: 1) Any person who sustains loss or damage under the following conditions: a) that there was no negligence on his part; and b) that the loss or damage sustained was through any omission, mistake or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the performance of their respective duties under the provisions of the Land Registration Act, now, the Property Registration Decree; or 2) Any person who has been deprived of any land or interest therein under the following conditions: a) that there was no negligence on his part; b) that he was deprived as a consequence of the bringing of his land or interest therein under the provisions of the Property Registration Decree; or by the registration by any other person as owner of such land; or by mistake, omission or misdescription in any certificate of owners duplicate, or in any entry or memorandum in the register or other official book or by any cancellation; and c) that he is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same.[3] The Court of Appeals correctly held that petitioners circumstances do not fall under the first case. Petitioners have not alleged that the loss or damage they sustained was through any omission, mistake or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the performance of their respective duties. Moreover, petitioners were negligent in not ascertaining whether the impostors who executed a deed of sale in their (petitioner's) favor were really the owners of the property.[4] Nor does petitioners situation fall under the second case. They were not deprived of their land as a consequence of the bringing of [the] land or interest therein under the provisions of the Property Registration Decree. Neither was the deprivation due to the registration by any other person as owner of such land, or by mistake, omission

or misdescription in any certificate or owners duplicate, or in any entry or memorandum in the register or other official book or by any cancellation. Petitioners' claim is not supported by the purpose for which the Assurance Fund was established. The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land.[5] Petitioners did not suffer any prejudice because of the operation of this doctrine. On the contrary, petitioners sought to avail of the benefits of the Torrens System by registering the property in their name. Unfortunately for petitioners, the original owners were able to judicially recover the property from them. That petitioners eventually lost the property to the original owners, however, does not entitle them to compensation under the Assurance Fund. While we commiserate with petitioners, who appear to be victims of unscrupulous scoundrels, we cannot sanction compensation that is not within the law's contemplation. As we said in Treasurer of the Philippines vs. Court of Appeals,[6] the Government is not an insurer of the unwary citizens property against the chicanery of scoundrels. Petitioners recourse is not against the Assurance Fund, as the Court of Appeals pointed out, but against the rogues who duped them. ACCORDINGLY, the petition is DENIED. GUARANTEED HOMES, INC., Petitioner, vs. HEIRS OF MARIA P. VALDEZ, (EMILIA V. YUMUL and VICTORIA V. MOLINO), HEIRS OF SEVERINA P. TUGADE (ILUMINADA and LEONORA P. TUGADE, HEIRS OF ETANG P. GATMIN (LUDIVINA G. DELA CRUZ (by and through ALFONSO G. DELA CRUZ), HILARIA G. COBERO and ALFREDO G. COBERO) and SIONY G. TEPOL (by and through ELENA T. RIVAS and ELESIO TEPOL, JR.), AS HEIRS OF DECEDENT PABLO PASCUA, Respondents. Facts: The descendants of Pablo Pascua filed a complaint (in their complaint respondents alleged that Pablo died intestate sometime in June 1945 and was survived by his four children, one of whom was the deceased Cipriano) seeking reconveyance of a parcel of land with an area of 23.7229 hectares situated in Cabitaugan, Subic, Zambales with Original Certificate of Title (OCT) No. 404 in the name of Pablo. In the alternative, the heirs of Valdez prayed that damages be awarded in their favor. OCT No. 404 was attached as one of the annexes of respondents complaint. It contained several annotations in the memorandum of encumbrances which showed that the property had already been sold by Pablo during his lifetime to Alejandria Marquinez and Restituto Morales. It was further averred in the complaint that Jorge Pascua, Sr., son of Cipriano, filed a petition before the RTC of Olongapo City for the issuance of a new owners duplicate of OCT No. 404. However, the RTC denied the petition and held that petitioner was already the owner of the land, noting that the failure to annotate the subsequent transfer of the property to it at the back of OCT No. 404 did not affect its title to the

property. Petitioner filed a motion to dismiss the complaint on the grounds that the action is barred by the Statute of Limitations, more than 28 years having elapsed from the issuance of TCT No. T-10863 up to the filing of the complaint, and that the complaint states no cause of action as it is an innocent purchaser for value, it having relied on the clean title of the spouses Rodolfo. The RTC granted petitioners motion to dismiss.

right to bring such action first occurred, which in this case was in 1967. The petition is GRANTED. G.R. No. 151424: EAGLE REALTY CORPORATION vs REPUBLIC OF THE PHILIPPINES, NATIONAL TREASURER OF THE PHILIPPINES, HEIRS OF CASIANO DE LEON and MARIA SOCORRO DE LEON July 04 2008 & July 31, 2009 (MFR) / Land Titles and Deeds

The appellate court further held that the ruling of the RTC that petitioner is an innocent purchaser for value is contrary to the allegations in respondents complaint. Hence, the present petition for review. Issue: The sole issue before this Court revolves around the propriety of the RTCs granting of the motion to dismiss and conversely the tenability of the Court of Appeals reversal of the RTCs ruling. Held: The petition is meritorious. It is well-settled that to sustain a dismissal on the ground that the complaint states no cause of action, the insufficiency of the cause of action must appear on the face of the complaint, and the test of the sufficiency of the facts alleged in the complaint to constitute a cause of action is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the complaint. Firstly, the complaint does not allege any defect with TCT No. T-8242 in the name of the spouses Rodolfo, who were petitioners predecessors -in-interest, or any circumstance from which it could reasonably be inferred that petitioner had any actual knowledge of facts that would impel it to make further inquiry into the title of the spouses Rodolfo. Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales executed by Cipriano alone despite the existence of the other heirs of Pablo, is not binding on such other heirs, nevertheless, it has operative effect under Section 44 of the Property Registration Decree (SEC. 44. Statutory Liens Affecting Title). Lastly, respondents claim against the Assurance Fund also cannot prosper. Section 101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be liable for any loss, damage or deprivation of any right or interest in land which may have been caused by a breach of trust, whether express, implied or constructive. Even assuming arguendo that they are entitled to claim against the Assurance Fu nd, the respondents claim has already prescribed since any action for compensation against the Assurance Fund must be brought within a period of six (6) years from the time the

Innocent Purchaser - Sunshine Finance Doctrine Eagle Realty, a company engaged in the real estate business, bought a parcel of land from a certain Reyes in 1984 via a Deed of Sale. This Reyes acquired the land from a certain Medina who earlier acquired the said land via surreptitiously entering a false record in the records of the Land Registration Commission. Eventually, the true owners of the said land, the de Leons, discovered that another title was fraudulently issued to Medina over the same parcel of land. De Leon was able to have the said title annulled as well as the TCT issued to Eagle Realty by virtue of the Deed of Sale. ISSUE: Whether or not Eagle Realty is an innocent purchaser. HELD: No. Based on case law (Sunshine Finance vs IAC, Oct. 28, 1991 / 203 SCRA 210), a corporation engaged in the buying and selling of real estate is expected to exercise a higher standard of care and diligence in ascertaining the status and condition of the property subject of its business transaction. Similar to investment and financing corporations, it cannot simply rely on an examination of a Torrens certificate to determine what the subject property, looks like as its condition is not apparent in the document. Motion for Reconsideration (July 31, 2009) Eagle Realty, not contented with the SC decision file a Motion for Reconsideration. It averred that the Sunshine Finance case is not applicable because the principle and jurisprudence laid down in that decision was promulgated by the SC for the first time only in 1991. That prior to that, when Eagle bought the land in 1984, such extra diligence was not required from corporations engaged in real estate business. ISSUE: Whether or not to apply the Sunshine Finance case in the case at bar. HELD: Yes. The case law is not in the nature of a statute that cannot be retroactively applied. Hence, the decision rendered by the SC in 2008 is merely based on contemporaneous legislative intent that the interpreted law carried into effect. The SC was following with consistency its construction. Further, the ruling in the Sunshine Finance case should be applied to this latter case otherwise it would be reduced to "a mere academic exercise with the result that the doctrine laid down would be no more than a dictum, and would deprive the holding in the case of any force."

G.R. No. L-36897 June 26, 1980 SPOUSES FLORENTINO S. TOMAS and FRANCISCA CARIO, plaintiffs-appellees, vs. EUSEBIA TOMAS, defendant, PHILIPPINE NATIONAL BANK, SANTIAGO, ISABELA BRANCH, defendant-appellant.

settlement executed by defendant Eusebia Tomas null and void, (c) declaring Original Certificate of Title No. I-4620 and its file and owner's copy revived (d) condemning defendant Eusebia Tomas to pay the plaintiffs in the amount of P950.00 as attorney's fee and P 55.80 representing the actual expenses of the plaintiffs; (e) declaring the mortgage in favor of the Philippine National Bank without force and effect against the plaintiffs, and ordering defendant Eusebia Tomas to pay the costs of this proceedings. From the portion of the foregoing judgment declaring the mortgage, in its favor without force and effect, the Philippine National Bank appealed to the Court of Appeals, 5 which, however, certified the appeal to this Court, this issue presented being purely legal. 6 The only issue to be resolved is whether the mortgage of the land in favor of the appellant bank is valid or not as against appellees. There is no dispute that the mortgagor Eusebia Tomas is not the owner of the land in question, the true owner being the appellees, who had always been in possession of said land since they applied for it by way of homestead patent. The owner's duplicate of OCT No. I-4620 covering the land in favor of appellee Florentino Tomas had always been with the latter, and was never lost as falsely and fraudulently misrepresented by Eusebia Tomas in her petition for a new owner's duplicate of OCT No. I-4620. Alleging however, good faith so as to invoke the protective provision of the Land Registration Act (Section 39, Act 496), pointing to the fact that the certificate of title, TCT-350 Nueva Vizcaya presented by Eusebia Tomas as mortgagor was in her name, and showed no encumbrance over the land, the appellant bank contends that its right as mortgagee must be fully rated as a mortgagee in good faith. Verily, the resolution of the issue raised in this appeal hinges on whether the appellant is a mortgagee in good faith and for value, for if it is, and without anything to excite suspension as it claims, it is protected in the same way as a purchaser in good faith and for value is protected under Section 39 of Act 496, otherwise known as the Land Registration Act. In claiming good faith as a mortgagee, and for value, appellant bank claims that no proof to the contrary was presented by appellees in the trial court. 7 It is a fact, however, that incontrovertible proofs have seen adduced showing that Eusebia Tomas, the mortgagor, was not the owner of the property mortgaged. This is an that appellees had to prove that would place appellant bank on obligation to show good faith, as in fact, it was the bank that alleged good faith as its defense. 8 It would be more legally correct, therefore, to say that it was incumbent on appellant to prove its affirmative allegation of good faith rather than appellee to show the contrary. In any case, to the statement in appellees' brief that appellant bank "did not object when appellees presented evidence in the lower court regarding negligence of appellant, like their failure to send field inspector to the land to discover who is the real owner of the land being offered as Atty. to the loan of impostor Eusebia Tomas," no denial was made in a reply brief which appellant should have filed if it wanted to deny this assertion of appellees. The allegation that appellate presented no proof of lack of good faith on the part of appellant bank may, therefore, not altogether be accurate.

DE CASTRO, J.: Plaintiff spouses, Florentino S. Tomas and Francisca Cario, are the owners of a parcel of land located in Malasian, Santiago, Isabela (now Saguday, Nueva Vizcaya) since 1929, which they obtained through a homestead patent with Original Certificate of Title No. I-4620. Through fraud and misrepresentation, one Eusebia Tomas succeeded in having OCT No. I-4620 cancelled, and obtained in her name TCT No. 8779, Isabela now TCT-350 Nueva Vizcaya, with which she obsessed a loan from the Philippine National Bank branch in Santiago, Isabela, as a security, mortgaging the land with the bank for the load of P2,500.00. Florentino Tomas discovered the fraudulent acts of Eusebia Tomas when he himself applied for a loan from the Philippine National Bank, and offered as a collateral the same land already mortgaged by Eusebia Tomas to the bank. In the action plaintiffs filed on April 14, 1964 to declare TCT-350, Nueva Vizcaya, null and void, against Eusebia Tomas, it was found by the court (Court of First Instance of Nueva Vizcaya) that Eusebia Tomas succeeded in having plaintiffs' OCT No. I-4620 (Isabela) 1 cancelled and having TCT No. 8779 (Isabela) 2 issued in her name, by executing a deed of extra-judicial settlement 3 in which she made it appear that she is the lone heir of the registered owner, Florentino Tomas, to whom she was not even known before, and who was at the time very much alive. She then petitioned for the issuance of another owner's duplicate of OCT No. I-4620, alleging loss of said owner's duplicate. On Order of the court (Court of First Instance of Isabela) where the petition was filed, a new owner's duplicate was issued to Eusebia Tomas as the petitioner. Upon the registration of the deed of extra-judicial settlement (Exhibit "J" OCT No. I4620 was cancelled, and TCT No. 8779, now TCT-350 Nueva Vizcaya was issued in the name of Eusebia Tomas on March 14,1957. In the same action, the Philippine National Bank was made a co-defendant as the mortgagee of the land, the plaintiffs alleging that the mortgage is null and void, the mortgagor not being the owner of the property mortgaged. After trial in which Eusebia Tomas never appeared to present any evidence, the court a quo rendered judgment dated June 9, 1967, the dispositive portion 4 of which reads: IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, decision is hereby rendered in favor of the plaintiffs and against the defendants: (a) declaring transfer Certificate of Title No. T-8779, now Transfer Certificate of Title No. T-350 in the name of defendant Eusebia Tomas null and void; (b) declaring the deed of extra-judicial

The facts as properly taken note of by the lower court would seem to bring the instant case within the ruling of the case of Pichay vs. Celestino, 9 the essence of which is as between two innocent persons, the mortgagee and the owner of the mortgaged property, 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. This is a principle that accords more with justice and equity, in the light of the common practice of banking institution, which is a matter of public knowledge, as observed by the trial court in the case aforecited, with which this Court agreed, before approving a loan, to send representatives to the premises of the land offered as collateral and investigate who are the true owners thereof. Incidentally, the ruling cited herein was against the same appellant bank, the Philippine National Bank, with reference to a mortgage entered into under solar circumstances. Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence which amount to lack of good faith by which they would be denied the protective mantle of the land registration statute, Act 496, extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and description. This is evidently the rationale of the doctrine laid down in the case of Pichay vs. Celestino, supra, which as in the instant suit, involved also a mortgage of a land covered by a certificate of title, mortgaged by the defendant who was not the owner. The latter, however, succeeded in cancelling the original certificate of title in the name of the real owner, by forging a deed of sale, purportedly executed by the said registered owner in his favor, upon the registration of which, he obtained a transfer certificate of title in his name, presenting a new owner's duplicate certificate he obtained by falsely alleging that the first owner's duplicate was burned in an exparte petition with prayer for the issuance of another owner's duplicate which the court granted. Thus, the facts of the instant case so closely resemble, if they are not exactly the same as, those in the Pichay vs. Celestino case, as to make the application of the ruling in said case to the one at bar unavoidable and compelling. There were only 12 days between the cancellation of OCT No. I-4620 on March 14, 1957 and the constitution of the mortgage on March 26, 1957, which shows that the application for the loan must have been filed within days only from the receipt of the new TCT No. 8779 by Eusebia Tomas. This fact should have aroused suspicion for appellant bank to send representative to the premises to ascertain who the true owner is, considering that homestead patents are generally applied for by male appellant applicants, and are very infrequently sold or alienated, the policy of the law being against sale or alienation. The decision of this Court in the aforecited case promulgated on May 30, 1967 preceded the decision of the lower court in this case dated June 7, 1967, by only a few days. However, the court a quo went along the doctrine as laid down in the Pichay vs. Celestino case even perhaps without having actually read the decision, although a similar rule had earlier been laid down in Blondeau, et al. vs. Nano, et al. 10 We, therefore, find no error in the holding of the court a quo that the mortgage executed by Eusebia Tomas, appellant's codefendant in favor of said appellant bank over the land

in question which the former never owned, is without effect as against appellees herein. We, indeed, find more weight and vigor in a doctrine which recognizes a better right for the innocent original registered owner who obtained his certificate of title through perfectly legal and regular proceedings, than one who obtains his certificate from a totally void one, as to prevail over judicial pronouncements to the effect that one dealing with a registered land, such as a purchaser, is under no obligation to look beyond the certificate of title of the vendor, for in the latter case, good faith has yet to be established by the vendee or transferee, being the most essential condition, coupled with valuable consideration, to entitle him to respect for his newly acquired title even as against the holder of an earlier and perfectly valid title. There might be circumstances apparent on the face of the certificate of title which could excite suspicion as to prompt inquiry, such as when the transfer is not by virtue of a voluntary act of the original registered owner, as in the instant case, where it was by means of a self-executed deed of extra-judicial settlement, a fact which should be noted on the face of Eusebia Tomas' certificate of title. Failing to make such inquiry would hardly be consistent with any pretense of good faith, which the appellant bank invokes to claim the right to be protected as a mortgagee, and for the reversal of the judgment rendered against it by the lower court. WHEREFORE, the judgement appealed from is hereby affirmed, without pronouncement to cost. G.R. No. 129977. February 1, 2001 JOSELITO VILLEGAS and DOMINGA VILLEGAS, Petitioners, v. COURT OF APPEALS and FORTUNE TOBACCO CORPORATION, Respondents. Facts: Ciciarco D. Andres and Henson Caigas had four (4) hectares of land registered under their names. They sold the land to Fortune Tobacco Corporation and both executed a joint affidavit declaring that they had no tenants on said lot. Later, they executed a Deed of Reconveyance of the same lot in favor of Filomena Domingo, the mother of Joselito Villegas, defendant in the case. On December 4, 1976, the Office of the Register of Deeds of Isabela was burned together with all titles in the office. Thirteen days after, the original of TCT No. T-91864 was administratively reconstituted by the Register of Deeds. On April 10, 1991, the trial court upon a petition filed by Fortune ordered the reconstitution of the original of TCT No. T-68737. After trial on the merits, the trial court rendered its assailed decision in favor of Fortune Tobacco, declaring it to be entitled to the property. Petitioners thus appealed this decision to the Court of Appeals, which affirmed the trial courts decision, with a modification on the award of damages and attorneys fees.

Issues: a) Who among of the parties is entitled to the property based from the validity of their respective titles? b) Has laches set in against private respondent Fortune Tobacco Corporation? Held: It is petitioners contention that Fortune was a buyer in bad faith. They allege that Fortune should have investigated if the property had any occupants. If it had done so, it would have found petitioners and their predecessors-in-interest in possession thereof. Petitioners also allege that Andres and Caigas were not the owners of the property at the time it was sold to Fortune. Throughout their pleadings, petitioners claim that Fortunes title is fake and spurious, having proceeded from its so-called reconstitution. Lastly, petitioners invoke the doctrine of laches against Fortunes bid to recover the property. Invoking the prior title rule, Fortune declares that it is the lawful owner of the property, as the certificate of title in its name was issued before issuance of another title to petitioners predecessor-in-interest, Filomena Domingo. Fortune claims that petitioners title is spurious. It also alleges that petitioners admitted the validity of Fortunes title, and that petitioners continuous possession of the property cannot defeat said title. Fortune also asserts that it bought the property in good faith. It was held however, that the Court is clothed with ample authority to review matters, even if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. In the case at bar, Fortunes title was judicially reconstituted by virtue of an order dated April 10, 1991, issued by the Regional Trial Court in Cauayan, Isabela. Section 110 of Presidential Decree No. 1529 provides: SEC. 110. Reconstitution of lost or destroyed original of Torrens title. Original copies of certificates of title lost or destroyed in the offices of Register of Deeds as well as liens and encumbrances affecting the lands covered by such titles shall be reconstituted judicially in accordance with the procedure described in Republic Act No. 26 insofar as not inconsistent with this Decree. The elements of laches are: (1) conduct on the part of the defendant, or one under whom he claims, giving rise to the situation that led to the complaint and for which the complaint seeks a remedy; (2) delay in asserting the complainants rights, having had knowledge or notice of the defendants conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. In the case at bar, there is no question on the presence of the first element. The object

of Fortunes complaint before the trial court was to recover possession of the property in question, which is presently in the hands of petitioners. The second element of delay is also present in this case. Fortunes suit for recovery of possession and damages was instituted only on May 29, 1991, fifteen years after the registration of Filomena Domingos title to the property in 1976. The third element of laches also present in this case. There is nothing in the record which shows that petitioners had any inkling of Fortunes intent to possess the subject property. As to the fourth element of laches, it goes without saying that petitioners will be prejudiced if Fortunes complaint is accorded relief, or not held barred, as then petitioners would be deprived of the property on which their households stand. The Decision is granted. [G.R. No. 165427, March 21, 2011] BETTY B. LACBAYAN, PETITIONER, VS. BAYANI S. SAMOY, JR., RESPONDENT. DECISION

VILLARAMA, JR., J.:

This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision[2] of the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole owner of the properties involved in this suit and awarding to him P100,000.00 as attorney's fees. This suit stemmed from the following facts. Petitioner and respondent met each other through a common friend sometime in 1978. Despite respondent being already married, their relationship developed until petitioner gave birth to respondent's son on October 12, 1979.[3] During their illicit relationship, petitioner and respondent, together with three more incorporators, were able to establish a manpower services company.[4] Five parcels of land were also acquired during the said period and were registered in petitioner and respondent's names, ostensibly as husband and wife. The lands are briefly described as follows: 1. A 255-square meter real estate property located at Malvar St., Quezon City covered by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan."[5]

2.

3.

4.

5.

A 296-square meter real estate property located at Main Ave., Quezon City covered by TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty Lacbayan."[6] A 300-square meter real estate property located at Matatag St., Quezon City covered by TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan Samoy."[7] A 183.20-square meter real estate property located at Zobel St., Quezon City covered by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."[8] A 400-square meter real estate property located at Don Enrique Heights, Quezon City covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."[9]

On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of merit.[23] In resolving the issue on ownership, the RTC decided to give considerable weight to petitioner's own admission that the properties were acquired not from her own personal funds but from the income of the manpower services company over which she owns a measly 3.33% share.[24] Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner of one-half of the properties in dispute. Petitioner argued that the trial court's decision subjected the certificates of title over the said properties to collateral attack contrary to law and jurisprudence. Petitioner also contended that it is improper to thresh out the issue on ownership in an action for partition. [25] Unimpressed with petitioner's arguments, the appellate court denied the appeal, explaining in the following manner: Appellant's harping on the indefeasibility of the certificates of title covering the subject realties is, to say the least, misplaced. Rather than the validity of said certificates which was nowhere dealt with in the appealed decision, the record shows that what the trial court determined therein was the ownership of the subject realties - itself an issue correlative to and a necessary adjunct of the claim of co-ownership upon which appellant anchored her cause of action for partition. It bears emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies only to original and not to subsequent registration as that availed of by the parties in respect to the properties in litigation. To our mind, the inapplicability of said principle to the case at bench is even more underscored by the admitted falsity of the registration of the selfsame realties in the parties' name as husband and wife. The same dearth of merit permeates appellant's imputation of reversible error against the trial court for supposedly failing to make the proper delineation between an action for partition and an action involving ownership. Typically brought by a person claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be co-owners, an action for partition may be seen to present simultaneously two principal issues, i.e., first, the issue of whether the plaintiff is indeed a co-owner of the property sought to be partitioned and, second - assuming that the plaintiff successfully hurdles the first - the issue of how the property is to be divided between plaintiff and defendant(s). Otherwise stated, the court must initially settle the issue of ownership for the simple reason that it cannot properly issue an order to divide the property without first making a determination as to the existence of co-ownership. Until and unless the issue of ownership is definitely resolved, it would be premature to effect a partition of the properties. This is precisely what the trial court did when it discounted the merit in appellant's claim of co-ownership.[26]

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, petitioner left her parents and decided to reside in the property located in Malvar St. in Project 4, Quezon City. Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square meter property in Don Enrique Heights.[10] Eventually, however, their relationship turned sour and they decided to part ways sometime in 1991. In 1998, both parties agreed to divide the said properties and terminate their business partnership by executing a Partition Agreement. [11] Initially, respondent agreed to petitioner's proposal that the properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over the three other properties will go to respondent.[12] However, when petitioner wanted additional demands to be included in the partition agreement, respondent refused.[13] Feeling aggrieved, petitioner filed a complaint for judicial partition[14] of the said properties before the RTC in Quezon City on May 31, 1999. In her complaint, petitioner averred that she and respondent started to live together as husband and wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real properties amounting to P15,500,000.00.[15] Respondent, in his Answer,[16] however, denied petitioner's claim of cohabitation and said that the properties were acquired out of his own personal funds without any contribution from petitioner.[17] During the trial, petitioner admitted that although they were together for almost 24 hours a day in 1983 until 1991, respondent would still go home to his wife usually in the wee hours of the morning.[18] Petitioner likewise claimed that they acquired the said real estate properties from the income of the company which she and respondent established.[19] Respondent, meanwhile, testified that the properties were purchased from his personal funds, salaries, dividends, allowances and commissions. [20] He countered that the said properties were registered in his name together with petitioner to exclude the same from the property regime of respondent and his legal wife, and to prevent the possible dissipation of the said properties since his legal wife was then a heavy gambler.[21] Respondent added that he also purchased the said properties as investment, with the intention to sell them later on for the purchase or construction of a new building.[22]

Hence, this petition premised on the following arguments: I. Ownership cannot be passed upon in a partition case.

II.

III.

IV. V.

The partition agreement duly signed by respondent contains an admission against respondent's interest as to the existence of co-ownership between the parties. An action for partition cannot be defeated by the mere expedience of repudiating co-ownership based on self-serving claims of exclusive ownership of the properties in dispute. A Torrens title is the best evidence of ownership which cannot be outweighed by respondent's self-serving assertion to the contrary. The properties involved were acquired by both parties through their actual joint contribution of money, property, or industry.[27]

approval by the [c]ourt after the parties have been accorded opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of their just share in the rents and profits of the real estate in question. x x x[29] (Emphasis supplied.)

Noticeably, the last argument is essentially a question of fact, which we feel has been squarely threshed out in the decisions of both the trial and appellate courts. We deem it wise not to disturb the findings of the lower courts on the said matter absent any showing that the instant case falls under the exceptions to the general rule that questions of fact are beyond the ambit of the Court's jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues may be summarized into only three: I. II. III. Whether an action for partition precludes a settlement on the issue of ownership; Whether the Torrens title over the disputed properties was collaterally attacked in the action for partition; and Whether respondent is estopped from repudiating co-ownership over the subject realties.

While it is true that the complaint involved here is one for partition, the same is premised on the existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties.[30] More importantly, the complaint will not even lie if the claimant, or petitioner in this case, does not even have any rightful interest over the subject properties.[31] Would a resolution on the issue of ownership subject the Torrens title issued over the disputed realties to a collateral attack? Most definitely, it would not. There is no dispute that a Torrens certificate of title cannot be collaterally attacked,[32] but that rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself.[33] The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document.[34] Petitioner apparently confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used.[35] Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the latter only serving as the best proof of ownership over a piece of land. The certificate cannot always be considered as conclusive evidence of ownership.[36] In fact, mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the certificate of title.[37] Needless to say, registration does not vest ownership over a property, but may be the best evidence thereof. Finally, as to whether respondent's assent to the initial partition agreement serves as an admission against interest, in that the respondent is deemed to have admitted the existence of co-ownership between him and petitioner, we rule in the negative. An admission is any statement of fact made by a party against his interest or unfavorable to the conclusion for which he contends or is inconsistent with the facts alleged by him.[38] Admission against interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides:

We find the petition bereft of merit. Our disquisition in Municipality of Bian v. Garcia[28] is definitive. There, we explained that the determination as to the existence of co-ownership is necessary in the resolution of an action for partition. Thus: The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and may be made by voluntary agreement of all the parties interested in the property. This phase may end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents and profits received by the defendant from the real estate in question is in order. x x x The second phase commences when it appears that "the parties are unable to agree upon the partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt with the assistance of not more than three (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and its

Sec. 26. Admissions of a party. - The act, declaration or omission of a party as to a relevant fact may be given in evidence against him.

To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter's interests, otherwise it would be self-serving and inadmissible.[39] A careful perusal of the contents of the so-called Partition Agreement indicates that the document involves matters which necessitate prior settlement of questions of law, basic of which is a determination as to whether the parties have the right to freely divide among themselves the subject properties. Moreover, to follow petitioner's argument would be to allow respondent not only to admit against his own interest but that of his legal spouse as well, who may also be lawfully entitled co-ownership over the said properties. Respondent is not allowed by law to waive whatever share his lawful spouse may have on the disputed properties. Basic is the rule that rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, good customs or prejudicial to a third person with a right recognized by law. [40] Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after seeing the need to amend the same to include other matters. Petitioner does not have any right to insist on the contents of an agreement she intentionally refused to sign. As to the award of damages to respondent, we do not subscribe to the trial court's view that respondent is entitled to attorney's fees. Unlike the trial court, we do not commiserate with respondent's predicament. The trial court ruled that respondent was forced to litigate and engaged the services of his counsel to defend his interest as to entitle him an award of P100,000.00 as attorney's fees. But we note that in the first place, it was respondent himself who impressed upon petitioner that she has a right over the involved properties. Secondly, respondent's act of representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law and escape his legal obligation to his lawful wife. Respondent, therefore, has no one but himself to blame the consequences of his deceitful act which resulted in the filing of the complaint against him. WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is hereby declared the sole owner of the disputed properties, without prejudice to any claim his legal wife may have filed or may file against him. The award of P100,000.00 as attorney's fees in respondent's favor isDELETED.