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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 97282 August 16, 1991
ATTY. PLARIDEL M. MINGOA, petitioner,
vs.
LAND REGISTRATION ADMINISTRATOR, respondent.
Plaridel M. Mingoa for and in his own behalf.

GANCAYCO, J .:p
The facts of this case are simple. A deed of donation of several parcels of land was executed by petitioner in favor of
his children on July 15, 1987. The deed was forwarded to the Register of Deeds of Romblon for registration by
registered mail on September 9, 1988. It was entered in the primary entry book of the Register of Deeds on
September 20, 1988 under Entry No. 181. Said Register of Deeds suspended registration of the donation until the
petitioner has secured the proper clearances from the Department of Agrarian Reform on the ground that under
Section 6 of Republic Act 6657, any disposition of private agricultural lands made prior to June 15, 1988, when the
Act took effect, must be registered within three (3) months from said date or on before September 13, 1988 to be
valid.
The matter was elevated by petitioner en consulta with the Administrator of the Land Registration Authority LTA.
On November 27,1990 the LTA Administrator issued a resolution sustaining the stand of the Register of Deeds that
unless the proper clearances from the Department of Agrarian Reform are secured, the deed of donation may not be
registered.
Hence this petition for certiorari whereby petitioner contends that Section 1, Rule 13 of the Rules of Court should
apply in a suppletory manner in that the date of the mailing should be considered the date of filing of the document
in the office of the Register of Deeds.
The petition is impressed with merit.
Section 6 of Republic Act No. 6657 provides, among others:
SEC. 6. Retention Limits.Except as otherwise provided in its Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according
to factors governing a viable family-size farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age, and (2) that he is actually
tilling the land or directly managing the farm: Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder: Provided, further, That original homestead grantees or their direct compulsory
heirs who still own the original homestead at the time of the approval of its Act shall retain the
same areas as long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to
the landowner; Provided, however, That in case the area selected for retention by the landowner is
tenanted, the tenant shall have the option to choose whether to remain therein or be a beneficiary
in the same or another agricultural land with similar or comparable features. In case the tenant
chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right
to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a leaseholder to the land retained by the landowner. The
tenant must exercise this option with a period of one (1) year from the time the landowner
manifests his choice of the area for retention.
In all cases the security of tenure of the farmers or farm workers on the land prior to the approval
of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of
possession of private lands executed by the original landowner in violation of this Act shall be null
and void; Provided, however, That those executed prior to this Act shall be valid only when
registered with the Register of Deeds within a period of three (3) months after the effectivity of this
Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR)
within thirty (30) days of any transaction involving agricultural lands in excess of five (5)
hectares. (Emphasis supplied)
The said law was approved by the President of the Philippines on June 10, 1988. Section 78 thereof provides that it
"shall take effect immediately after publication in at least two (2) national newspapers of general circulation." It
appears the law took effect on June 15, 1988.
Section 56 of Presidential Decree No. 1529 also provides:
SEC. 56. Primary Entry Book; fees; certified copies.Each Register of Deeds shall keep a
primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their
reception, all instruments including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note in such book the date, hour

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and minute of reception of all instruments, in the order in which they were received. They shall be
regarded as registered from the time so noted, and the memorandum of each instrument, when
made on the certificate of title to which it refers, shall bear the same date: Provided, that the
national government as well as the provincial and city governments shall be exempt from the
payment of such fees in advance in order to be entitled to entry and registration.
Every deed or other instrument, whether voluntary or involuntary, so filed with the Register of
Deeds shall be numbered and indexed and endorsed with a reference to the proper certificate of
title. All records and papers relative to registered land in the office of the Register of Deeds shall
be open to the public in the same manner as court records, subject to such reasonable relations as
the Register of Deeds, No. 97282 under the direction of the Commissioner of Land Registration,
may prescribe.
All deeds and voluntary instruments shall be presented with their respective copies and shall be
attend and sealed by the Register of Deeds, endorsed with the file number, and copies may be
delivered to the person presenting them.
Certified copies of all instruments filed and registered may also be obtained from the Register of
Deeds upon payment of the prescribed fees.
The foregoing provision requires the Register of Deeds, upon payment of the entry fees, to enter in the primary book
of entry, in the order of reception, all instruments including copies of writs and processes filed with him relative to
registered land; the date, hour and minute shall be noted in said book which shall be regarded as the date of
registration of the instrument; and the memorandum of each instrument on the certificate of title shall bear the same
date.
Section 34 of Presidential Decree No. 1529 likewise provides:
SEC. 34. Rules of procedure.The Rules of Court shall, insofar as not inconsistent with the
provisions of this Decree, be applicable to land registration and cadastral cases by analogy or in a
suppletory character and whenever practicable and convenient.
Consequently, Section 1, Rule 13 of the Rules of Court is applicable to this case in a suppletory character as it
provides:
SEC. 1. Filing with the court, defined.The filing of pleadings, appearances, motions, notices,
orders and other papers with the court as required by these rules shall be made by filing them
personally with the clerk of the court or by sending them by registered mail. In the first case, the
clerk shall endorse on the pleading the date and hour of filing. In the second case, the date of the
mailing of motions, pleadings, or any other papers or payments or deposits as shown by the post
office stamp on the envelope or the registry receipt, shall be considered as the date of their filing,
payment, or deposit in court. The envelope shall be attached to the record of the case.
The foregoing rule clearly provides that the date of mailing of the motion, pleading, or any other papers, which may
include instruments as the deed of donation, is considered the date of filing as shown by the post office stamp on the
envelope or registry receipt.
The Court therefore finds and so holds that the date of mailing of an instrument to the Register of Deeds for
purposes of registration should be considered the date of filing and receipt thereof by the Register of Deeds. It is this
date that should be entered in the primary entry book of the Register of Deeds which shall be regarded as the date of
its registration.
Since in this case, the deed of donation was admittedly sent by registered mail to the Register of Deeds on
September 9, 1988, said date is in effect the date of filing, receipt and registration of the instrument, although the
instrument was actually received by said office only on September 20, 1988.
WHEREFORE, the petition is given due course and is hereby GRANTED. The questioned resolution of the public
respondent Administrator of the Land Registration Authority dated November 27,1990 is hereby SET ASIDE and it
is hereby directed that the registration of deed of donation subject of this petition be effected by the Register of
Deeds of Romblon.
SO ORDERED.
Narvasa (Chairman), Cruz, Grio-Aquino and Medialdea, JJ., concur.

SOURCE: http://www.lawphil.net/judjuris/juri1991/aug1991/gr_97282_1991.html

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14676 January 31, 1963
CANDIDA VILLALUZ, ET AL., plaintiffs-appellants,
vs.
JUAN NEME and FELICISIMA VILLAFRANCA, defendants-appellees.
Jose L. Lapak for plaintiffs-appellants.
Rosario B. Zono-Sunga for defendants-appellees.
PAREDES, J .:
This case was elevated to this Court "on purely questions of law." The record discloses that Maria Rocabo died
intestate on February 17, 1937, leaving a parcel of land granted her under Homestead Patent No. 185321, issued on
May 20, 1930, and covered by Original Certificate of Title No. 217 (Exh. A), of the Register of Deeds of Camarines

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Norte. She left three (3) daughters, named Sinforosa, Patricia and Maria, surnamed Villaluz and grandchildren,
Candida, Emilia, Clemencia, Roberto and Isidra Villaluz, legitimate children of her deceased son Pedro Villaluz;
Isabelo and Teodoro Napoles, legitimate sons of a deceased daughter; Severina Villaluz and Sinforosa and Leonor
Napoles, legitimate daughters of another deceased daughter, Gregoria Villaluz.
After the approval of her application, but before granting of the patent, on March 6, 1926, Maria Rocabo donated the
southern portion of the land to Maria, and the northern portion to Patricia, in two notarial deeds donation (Exhibits 1
and 7), giving them the right to present their deeds of donations to the Bureau of Lands. The said donees accepted
the donations and took actual possession of their respective portions, but only Maria Villaluz remained on the entire
land because Patricia left. Maria cultivated and improved the land from 1927 to 1938, inclusive. Maria and Patricia,
however, forgot and cared not to present the deeds of donation to the Bureau of Lands. On March 27, 1930, the
patent was granted and O.C.T. No. 217 was issued in the name of Maria Rocabo. Realizing that the deeds of
donation were not in accordance with the formalities required by law, and because Sinforosa Villaluz, who had the
custody of the title would not surrender it to the donees, unless given a share, upon the advise of a Notary Public,
Carlos de Jesus, Maria, Patricia and Sinforosa, on September 1, 1939, executed a deed of extrajudicial partition
(Exh. 2) among themselves, to the exclusion and without the knowledge and consent of their nephews and nieces,
the herein plaintiffs-appellants, and in virtue thereof, O.C.T. No. 217 was cancelled and Transfer Certificate of Title
No. 269 was issued in their names (Exh. 5) after having made representations that they were the only heirs of their
mother, Maria Rocabo. On September 2, 1939, the 3 sisters declared the land for taxation purposes (Exh. 4). On
September 11, 1939, they sold the land to Ramona Pajarillo, wife of Adriano Mago and Angela Pajarillo, wife of
defendant Juan Neme (Exh. 3). Ramona and Angela declared land for taxation purposes in their names (Exh. 6). On
August 3, 1953, the heirs of Adriano and Ramona sold the undivided interest of the latter to Juan Neme (Exh. 8),
who, on August 8, 1953, sold the southern half portion of the property in favor of defendant Felicisima Villafranca
(Exh. 13). Thereafter, the plaintiffs-appellants came to know that the land which was in the administration of their
aunts, Sinforosa, Patricia and Maria, was already in the possession of the defendants. After attempts of amicable
settlement had failed, the plaintiffs on June 3, 1954, filed a complaint for partition of said land and recovery of their
respective shares on the property and accounting of the fruits thereof.
It also appears that the deeds of sale of the land in question executed in favor of the defendants, had not been
registered in favor of the defendants and had not been recorded in accordance with Public Land Act No. 141 and the
Land Registration Law, Act No. 496; that the vendees failed to have their deed of sale (Exh. 3), annotated on said
T.C.T. No. 269, or have the title thereof transferred in their names.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t
After due trial, the lower court rendered judgment, dismissing the complaint, with costs against the plaintiffs, and
declaring the defendants the owners of the land described in the complaint and in the T.C.T. No. 269. Plaintiffs in
their appeal, claim that the lower court erred: (1) In not finding that the extrajudicial partition (Exh. 2), only affected
the partition of Sinforosa, Patricia and Maria, surnamed Villaluz, on the land in question and not the participation of
the plaintiffs-appellants, as compulsory heirs of Maria Rocabo; (2) In finding that plaintiffs-appellants are already
barred from claiming their participation thereon; and (3) In finding that defendants-appellees are owners, with right
of possession, of the said land.
The contention of the plaintiffs-appellants is meritorious. The decision found to be an incontrovertible fact that the
land in question should be divided among the heirs of the decedent Sinforosa, Patricia and Maria Villaluz and her
grandchildren. Thus, the trial Court said:
... The settlement of the estate of Maria Rocabo was summarily effected by the extrajudicial partition
executed September 1, 1939, by the three surviving children to the exclusion of the plaintiffs who were
entitled to inherit by representation. By virtue of the extrajudicial partition, Exhibit 1, the Original
Certificate of Title No. 217 in the name of Maria Rocabo was cancelled and Transfer Certificate of Title
No. 269 was issued in lieu thereof in favor of Sinforosa Villaluz, Patricia Villaluz and Maria Villaluz on
September 6, 1939, to the prejudice of the plaintiffs. . . .
Furthermore, Maria having left no testament or last will, her heirs succeeded to the possession and ownership of the
land in question from the time of her death (Art. 440, Old Civil Code, Art. 533, New Civil Code; Lubrico v. Arbado,
12 Phil. 391). The deed of extrajudicial partition (Exh. 2), was fraudulent and vicious, the same having been
executed among the 3 sisters, without including their co-heirs, who had no knowledge of and consent to the same.
The partition, therefore, did not and could not prejudice the interest and participation of the herein plaintiffs-
appellants, and the sale of the land to the defendants did not and could not also prejudice and effect plaintiffs-
appellants' interest and participation thereon. The cancellation of O.C.T. No. 217 and the issuance of T.C.T. No.
269, did not likewise prejudice the interest and the participation of the plaintiffs-appellants. The three sisters could
not have sold what did not belong to them. Nemo dat quod non habet.
The trial court held that under Sec. 4, Rule 73 of the Rules, the plaintiffs' cause of action had already prescribed.
This section, however, refers only to the settlement and distribution of the estate of the deceased by the heirs who
make such partition among themselves in good faith, believing that they are the only heirs with the right succeed. In
the case at bar, however, the surviving sisters could not have ignored that they had co-heirs, the children of the 3
brothers who predeceased their mother. Considering that Maria Rocabo died during the regime of the Spanish Civil
Code, the distribution of her properties should be governed by said Code, wherein it is provided that between co-
heirs, the act to demand the partition of the inheritance does not prescribe. (Art 1965 [Old Civ. Code]; Baysa, et al.
v. Baysa, 53 Off. Gaz., 7282). Verily the 3 living sisters were possessing the property as administratrices or trustees
for and in behalf of the other co-heirs, plaintiffs-appellants herein, who have the right to vindicate their inheritance,
regardless of the lapse of time (Sevilla v. De los Angeles, L-7745; 51 Off. Gaz., 5590, and case cited therein).

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Moreover, the acquisition of the land in question is governed by the Public Land Act No. 141 and the Land
Registration Law Act No. 496. And considering that the deed of sale had not been registered in accordance with the
said laws, the same did not constitute a conveyance which would bind or affect the land, because the registration of
a voluntary sale of land is the operative act that transmits or transfers title (Tuason v. Raymundo, 28 Phil.635).
Defendants-appellees further argue that the extrajudicial partition should not be taken independently of the deeds of
donation as in fact, according to them, the crux of the case lies mainly in the two deeds of donation, which enabled
the donees to possess the land and cut any and all rights of the plaintiffs-appellants to claim participation therein. In
other words, it is pretended that after the alleged donations, the land in question was no longer a part of the intestate
estate of Maria Rocabo, and the plaintiffs-appellants could no longer participate thereon. But the deeds of donation,
according to the trial court, were defective and inoperative, because they were not executed in accordance with law.
The trial court itself began to count the period of prescription "after the execution of the extrajudicial partition and
the issuance of Transfer Certificate of Title No. 269". The donees themselves know that the donations were
defective and inoperative, otherwise they would not have subsequently decided to execute the deed of extrajudicial
partition, which also goes to show that the rights of the three sisters and the vendees, stemmed from the said
extrajudicial partition. The defendants-appellees, finally argue that, this notwithstanding, the subsequent registration
of the land in the names of the two donees and Sinforosa Villaluz pursuant to the extrajudicial partition on
September 1, 1939, and the subsequent sale thereof by the registered owners to the defendants-appellees, on
September 11, 1939, followed by the actual, adverse and continuous possession by the vendees and successors for
more than 10 years, before the present complaint was filed, had barred the right of appellants to recover title of the
property and claim participation therein. Having held that the three sisters were mere trustees of the property for the
benefit of the appellants, and it appearing that they had not repudiated the trust, defendants-appellees' pretension in
this respect is without merit. The finding in the appealed decision that "there is no evidence that the said defendants
are not innocent purchasers and for value" (good faith), is of no moment in the case at bar. As heretofore adverted
to, there was no effective sale at all, which would affect the rights of the plaintiffs-appellants. Moreover, the lack of
good faith on the part of the defendants-appellees can reasonably be inferred from thier conduct in not presenting for
registration the supposed deed of sale in their favor; in failing to annotate the sale on the T.C.T. of the alleged
donees, and in not asking that a transfer certificate of title be issued in their (vendees') names. It may also be
reasonably concluded that if they did not present the deed of sale for registration, it was because they knew that their
vendors were not the sole and only heirs so as to entitle them to the ownership of the land in question.
IN VIEW HEREOF, the decision appealed from is hereby set aside, and the case is remanded to the court of origin,
for further and appropriate proceedings..
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and Regala, JJ., concur.
Bengzon, C.J., took no part.
Makalintal, J., reserves his vote.

SOURCE: http://www.lawphil.net/judjuris/juri1963/jan1963/gr_l-14676_1963.html

FIRST DIVISION
G.R. No. L-40105 November 11, 1985
NESTOR L. CENTENO, BONIFACIO GUTIERREZ, ARTEMIO GUTIERREZ, GREGORIO
FERNANDEZ, ZENAIDA DE LA CRUZ, FRANCISCO GOMEZ, RICARDO ADRAO, AMPARO RAYOS
and OFELIA SANTOS, Petitioners, vs. COURT OF APPEALS, RUFINA C. VICTORIA and DANIEL O.
VICTORIA, Respondents.
Fortunato Gupit, Jr. & Associates for petitioners.chanrobles virtual law library
Roldan, Sandoval & Malate Law Office for respondents.
PATAJO, J .:
This is a petition for review on certiorari of the decision of the Court of Appeals promulgated on December 4, 1974,
reversing the decision of the Court of First Instance of Rizal, based on the following Stipulation of Facts:
STIPULATION OF FACTS AND STATEMENT OF ISSUES chanrobles virtual law library
COME NOW the plaintiffs and the defendant thru their undersigned counsels, and to this Honorable Court
respectfully submit the following Stipulation of Facts and Statement of the Issues: chanrobles virtual law library
1. The personal circumstances of the plaintiffs and the defendants are
admitted.chanroblesvirtualawlibrary chanrobles virtual law library
2. In June 1969, the spouses Pedro M. Cruz and Rosanna Villar offered to purchase from the defendants- spouses
and the latter agreed to sell to the former, a parcel of unregistered land situated in Hagonoy, Taguig, Rizal, covered
and evidenced by Tax Declaration No. 5685. In making the offer to purchase, the spouses Pedro M. Cruz and
Rosanna Villar disclosed to the defendants their intention to subdivide the said property into residential lots to be
sold later on as much.chanroblesvirtualawlibrary chanrobles virtual law library
3. On July 10, 1969, defendants executed a Contract to Sell in favor of the spouses Pedro M. Cruz and Rosanna
Villar the above-described parcel of land covered by Tax Declaration No. 5685. Xerox copy of said Contract to Sell
is hereto attached as ANNEX 'A'.chanroblesvirtualawlibrary chanrobles virtual law library
4. The spouses Pedro M, Cruz and Rosanna Villar in fact caused to be subdivided the said property subject of the
Contract to Sell into residential lots to be offered for sale to individual
purchasers.chanroblesvirtualawlibrary chanrobles virtual law library

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5. The said Pedro M. Cruz entered into separate 'Contracts of Sale' involving thirty-one (31) residential lots with
various persons, among them whom are the plaintiffs. The separate 'Contracts of Sale' entered into by the said Pedro
M. Cruz with the plaintiffs are hereto attached and marked as follows:
Nestor Centeno - Annex 'B'
BonifacioGutierrez - Annex 'B-1'
Artemio Gutierrez - Annex 'B-2'
GregorioFernandez - Annex 'B-3'
Zenaida de la Cruz - Annex 'B-4'
Francisco Gomez - Annex 'B-5'
Ricardo Adrao - Annex 'B-6'
Ricardo Adrao - Annex 'B-7'
Amparo Rayos - Annex 'B-8'
Ofelia Santos - Annex 'B-9'
6. In Annexes 'B-2', 'B-3', 'B-4' 'B-5', 'B-6', 'B-7', 'B-8','B-9', the said Pedro M. Cruz represented himself 'as attorney-
in-fact of the owner of a parcel of land situated in Hagonoy, Taguig, Rizal, which is more particularly described in
Tax Declaration No. 5685' when in truth and in fact he has never been appointed as Attorney-in-Fact by either or
both of the defendants.chanroblesvirtualawlibrary chanrobles virtual law library
7. On March 11, 1970, defendants executed 'Deed of Sale with First Mortgage' in favor of the land subject matter of
the Contract to Sell (ANNEX 'A') and ownership of said property passed from defendants to the Cruz spouses,
subject to the said first mortgage, Xerox copy of said Deed of Sale with First Mortgage hereto attached as ANNEX
'C'.chanroblesvirtualawlibrary chanrobles virtual law library
8. The spouses Pedro M. Cruz and Rosanna Villar thereafter applied for the registration of the subject land with the
Court of First Instance of Rizal and after due hearing on August 14, 1970, a Decision was rendered in Land
Registration Case No. N-129-M (N-66) L.R.C. Rec. No. N-38492, granting their application for registration and
once final, Original Certificate of Title No. 8626 was issued in the name of the Cruz spouses, In said Original
Certificate of Title No. 8626, it is expressly stated that the parcel of land so registered is subject 'to a first mortgage
in favor of Rufina Cruz Victoria in the amount of P72,000.00 Philippine Currency, payable in four (4) equal
installments of P18,000.00 each on July 31, 1970, December 31, 1970, May 31, 1971 and October 31, 1971,
respectively'. Xerox copy of the said Original Certificate of Title No. 8626 is hereto attached as Annex
'D'.chanroblesvirtualawlibrary chanrobles virtual law library
9. In view of the failure of Pedro M. Cruz and Rosanna Villar to comply with the terms and conditions of the
mortgage on the land covered in and evidenced by Original Certificate of Title No. 8626, defendants caused the
extrajudicial foreclosure of the mortgage on January 9, 1971 the Provincial Sheriff of Rizal gave written notice of
the Sheriff's sale at public auction of said property set for February 15, 1971. Xerox copy of the Notice of Sheriff's
Sale hereto attached as ANNEX 'E'.chanroblesvirtualawlibrary chanrobles virtual law library
10. On February 9, 1971 after the 'Notice of the Sheriff's Sale' (ANNEX 'E') was published and before the sale at
public auction, Pedro M. Cruz filed a petition with the Court of First Instance of Rizal for the approval of
subdivision plan (LRC) Psd-132057 of the property covered by Original Certificate of Title No. 8626 and for the
cancellation of said title for each of the resulting lots in the approved subdivision
plan.chanroblesvirtualawlibrary chanrobles virtual law library
11. On February 15, 1971, the extrajudicial foreclosure sale of Original Certificate of Title No. 8626 was hold and
the defendants-spouses, being the highest bidders, were awarded the property and the corresponding Certificate of
Sale was executed in their favor by the Provincial Sheriff of Rizal Copy of said Certificate of Sale is attached hereto
as ANNEX 'F'.chanroblesvirtualawlibrary chanrobles virtual law library
12. The 'Contract of Sale' between the said Pedro M. Cruz and the plaintiffs (ANNEXES 'B', 'B-l', to 'B-9', inclusive)
were not registered with the Registry of Deeds for the Province of Rizal, nor annotated in Original Certificate of
Title No. 8626 issued in the name of the spouses Pedro M. Cruz and Rosalina Villar, nor annotated in the new and
individual Transfer Certificate of Title issued also in the name of the Cruz spouses for each (A the lots of the
abovementioned plan.chanroblesvirtualawlibrary chanrobles virtual law library
13. On April 17, 1971, defendants spouses on one hand and Pedro M. Cruz and Rosalina Villar on the other, entered
into an 'Interim Agreement Pending Expiration of Redemption Period' consisting of four (4) pages and entered in the
Notarial Register of Notary Public for Rizal, Gil M. Madarang, as Document No. 208, Page No. 43, Book No. 1,
series of 1971. Xerox copy of which Agreement is hereto attached and marked as ANNEX 'G', Annex A therein
being marked as ANNEX 'G-l'.chanroblesvirtualawlibrary chanrobles virtual law library
14. On April 19, 197 1, defendants thru their attorney-in-fact, Atty. Alfonso C. Roldan, wrote the Register of Deeds
of Rizal expressing their conformity and lack of objection to the approval of the subdivision plan and the issuance of
separate titles, subject to the conditions therein specified. Xerox copy of said letter is hereto attached as ANNEX
'H'.chanroblesvirtualawlibrary chanrobles virtual law library

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15. On the basis of the Order of the Court of First Instance of Rizal dated February 27, 1971 in Land Recskadon
Case No. N-129-M approving the subdivision plan and directing the issuance of new and separate titles for the
resulting lots, Original Certificate of Title No. 8626 was cancelled and individual titles were issued by the Register
of Deeds of Rizal Copy of the said Order of the CFI of Rizal is hereto attached as ANNEX
'I'.chanroblesvirtualawlibrary chanrobles virtual law library
Each of the new and separate Transfer Certificates of Title issued in the name of the Cruz spouses for the
subdivision Lots uniformly contained the following encumbrances or
annotations.chanroblesvirtualawlibrary chanrobles virtual law library
(a) A First Mortgage in favor of Rufina Cruz Victoria in the amount of P72,000.00, Philippine Currency, payable in
four equal installments of P18,000.00 each on July 31, 1970, December 31, 1970, May 31, 1971 and October 31,
1971 respectively. (Fr. OCT No. 8626/A-79).chanroblesvirtualawlibrary chanrobles virtual law library
(b) Entry No. 39329/0-8626-CERTIFICATE OF SALE in favor of RUFINA CRUZ VICTORIA Vendee; covering
the property described herein for the sum of P78,082.88 in accordance with the Certificate of Sale issued by the
Provincial Sheriff of Rizal.
Date of the instrument-Feb. 15, 197 1.chanroblesvirtualawlibrary chanrobles virtual law library
Date of the inscription-Feb. 16. 1971 at 11:40 a.m.
(c) Entry No. 47353/PA-11343. SPECIAL POWER OF ATTORNEY executed by RUFINA CRUZ VICTORIA, in
favor of ALFONSO C. ROLDAN, an attorney-in-fact, among other powers to act for and in behalf in connection
with the obligations of the herein registered owners, and to enter into and execute any agreement or contract with the
said owners involving the property herein described. (Doc. No. 126, Page 27, Bk. I., S. of 1971 of Not. Pub. for
Rizal, Gil. M. Madarang) chanrobles virtual law library
Date of the instrument-March 18, 197 1.chanroblesvirtualawlibrarychanrobles virtual law library
Date of the inscription-April 21, 1971 at 11.59 a.m.chanroblesvirtualawlibrary chanrobles virtual law library
(d) Entry No. 47354/T-No. 322-281-INTERIM AGREEMENT PENDING EXPIRATION OF REDEMPTION
PERIOD duly executed by the herein registered owners and ALFONSO C. ROLDAN, as attorney-in-fact, covering
the property herein described subject to the terms and conditions set forth in Doc. No. 208, Page No. 43, Bk. I., S. of
1971 of Not. Pub. for Rizal, Gil M. Madarang) chanrobles virtual law library
Date of the instrument-April 17, 1971.chanroblesvirtualawlibrary chanrobles virtual law library
Date of inscription-April 21, 1971 at 12:00 a.m.chanroblesvirtualawlibrarychanrobles virtual law library
16. The spouses Pedro M. Cruz and Rosalina Villar failed to redeem the subject property within the reglementary
and redemptive period of one year or on February 15, 1972 and defendants-spouses cause ownership of said realty to
be consolidated with them thereafter obtaining the issuance to them of new Transfer Certificates of Title with them
appearing as the registered owners, free from any liens and encumbrances.chanroblesvirtualawlibrarychanrobles
virtual law library
17. The ten (10) residential lots involved in the 'Contracts of Sale' (ANNEXES 'B', 'B-l' to 'B-9', inclusive) are
presently registered in the name of defendants, free from any liens and encumbrances, as evidenced by the Transfer
Certificates of Title, xerox copies of which are hereto attached as ANNEXES, as follows:
T.C.T. NO. LOT & BLOCK NO.
355816 Lot 4, Block II ANNEX 'J'
355809 Lot 9, Block I ANNEX 'J-l'
355810 Lot 10, Block I ANNEX 'J-2'
355829 Lot 18, Block II ANNEX 'J-3'
355811 Lot 11, Block I ANNEX 'J-4'
355802 Lot 2, Block I ANNEX 'J-5'
355812 Lot 1, Block II ANNEX 'J-6'
355814 Lot 3, Block II ANNEX 'J-7'
355801 Lot 1. Block I ANNEX 'J-8'
355830 Lot 19, Block II ANNEX 'J-9'
chanrobles virtual law library
17. On April 11, 1972 and May 29, 1972, defendants thru their attorney-in-fact, Alfonso C. Roldan, gave individual
written notices to all persons in whose favor the said Pedro M. Cruz had executed contracts to sell for lots in St.
Michael subdivision II, Hagonoy, Taguig, Rizal, including herein plaintiffs, granting the said persons the option or
privilege to purchase the lots involved under the terms and conditions as therein stated. Copy of said letters of April
11, 1972 and May 29, 1972 are hereto attached as ANNEXES 'K' and 'L',
respectively.chanroblesvirtualawlibrarychanrobles virtual law library

7

18. The defendants came to know from said Pedro M. Cruz himself of the 'Contracts of Sale' executed by the latter
in favor of various persons, including the plaintiffs only after the Certificate of Sale executed by the Provincial
Sheriff of Rizal(ANNEX 'F') was issued.chanroblesvirtualawlibrary chanrobles virtual law library
19. The present Complaint was filed on June 28, 1972 and summons was served upon the defendants on July
14.1972.chanroblesvirtualawlibrary chanrobles virtual law library
20. Plaintiffs have not made any demand. oral or written, upon the defendants, prior to the filing of their Complaint-
chanrobles virtual law library
21. Lot 4, Block 11, involved in the 'Contract of Sale' (ANNEX 'B') executed by Pedro M, Cruz in favor of plaintiff
Nestor Centeno, was the subject of an earlier 'Contract of Sale' executed by said Pedro M. Cruz in favor of Conrado
P. Uy on May 26. 1969. xerox copy of which is hereto attached as 'ANNEX
M'.chanroblesvirtualawlibrary chanrobles virtual law library
Subsequently, said Conrado P. Uy, for consideration paid to him by plaintiff Nestor Centeno, assigned and
transferred rights and interests on said Lot 4, Block 11 to the said plaintiff, with the conformity of Pedro M, Cruz.
Thus Pedro M. Cruz executed the Contract of Sale (ANNEX 'B') in favor of plaintiff Nestor
Centeno.chanroblesvirtualawlibrary chanrobles virtual law library
22. From February 1972 up to the present, plaintiffs have not paid the installments specified under the 'Contract of
Sale (ANNEXES 'B-1 ' to 'B-9', inclusive) either to the spouses Pedro M, Cruz and Rosalina Villar, or to the
defendants. Plaintiffs have not made any tender of payment of the said installments as they fell due to the spouses
Pedro M. Cruz and Rosalina Villar or to the defendants after consolidation of ownership of the foreclosed property
in favor of the defendants. Neither have the plaintiffs made consignation of the said installments as they fell due
with the court of proper jurisdiction, also after consolidation of ownership of said property in favor of the
defendants. ....
(Sgd.) ALFONSO C. ROLDAN
Counsel for Defendants
Rm. 701 Madrigal Building
Ayala Avenue, Makati, Rizal
(Sgd.) PROSPERO CRESCINI Counsel for Plaintiffs
Rm. 511 Madrigal Building
Escolta, Manila (pp. 124-137, A)
On the basis of the aforequoted stipulation of facts, the lower court rendered judgment on April 11, 1973, the
dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, the Court hereby renders judgment directing defendants to respect,
recognize and abide by the terms and conditions of the contracts of sale, Annexes B, B-1 to B-9; for plaintiffs to
continue the payments of the installment due thereunder; for defendants to credit plaintiffs for all the installment
payments heretofore made by them on their respective lots; and for defendants to pay plaintiffs the sum of P2,000.00
byway of attorney's fees. The rest of the prayer for damages is denied for lack of sufficient basis.
On appeal, the Court of Appeals reversed said judgment and dismissed plaintiffs' complaint. In reversing the lower
court, the Court of Appeals held that the disclosure by the spouses Cruz to the Victorias of their intention to
subdivide the property into residential lots was merely simple talk on preliminaries attendant to a contract of sale,
and its non-compliance does not affect the rights and obligations embodied in their contract; that the statement made
by Cruz spouses that they were the attorney in fact of Victorias was not at all binding upon Victoria, as it was
expressly stated in paragraph 6 of the Stipulation of Facts that the Cruz spouses were never been appointed as such;
that when the spouses Cruz and the Victorias formally executed a deed of sale with mortgage on March 1 1,1970,
the contracts of sale in favor of the lot buyers were not mentioned in the said deed considering that the contracts of
sale were made prior to the execution of the said deed, hence, the lot buyers could not compel the Victorias to
recognize their contracts with the spouses Cruz; that there is no stipulation and evidence that the lot buyers upon the
execution of the con-tracts in their favor took possession, openly and publicly of the property in question so as to
give notice to the Victorias of their prior rights; that the separate titles issued on each lot were all in the name of
Cruz with the mortgage in favor of the Victorias annotated, but no notation was made as to the interests of the lot
buyers; that there is no evidence on record to show that the Victorias were in estoppel; that there is no stipulation
that any of the money paid by the lot buyers to the spouses Cruz had been illegally appropriated by the Victorias and
that the spouses Victoria were clearly mortgagees with real right to foreclose the same when their mortgage credit
was not paid on time.chanroblesvirtualawlibrary chanrobles virtual law library
Hence, the instant petition for review on certiorari, petitioner assigned to this Court for resolution five (5) errors, to
wit:
Ichanrobles virtual law library
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT FROM THE COMBINATION OF THE
UNDISPUTED CIRCUMSTANCES IN THIS CASE, THE VICTORIAS KNEW OF THE SALE BY PEDRO M.
CRUZ OF THE SUBDIVIDED LOTS TO THE PETITIONERS.chanroblesvirtualawlibrary chanrobles virtual law
library
IIchanrobles virtual law library
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE VICTORIAS MERELY STEPPED INTO
THE SHOES OF THE CRUZ SPOUSES.chanroblesvirtualawlibrarychanrobles virtual law library
IIIchanrobles virtual law library
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE EXTRAJUDICIAL FORECLOSURE OF
THE MORTGAGE HERE INVOLVED IS A TOTAL NULLITY BECAUSE THE DEED OF MORTGAGE DID
NOT CONTAIN A SPECIAL POWER OF ATTORNEY IN FAVOR OF THE MORTGAGEES TO SELL THE

8

PROPERTY AT PUBLIC AUCTION.chanroblesvirtualawlibrary chanrobles virtual law library
IV chanrobles virtual law library
THE COURT OF APPEALS ERRED IN HOLDING THAT THE VICTORIAS WERE NOT UNJUSTLY
ENRICHED AT THE EXPENSE OF THE PETITIONERS.chanroblesvirtualawlibrarychanrobles virtual law library
V chanrobles virtual law library
THE COURT OF APPEALS ERRED IN NOT MOTU PROPRIO HOLDING THAT IT HAD NO JURISDICTION
OVER THE PRESENT APPEAL AND IN NOT ELEVATING THE APPEAL TO THIS HONORABLE COURT
FOR DETERMINATION.chanroblesvirtualawlibrary chanrobles virtual law library
We find no merit in the present appeal. The property in question was originally owned by the Victories. On July
10,1969, they executed in favor of the spouses Pedro M. Cruz and Rosalina Villar a contract to sell said property,
which at that time was still unregistered and was covered by Tax Declaration No. 5685, Under said agreement, it
was stipulated that while possession of the property shag be considered delivered to the buyers Pedro M. Cruz and
Rosalina Villar, the ownership thereof shall remain with the Victorias until the downpayment of P70,000.00 shag
have been paid, in which event the necessary deed of transfer of ownership of the property will be executed together
with a first mortgage on the property in favor of the Victorias to secure payment of the balance of the purchase
price. On March 11, 1970, said deed of transfer with first mortgage on the property was executed between the
Victorias and Pedro M. Cruz and Rosalina Villar. Thereafter the Cruzes registered the property and were issued
Original Certificate of Title No. 8626 with the mortgage constituted on the property in favor of the Victorias
annotated thereon.
Because the Cruzes failed to pay the balance of the purchase price of the property the Victorias foreclosed
extrajudicially the mortgage in their favor and at the auction sale they were the highest bidder. Before the expiration
of the period of redemption with the consent of the Victorias the property was subdivided into several lots and
individual titles were issued covering said lots in the name of Pedro M. Cruz. Each of new certificate of transfer for
the lots to which the property was subdivided was issued in the name of Pedro M. Cruz with the mortgage and
sheriffs certificate of sale in favor of the Victorias duly annotated thereon.chanroblesvirtualawlibrary chanrobles
virtual law library
When the property was sold at public auction in view of the default of the Cruzes to pay their mortgage indebtedness
there was no annotation of any sale executed by the Cruzes in favor of the petitioners which would have placed on
notice the bidders including the Victories at said public auction sale. Well settled is the rule that all persons dealing
with property covered by torrens certificate of title are not required to go beyond what appears on the face of the
title. When there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property,
or any encumbrance thereon, the 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. (William
Anderson vs. Garcia, 64 Phil., 506;Fulle vs. Legare, 7 SCRA 351).chanroblesvirtualawlibrarychanrobles virtual law
library
As a matter of fact, there is no evidence nor any statement in the Stipulation of Facts to show that petitioners had
actually taken possession of portions of the property in question sold to them which would have at least called the
attention of the Victorias that the Cruzes had sold said portions to petitioners. The contracts of sale in favor of some
petitioners executed in 1959 stated that Pedro M. Cruz was merely the attorney-in-fact of the owner of the property.
(Annexes A-2, Contract of Sale in favor of Artemio Gutierrez; Annex A-3, Contract of Sale in favor of Gregorio
Hernandez, A-4, Contract of Sale in favor of Zenaida de la Cruz; A-5, Contract of Sale in favor of Francisco Gomez:
A-6. Contract of Sale in favor of Ricardo Adrao: A-7, Contract of Sale in favor of Amparo Rayos; A-8, Contract of
Sale in favor of Ofelia Santos), At the time Pedro M. Cruz executed said deeds of sale, he was not yet the owner of
the property. Said, buyers should have known that the owners of the property were the Victorias as the deeds of sale
in their favor described the property as property described in Tax Declaration No. 8685 of the municipality of
Taguig, Rizal. Had they investigated in whose name Tax Declaration No. 5685 was issued, they would have found
out that it was in the name of the Victorias.chanroblesvirtualawlibrary chanrobles virtual law library
After Pedro M. Cruz had obtained a certificate of title over the property in his name said title was subject to the
mortgage in favor of the Victorias. Any sale executed by the Cruzes in favor of the petitioners would then be subject
to the rights of the mortgages of said property. Even if the petitioners had registered the deed in their favor, which
they did not, their rights under said deed of sale can not prevail over the rights of the mortgagee which have been
annotated on said property from the beginning, that is to say when original certificate of title 8626 was issued in
February 1971.chanroblesvirtualawlibrary chanrobles virtual law library
Moreover, the petitioners can not bind the Victorias under the deeds of sale executed in their favor by Cruz allegedly
as an attorney-in-fact of the Victorias because it is not true that Pedro M. Cruz was the attorney-in-fact of the
Victorias. According to paragraph 6 of the Stipulation of Facts, Pedro M. Cruz had never been appointed as their
attorney-in-fact by the Victorias. Neither can they compel the Victories to recognize the deeds of sale in their favor
the ground of estoppel in allowing Pedro M. Cruz to sell the properties in question to petitioners. According to
paragraph 18 of the Stipulation of Facts Victorias came to know of the sales made by Pedro M. Cruz in favor of
petitioners only after property was sold to the them the foreclosure sale.
18. The defendants came to know from said Pedro M. Cruz himself of the "Contract of Sale" executed by the latter
in favor of various persons, including the plaintiffs only after the Certificate of Sale executed by the Provincial
Sheriff of Rizal (Annex 'F') was issued:
Pan 2 of the Stipulation of Facts wherein it is stated that when the Victorias agreed to sell the property to the Cruzes
in 1969 the latter informed the former that their intention was to subdivide the property for resale is cited by
petitioners as proof that the Victorias had knowledge of the sales of the lots to which the property had been
subdivided. That is not necessarily so. Moreover, even granting that the Cruzes had told the Victorias of their plan to

9

subdivide the property they were buying, that did not impose any legal obligation upon the Victorias to be bound by
any sales made by Cruz before they become the owner of the property. Neither did that imply that subdivision of the
property and subsequent sale of the lots to which it be subdivided would in any way bar them from asserting their
legal rights to sail property as the owners thereof before they are fully paid the purchase price or their rights under
any mortgage executed in their favor to secure the balance of the payment of the purchase price of the
property.chanroblesvirtualawlibrarychanrobles virtual law library
As the Victories were not parties to the contracts of sale in favor of petitioners, the same having been executed by
Pedro M. Cruz and petitioners and according to the Stipulation of Facts Pedro M. Cruz had never been appointed
attorney-in-fact of the Victories, there is no privity of contract between petitioners and the Victorias. Petitioners
have no cause of action against the Victories since there is no evidence whatsoever to show that petitioners by acts
or omissions of the Victorias had been induced to buy lots to which the property had been subdivided by the Cruzes.
Neither is there any evidence that the Victorias had received any of the money paid by said petitioners to the Cruzes
for the lots bought by them. Petitioners recourse must be against the Cruzes.chanroblesvirtualawlibrary chanrobles
virtual law library
In view of the foregoing, the present petition is DISMISSED for lack of merit and the decision of the Court of
Appeals AFFIRMED with costs against petitioners.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Gutierrez, Jr., and De la Fuente, JJ.,
concur.chanroblesvirtualawlibrarychanrobles virtual law library
Plana, J., took no part.chanroblesvirtualawlibrarychanrobles virtual law library
Relova, J., is on leave.

SOURCE: http://www.chanrobles.com/scdecisions/jurisprudence1985/nov1985/gr_l40105_1985.php

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-48322 April 8, 1987
FELIPE DAVID and ANTONIA G. DAVID, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA SILVERIO, JOSE, GABRIEL,
ANICETA, VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN, RAYMUNDA BANDIN,
VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS. respondents.

No. L-49712 April 8, 1987
MAGNO DE LA CRUZ, petitioner,
vs.
HONORABLE COURT OF APPEALS; EULOGIO BANDIN (substituted by his legal heirs, namely:
JUANA, SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed Bandin);
GREGORIO BANDIN, RAYMUNDA BANDIN, SOFIO BRIONES and AGAPITA RAMOS; respondents.
No. L-49716 April 8, 1987
JUANITA MARTIN VDA. DE LUCENA MAXIMINA MARTIN VDA. DE COSME, VICTORIA MARTIN
VDA. DE OMANBAC, NEMESIO A. MARTIN, LEONORA DE LA CRUZ and AQUILINA DE LA CRUZ,
petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL,
ANICETA, VIRGINIA and FELIX, all surnamed Bandin);, VALENTIN BRIONES, AGAPITA RAMOS and
COURT OF APPEALS, respondents.
No. L-49687 April 8,1987
JOSE RAMIREZ and HEIRS OF AMBROCIA P. VDA. DE SOTERO RAMIREZ, petitioners,
vs.
COURT OF APPEALS and EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA,
SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed BANDIN); GREGORIO
BANDIN, RAYMUNDA BANDIN, VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS,
respondents.
Benito P. Fable for petitioners in G.R. No. L-48322.
Pedro R. de la Cruz for petitioner in G.R. No. L-49712.
David R. Advincula for petitioners in G.R. No. L-49716.
Antonio S. Reyes for petitioners in G. R. No. L-49687.
Enrique C Villanueva for respondents.

YAP, J .:
These petitions, which were consolidated by resolution of this Court dated February 20, 1980, stemmed from
a complaint filed by the herein respondents with the Court of First Instance of Rizal Branch VII, Pasay City,
on June 14, 1963, for the recovery and partition of property. The complaint was amended twice to reflect

10

additional pertinent and material facts, such as transfers, partitions, subdivisions and registration of portions
of the properties involved, and to bring in other indispensable parties to the case.
On April 12, 1975, a decision was rendered by the trial court, in favor of the plaintiffs, declaring, however,
that certain properties could no longer be reconveyed to plaintiffs since they had been transferred to
purchasers who bought them in good faith for value. Not satisfied with the decision, both plaintiffs and
defendants appealed to the Court of Appeals. The plaintiffs' appeal was docketed as CA-G.R. No. 58647-R,
while that of defendants as CA-G.R. No. 60511-R. . Both appeals were consolidated, and a decision was
rendered by the Court of Appeals on May 19, 1978, which modified the decision of the trial court in that it
nullified the transfers made to the defendants who were declared by the trial court as purchasers in good
faith.
From the decision of the Court of Appeals, an appeal was taken by the parties adversely affected thereby to
this Court. Except for petitioners in G.R. No. L-49716 who seek restoration of the status quo ante, all other
petitioners pray that the decision of the trial court be reinstated.
The facts antecedent of this petition, as may be gathered from the decision, are as follows:
During their lifetime, the spouses Juan Ramos, who died on March 5, 1919, and Fortunate Calibo, who died
before 1919, were the owners of two parcels of land situated in Las Pinas, Rizal: 1) A parcel of land situated
in Barrio Talon, with an area of 39,887 square meters, under Tax Declaration No. 9614 (Talon property for
short); and 2) A parcel of land situated in Barrio Laong, with an area of 15,993 square meters, under Tax
Declaration No. 4005, although the actual area when surveyed was 22,285 square meters (Laong property for
short).
Both spouses died intestate, leaving as heirs two legitimate children, Candida and Victorians Ramos, and
grand-daughter, Agapita Ramos, daughter of their deceased sora Anastacio. Upon the death of the said
spouses, their daughter, Candida Ramos, assumed administration of the properties until her death on
February 16, 1955. Victorians Ramos died on December 12,1931.
Both Candida and Victoriana Ramos died intestate. Candida Ramos was survived by the following heirs: 1)
Victoria Martin-Omanbac, 2) Antonio Martin, 3) Juanita Martin Vda. de Lucena, 4) Maximina Martin Vda.
de Cosme, 5) Raymundo Martin, 6) Aquilina de la Cruz, and 7) Leonora de la Cruz. Victoriana's heirs are
her children from her two marriages, namely: 1) Eulogio Bandin, 2) Gregorio Bandin, 3) Raymunda Bandin,
4) Valentin Briones, and 5) Sofio Briones.
The record shows that sometime in 1943, Candida Ramos prevailed upon her niece, Agapita Ramos, and her
nephew, Eulogio Bandin, to sell a portion of the Talon property to the spouses Rufino 0. Miranda and
Natividad Guinto. This portion was divided into three lots: Parcel 1, containing an area of 24,363 square
meters, declared under Tax Declaration No. 2996 (1948). The spouses Rufino Miranda and Natividad Guinto
subsequently sold the said lot to Narciso Velasquez and Albino Miranda. These two later sold the same
property to Velasquez Realty Company, Inc., which registered the property and obtained OCT No. 1756
(later cancelled and replaced by TCT No. 165335); Parcel 2, containing an area of 752 square meters,
declared under Tax Declaration No. 3358 (1949); and Parcel 3, containing an area of 516 square meters under
Tax Declaration No. 3359 (1949). Parcels 2 and 3 were subsequently sold by Rufino Miranda and Natividad
Guinto to Jose Ramirez and Sotero Ramirez (survived by Ambrocia Vda. de Martin), respectively, who
registered these properties and obtained OCT Nos. 2027 and 2029 in their respective names.
The remaining portion of the Talon property was extrajudicially partitioned on September 17, 1955 among
the heirs of Candida Ramos, namely: Juanita Martin, Victoria Martin, Maximina M. Vda. de Cosme,
Antonio Martin and Raymundo Martin. In 1959, this property was subdivided (Subdivision Plan PSU-
173299) into seven lots and adjudicated as follows:
1) To the heirs of Raymundo Martin, namely, Juan, Antonio, Rodrigo, Norma, Bernards, Rufina and Nieves,
all surnamed Martin, and Trinidad Bunag Vda. de Martin Lot 1, containing an area of 774 square meters,
declared under Tax Declaration No. 5588 (1960). This lot was subsequently sold to Consolacion de la Cruz
who was able to register the property in her name under OCT No. 4731 (later cancelled and replaced by TCT
Nos. 227470 and 227471).
2) To Juanita Martin Lot 2, containing an area of 774 square meters, declared under Tax Declaration No.
4831, and subsequently titled in her name under OCT No. 10002, issued on December 18, 1973.
3) To Leonora de la Cruz, granddaughter of Candida Ramos by her son Meliton de la Cruz by her first
husband Lot 3, containing an area of 346 square meters, declared under Tax Declaration No. 5526 (1960)
and subsequently registered under OCT No. 6102, issued on January 29, 1967.
4) To Antonio Martin Lot 4, containing an area of 774 square meters, declared under Tax Declaration No.
4833. The property was subsequently sold by the heirs of Antonio Martin to Nemesio Martin.
5) To Victoria Martin Lot 5, containing an area of 773 square meters, declared under Tax Declaration No.
5590. This lot was later registered by Victoria, to whom OCT No. 3706 was issued on August 22, 1963. She
subsequently sold a portion of 300 square meters to Magno de la Cruz on September 25,1963, to whom was
issued TCT No. 116450.
6) To Maximina Martin Lot 6, containing an area of 773 square meters, under Tax Declaration No. 5591
(1960). Maximina was able to register the land and was issued OCT No. 3707 on August 22, 1963. She later
sold a portion of 300 square meters to Magno de la Cruz, to whom was issued TCT No. 116450.
7) To Aquiline de la Cruz Lot 7, with an area of 428 square meters, declared under Tax Declaration No.
5592 (1960). Aquilina is the granddaughter of Candida Ramos by her son Meliton de la Cruz by her first
marriage. Aquilina registered the land in her name in 1967 and was issued OCT No. 6103.

11

The Laong property was sold by Candida Ramos and her children on December 19, 1943 to Hermogenes
Lucena, husband of Juanita Martin, one of the daughters of Candida. On September 23, 1959, Juanita (then
widowed) sold the property to the spouses Gregorio and Mary Venturanza for P43,236.00 of which P10,000
was paid as down payment, the balance to be paid upon the vendor obtaining Torrens title to the land. On
January 21, 1965, the Venturanzas, in a deed of sale also signed by Juanita Martin, conveyed a portion of the
property with an area of 15,000 square meters to the spouses Felipe and Antonia David, in liquidation of the
latter's investment in the joint real estate venture which they had entered into with the Venturanzas in April
1959. Juanita Martin Vda. de Lucena was able to register the property in her name and was issued OCT No.
8916 on July 1, 1971. The portion sold to the spouses Felipe and Antonia David is presently covered by TCT
No. 372092.
From the foregoing facts as established by the evidence, the trial court held that the Talon and Laong
properties formed part of the estate of the spouses Juan Ramos and Fortunate Calibo, which after their death
devolved by right of succession upon their heirs, namely, Candida Ramos, Victorians Ramos and Agapita
Ramos, each of whom was entitled to one-third (1/3) pro-indiviso share of the properties. The estate of the
deceased spouses was never judicially or extra-judicialy settled among their heirs, who, therefore, remained
pro-indiviso co-owners of the said properties, and upon the death of Victorians and Candida, their respective
shares in turn passed to their heirs. Accordingly, the trial court declared the plaintiffs, Agapita Ramos, and
the heirs of Victorians Ramos, entitled to two- thirds (2/3) pro-indiviso share of the Talon and Laong
properties, and ordered the defendants heirs of Candida Ramos to reconvey to plaintiffs their shares in those
properties. However, such reconveyance was no longer possible with respect to the portions which, in the
meantime, had been sold and disposed of to third parties who were purchasers in good faith and for value.
The following parties were held to be purchasers in good faith. 1) defendants Rufino Miranda, Narciso
Velasquez, Albina Miranda and Velasquez Realty Co., with respect to 24,636 square meters (Parcel 1) of the
Talon property sold by Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943; 2) defendants Jose
Ramirez and Ambrocia Vda. de Ramirez (widow of Sotero Ramirez), with respect to 752 square meters
(Parcel 2) and 516 square meters (Parcel 3), respectively, of the Talon property, 3) defendant Consolacion de
la Cruz, with respect to 774 square meters (Lot 1 of Subdivision Plan PSU-173299); 4) defendant Nemesio
Martin, with respect to 774 square meters (Lot 2 of Subdivision Plan); 5) defendant Magno de la Cruz, with
respect to 300 square meters sold by Victoria Martin and 300 square meters sold by Maximina Martin
(portions of Lots 5 and 6 of Subdivision Plan); 6) defendant spouses Felipe and Antonia David, with respect to
15,000 square meters of the Laong property. Since the foregoing properties could not be reconveyed to the
plaintiffs, the defendants heirs who sold them were ordered to pay the plaintiffs two-thirds (2/3) of the
present value of such properties.
As stated heretofore, the trial court's decision was upheld by the respondent Court of Appeals, except with
respect to the finding that third parties who bought portions of the properties from the defendants heirs were
purchasers in good faith This finding was reversed by the respondent appellate court. In fine, the appellate
court: a) nullified the sale of the Laong property by Candida Ramos Vda. de Martin and her children in 1943
in favor of Hermogenes Lucena, the husband of Juanita Martin, one of the daughters of Candida, as wen as
an subsequent sales, transfers and conveyances of said property, insofar as they affected the two-thirds (2/3)
pro-indiviso share of Agapita Ramos and the heirs of Victorians Ramos; b) nullified the sale of portions of the
Talon property by Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943 in favor of the spouses
Rufino Miranda and Natividad Guinto, and all the subsequent transfers of said properties, insofar as the
four-fifteenth (4/15) share of Gregorio Bandin, Raymundo Bandin, Sofio Briones and Valentin Briones were
affected; and c) invali dated the deed of extrajudicial partition among the heirs of Candida Ramos over the
remaining portion of the Talon property in 1955 and the subdivision thereof into individual lots among said
heirs, as well as all subsequent transfers and conveyances of some of said lots, or portions thereof, to third
parties, insofar as they affected the two-third (2/3) pro- indiviso share pertaining to Agapita Ramos and the
heirs of Victorians Ramos.
From the above decision of the Court of Appeals, the petitioners have come to us on separate petitions for
review by certiorari.
G.R. No. L-49716.:
The petitioners are the heirs of Candida Ramos, led by Juanita Martin Vda. de Lucena and joined in by her
brothers and sisters who are the children of Candida by her first and second marriages. Primarily,
petitioners alleged that the Court of Appeals erred in not declaring that private respondents' claim if any, is
barred by prescription; and in annulling and ordering the cancellation of Original Certificate of Title No.
8916 issued in the name of Juanita Martin pursuant to a decision by the land registration court, affirmed by
the Court of Appeals in CA G.R. No. 35191-R, which had already become final and executory.
Petitioners claim in their brief, apparently referring to the Laong property only, that Juanita Martin, widow
of Hermogenes Lucena and daughter of Candida Ramos, had been in possession of the property since 1943 to
the exclusion of private respondents. The trial court, however, found that Candida Ramos, until her death on
February 15, 1955, administered the Laong property, and that plaintiffs- appellants were given their shares
of the fruits thereof, though irregular and at times little, depending on the amount of the harvest. Under
Article 494 of the new Civil Code (Article 400 of the old Civil Code), prescription generally does not run in
favor of a co-heir or co-owner as long as, he expressly or impliedly recognizes the co-ownership. While an
implied or constructive trust prescribes in ten years, the rule does not apply where a fiduciary relation exists
and the trustee recognizes the trust. 1
In the case at bar, there is no showing that the rights of the plaintiffs as co-owners were repudiated by

12

Candida Ramos in her lifetime; in fact, the evidence as found by the trial court show the contrary.
The court a quo did not sustain the defense of laches and prescription put up by the defendants (herein
petitioners) since it was not shown that the plaintiffs were guilty of negligence or slept on their rights. They
sent a letter of demand to the heirs of Candida Ramos on April 23, 1963, and filed their complaint against
them on June 14, 1963, or within a period of approximately eight (8) years from Candida's death.
In sustaining the findings of the trial court, the Court of Appeals did not commit any reversible error.
Petitioners further invoke the doctrine of res judicata in that the decree of registration of the property in the
name of Juanita Martin as owner by the land registration court was affirmed by the Court of Appeals in its
decision dated July 16, 1969 in CA G.R. No. 35191-R, which had already become final and executory. Both
the respondent Court of Appeals and the trial court correctly rejected the petitioners' contention. There can
be no res judicata since private respondents were not parties to the above case. Neither can it be claimed that
the decree of registration vested ownership in Juanita Martin. The appellate court, citing jurisprudence
established by this Court, held that the purpose of the Land Registration Act is not to create or vest title, but
to confirm and register title already vested and existing in the applicant for a title.
2

G.R. No. L-48322.:
The petitioners spouses Felipe David and Antonia G. David purchased portions of the Laong property,
consisting of 15,000 square meters, on February 21, 1965 from the spouses Gregorio and Mary Venturanza,
who, in turn, purchased the property from Juanita Martin Vda. de Lucena, on September 23, 1959. At the
time both purchases took place, the property in question was still an unregistered land. The land was
registered in the name of Juanita Martin only on July 1, 1971, to whom was issued OCT No. 8916.
Petitioners contend that the Court of Appellee erred in holding that they are buyers in bad faith, in ordering
the cancellation of OCT No. 8916 and all subsequent transfer certificates of title derived therefrom, and in
ordering petitioners - to reconvey to respondents their two-third (2/3) pro-indiviso share of the land and to
segregate therefrom 10,000 square meters for reconveyance to respondents.
In assailing the decision of the appellate court, petitioners invoke the doctrine of incontrovertibility of the
decree of registration after one year from issuance, and the doctrine of conclusiveness and indivisibility of
titles issued under the Torrens system. Petitioners might have stood on solid ground in invoking the above
doctrines if they had purchased the property from the registered owner after the issuance of the decree of
registration and the corresponding certificate of title in his name.
3

As the record shows, petitioners bought the property when it was still unregistered land. The defense of
having purchased the property in good faith may be availed of only where registered land is involved and the
buyer had relied in good faith on the clear title of the registered owner. One who purchases an unregistered
land does so at his peril His claim of having bought the land in good faith, i.e. without notice that some other
person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not
actually own the property. This is what happened in the case at bar.
G.R.No. L-49867:
In this petition, petitioners Jose Ramirez and the heirs of Ambrocia P. Vda. de Ramirez (widow of Sotero
Ramirez), assail the decision of the respondent Court of Appeals declaring them purchasers in bad faith and
ordering them to reconvey to the plaintiffs Gregorio Bandin, Raymunda Bandin&A Valentin Briones and
Soto Briones, four-fifteenth (4/15) share pro-indiviso of the properties they purchased from the spouses
Rufino Miranda and Natividad Guinto. The land in question, containing an area of 516 square meters, more
or less, was purchased by Jose Ramirez on June 4, 1949. Sotero Ramirez purchased his land, with an area of
752 square meters on July 9, 1948 and May 10, 1949. These parcels of land purchased by the Ramirezes were
part of the portion of the Talon property bought by the spouses Rufino and Natividad Miranda from
Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943.
The appellate court held that Jose Ramirez and his father Sotero Ramirez were not purchasers in good faith,
not having made diligent investigation of the true ownership of the properties they bought, but relied merely
on the tax declaration shown to them by the seller, Rufino Miranda. We have no reason to disturb the
foregoing findings of the respondent appellate court. Besides, as mentioned earlier, the issue of good faith or
bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is
buying the same from the registered owner, whose title to the land is clean. In such case, the purchaser who
relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value.
However, this is not the situation before us in the instant case, What petitioners bought were unregistered
lands.
Petitioners contend that the respondents are barred by estoppel and laches from recovering the property in
question We have already dealt with this issue above. We find the contention without merit.
Petitioners suggest that the portion ordered to be taken from the properties of Jose and Sotero Ramirez
should be taken instead from the shares which pertain to and are held by the heirs of Candida Ramos. We do
not find the suggestion meritorious. The respondents are entitled to their pro- indiviso share of the property
unlawfully sold by Candida Ramos, Agapita Ramos and Eulogio Bandin to the Miranda spouses from whom
the petitioners bought the parcels of land in question. Hence, it would not be proper for the court to
respondents' right to recover their pro-indiviso share of the property only from the remaining portion still in
the possession of the heirs of Candida Ramos.
G.R. No. L-49712:
The case of Magno de la Cruz stands on different footing from the other petitions. The property purchased
by him from Victoria Martin and Maximina Martin were registered lands, covered by Torrens title. Being a
purchaser in good faith for value, Magno de la Cruz is protected by the law. In the absence of a showing that

13

he had actual notice of the defect in the title of the vendors or that he is a buyer in bad faith the deed of sale in
his favor and the corresponding certificate of title issued in his name can not be nullified and cancelled.
Hence, it was error for the respondent court to invalidate the sale made by Victoria and Maximina Martin in
favor of Magno de la Cruz to the extent that it prejudiced the two-third (2/3) pro-indiviso share of
respondents in the property and to order petitioner to reconvey said share to respondents. The petition of
Magno de la Cruz is meritorious, and the decision appealed from should be modified accordingly.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:
1. Dismissing the petitions in G.R. Nos. L-48322, L-49716 and L-49687;
2. Granting the petition in G.R. No. L-49712, declaring valid the deeds of sale executed by Victoria Martin
(Exh. 8-Magno de la Cruz) and Maximina Martin (Exh. 4-Magno de la Cruz) in favor of petitioner Magno de
la Cruz, as well as Transfer Certificate of Title No. 116450 issued in the latter's name, ordering Victoria
Martin and Maximina Martin to pay the respondents two-third (2/3) of the present value of the property sold
by them to Magno de la Cruz, and modifying the appealed decision accordingly; and
3. Affirming the appealed decision, except as modified above.
No pronouncement as to costs.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Feliciano and Sarmiento, J J ., concur.
Gancayco, J ., took no part.

SOURCE: http://www.lawphil.net/judjuris/juri1987/apr1987/gr_l_48322_1987.html

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-79787 June 29, 1989
APOLONIO EGAO AND BEATRIZ EGAO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO
BONTILAO,respondents.
Eliud J. Pailagao for petitioners.
Guerrero A. Adaza for private respondents.

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

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxes paid by
private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegally portions of the land.
2

Petitioners' answer to the complaint asserted that Apolonio Egao is the registered owner of the parcel of land known
as Lot No. 662, Pls 854 with an area of 3,451 sq. meters evidenced by OCT No. P-3559 issued by the Register of
Deeds of Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965; that he (Apolonio Egao) and his
family have been in actual, physical, adverse, open and continuous possession thereof even before the issuance to
him of the free patent; that the land has never been sold by reason of the prohibition against alienation under
Commonwealth Act No. 141 (Public Land Law); and that the instant case was the fourth in a series filed against the
Egaos and is part of respondents' scheme to grab said parcel of land from the petitioners.

14

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, thus-
That the land is titled in the name of defendant Apolonio Egao is not in question. The main point
in issue is whether defendants could validly sell the land to Marfori who in turn transferred
ownership thereof to the plaintiff.
4

Marfori and Egao were both held by the Court of Appeals in pari delicto for violating the five (5) year restriction
under Sec. 118, Commonwealth Act No. 141 as amended by Act No. 496 against encumbrance or alienation of lands
acquired under a free patent or homestead; hence, they cannot, according to the appellate court, seek affirmative
relief, but respondents on the other hand were declared innocent purchasers for value who obtained the owner's
duplicate copy of the OCT (still in the name of the Egaos) from Marfori who transferred to them (respondents)
physical possession of the property. Finally, the Court of Appeals held:
WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is rendered:
1. Declaring the plaintiffs as the absolute owners of the land known as Lot No.
662, Pls-854 of the Land Registry of Bukidnon;
2. Ordering the Register of Deeds of Bukidnon to effect the cancellation of
Original Certificate of Title No. P-3559 in the name of Apolonio Egao and in
lieu thereof, another one be issued in the names of plaintiffs, after payment of
the proper fees;
3. Ordering the defendants to surrender peaceful possession of the land to
plaintiffs and to desist from further disturbing the possession over the land of
plaintiffs;
4. Ordering the defendants to pay the costs.
SO ORDERED.
5

Petitioners turn to this Court for relief, assailing the appellate court for allegedly committing grave abuse of
discretion amounting to lack of jurisdiction in holding that:
a. Petitioners sold Lot 662 to Roberto Marfori;
b. It was only in 1983 when Petitioners wrested possession over the land from
private respondents;
c. Petitioners never denied the sales made in favor of Marfori, in their answer;
d. Private Respondents are "innocent purchasers for value.
6

and/or for allegedly deciding questions of substance not in accordance with law and/or applicable decisions of this
Court.
Without giving due course to the petition, the Court required respondents to comment.
7
After comment, the Court
resolved to require petitioners to file a reply, which they did. Respondents filed a rejoinder. Considering the
allegations, issues and arguments adduced, the Court resolved to give due course to the petition. Upon submission
by the parties of their respective memorandum, the petition was submitted for decision.
8

Validity of the Deeds of Sale executed between Marfori (as purchaser) and the petitioners (as sellers) is the main
issue to be resolved, in determining respondents' right over the disputed land, the respondents being the transferees
of Marfori.
It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on 12 August,
1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation or encumbrance, within a
period of five (5) years from the date of issuance of the patent, of lands acquired under free patent or homestead.
Assuming, arguendo, the authenticity of the Deeds of Sale executed by the Egaos in favor of Marfori over portions
of Lot No. 662 (the land in question), dated 7 May 1964, 14 January and 6 October 1965, it clearly appears that all
deeds were executed within the prohibited period of five (5) years. As correctly found by the appellate court-
Section 124 of the Public Land Act provided [sic] that any acquisition, conveyance, abenation,
transfer or other contract made or executed inviolation of any of the provisions of Sections
118,121,120,122 and 123 of this Act shall be unlawful, null and void from its execution and shall
produce the effect of annulling and cancelling the grant, title, patent or permit originally issued,
recognized or confirmed, actually or prescriptively, and cause the reversion of the property and its
improvements to the state.
9


15

Petitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori, asserting
continued ownership over the land by virtue of a Torrens Certificate of Title issued in their name. While the Court is
not satisfied with respondents' explanation of their failure to present the notaries public (who were residents of a
neighboring province) to affirm their participation in the preparation of the Deeds, the Court also finds as
insufficient the mere denials by petitioners as to due execution and authenticity of said Deeds of Sale. A notarial
document is evidence of the facts in clear unequivocal mariner therein expressed. It has in its favor the presumption
of regularity To contradict all these there must be evidence that is clear, convincing and more than merely
preponderant.
10
The question of authenticity being one of fact, the Court will not disturb the conclusions of the
Court of Appeals on the matter.
Original Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a few months afterthe
execution by the Egaos of the last Deed of Sale in favor of Marfori.
11
The OCT is registered in the name of the
Egaos, herein petitioners.
A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A registered
title under the Torrens system cannot be defeated by prescription. The title, once registered, is notice to the world.
All persons must take notice. No one can plead ignorance of the registration.
12

Contrary to the appellate court's conclusion, respondents are not innocent purchasers for value.
13
An "innocent
purchaser for value" is deemed, under the Torrens system, to include an innocent lessee, mortgagee or other
encumbrancer for value.
14
Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts
which should put a reasonable man on his guard as to the possibility of the existence of a defect in his vendor's title,
and relying on the belief that there was no defect in the title of the vendor, purchases the property without making
any further investigation, he cannot claim that he is a purchaser in good faith for value.
15

Furthermore, a private individual may not bring an action for reversion or any action which would have the effect of
cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the result that the
land covered thereby will again form part of the public domain, as only the Solicitor General or the officer acting in
his stead may do so.
16

The rule of pari delicto non oritur actio (where two persons are equally at fault neither party may be entitled to
relief under the law), admits of exceptions and does not apply to an inexistent contract, such as, a sale void ab
initio under the Public Land Act, when its enforcement or application runs counter to the public policy of preserving
the grantee's right to the land under the homestead law.
17

Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration Act (Act
No. 496) expressly provides that the registration of the Deed is the operative act that binds or affects the land insofar
as third persons are concerned. The law requires a higher degree of prudence from one who buys from a person who
is not the registered owner, when the land object of the transaction is registered land. While one who buys from the
registered owner need not look behind the certificate of title, one who buys from another who is notthe registered
owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land. Failing to exercise
caution of any kind whatsoever is tantamount to bad faith.
18

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void (Sec. 124,
Public Land Act). No title passed from the Egaos to Marfori which could be validly transferred to herein
respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of that which does not belong to
him).
19

While the government has not taken steps to assert its title, by reversion, to a homestead sold in violation of the
Public Land Act, the vendor or his heirs is better entitled to the possession of the said, the vendee being in no better
situation than any intruder.
20

Accordingly, respondents who are not innocent purchasers for value have no standing to question petitioners' right
to the land and to file an action for quieting of title.
WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSED and SET
ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physical possession of the disputed
property. Respondents are ordered to deliver the owner's duplicate copy of the OCT (No. 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.
Let a copy of this decision be furnished the Solicitor General.
SO ORDERED.
Melencio-Herrera, (Chairperson), Sarmiento and Regalado, JJ., concur.
Paras, J., took no part.

SOURCE: http://www.lawphil.net/judjuris/juri1989/jun1989/gr_l79787_1989.html


16

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18861 June 30, 1964
DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,
vs.
LAZARO MANGAWANG, ET AL., defendants-appellees.
Jesus A. Avancea for plaintiff-appellant.
Pablo Q. Ilaya for defendants-appellees.
BAUTISTA ANGELO, J .:
This is an appeal from a decision of the Court Of First instance of Bataan declaring the Mangawang brothers owners
of Lot No. 1633 of the Balanga cadastre.
It appears that Gavino Amposta applied with the Director of Lands for the issuance of a homestead patent over a
parcel of land situated at Balanga, Bataan. Pending action on his application, cadastral proceedings were instituted
by the government in said municipality wherein Amposta filed an answer praying for the adjudication of the same
land in his favor which was designated therein as Lot No. 1633. On March 8, 1920, the cadastral court rendered
decision awarding the land to Amposta. Since no advice on this matter was given either to the Bureau of Lands or to
the Governor General, the latter, on November 2, 1920, issued in favor of Amposta Homestead Patent No. 2388
covering the same land, and on November 29, 1920, Original Certificate of Title No. 100 was issued to him by the
Governor-General.
On December 20, 1922, the cadastral court issued a decree of registration of the land in favor of Amposta pursuant
to the decision rendered in the cadastral case, and or, July 5, 1924, Original Certificate of Title No. 2668 was issued
to him covering the same property.
On November 24, 1941, Amposta sold the land to Santos Camacho surrendering to him Original Certificate of Title
No. 100, and because of this transfer said title was cancelled and transfer Certificate of Title No. 5506 was issued in
the name of Camacho. On November 18, 1946, Santos-Camacho sold the land to Bonifacio Camacho as a result of
which Transfer Certificate of Title No. 248 was issued to the latter. On April 28, 1948, Bonifacio Camacho
mortgaged the land to the Rehabilitation Finance Corporation (now Development Bank of the Philippines), and
having failed to pay the loan as agreed upon the land was sold at public auction to said bank as the highest bidder.
The period of redemption having elapsed without Camacho being able to redeem the property, a final deed of sale
was executed in favor of the bank, and Transfer Certificate of Title No. 6961 was issued in its name on June 29,
1957.
Meanwhile, or on June 11, 1947, Gavino Amposta again sold the same property to Lazaro and Arsenio Mangawang
for the sum of P2,000.00, the vendees executing a mortgage on the land to secure the payment of the balance. On
March 17, 1948, the vendees paid the balance of the purchase price, and an absolute deed of sale was executed in
their favor. In connection with this transaction, Amposta surrendered to the vendees the title that was issued to him
in the cadastral case, which was later substituted by Transfer Certificate of Title No. 1098 issued in the name of the
vendees.1wph1.t
As a consequence of their purchase of the land, the Mangawang brothers took possession thereof, and upon learning
of this transfer, the Development Bank of the Philippines, which as already stated became the owner of the property,
commenced the present action against them in the Court of First Instance of Bataan to recover its possession and
damages. In this case, the parties submitted a stipulation of facts, and on the strength thereof, the court a
quo rendered decision awarding the land to the Mangawang brothers. Seasonably, the bank appealed to this Court.
Appellees contend that their right over the property in litigation should be restored because the certificate of title
they are holding is derived from that issued pursuant to a decision rendered by a cadastral court, while the title being
held by appellant was merely based on the title issued in an administrative proceeding, upon the theory that a
judicial title is deemed preferred to one issued administratively. They further contend that since the decision which
gave rise to their title was rendered on March 8, 1920, which became final thirty days thereafter, their right over the
land must be deemed vested on said date, whereas the title of appellant is merely a deprivation of the one issued to
Amposta on November 29, 1920, or seven months after the decision rendered in the cadastral case.
There is no doubt that if the two original certificates of title were issued on different occasions to two different
persons the contention of appellees would be correct it being in line with the several decisions rendered by this
Court.
1
But the case at bar is different. Here two certificates of title were issued to Gavino Amposta over the same
parcel of land, one under the Homestead Law and another under the Cadastral Act. Said titles were regularly issued
and on their face both appear to be valid, and under such predicament it behooves Amposta to choose which of them
he would prefer, as he could not validly make use of both of them. But this Amposta did not do. On the contrary, he
took advantage of the situation by selling the land to two different persons surrendering to each purchaser the
pertinent certificate of title. The question then that arises is: Who of the two buyers should be considered as the
rightful owner of the land?
On this score, it is important to consider the facts that led to the sale of the land to the parties herein. Note that
Amposta first sold the land to Santos Camacho on November 24, 1941, who registered it in his name on the same
date. And seven years thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang brother,
who also registered it in their name on the same date. Since both purchasers apparently have acted in good faith, as
there is nothing in the evidence to show that they did otherwise, we cannot but conclude that the sale made by A

17

mposta to Santos Camacho is the valid one considering that when Amposta sold the same land to the Mangawang
brothers he had nothing more to sell even if the title he surrendered to them is one issued covering the same
property. In legal contemplation, therefore, Amposta sold a property he no longer owned, and hence the transaction
is legally ineffective.
On the other hand, the case under consideration can also be viewed under a different angle. It can also be treated as
one of double sale, where a person sells the same land to two different persons who are unaware of the flaw that lies
in its title, and where the law adjudicates the property to the purchaser who first registers the transaction in his name
in the registry of property.
2
And applying this principle, we cannot conclude that the title should likewise be
adjudicated to appellant whose predecessor-in-interest acquired and registered the property much ahead in point of
time than the appellees. Verily, the title acquired by the latter is invalid and ineffective, contrary to the finding of the
court a quo.
WHEREFORE, the decision appealed from is reversed. We hereby declare appellant owner of Lot No. 1633 of the
Balanga cadastre and uphold the validity of Transfer Certificate of Title No. 6961 issued in its favor. Transfer
Certificate of Title No. 1098 issued in the name of appellees is hereby ordered cancelled. No pronouncement as to
costs.
Bengzon, C.J., Padilla, Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal, JJ., concur.
Labrador, Barrera and Dizon, JJ., took no part.

SOURCE: http://www.lawphil.net/judjuris/juri1964/jun1964/gr_l-18861_1964.html

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-63046 June 21, 1990
MARIANO TORRES Y CHAVARRIA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE FERNANDEZ,
ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the NATIONAL TREASURER, as Custodian of the
Assurance Fund,respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for petitioner.
Albon, Serrano & Associates for private respondents.
T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J .:
This is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 62248-R entitled "Mariano
Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.," which reversed the decision of the then Court of First
Instance of Manila, Branch 7, by holding that it is the respondent Rosario Mota who is legally entitled to the
disputed realties, being an innocent mortgagee and later the highest bidder when the properties were supposedly
foreclosed, and not the petitioner Mariano Torres, the defrauded owner thereof; and of the resolution of that Court
denying Torres' motion for reconsideration.
The parcel of land located at the comer of Quezon Boulevard and Raon Street (now Gonzalo Street), and the
building erected thereon known as "M. Torres Building" is owned by Mariano Torres, the herein petitioner, as
evidenced by Transfer Certificate of Title No. 53628-Manila issued in his name. As far as the records show, Torres
was and still is in possession of the realties, holding safely to his owner's duplicate certificate of title, and, at least
until 1971, paying the real estate taxes due thereon, and collecting rentals from his tenants occupying the building.
Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with the Court of First Instance of
Manila, docketed as LRC GLRO Cad. Rec. No. 133, where he, misrepresenting to be the attorney-in-fact of Torres
and falsely alleging that the a duplicate copy of TCT No. 53628 was lost, succeeded in obtaining a court order for
the issuance of another copy of the certificate.
Once in possession thereof, Fernandez forged a simulated deed of sale of the realties in his favor. Whereupon TCT
No. 53628 in the name of Torres was canceled and TCT No. 86018 was issued in Fernandez' name.
On various dates from December, 1966 to November, 1967 Fernandez mortgaged the realties to Rosario Mota, wife
of Ernesto Cue, and also to Angela Fermin, who later assigned her credit to the spouses Cue. The mortgages were
annotated at the back of TCT No. 86018 and so was the deed of assignment.
Torres, who up to this time still had possession of his owner's duplicate certificate of title and who was still
collecting rentals from the occupants of the subject building, upon Teaming of the fraud committed by Fernandez,
caused, on March 18, 1968, the annotation on the latter's TCT a notice of adverse claim.
On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT No. 86018 as well as the
proceedings in LRC GLRO Cad. Rec. No. 133. On April 2, 1968, a notice of lis pendens was annotated at the back
of Fernandez' TCT.
In the meantime, Fernandez failed to pay his various loans which prompted the Cues to institute an extrajudicial
foreclosure of the mortgage.
On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue for the annulment of the
mortgage with preliminary injunction.
After the foreclosure was enjoined, the parties entered into an amicable settlement, approved by the court whereby it
was stipulated that Fernandez acknowledged and promised to pay his debt to the Cues for Five Hundred Sixty-Two

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Thousand Nine Hundred Fifty-Five and 28/100 (P562,955.28) Pesos on or before, March 30, 1970, while the
spouses bound themselves to execute and deliver, within ten (10) days from receipt of the sum mentioned such
documents as are necessary to release the mortgages in favor of defendants on plaintiffs' property.
Before Fernandez could pay his obligation under the settlement agreement, a decision was rendered in Civil Case
No. 72494 where it was declared that the proceedings held in LRC GLRO Cad. Rec, No. 133 was void and that TCT
No. 86018, issued in the name of Fernandez, is without force and effect as TCT No. 53628 in the name of Torres is
the true and legal evidence of ownership of the subject immovables. Fernandez appealed from this decision to the
Court of Appeals where it was docketed as CA-G.R. No. 46386-R. The Court of Appeals, on April 20, 1979,
affirmed the decision of the trial court. There being nothing on the records that would indicate that the judgment of
the appellate court was elevated here, it would appear that it had become final and executory.
But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez failed to comply with his
obligation under the amicable settlement and whereupon the Cues applied for and were granted a writ of execution.
The subject realties were then levied upon and sold at public auction where Rosario Mota was the highest bidder.
On August 31, 1971, the redemption period for the subject immovables having lapsed without Fernandez nor Torres
redeeming the properties, Rosario Mota was issued the Sheriffs Deed of Sale. Thereafter, TCT No. 86018 was
canceled and TCT No. 105953 was issued in her name.
On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M. Torres Building" that she is the
new owner thereof and henceforth, payment of their rentals should be made to her.
On December 17, 1971 Torres filed a complaint, which later gave rise to this petition, with the Court of First
Instance of Manila, docketed as Civil Case No. 85753, against Fernandez and his spouse and the Cues to restrain the
latter from collecting rentals and for the declaration as void TCT No. 105953. The Cues in turn filed a cross-claim
against Fernandez spouses and a third party complaint against the National Treasurer as the custodian of the
Assurance Fund.
During the proceeding, Mariano Torres, having died sometime in 1974, was substituted by his widow. On June 3,
1977, the trial court rendered its decision declaring TCT No. 105953 in the name of Rosario Mota nun and void as it
upheld the validity of TCT No. 53628 in the name of Torres as the true evidence of title to the disputed realties, and
at the same time dismissing the Cue's third party complaint and cross claim.
The decision was reviewed by the respondent court at the instance of the Cues which, as aforementioned, reversed
the trial court in its decision dated July 30, 1982 and the Resolution of January 14, 1983. Hence, this petition.
There is nothing on the records which shows that Torres performed any act or omission which could have
jeopardized his peaceful dominion over his realties. The decision under review, however, in considering Mota an
innocent mortgagee protected under Section 55 of the Land Registration Law, held that Torres was bound by the
mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the highest bidder, also bound Torres
and concluded that the certificate of title issued in the name of Mota prevails over that of Torres'. As correctly
pointed out by Torres, however, his properties were sold on execution, and not on foreclosure sale, and hence, the
purchaser thereof was bound by his notice of adverse claim and lis pendens annotated at the back of Fernandez'
TCT. Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the
appellate court that a forged instrument may become the root of a valid title, cannot be applied where the owner still
holds a valid and existing certificate of title covering the same interest in a realty. The doctrine would apply rather
when, as in the cases for example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951,
February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru insidious
means obtains the owner's duplicate certificate of title, converts it in his name, and subsequently sells or otherwise
encumbers it to an innocent holder for value, for in such a case the new certificate is binding upon the owner (Sec.
55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and existing certificate of title, his would be
indefeasible as against the whole world, and not that of the innocent holder's. "Prior tempore potior jure"as We have
said in Register of Deeds v. Philippine National Bank, No. L-17641, January 30, 1965, 13 SCRA 46 , citing Bank,
No. L Legarda v. Saleeby, 31 Phil. 590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546,Reyes v.
Borbon, 50 Phil. 791. in C.N. Hodges v. Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292,
We laid down the doctrine that:
The claim of indefeasibility of the petitioner's title under the Torrens land title system would be
correct if previous valid title to the same parcel of land did not exist. The respondent had a valid
title ... It never parted with it; it never handed or delivered to anyone its owner's duplicate of the
transfer certificate of title, it could not be charged with negligence in the keeping of its duplicate
certificate of title or with any act which could have brought about the issuance of another
certificate upon which a purchaser in good faith and for value could rely. If the petitioner's
contention as to indefeasibility of his title should be upheld, then registered owners without the
least fault on their part could be divested of their title and deprived of their property. Such
disastrous results which would shake and destroy the stability of land titles had not been foreseen
by those who had endowed with indefeasibility land titles issued under the Torrens system.
Veronica Bareza perpetrated the fraud by making false representations in her petition and the title
issued to her being the product of fraud could not vest in her valid and legal title to the parcel of
land in litigation. As she had no title to the parcel of land, in the same way that a thief does not
own or have title to the stolen goods, she could not transmit title which she did not have nor
possess.
We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra, where We noted that said ruling
is "a mere affirmation of the recognized principle that a certificate is not conclusive evidence of title if it is shown
that the same land had already been registered and an earlier certificate for the same land is in existence." Again in

19

the case of Baltazar v. Court of Appeals, G.R. No. 78728, December 8, 1988, 168 SCRA 354, We held that as
between two persons both of whom are in good faith and both innocent of any negligence, the law must protect and
prefer the lawful holder of registered title over the transfer of a vendor bereft of any transmissible rights.
In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was an innocent mortgagee
would be futile because, as above shown, no certificate of title covering the subject realties in derogation of Torres'
certificate of title may validly be issued.
Then it becomes evident that the remaining possible remedies of the Cues are to go against Fernandez or the
Assurance Fund, as they in fact had done in the lower court by filing a cross claim and third party complaint. The
lower court dismissed the Cues' cross-claim against Fernandez reasoning out that their remedy is to cause the final
judgment (compromise agreement) in Civil Case No. 75643 executed. This, of course, is correct since the rights and
obligations of both parties had been determined in that case.
The trial court also dismissed the Cues' third party complaint against the Treasurer of the Philippines as custodian of
the Assurance Fund after finding them negligent in protecting their interest. The trial court recognized the principle
that a person dealing with registered lands need not go beyond the certificate of title but nevertheless pointed out
that there are circumstances in this case which should have put the Cues on guard and prompted them to investigate
the property being mortgaged to them, thus:
The property in question is a very valuable property, in fact accepted by defendants Mota and
Medina Cue as collateral for more than half a million pesos in loans granted by them to Fernandez.
Its value lies principally in its income potential, in the form of substantial monthly rentals.
Certainly, the registered title does not yield any information as to the amount of rentals due from
the building, much less on who is collecting them, or who is recognized by the tenants as their
landlord. Any prospective buyer or mortgagee of such a property, if prudent and in good faith, is
normally expected to inquire into all these and related facts and circumstances.
Besides, by the course of visible dimensions of the M. Torres Building, it should be readily
obvious to any one that the area of the two lots ... covered by TCT No. 86018 cannot
accommodate the building, as in fact it also rests upon a lot covered by TCT No. 56387, and partly
upon a lot leased by (Torres) from the City of Manila. Had (the Cues) known of this fact would
they have accepted the mortgage alone over TCT No. 86018? The answer is obvious. And yet, to
all indications, they never bothered to look into this fact about the M. Torres Building.
xxx xxx xxx
Another thing that defendants Mota and Medina Cue must have investigated, as any prudent buyer
or mortgagee should before consummating any transaction on real property, in the matter of
payment of taxes on the property. After all, the big value of the property in question necessarily
means that even real estate taxes on it alone would involve big amounts of money, and if there are
tax arrearages, any buyer or subsequent owner of the property wig have to come face to face with
the tax hen attaching to the property wherever its owner may be. ... (P. 257, Record on Appeal)
We likewise take note of the manifestation of the Office of the Solicitor General that the Cues failed to contest the
ruling of the trial court negating the liability of the Assurance Fund. For these reasons, We hold that the Cues'
remedy merely is to go against Francisco Fernandez or rather his estate since record shows that he died sometime in
1983.
ACCORDINGLY, the decision and resolution under review are REVERSED and the decision of the then Court of
First Instance, Branch 7, Manila in Civil Case No. 85753 is REINSTATED.
SO ORDERED.
Narvasa (Chairman), Cruz and Gancayco, JJ., concur.
Grio-Aquino, J., took no part.

SOURCE: http://www.lawphil.net/judjuris/juri1990/jun1990/gr_l_63046_1990.html

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50008 August 31, 1987
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales
and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE, respondents.

PARAS, J .:
This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court of First Instance of
Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula
Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage
executed by respondent spouses in favor of petitioner bank are null and void.
The undisputed facts of this case by stipulation of the parties are as follows:
... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale

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secured a loan in the sum of P70,000.00 from the defendant Prudential Bank. To secure payment
of this loan, plaintiffs executed in favor of defendant on the aforesaid date a deed of Real Estate
Mortgage over the following described properties:
l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a
total floor area of 263 sq. meters, more or less, generally constructed of mixed hard wood and
concrete materials, under a roofing of cor. g. i. sheets; declared and assessed in the name of
FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the Assessor of Olongapo
City with an assessed value of P35,290.00. This building is the only improvement of the lot.
2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on
the lot where the above property is erected, and more particularly described and bounded, as
follows:
A first class residential land Identffied as Lot No. 720, (Ts-308, Olongapo
Townsite Subdivision) Ardoin Street, East Bajac-Bajac, Olongapo City,
containing an area of 465 sq. m. more or less, declared and assessed in the name
of FERNANDO MAGCALE under Tax Duration No. 19595 issued by the
Assessor of Olongapo City with an assessed value of P1,860.00; bounded on the
NORTH: By No. 6, Ardoin Street
SOUTH: By No. 2, Ardoin Street
EAST: By 37 Canda Street, and
WEST: By Ardoin Street.
All corners of the lot marked by conc. cylindrical monuments
of the Bureau of Lands as visible limits. ( Exhibit "A, " also
Exhibit "1" for defendant).
Apart from the stipulations in the printed portion of the aforestated deed of
mortgage, there appears a rider typed at the bottom of the reverse side of the
document under the lists of the properties mortgaged which reads, as follows:
AND IT IS FURTHER AGREED that in the event the Sales
Patent on the lot applied for by the Mortgagors as herein stated
is released or issued by the Bureau of Lands, the Mortgagors
hereby authorize the Register of Deeds to hold the
Registration of same until this Mortgage is cancelled, or to
annotate this encumbrance on the Title upon authority from
the Secretary of Agriculture and Natural Resources, which
title with annotation, shall be released in favor of the herein
Mortgage.
From the aforequoted stipulation, it is obvious that the mortgagee (defendant
Prudential Bank) was at the outset aware of the fact that the mortgagors
(plaintiffs) have already filed a Miscellaneous Sales Application over the lot,
possessory rights over which, were mortgaged to it.
Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act
3344 with the Registry of Deeds of Zambales on November 23, 1971.
On May 2, 1973, plaintiffs secured an additional loan from defendant Prudential
Bank in the sum of P20,000.00. To secure payment of this additional loan,
plaintiffs executed in favor of the said defendant another deed of Real Estate
Mortgage over the same properties previously mortgaged in Exhibit "A."
(Exhibit "B;" also Exhibit "2" for defendant). This second deed of Real Estate
Mortgage was likewise registered with the Registry of Deeds, this time in
Olongapo City, on May 2,1973.
On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over
the parcel of land, possessory rights over which were mortgaged to defendant Prudential Bank, in
favor of plaintiffs. On the basis of the aforesaid Patent, and upon its transcription in the
Registration Book of the Province of Zambales, Original Certificate of Title No. P-2554 was
issued in the name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of
Zambales, on May 15, 1972.
For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon
application of said defendant, the deeds of Real Estate Mortgage (Exhibits "A" and "B") were
extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties therein
mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant
City Sheriff on April 12, 1978 (Exhibit "E"). The auction sale aforesaid was held despite written
request from plaintiffs through counsel dated March 29, 1978, for the defendant City Sheriff to
desist from going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil Case No.
2443-0, Rollo, pp. 29-31).
Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate Mortgage as null and
void (Ibid., p. 35).
On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed by private
respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated January 10, 1979 (Ibid., p. 63), the Motion
for Reconsideration was denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).

21

The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the respondents to
comment (Ibid., p. 65), which order was complied with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner
filed its Reply on June 2,1979 (Ibid., pp. 101-112).
Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the parties were required to
submit simultaneously their respective memoranda. (Ibid., p. 114).
On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondents filed their
Memorandum on August 1, 1979 (Ibid., pp. 146-155).
In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., P. 158).
In its Memorandum, petitioner raised the following issues:
1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF
MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE
COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT OF
INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).
This petition is impressed with merit.
The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected
on the land belonging to another.
The answer is in the affirmative.
In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is
obvious that the inclusion of "building" separate and distinct from the land, in said provision of law can only mean
that a building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958;
Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).
Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements
thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a
mortgage would be still a real estate mortgage for the building would still be considered immovable property even if
dealt with separately and apart from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same
manner, this Court has also established that possessory rights over said properties before title is vested on the
grantee, may be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438
[1961]).
Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2-storey
semi-concrete residential building with warehouse and on the right of occupancy on the lot where the building was
erected, was executed on November 19, 1971 and registered under the provisions of Act 3344 with the Register of
Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April
24, 1972, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando Magcale on
May 15, 1972. It is therefore without question that the original mortgage was executed before the issuance of the
final patent and before the government was divested of its title to the land, an event which takes effect only on the
issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty
Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702,
May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing considerations, it is evident that the
mortgage executed by private respondent on his own building which was erected on the land belonging to the
government is to all intents and purposes a valid mortgage.
As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be noted that Sections
121, 122 and 124 of the Public Land Act, refer to land already acquired under the Public Land Act, or any
improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was
executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the
face of private respondent's title has likewise no application in the instant case, despite its reference to encumbrance
or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself
and does not mention anything regarding the improvements existing thereon.
But it is a different matter, as regards the second mortgage executed over the same properties on May 2, 1973 for an
additional loan of P20,000.00 which was registered with the Registry of Deeds of Olongapo City on the same date.
Relative thereto, it is evident that such mortgage executed after the issuance of the sales patent and of the Original
Certificate of Title, falls squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public Land Act
and Section 2 of Republic Act 730, and is therefore null and void.
Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily
surrendered the same to the bank in 1977 in order that the mortgaged may be annotated, without requiring the bank
to get the prior approval of the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential
Bank to cause the annotation of said mortgage on their title.
However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118, 120, 122 and 123
of Commonwealth Act 141, has held:
... Nonetheless, we apply our earlier rulings because we believe that as in pari delicto may not be
invoked to defeat the policy of the State neither may the doctrine of estoppel give a validating
effect to a void contract. Indeed, it is generally considered that as between parties to a contract,
validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19
Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by
law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra). ... (Arsenal
vs. IAC, 143 SCRA 54 [1986]).

22

This pronouncement covers only the previous transaction already alluded to and does not pass upon any new
contract between the parties (Ibid), as in the case at bar. It should not preclude new contracts that may be entered
into between petitioner bank and private respondents that are in accordance with the requirements of the law. After
all, private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be
open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction, however, would be
subject to whatever steps the Government may take for the reversion of the land in its favor.
PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo City is hereby
MODIFIED, declaring that the Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of
Real Estate Mortgage for an additional loan of P20,000.00 is null and void, without prejudice to any appropriate
action the Government may take against private respondents.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

SOURCE: http://www.lawphil.net/judjuris/juri1987/aug1987/gr_l_50008_1987.html

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-29740 November 10, 1978
TERESITA ROSAL ARRAZOLA, petitioner-appellee,
vs.
PEDRO A. BERNAS and SOLEDAD VERNAS ALIVIO, oppositors-appellants.
Gellada & Gellada for appellants.
Venicio Escolin for appellee.

AQUINO, J .:
This case is about the cancellation of an adverse claim which was annotated on Transfer Certificates of Title Nos. T-
6881 and T-6882 in the name of Teresita Rosal Bernas (Arrazola), covering Lots Nos. 371 and 373 of the Pilar,
Capiz cadastre with a total area of 12,830 square meters.
Teresita was allegedly an adopted daughter of Elviro Bernas who on May 5, 1967, when he was 79 years old,
executed in Iloilo City a notarized will wherein he disinherited Teresita and instituted his brother Pedro A. Bernas
and his sister Soledad Bernas Alivio as heirs to all his properties, including Lots Nos. 371 and 373 which he had
allegedly "involuntarily transferred" to Teresita.
A month later, or on June 5, 1967, Elviro Bernas died in Roxas City. His brother Pedro filed with the Court of First
Instance of Capiz a petition dated September 6, 1967 for the probate of his will (Special Proceeding No. V-2965).
On December 12, 1967, Pedro A. Bernas filed with the register of deeds of Capiz a verified notice of adverse
claimwhich was recorded as follows:
Entry No. 27222. Notice of adverse claim in favor of Pedro and Soledad, all surnamed Bernas.
Claiming ownership in the parcels of land described in T-6881 and T-6882 by virtue of the Last
Will executed before Not. Public Reynaldo Gellada of Iloilo City on May 5, 1967, Doc. No. 4,
page 2, Book III, series of 1967: by Elviro Bernas. Inscription Dec. 12, 1967 at 8:20 a.m.
He alleged in that adverse claim that Lots Nos. 371 and 373 were conveyed by his brother Elviro to Teresita Rosal
Bernas "involuntarily, fictitiously and without consideration" and that in Elviro's will the two lots were devised to
him (Pedro) and his sister Soledad. A copy of the will was attached to the adverse claim.
After the register of deeds had annotated the adverse claim on TCT Nos. T-6881 and T-6882, Teresita R. Bernas
Arrazola filed in the cadastral and probate proceedings a motion dated August 13, 1968 for the cancellation of the
annotation of adverse claim. The motion was predicated on the grounds that she was not served with prior notice" of
the adverse claim and that there was "no petition for approval or justification" thereof filed with the court. Pedro A.
Bernas and Soledad Bernas Alivio opposed the motion. The lower court in its order of August 20, 1968 granted it
and ordered the register of deeds to cancel the annotation. The oppositors appealed.
The correctness of the lower court's order is to be passed upon in the light of section 110 of Act No. 496 which
reads:
SEC. 110. Whoever claims any right 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
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
claimant's residence and designate a place at which all notices may be served upon him. This
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 canceled. 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

23

claimant double or treble costs in its discretion.
Under section 110, the adverse claimant must be one who claims any right or interest in registered land adverse to
the registered owner, arising subsequent to the original registration. That interest is registerable as an adverse claim
if no other provision is made in Act No. 496 for its registration.
Applying section 110, it was held that a claim based on occurrences prior to the original registration is not
registerable as an adverse claim (De los Reyes vs. De los Reyes, 91 Phil. 528).
A lease over a parcel of land for a ten-year period, which could not be registered because the owner's duplicate of
the title was not surrendered, could be registered as an adverse claim and the owner could be compelled to surrender
the owner's duplicate of the title so that the adverse claim could be annotated thereon. If the adverse claim turns out
to be invalid, the owner could ask for its cancellation and, if found to be frivolous or vexatious, then double or treble
costs may be adjudged against the adverse claimant. (Register of Deeds of Manila vs. Tinoco Vda. de Cruz, 95 Phil.
818)
But where the vendee of a parcel of land may register the deed of sale in his favor, as provided for in section 57 of
Act No. 496, he is not entitled to cause that sale to be annotated as an adverse claim on the vendor's title (Register of
Deeds of Quezon City vs. Nicandro, 111 Phil. 989, 997).
An example of a baseless adverse claim is when the possessor of land already registered in the name of another
person claims the land on the basis of prescription and adverse possession. That claim is not registerable as an
adverse claim (Estella vs. Register of Deeds of Rizal, 106 Phil. 911).
However, the claim of a person that she has hereditary rights in the land fraudulently registered in her sister's name,
because the land belonged to their mother, whose estate is pending settlement in a special proceeding, is registerable
as an adverse claim (Gabriel vs. Register of Deeds of Rizal, 118 Phil. 980).
In the instant case, the lower court ordered the cancellation of the adverse claim because the will of Elviro Bernas
had not yet been probated. It reasoned out that before the probate Pedro A. Bernas and Soledad Bernas Alivio are
merely presumptive heirs with a "contingent, expectant and inchoate" interest in the two lots.
We hold that the lower court erred in ordering the cancellation of the adverse claim. It is true that the will of Elviro
Bernas has not yet been probated but the fact is that there is a pending proceeding for its probate. And in that will
the testator transmitted to his surviving brother and sister, the herein oppositors-appellants or adverse claimants, the
right to secure a declaration as to the invalidity of his conveyance of lots Nos. 371 and 373 to Teresita Rosal
Arrazola.
Because of that will, Teresita's title to the two lots have become controversial. To alert third persons, or for that
matter the whole world, to the fact that Pedro A. Bernas and Soledad Bernas Alivio have an adverse claim on the
two lots, section 110 of Act No. 496 gives them the remedy of causing to be annotated their adverse claim on the
titles of the two lots. If that remedy is not given to them, then the registered owner can transfer the lots to an
innocent purchaser for value and, in that event, the unregistered adverse claim will be nullified or frustrated. (See
Reyes vs. Court of Appeals, 95 Phil. 952 as to the right of an heir to sue for the annulment of a conveyance made in
fraud of the deceased.)
The purpose of annotating the adverse claim on the title of the disputed land is to apprise third persons that there is a
controversy over the ownership of the land and to preserve and protect the right of the adverse claimant during the
pendency of the controversy. It is a notice to third persons that any transaction regarding the disputed land is subject
to the outcome of the dispute.
Appellants' adverse claim, which was made in good faith, has some basis and semblance of plausibility and is not
palpably frivolous or vexatious. Hence, it is premature to order the cancellation of the annotation thereof before it is
finally determined by the courts that the titles of Teresita Rosal Arrazola to the disputed lots are indefeasible and
that appellants' claim is devoid of merit.
The instant case has some similarity to Ty Sin Tei vs. Dy Piao, 103 Phil. 858, where the testator, Dy Lac, in 1940
purchased houses and a lot located at Zurbaran Street, Manila, and placed the title thereof, Transfer Certificate of
Title No. 58652, in the name of his maidservant and concubine named Paz Ty Sin Tei. After the testator's death in
1948, Paz filed a petition for the probate of his will. Lee Dy Piao and Uy Cho, the respective legitimate son and
widow of Dy Lac acting pursuant to section 110 of Act No. 496, caused their claim, as heirs of Dy Lac, to be
annotated on the back of TCT No. 58652 pending the determination of their hereditary rights in the testamentary
proceeding.
On March 23, 1955, Paz Ty Sin Tei filed a petition in the land registration record of TCT No. 58652 for the
cancellation of the adverse claim. The Court of First Instance of Manila cancelled it over Lee Dy Piao's opposition.
On appeal, this Court set aside the order of cancellation and further held that the adverse claim could subsist
concurrently with a subsequent annotation of a notice of lis pendens which referred to a case filed by Lee Dy Piao,
involving the same right or interest covered by the adverse claim.
In further support of our holding that the lower court erred in ordering the cancellation of the annotation of the
adverse claim, it is also relevant to cite the holding that where a guardianship proceeding was instituted for an
octogenarian woman, it was proper to annotate on the title of her land the pendency of such a proceeding by means
of a notice of lis pendens for the purpose of alerting anyone who might wish to buy the land that his purchase might
be questioned later on (Diaz vs. Hon. Perez, 103 Phil. 102). An adverse claim and a notice of lis pendens have the
same purpose.
In this case, the trial court relied on the ruling of the Court of Appeals that the contingent, expectant and inchoate
hereditary rights of the children of a living parent do not constitute an adverse claim during his lifetime which could
be annotated on the titles covering the parent's land (Diaz vs. Santos Diaz, CA 54 0. G. 8082). That is an illustration
of a frivolous or vexatious adverse claim.

24

That ruling is not applicable to this case because in the Diaz case the hereditary rights had not yet accrued, since the
parent was still alive. In the instant case, the testator is dead and there is a proceeding for the probate of his will
which is the basis of appellants' adverse claim. Hence, they are entitled to announce to third persons, by means of a
notice of adverse claim annotated on the titles of the two lots, that they are contesting the validity of those titles.
It has been said that the annotation of an adverse claim should not be confused with its validity which should be
litigated in a proper proceeding and that the registration of an invalid adverse claim is not as harmful as the non-
registration of a valid one (Gabriel vs. Register of Deeds of Rizal, 118 Phil. 980).
WHEREFORE, the lower court's order of August 20, 1968, ordering the cancellation of appellants' adverse claim on
TCT Nos. T-6881 and T-6882, is reversed and set aside. Costs against the petitioner-appellee.
SO ORDERED.
Fernando (Chairman), Barredo, Antonio, Concepcion, Jr. and Santos, JJ., concur.

SOURCE: http://www.lawphil.net/judjuris/juri1978/nov1978/gr_29740_1978.html

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-60323 April 17, 1990
MAGDALENA HOMEOWNERS ASSOCIATION, INC., RICARDO CHUNG, JOSE ESTRELLA,
LEONCIO PALANCA, NORBERTO ROBLEZA, J.S. VALBUENA, GREGORIO CANCIO FRANCISCO
BUENCAMINO, and JESUS TOMACRUZ, petitioners,
vs.
COURT OF APPEALS, MAGDALENA ESTATE, INC., QUEZON CITY, DEVELOPMENT BANK OF
THE PHILIPPINES, and THE REGISTER OF DEEDS, QUEZON CITY, respondents.

NARVASA, J .:
A Resolution of the Court of Appeals
1
ordering, on motion, the Register of Deeds to cancel a notice of lis
pendens annotated in several Torrens titles
2
is the subject of the special civil action of certiorari at bar.
The notice of lis pendens was recorded at the instance of the plaintiffs in Civil Case No. Q-18223 of the Court of
First Instance at Quezon City.
3
The case involved a dispute regarding the ownership of certain lots within a
subdivision known as Magdalena Rolling Hills which the residents claimed had been reserved as an "open space"
and therefore could not in any manner be sold, disposed of or encumbered.
The subdivision was owned by the Magdalena Estate, Inc. (hereafter simply MEI), located at New Manila, Quezon
City. It originally had a total area of 355,490 square meters. Among the subdivision lots was Lot 15, Block 18,
which had an area of 21,460 square meters. A part of this Lot 15, measuring 7,100 square meters, had initially been
set aside as the subdivision's "open space," i.e., reserved for use as a park, playground or recreational zone.
However, an amendment of the plan of the subdivision (amended subdivision plan [LRC] Psd-18617)
4

substituting the area earlier designated as open space with an area of 7,100 square meters (being as aforesaid a
portion of Lot 15, Block 18), with several other lots (Lots 21 to 27 of Block 20) having a combined area also of
7,100 square meters was approved by the City Council of Quezon City. The Council also authorized the
subdivision for disposition to the public of the former open space.
5
Subsequently, the Court of First Instance of
Quezon City also approved the same amended subdivision plan [LRC] Psd-18167) in accordance with Republic Act
No. 44, subject to the condition "that all the roads, alleys, drainage and open space, dedicated for public use,
delineated therein, shall be made subject to the limitations imposed by law."
6

MEI then had the original open space (a portion of Lot 15, Block 18) result resurveyed and subdivided into several
lots. The new plan, (LRC) Pcs-2299, was approved in due course by the Land Registration Commission.
7

Some time afterwards, by virtue of a deed executed by MEI and accepted by the City Mayor of Quezon City, MEI
donated to the City Government certain lots in its subdivision for use as parks and playgrounds; and the donation
was ratified by the Council.
8

After the donation of the parks and playgrounds just mentioned, MEI disposed of the entire Lot 15, Block 18
including that part thereof or originally designated as open space (measuring 7,100 square meters). An area of'
15,778 square meters within this Lot 15, was subsequently conveyed to the Development Bank of the Philippines
(DBP) by way of dacion en pago on May 19, 1971.
9
The rest, residential lots with an aggregate area of 5,688 square
meters, were sold to third parties who thereafter constructed houses thereon.
10

Now, the purchasers of the other subdivision lots, who had organized themselves into a non-stock corporation
known as the Magdalena Homeowners Association, Inc., believed that the act of the Quezon City Government of
authorizing the release of said Lot 15 as open space, after it had been so declared and earlier dedicated as such
and its substitution by another portion of the subdivision was beyond the City Government's authority. They
therefore brought suit against the Magdalena Estate, Inc. MEI in the Court of First Instance at Quezon City for the
recovery of said Lot 15 as "open space" for public use of the residents of the subdivision.
11
The complaint, amended
a few months later to implead the Quezon City Government,
12
prayed for judgment (1) that MEI pay Quezon City
P2,575,200, representing the market value of Lot 15, Block 18, or that, alternatively, (2) the transfer certificates
covering Lots 1 to 10, Block 11 (12?), (LRC) Psd-19167, with an aggregate area of 5,359 square meters i.e.,
Transfer Certificates of Title Numbered 166683, 166754 to 166763, inclusive, of the Registry of Deeds for Quezon
City be cancelled and new ones issued in the name of Quezon City for the use and employment, as parks and
playgrounds, of the residents of the subdivision.
13
Answers were in due course filed by the defendants.

25

While the case was pending, notices of lis pendens were, at the plaintiffs' instance, inscribed by the Register of
Deeds of Quezon City on the Torrens is titles of all the lots embraced within Block 12 (Numbered 166754 to
166763, inclusive, as well as those titles numbered 258973, 258974, 266509, 266510, 267304 to 267309,
inclusive).
14
These were among the lots previously conveyed by MEI to the Development Bank of the Philippines
by way of dacion en pago, supra.
15

Judgment was rendered by the Trial Court after due proceedings,
16
the dispositive portion of which is as follows:
WHEREFORE, considering that the plaintiffs have no cause of action against defendant Quezon
City government, the complaint against it is hereby DISMISSED.
HOWEVER, insofar as the action for recovery of open space is concerned, judgment is hereby
rendered authorizing the plaintiffs to recover the subject space from MEI, thereafter to be donated
to the Quezon City government, to maintain and develop the same for the ultimate use of the
common weal.
Not satisfied with this judgment, the petitioners went up to the Court of Appeals to seek its modification.
17

While the case was pending adjudgment, MEI and DBP filed separate motions with the Court of Appeals praying for
cancellation of the notice of lis pendens annotated on the titles of the lots in Block 12 of the subdivision.
18
These
motions were granted by resolution dated December 10, 1981. Reconsideration was sought and denied by
Resolution dated February 8, 1982. Hence, the petition at bar, for nullification of the resolutions of December 10,
1981 and February 8, 1982 on the theory that in promulgating them, the Court of Appeals had acted with grave
abuse of discretion if not indeed without or in excess of its jurisdiction.
The petitioners' first argument, that the Court of Appeals had no jurisdiction to take cognizance of and grant the
motion to cancel notice of lis pendens because no such motion had ever been filed in the Court a quo, cannot be
sustained.
According to Section 24, Rule 14 of the Rules of Court
19
and Section 76 of Presidential Decree No. 1529,
20
a
notice of lis pendens is proper in the following cases, viz.:
a) An action to recover possession of real estate;
b) An action to quiet title thereto;
c) An action to remove clouds thereon;
d) An action for partition and
e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or
occupation thereof or the buildings thereon.
The notice of lis pendens i.e., that real property is involved in an action is ordinarily recorded without the
intervention of the court where the action is pending. The notice is but an incident in an action, an extra judicial one,
to be sure. It does not affect the merits thereof. It is intended merely to constructively advise, or warn, all people
who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the
property in any voluntary transaction are subject to the results of the action, and may well be inferior and
subordinate to those which may be finally determined and laid down therein.
21
The cancellation of such a
precautionary notice is therefore also a mere incident in the action, and may be ordered by the Court having
jurisdiction of it at any given time. And its continuance or removal like the continuance or removal of a
preliminary attachment or injunction is not contingent on the existence of a final judgment in the action, and
ordinarily has no effect on the merits thereof.
In the case at bar, the case had properly come within the appellate jurisdiction of the Court of Appeals in virtue of
the perfection of the plaintiffs' appeal. It therefore had power to deal with and resolve any incident in connection
with the action subject of the appeal, even before final judgment. The rule that no questions may be raised for the
first time on appeal have reference only to those affecting the merits of the action, and not to mere incidents thereof,
e.g., cancellation of notices of lis pendens, or, to repeat, the grant or dissolution of provisional remedies.
Now, 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 recorded."
22

The Court of Appeals found as a fact that the case had dragged on and had been unnecessarily prolonged by
repeated amendments of the complaints by the plaintiffs, and that the circumstances on record justified the
conclusion that the annotation of the notice of lis pendens was intended to molest and harass the defendants.
23

That determination, and the conclusion that Presidential Decree No. 1529 "authorizes the cancellation of notices
of lis pendens before final judgment upon order of the Court, upon the grounds previously mentioned," are not
whimsical or capricious, despotic, arbitrary or oppressive in the premises so as to call for correction by the
extraordinary remedy of certiorari.
WHEREFORE, the petition is DISMISSED, with costs against the petitioners.
IT IS SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea JJ., concur.

SOURCE: http://www.lawphil.net/judjuris/juri1990/apr1990/gr_l_60323_1990.html

26

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27294 June 28, 1983
ALFREDO ROA, JR., LETICIA ROA DE BORJA, RUBEN ROA, CORNELIO ROA and ELSIE ROA-
CACNIO (as heirs of the late Alfredo Roa, Sr.). petitioners,
vs.
HON. COURT OF APPEALS and the spouses JOAQUIN CASIO and CUSTODIA
VALDEHUESA, respondents.
Alberto Cacnio for petitioners.
Melecio Virgilio Law Office for respondents.

GUERRERO, J .:
Appeal by way of certiorari from the Decision of the Court of Appeals
1
in CA-G.R. No. 34746-R entitled "Alfredo
Roa, Plaintiff-Appellant, versus Joaquin Casio et al., Defendants-Appellees," and from the Resolution of the said
Court
2
denying plaintiff-appellant's motion for reconsideration of the said Decision.
On September 1, 1955, an action for recovery of possession of a parcel of land was filed before the Court of First
Instance of Misamis Oriental by Alfredo Roa, Sr. (now deceased and subsequently substituted by his heirs, the
herein petitioners) against respondent spouses, Joaquin Casio and Custodia Valdehuesa (real name appears to be
Teodosia Valdehuesa), successors-in- interest of one Pablo Valdehuesa, now deceased.
In his complaint, Alfredo Roa, Sr. alleged that the said land is agricultural; that it is situated in Bugo, formerly
within the municipality of Tagoloan, Misamis Oriental, now comprised within the limits of the City of Cagayan de
Oro; that it is registered in his name under Original Certificate of Title No. T-21D; that he found the private
respondents occupying said land. He prayed that possession of the same be returned to him and that he be awarded
actual and moral damages in the sum of P10,000.00.
In answer to the complaint, respondent spouses alleged that the land in question formerly belonged to one Pablo
Valdehuesa, father of respondent Custodia (Teodosia) Valdehuesa and now deceased; that it was however titled in
the name of Alfredo Roa, Sr., Trinidad Reyes Roa, Esperanza Roa de Ongpin, Concepcion Roa and her husband
Zosimo Roa in Land Registration Case No. 12, G.R.L.O. Record No. 10003 of the Court of First Instance of
Misamis Oriental by virtue of an agreement entered into between the Roas and said Pablo Valdehuesa; that the
conditions of the said compromise agreement were never complied with by the Roas notwithstanding the death of
Pablo Valdehuesa in 1928 and despite repeated demands for compliance thereof; that the heirs of said Pablo
Valdehuesa sold the land in question to them on April 30, 1930, after rescinding the aforementioned compromise
agreement; and that they now enjoy the privileges of absolute ownership over said land by reason of their
continuous and adverse possession thereof since time immemorial. By way of counterclaim, the respondents prayed
for the reconveyance of the said parcel of land contending that the compromise agreement created an implied trust
between the parties to it, and for damages in the amount of P10,000.00.
In answer to private respondent's counterclaim, Alfredo Roa, Sr. maintained that the heirs of Pablo Valdehuesa
cannot rescind the compromise agreement by their own act alone or without going to court; and that the alleged sale
of the said heirs to private respondents was null and void, in view of the fact that respondent spouses knew that the
land was then titled in the name of the Roas under Act 496.
On December 22, 1959, the parties submitted to the Court a quo an agreed Stipulation of Facts, to wit:
STIPULATION OF FACTS
That parties herein, assisted by their respective attorneys, have agreed on the following facts:
1. That the plaintiff and the defendants are all of age and with capacity to sue and be sued.
2. That the plaintiff and his brothers and sisters Trinidad Reyes Roa, Esperanza Roa de Ongpin,
Concepcion Roa and Zosimo Roa, husband of the latter, were the owners pro-indiviso of a parcel
of land located in Tagoloan, Misamis Oriental, containing an area of several hundred hectares, and
sometime in 1925, and for the purpose of registering their title to said parcel of land, the said co-
owners filed an application with the Court of First Instance of Misamis Oriental, and said
application was docketed in said Court as Expediente No. 12, G.L.R.O. Record No. 10003.
3. That in the application as well as in the plans accompanying said application in Expediente No.
12, G.L.R.O. No. 10003, was included a parcel of land which is now the portion in litigation in
this case.
4. That one Pablo Valdehuesa filed an opposition in said Expediente No. 12, G.L.R.O. Record No.
10003. claiming absolute and exclusive ownership over a portion which is now the property under
litigation.
5. That sometime during the year 1925, the co-owners, said Concepcion Roa, Esperanza Roa de
Ongpin and Trinidad Reyes Roa and Zosimo Roa entered into an agreement with the said Pablo
Valdehuesa, and the terms of their agreement are contained in the document hereto attached, made
a part hereof, and marked as Exhibit "1".
6. That in compliance with his obligation under and by virtue of said Exhibit " 1" the said Pablo
Valdehuesa withdrew the opposition filed by him in said case Expediente No. 12, G.L.R.O.
Record No. 10003, and as the result of said withdrawal, the plaintiff and his co-owners succeeded
in registering their title to their property, including the portion owned by Pablo Valdehuesa as
claimed in his opposition.

27

7. That the said Pablo Valdehuesa died in May of 1928, and upon his death his estate passed to the
ownership of his widow and legitimate children including all his rights under said Exhibit " 1 " to
the property in question.
8. That since then the property in question has been in the possession of the defendants, and their
possession together with the possession of their predecessors in said property has been open,
continuous and uninterrupted to this date.
9. That sometime after the issuance of title in favor of the plaintiff (Transfer Certificate of Title
No. 21-A) and his aforementioned brothers and sisters covering the parcel of land subject matter
of the application filed by them in Expediente No. 12, G.L.R.O. Record No. 10003, the said
plaintiff and his brothers and sisters partitioned among themselves said property, and plaintiff was
adjudicated a share in said property, of which the parcel of land covered by the opposition of
Pablo Valdehuesa withdrawn under the terms of Exhibit " 1" is a part or portion of said charge,
and covered by T-21-D (copy attached as Exh. "A").
10. That the portion in litigation as correctly described in paragraph 3 of the complaint is covered
by the certificate of title referred to above.
11. That in 1955 the plaintiff had a surveyor relocate the corners and boundaries of his land as
described in his title and that the portion of about 2 hectares on the eastern end of the land is in the
possession and is actually occupied by the defendant. This is the portion in litigation described in
par. 3 of the complaint .
12. That Expediente No. 12, G.L.R.O. Record No. 10003 have been totally destroyed during the
last World War, and the parties reserve the right to present additional evidence during the hearing
of this case.
Cagayan de Oro City, December 22, 1959.
(
S
g
d
.
)

A
L
F
R
E
D
O

R
O
A


P
l
a
i
n
t
i
f
f
(Sgd.)
HERNA
NDO
PINED
A
(Attorne
y for
Plaintiff
)
(Sgd.) JOAQUIN
CASIO
(Sgd.)
CUSTO
DIA
VALDE
HUESA
(Defend
ants)
(Sgd.) MANUEL C.
FERNANDEZ
(Sgd.)
CONCO
RDIO
28

C. DIEL
(Attorne
y for
defenda
nts")
The aforesaid compromise agreement mentioned in paragraph 5 of the agreed Stipulation of Facts was thereafter
ratified on May 11, 1927 as shown in Exhibit " 1" as follows:
SEPAN TODOS LOS QUE LA PRESENTE VIEREN :
Que nosotros, los abajo firmantes, mayores de edad hacemos constar:
1. Que somos los dueos mancomunados de la propiedad conocida por Terrenos de Bugu, en el
municipio de Tagoloan, provincia de Misamis.
2. Que en la tramitacion del Exp. No.12,G.L.R.O.,Record No. 10003, para el registro de dicha
propiedad, el Sr. Pablo Valdehuesa del municipio de Tagoloan, que era uno de los opositores,
consintio en retirar su oposicion contra nuestra citada solicitud de registro a condicion de que le
reconozcamos su dominio y propiedad sobre una parcela de terreno dentro de la comprension de
Bugu que el ocupaba, o se le compre, y de otro modo se le compense al reintegrarnos dicha
parcela en tiempo oportuno. La descripcion del terreno referido cuya extension es de una hectares,
cuarenta y nueve areas y cincuenta y nueve centiareas, aparece en el escrito de oposicion que obra
en el referido Exp. 12, y que luego fue retirado por convenio de partes.
3. Por tanto, en complimiento de dicho convenio y como consecuencia del mismo, ratificamos lo
que tenemos prometido, para lo cual autorizamos al Sr. Zosimo Roa a que busque y adquiera otro
pedazo de terreno fuera de la comprension de Bugu, de una hectarea, cuarenta y nueve areas y
cincuenta y nueve centiareas, poco mas o menos, y que sea acceptable para el Sr. Pablo
Valdehuesa, como canje or permuta con la parcela que el ocupa; en la inteligencia de que el valor
de compra no exceda de P400.00 en su defecto, si no se encuentra un terreno que sea satisfactorio
para el Sr. Pablo Valdehuesa, se le compensara el reintegro arriba citado en la mencionada
cantidad de P400.00.
4. Por su parte, el Sr. Pablo Valdehuesa, acepta todo lo establecido en este documento,
obligandose a respetarlo y acatarlo.
En testimonio de todo lo cual, firmamos el presente documento en Cagayan de Misamis, hoy, 11
de Mayo de 1927.
(Sgd.) Trinidad Roa de Reyes (Sgd.) Esperanza Roa de Ongpin
(Sgd.) Concepcion Roa (Sgd.) Zosimo Roa
__________________________
Alfredo Roa
___________________________
Pablo Valdehuesa
Pursuant to said Exhibit "1", Concepcion, Esperanza, Trinidad and Zosimo, all surnamed Roa, agreed to replace the
land of Pablo Valdehuesa with another parcel of land with an area of 1.4959 hectares to be given to Pablo
Valdehuesa in exchange for the land occupied by him, or if said land was not acceptable to him, to pay him the
amount of P400.00. Neither of these undertakings was complied with by the Roas and Pablo Valdehuesa continued
in possession of the land occupied by him until the same was sold by the heirs of Pablo Valdehuesa to the
respondent spouses on April 30, 1930.
On March 6, 1964, the lower court rendered the decision ordering the plaintiff Alfredo Roa to reconvey the land in
dispute to the defendants, now the respondent spouses, on the ground that same could not have been registered in the
name of the plaintiff and his brother and sisters if not for the compromise agreement aforestated and further to pay
said defendants the amount of P1,000.00 as attorney's fees plus costs.
On appeal taken by Alfredo Roa, the appellate court affirmed the decision of the lower court and declared that (a)
the compromise agreement created an express trust between the Roa brothers and sisters, including Alfredo, Sr., (b)
that the respondent spouses' action for reconveyance was imprescriptible on the authority of Mirabiles, et al. v.
Quito, et al., L- 14008, October 18, 1956; and (c) that Alfredo Roa cannot invoke the indefeasibility and
imprescriptibility of the Torrens title issued in his name for the land in dispute since the said title was secured by
him in breach of an express trust, and thus, the Court ordered the reconveyance of the property within fifteen (15)
days from the finality of the decision.
Alfredo Roa, now substituted by his heirs, the herein petitioners Alfredo Roa, Jr., Leticia Roa de Borja, Ruben Roa,
Cornelio Roa and Elsie Roa-Cacnio, moved to reconsider the adverse decision. Acting on this motion for
reconsideration, the Court of Appeals in a majority resolution denied the said motion, and while conceding that "the
creation of an express trust leaves room for doubt," the said Court ruled that the compromise agreement, at the least
gave rise to an implied trust under Art. 1456 of the New Civil Code. Hence, petitioners filed this present petition on
the following assignment of errors:
I. The respondent Court of Appeals erred when it ruled that Alfredo Roa, the petitioners'
predecessor-in-interest, was bound by the compromise agreement (Exh. "I") in the execution of
which, according to the Stipulation of Facts, said Alfredo Roa neither participated nor signed.
II. On the assumption that the aforementioned compromise agreement was binding upon Alfredo
Roa, the respondent Court of Appeals erred when it held the said agreement, which stipulated the
conveyance of the property in dispute for a consideration, as having established a trust relationship
between the parties to it.

29

III. The respondent Court of Appeals erred when it held that the ruling in the case of Gerona, et al.
va. De Guzman, G.R. No. L-19060, May 29, 1964, is inapplicable to the case at bar.
On the first assigned error, We reject the contention of the petitioners that Alfredo Roa, Sr. was not bound by the
compromise agreement for not being a participant or signatory thereto. It may be true that Alfredo Roa, Sr. did not
sign the compromise agreement, Exh. " 1 ", for he was then in Manila working as a newspaperman but he certainly
benefited from the effects of the compromise agreement which obliged Pablo Valdehuesa to withdraw, as he did
withdraw his opposition to the registration of the Roa property under the Torrens system. The Roa property was
subsequently registered without opposition and title was issued thereto in the name of Alfredo Roa, his brother
Zosimo and his sisters Trinidad, Esperanza and Concepcion, all surnamed Roa as co-owners thereof. Certainly, the
Roas may not escape compliance from their obligation under the compromise agreement by partitioning the property
and assigning the property in dispute as part of the share of the petitioners. Moreover, it will be a pure and simple
case of unjust enrichment for petitioners to acquire and own the property of Pablo Valdehuesa, without paying the
value thereof or exchanging the land with another with an equal area as originally agreed.
With respect to the second assignment of error, We do not agree with the holding of the respondent appellate court
that an express trust was created between the parties by reason of the compromise agreement entered into between
them. Express trusts are created by the intention of the trustor or one of the parties (Article 1441, New Civil Code).
While no particular words are required for the creation of an express trust, it being sufficient that a trust is clearly
intended (Article 1444, New Civil Code), in the case at bar, We find no direct and positive intent to create a trust
relationship between the parties to the compromise agreement under which Pablo Valdehuesa agreed to withdraw
his opposition to the application for registration upon the commitment of the Roas to give Valdehuesa another piece
of land of equal area or pay its price of P 400.00. It seems clear to Us that the Roas under the compromise agreement
did not commit themselves to hold the lot claimed by Pablo Valdehuesa for Pablo Valdehuesa and in Pablo
Valdehuesa's name.
If the compromise agreement did not result to an express trust relationship, did it, however, give rise to an implied
trust? Private respondents claim that under the terms of the compromise agreement, the land claimed by Pablo
Valdehuesa should be deemed held in trust by the Roas when the latter failed to relocate him or pay the price
therefor. The respondent appellate court took private respondents' position, and opined,
3
thus
It could thus be gleaned that had it not been for the promise of the Roas contained in Exhibit 1,
Valdehuesa would not have been induced to withdraw his opposition in the land registration case.
When, therefore, the Roas turned their back to a solemn agreement entered in a court proceedings,
they were guilty of fraud.
Fraud is every kind of deception, whether in the form of insidious machinations,
manipulations, concealments or misrepresentations, for the purpose of leading
another party into error and then execute a particular act. It must have a
determining influence on the consent of the victim." (4 Tolentino, Civil Code, p.
462)
It results from the foregoing that although the creation of an express trust leaves room for doubt,
by operation of law, an implied trust is created,
Art. 1456. 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. (N.C.C)".
We cannot sustain the holding of the respondent appellate court in its Resolution denying petitioners' motion for
reconsideration that by operation of law an implied trust was created under the terms of the compromise agreement
in the light of Article 1456 of the New Civil Code cited above. We rule that Art. 1456 is not applicable because it is
quite clear that the property of Pablo Valdehuesa was acquired by the Roas not through mistake or fraud but by
reason of the voluntary agreement of Valdehuesa to withdraw his opposition to the registration of the land under the
Torrens system.
There is incontrovertible evidence that the Roas intended to abide by the compromise agreement at the time of the
execution of the same. The private respondents themselves introduced additional evidence which showed that on
May 11, 1927, Trinidad Roa, Esperanza Roa de Ongpin, Concepcion Roa and Zosimo Roa confirmed in writing the
terms and conditions of the agreement they had entered into with Pablo Valdehuesa in the land registration
proceedings. Even the respondent appellate court expressly determined the aforesaid failure of the Roas to comply
with the terms of the compromise agreement to be an afterthought; thus,
The change of mind of the plaintiff-appellant later is of no moment in the case at bar.
4

While it is Our ruling that the compromise agreement between the parties did not create an express trust nor an
implied trust under Art. 1456 of the New Civil Code, We may, however, make recourse to the principles of the
general law of trusts, insofar as they are not in conflict with the New Civil Code, Code of Commerce, the Rules of
Court and special laws which under Art. 1442 of the New Civil Code are adopted. While Articles 1448 to 1456 of
the New Civil Code enumerates cases of implied trust, Art. 1447 specifically stipulates that the enumeration of the
cases of implied trust does not exclude others established by the general law of trusts, but the limitations laid down
in Art 1442 shag be applicable.
In American law and jurisprudence, We find the following general principles:
A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust de son tort,
an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to
intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of
confidence, by commission of wrong, or by any form of unconscionable conduct, artifice,
concealment, or questionable means, or who in any way against equity and good conscience,

30

either has obtained or holds the legal right to property which he ought not, in equity and good
conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a
constructive trust does not arise on every moral wrong in acquiring or holding property or on
every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be
declared only on wrongful acquisitions or retentions of property of which equity, in accordance
with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with
statutory provision, takes cognizance. It has been broadly ruled that a breach of confidence,
although in business or social relations, rendering an acquisition or retention of property by one
person unconscionable against another, raises a constructive trust. (76 Am. Jur. 2d, Sec. 221, pp.
446-447).
And specifically applicable to the case at bar is the doctrine that "A constructive trust is substantially an appropriate
remedy against unjust enrichment. It is raised by equity in respect of property, which has been acquired by fraud, or
where, although acquired originally without fraud, it is against equity that it should be retained by the person
holding it." (76 Am. Jur. 2d, Sec. 222, p. 447).
The above principle is not in conflict with the New Civil Code, Code of Commerce, Rules of Court and special laws.
And since We are a court of law and of equity, the case at bar must be resolved on the general principles of law on
constructive trust which basically rest on equitable considerations in order to satisfy the demands of justice,
morality, conscience and fair dealing and thus protect the innocent against fraud. As the respondent court said, "It
behooves upon the courts to shield fiduciary relations against every manner of chickanery or detestable design
cloaked by legal technicalities."
The next point to resolve is whether the counterclaim of private respondents for the reconveyance of the property in
dispute has already prescribed in the light of established jurisprudence that the right to enforce an implied trust
prescribes in ten years.
Admittedly, Pablo Valdehuesa and his heirs remained in possession of the property in question in 1925 when by
reason of the compromise agreement Valdehuesa withdrew his opposition to the registration applied for by the Roas
for which reason the latter were able to obtain a Torrens title to the property in their name. However, Valdehuesa
and his heirs continued their possession of the land until he sold the property in question to private respondents
herein on April 30, 1930 and the latter remained in possession and were never disturbed in their occupancy until the
filing of the original complaint for recovery of possession on Sept. 1, 1955 after demand was made upon them when
a relocation survey initiated by petitioners established that private respondents were actually occupying about 2
hectares on the eastern end of the property. Upon these facts, the prescriptive period may only be counted from the
time petitioners repudiated the trust relation in 1955 upon the filing of the complaint for recovery of possession
against private respondents so that the counterclaim of the private respondents contained in their amended answer of
June 12, 1956 wherein they asserted absolute ownership of the disputed realty by reason of their continuous and
adverse possession of the same is well within the ten-year prescriptive period.
Finally, the case at bar is quite similar to the case of Dolores Pacheco vs. Santiago Arro, 85 Phil. 505, wherein the
claim to the lots in the cadastral case was withdrawn by the respondents relying upon the assurance and promise
made in open court by Dr. M. Y. in behalf of J. Y. y R., the predecessor-in-interest of the petitioners and the Court
held that a trust or a fiduciary relation between them arose, or resulted therefrom, or was created thereby and the
trustee cannot invoke the statute of limitations to bar the action and defeat the right of the cestuis que trustent. (Cited
in Tolentino, Civil Code of the Philippines, Vol. IV, p. 627).
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED.
SO ORDERED.
Concepcion, Jr., De Castro and Escolin, JJ., concur.
A quino J., concurs in the result
Makasiar (Chairman) and Abad Santos, JJ., took no part.

SOURCE: http://www.lawphil.net/judjuris/juri1983/jun1983/gr_l_27294_1983.html

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. Nos. 86181-82 January 13, 1992
MANUEL T. SANTOS and RAFAEL G. CAMUS, petitioners,
vs.
HON. BENJAMIN M. AQUINO, JR., Judge, Regional Trial Court of Malabon-Navotas, FINASIA
INVESTMENTS & FINANCE CORP., JOSE T. VILLAROSA, TRIPLEX ENTERPRISES INC.,
JOMARIAS INTERNATIONAL CORP. (formerly Metro Realty Corp.), PHILIPPINE COMMERCIAL
AND INTERNATIONAL BANK, PHILIPPINE AMERICAN LIFE INSURANCE CORP., FAR EAST
BANK & TRUST CO., & THE REGISTERS OF DEEDS OF MAKATI AND PARAAQUE, respondents.
Manuel T. Santos for petitioners.
Joselito L. Manalo for Philamlife.
Quasha, Asperilla, Ancheta, Pea and Nolasco for FINASIA.
Balgos & Perez for respondents Jomarias Int'l. Corp. and J. Villarosa.
Carpio, Villaraza & Cruz for Triplex Ent., Inc. and PCIB.
Buenconsejo, Fernandez, Pealosa & Associates for FEBTC.


31

GRIO-AQUINO, J .:
Assailed in this petition for certiorari, mandamus and prohibition are the orders dated October 10, 1988 and
December 10, 1988 of respondent Judge Benjamin M. Aquino, Jr., allowing the substitution of attached properties in
two civil cases for recovery of sums of money. As prayed for in the petition, respondent Judge was temporarily
restrained from further proceeding in those cases during the pendency of this special civil action.
On November 3, 1983 and November 13, 1983, petitioners Manuel T. Santos and Rafael G. Camus respectively
filed Civil Case No. 365-MN and Civil Case No. 374-MN in the Regional Trial Court of Malabon-Navotas against
FINASIA Investments and Finance Corporation (hereafter "FINASIA"), Jose T. Villarosa, Rodolfo Abiog, Benedict
Go Alcantara, Willy Trinidad and Ceferino Sanchez (the last five being, respectively, the president and directors of
FINASIA) to recover their respective money placements of P752,100 and P769,500, with interests, damages, and
costs. They alleged that through the defendants' fraudulent misrepresentations, they were lured to make the money
placements with FINASIA.
Upon the petitioners' application, and on the strength of the attachment bonds in the total sum of P1,276,058 posted
by them, preliminary attachments were issued by the court on the following properties of FINASIA and Jose
Villarosa:
TCT No. Registered Owner Description at the
Time of Attachment
13350-A Spouses Jose T. & 411 sq.m., Pasay City
Amelita Villarosa
13351-A -ditto- 364 sq.m., Pasay City
120450-A FINASIA 4,000 sq.m. at Pasong
Tamo, Makati,
mortgaged to UCPB for P5,947,000
56352 Ann Tunnheim Pasay City, what was
attached was FINASIA's
right to repurchase
56355 -ditto- -ditto-
83398 Rosita de Castro Pasay City, mortgaged
(48695-A) to FINASIA to secure
the debt of Felicisimo Francisco. The mortgage credit was allegedly assigned by FINASIA to
Pioneer Savings & Loan Bank, Inc.
On January 9, 1984, or less than three (3) months later, the proceedings against FINASIA were suspended because it
was placed under receivership by the Securities and Exchange Commission (SEC) for operating without prior SEC
registration and for failure to pay maturing money market placements.
FINASIA and Villarosa filed separate motions to lift the attachments on their respective properties by offering
counterbonds. The petitioners opposed the motions for insufficiency of the counterbonds and unreliability of the
bonding companies AFISCO and Interworld Assurance Company.
On August 1, 1988 and June 2, 1988, FINASIA and Villarosa filed separate motions to substitute their attached
properties with other properties supposedly worth P3.5 million and free from liens and encumbrances. Villarosa
alleged that the existing attachment on his two Pasay City lots was excessive.
Petitioners opposed the motions for substitution. The hearing of the motions was set on August 16, 1988 and later
reset on September 22, 1988.
On September 21, 1988, petitioners' (plaintiffs') counsel, Atty. Eriberto D. Ignacio, telephoned Santos that the
hearing on September 22, 1988 had been cancelled because the judge would be attending a seminar for Regional
Trial Court judges. Santos checked with the branch clerk of court who promised to inform him and/or his lawyer of
the next setting.
In view of that circumstance, the petitioners-plaintiffs did not appear in court on September 22, 1988. Unfortunately,
instead of resetting the hearing of FINASIA's and Villarosa's motions for substitution of their attached properties,
respondent Judge issued on that date an Order declaring them "submitted for resolution."
The next day, September 23, 1988, FINASIA filed "Additional Argument in Support of Motion for Substitution of
Attached Properties." Three (3) days later, respondent Judge issued an Order resetting for the last time, on October
6, 1988, the hearing of the motions for substitution of properties. Petitioners' counsel, Atty. Ignacio, received a copy
of that order, but, for some unexplained reason, he failed to inform his clients about it and he also absented himself
from the hearing. The result was that on October 10, 1988, respondent Judge granted the motions on the ground:
. . . that the properties being offered as substitutes for the attached ones appear to be worth at least
P3.415 million, per appraisal report of the Valencia Appraisal Corporation (P3.5 million according
to the Rehabilitation Receiver of defendant Finasia) and considering that the attachment bonds in
these cases are only for the total amount of P1,276,050 . . . (p. 30, Rollo.)
Respondent Judge discharged all the attached properties of Villarosa and ordered the attachment of eight (8) small
lots in Pasay City of FINASIA, which was then already under receivership.
On November 30 1988, Attorney Ignacio filed a "Motion to Reconsider or Recall" the order of substitution but it
was too late to mollify his client, Santos. Santos discharged his lawyer and decided to appear as his own counsel. He
filed his own motion for reconsideration of the court's order of substitution. Santos alleged that he and Camus had
been denied due process through their lawyer's gross negligence, and that the order of substitution was issued in
excess of the court's jurisdiction (p. 169, Rollo).
Before the order lifting the attachment was recorded on Villarosa's titles, the latter had already sold for P232,500 the
two (2) Pasay City lots covered by his TCTs Nos. 13350-A and 13351-A, to Metro Realty Corporation, later

32

renamed Jomarias International. Inc. Mrs. Villarosa herself is the president of Jomarias. New TCTs Nos. 93264 and
93265 were issued to Jomarias. The order lifting the attachment was annotated on Jomarias' new TCTs on October
11, 1988. Two months later, Jomarias mortgaged the properties to the Philippine Commercial and International
Bank (PCIB) for P1.5 million on December 12, 1988. Similarly, Triplex mortgaged the Pasong Tamo property to
Philamlife as security for a P10 million loan.
On December 29, 1988, their motions for reconsideration having been denied, Santos and Camus filed this petition
for certiorari, prohibition and mandamus with a prayer for the issuance of a restraining order against Judge
Benjamin M. Aquino, Jr., FINASIA Investments and Finance Corporation, Jose T. Villarosa, Triplex Enterprises,
Inc., Jomarias International Corporation, Philippine Commercial & International Bank, Philippine American Life
Insurance Corporation, Far East Bank and Trust Company, and the Registers of Deeds of Makati and Paraaque,
praying the Court to:
1. Issue a restraining Order and writ of preliminary injunction enjoining respondent Judge from
further proceeding with Civil Case Nos. 365-MN and 374-MN, entitled Santos vs. Finasia, et al.
and Camus vs. Finasia, et al. respectively;
2. Declare the Orders issued by respondent Judge dated October 10, 1988 and December 10, 1988
to be null and void for being illegal and for having been issued without jurisdiction and [with]
grave abuse of discretion;
3. Declare the levy on attachment on the properties covered by TCTs Nos. 13550-A, 13551-A,
56352, 56353, S-83398 and 120450 as having subsisted from the date of the original levy and
without having been interrupted by the erroneous lifting of said attachment;
4. Declare null and void all transactions affecting the above properties which occurred after the so-
called "substitution of attached properties;"
5. Direct the Registers of Deeds of Makati and Paraaque to re-annotate the original attachments
obtained by petitioners in the above-entitled cases on TCTs Nos. 13550-A, 13551-A, 120450,
56352, 56353 and S-83898 and on their successor titles and to cancel from said titles all
inscriptions of the order of the respondent Judge dated October 10, 1988. (pp. 13-14, Rollo.)
By Resolution dated March 16, 1989, the Court gave due course to the petition and required the parties to submit
simultaneous memoranda.
Did respondent Judge gravely abuse his discretion and/or exceed his jurisdiction in allowing the substitution of the
attached properties?
After deliberating on the petition, the comments and memoranda of the parties, we conclude that the petition is
meritorious.
The trial court's order allowing the substitution of the attached properties was premised on the defendants' allegation
that the properties offered by them in substitution for the attached properties are supposedly worth P3.5 million and
are unencumbered. However, respondent Judge received no evidence of the value of the properties offered as
substitutes except the self-serving allegations in the motions for substitution and the Appraisal Report of a private
appraiser whom the plaintiffs had no chance to cross-examine because, through the gross negligence of their
counsel, they were neither heard nor represented at the hearing of defendants' motions.
The rule is that when real property, or an interest therein, of the judgment debtor is attached, the levy creates a lien
which nothing can subsequently destroy except by the dissolution of the attachment. Prior registration of the lien
creates a preference, since the act of registration is the operative act to convey and affect the land (Lu vs. IAC, et al.,
169 SCRA 595; Vda. de Carvajal vs. Coronado, 18 SCRA 635, 641). Because an attachment is a proceeding in
rem against particular property/properties, the attaching creditor acquires a specific lien upon the attached properties
which ripens into a judgment against the res when the order of sale is made. Such a proceeding is in effect a finding
that the properties attached are indebted things considered as a virtual condemnation to pay the owners' debt. (Art.
2242[7] of the Civil Code; Rules 39 and 57 of the Rules of Court; 7 CJS 433.) The lien obtained by attachment
stands upon as high equitable ground as a mortgage lien, a fixed and positive security which must necessarily
continue until the debt is paid. (Roa vs. CA, 190 SCRA 262, citing Government vs. Mercado, 67 Phil. 409.) It
necessarily follows that the attached properties cannot be interfered with until sold to satisfy the judgment, or
discharged in the manner provided by the Rules of Court requiring the conduct of a proper hearing by the court (Uy
vs. CA, 191 SCRA 275, citing Manila Herald Publishing Co., Inc. vs. Ramos, 88 Phil. 94 and BF Homes, Inc. vs.
CA, 190 SCRA 263, on Secs, 12 and 13, Rule 57 of the Rules of Court).
The writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the
termination, of a suit. It places the attached properties in custodia legis, obtaining pendente lite a lien until the
judgment of the proper tribunal on the plaintiff's claim is established, when the lien becomes effective as of the date
of the levy (pp. 407-503, 83 CJS, citing Bank of Missouri vs. Matson, 26 No. 243, 73 Amd 208; Forrier vs. Masters,
83 459, 473, 2 SE 927).
There is no rule allowing substitution of attached property although an attachment may be discharged wholly or in
part upon the security of a counterbond offered by the defendant upon application to the court, with notice to, and
after hearing, the attaching creditor (Sec. 12, Rule 57, Rules of Court), or upon application of the defendant, with
notice to the applicant and after hearing, if it appears that the attachment was improperly or irregularly issued (Sec.
13, Rule 57, Rules of Court).
If an attachment is excessive, the remedy of the defendant is to apply to the court for a reduction or partial discharge
of the attachment, not the total discharge and substitution of the attached properties. The reason for this is that the
lien acquired by the plaintiff-creditor as of the date of the original levy would be lost. It would in effect constitute a
deprivation without due process of law of the attaching creditors' interest in the attached property as security for the
satisfaction of the judgment which he may obtain in the action.

33

The notice of levy in Civil Cases 365-MN and 374-MN was annotated on FINASIA's TCTs Nos. 120450 on
November 22 and 23, 1983 and on Villarosa's TCTs Nos. 13350-A and 13351-A on November 7 and 30, 1983. By
ordering the substitution on October 11, 1988, the Court obliterated the petitioners' earlier lien under the original
attachment and in effect deprived the petitioners of their interest in the attached properties without due process of
law.
The substitution of Villarosa's and FINASIA's properties was done in bad faith to defeat the petitioners' chances of
collecting their claims against both defendants. The two properties of Villarosa (who is not insolvent and against
whom actions have not been suspended) were released from the attachment without substituting other property of
Villarosa for them. The court arbitrarily allowed Villarosa's properties to be replaced with properties of FINASIA,
an insolvent corporation under receivership, against whom actions have been suspended.
The new owners of the released properties, TRIPLEX and JOMARIAS International, Inc. (Mrs. Villarosa is the
president of Jomarias) may not claim to be innocent purchasers for value because the deeds of sale in their favor
were executed before the court had ordered the substitution or discharge of the attachment. They are bound by the
attachment as if it was not discharged at all.
A purchaser of the attached property subsequent to the attachment takes the property subject
thereto. (Joaquin vs. Arellano, 6 Phil. 551.)
Section 51 of Act 496 provides that every attachment affecting registered land shall, if registered
in the office of the register of deeds, be a notice to all persons from the time of such "registering,
filing or entering," and Section 50 of the same Act provides that the act of registration constitutes
the operative act that affects the land and binds the whole world. This is the essence of registration
that constitutes a cardinal feature of the Torrens System. (Guerrero vs. Agustin, 7 SCRA 773.)
It is settled that if there is an attachment or sequestration of the goods or estate of the defendant in
an action which is removed to a bankruptcy court, such an attachment or sequestration will
continue in existence and hold the goods or estate to answer the final judgment or decree in the
same manner as they would have been held to answer the final judgment or decree rendered by the
Court from which the action was removed, unless the attachment or sequestration is invalidated
under applicable law (28 USCS No. 1479[a], 9 AM. Jur. 2d). (BF Homes, Inc. vs. CA, 190 SCRA
271.)
The grounds for the dissolution of an attachment are fixed in the Rules of Court and the power of the court to
dissolve an attachment is limited to the grounds specified therein. Before an attachment lien will be deemed
abandoned there must be an affirmative act or conduct of the creditor inconsistent with the continuance of the lien (6
Am Jur 412). The fact that more property has been attached than an amount sufficient to satisfy the recovery of an
action is NOT a ground for dissolution (6 Am Jur 2d 868, citing National Reefer Service vs. Felman, 164 Neb 783,
83 NW 2d 547).
Respondent Judge gravely abused his discretion in ordering the substitution of the attached properties over the
vigorous opposition of the petitioners and without hearing them. His orders dated October 10, 1988 and December
10, 1988 are hereby annulled and set aside. The original writ of attachment should be deemed to have subsisted on
the attached properties from the date of the original levy in November, 1983, without interruption, and to have
followed said properties into the hands of the new owners thereof, Triplex Enterprises, Inc. and Jomarias
International Corporation.
Corollarily, the real estate mortgage in favor of the Philippine American Life Insurance Corporation over the Pasong
Tamo property of Triplex Enterprises, Inc. and the mortgage of the Philippine Commercial and International Bank
(PCIB) over the Pasay lots of Jomarias International Corporation are without prejudice to the subsisting attachment
liens of the petitioners in this case. For both PCIB and Philamlife are mortgagees in bad faith. PCIB was aware of
the attachment on the property which Jomarias mortgaged to it because the order lifting it was annotated on the title
of Jomarias. If PCIB had taken the trouble to ascertain from the records of Civil Cases Nos. 365-MN and 374-MN
whether that order was already final, it would have known that the court's order lifting the writ of attachment was
not yet final and was in fact being contested by the plaintiffs (herein petitioners).
The same may be said of Philamlife. FINASIA's Pasong Tamo property (covered by TCT No. 120450-Makati) was
sold to Triplex for P14,600,000 on May 11, 1988, five (5) months before the attachment was lifted on October 10,
1988. Triplex applied for a P10 million loan from Philamlife with a mortgage on the Pasong Tamo property as
collateral, but Philamlife delayed the release of the loan until the very day, November 14, 1988, that a new TCT No.
158036 was issued in the name of TRIPLEX a clear indication that Philamlife waited for the writ of attachment
to be lifted before it released the loan to Triplex. But, like PCIB, Philamlife did not wait for the finality of the order
lifting the attachment. Therefore, both PCIB and Philamlife may not claim to be mortgagees in good faith, for good
faith is "an honest intention to abstain from taking any unconscientious advantage of another" (Duran vs. IAC, 138
SCRA 489). In the following cases, we held:
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. (J.M. Tuason & Co., Inc. vs. CA, 94 SCRA 413.)
A buyer of land who is aware of sufficient facts to induce a reasonably prudent man to inquire into
the status of the title to the land can not legally claim the right of a purchaser in good faith.
(Maacop, Jr. vs. Cansino, 1 SCRA 572.)
A purchaser who has knowledge of facts which should put him upon inquiry and investigation as
to possible defects of the title of the vendor and fails to make such inquiry and investigation,
cannot claim that he is a purchaser in good faith. (Paylago vs. Jarabe, 22 SCRA 1247.)
These rulings are also applicable to mortgagees.

34

WHEREFORE the petition for certiorari and mandamus is granted. The order dated October 10, 1988 of respondent
Judge is hereby annulled and set aside. The Registers of Deeds of Makati and Paraaque are hereby ordered:
(1) to re-annotate on the titles of the properties in question, namely, TCT No. 158036 in the name of TRIPLEX
Enterprises, Inc. and TCTs Nos. 93264 and 93265 in the name of JOMARIAS International Corporation, the
original writ of preliminary attachment obtained by petitioners in Civil Cases Nos. 365-MN and 374-MN; and (2) to
cancel or delete from the new titles the inscriptions of the assailed order dated October 10, 1988 of respondent judge
in the aforesaid cases. The temporary restraining order issued by this Court is hereby lifted and respondent Judge is
ordered to proceed immediately with the trial of Civil Cases Nos. 365-MN and 374-MN.
SO ORDERED.
Narvasa, C.J., Cruz and Medialdea, JJ., concur.

SOURCE: http://www.lawphil.net/judjuris/juri1992/jan1992/gr_86181_1992.html