Land Titles Prefinals 1st Set

1
Land Titles Prefinal 1st Set
[G.R. No. 138053. May 31, 2000]

CORNELIO M. ISAGUIRRE, petitioner, vs. FELICITAS DE LARA, respondent.
DECISION
GONZAGA-REYES, J.:
In this petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure,
petitioner Cornelio M. Isaguirre assails the October 5, 1998 decision [1] of the Court of Appeals[2] and its
Resolution promulgated on March 5, 1999.
The antecedent facts of the present case are as follows:
Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application over a parcel of
land identified as portion of Lot 502, Guianga Cadastre, filed with the Bureau of Lands on January 17, 1942
and with an area of 2,342 square meters. Upon his death, Alejandro de Lara was succeeded by his wife respondent Felicitas de Lara, as claimant. On November 19, 1954, the Undersecretary of Agriculture and
Natural Resources amended the sales application to cover only 1,600 square meters. Then, on November
3, 1961, by virtue of a decision rendered by the Secretary of Agriculture and Natural Resources dated
November 19, 1954, a subdivision survey was made and the area was further reduced to 1,000 square
meters. On this lot stands a two-story residential-commercial apartment declared for taxation purposes
under TD 43927 in the name of respondents sons - Apolonio and Rodolfo, both surnamed de Lara.
Sometime in 1953, respondent obtained several loans from the Philippine National Bank. When she
encountered financial difficulties, respondent approached petitioner Cornelio M. Isaguirre, who was married
to her niece, for assistance. On February 10, 1960, a document denominated as "Deed of Sale and Special
Cession of Rights and Interests" was executed by respondent and petitioner, whereby the former sold a
250 square meter portion of Lot No. 502, together with the two-story commercial and residential structure
standing thereon, in favor of petitioner, for and in consideration of the sum of P5,000.
Sometime in May, 1968, Apolonio and Rodolfo de Lara filed a complaint against petitioner for recovery of
ownership and possession of the two-story building. [3] However, the case was dismissed for lack of
jurisdiction.
On August 21, 1969, petitioner filed a sales application over the subject property on the basis of the deed
of sale. His application was approved on January 17, 1984, resulting in the issuance of Original Certificate
of Title No. P-11566 on February 13, 1984, in the name of petitioner. Meanwhile, the sales application of
respondent over the entire 1,000 square meters of subject property (including the 250 square meter
portion claimed by petitioner) was also given due course, resulting in the issuance of Original Certificate of
Title No. P-13038 on June 19, 1989, in the name of respondent. [4]
Due to the overlapping of titles, petitioner filed an action for quieting of title and damages with the
Regional Trial Court of Davao City against respondent on May 17, 1990. The case was docketed as Civil
Case No. 20124-90. After trial on the merits, the trial court rendered judgment on October 19, 1992, in
favor of petitioner, declaring him to be the lawful owner of the disputed property. However, the Court of
Appeals reversed the trial courts decision, holding that the transaction entered into by the parties, as
evidenced by their contract, was an equitable mortgage, not a sale. [5] The appellate courts decision was
based on the inadequacy of the consideration agreed upon by the parties, on its finding that the payment
of a large portion of the "purchase price" was made after the execution of the deed of sale in several
installments of minimal amounts; and finally, on the fact that petitioner did not take steps to confirm his
rights or to obtain title over the property for several years after the execution of the deed of sale. As a
consequence of its decision, the appellate court also declared Original Certificate of Title No.P-11566
issued in favor of petitioner to be null and void. On July 8, 1996, in a case docketed as G. R. No. 120832,
this Court affirmed the decision of the Court of Appeals and on September 11, 1996, we denied petitioners
motion for reconsideration.
On May 5, 1997, respondent filed a motion for execution with the trial court, praying for the immediate
delivery of possession of the subject property, which motion was granted on August 18, 1997. On February
3, 1998, respondent moved for a writ of possession, invoking our ruling in G. R. No. 120832. Petitioner
opposed the motion, asserting that he had the right of retention over the property until payment of the
loan and the value of the improvements he had introduced on the property. On March 12, 1998, the trial
court granted respondents motion for writ of possession. Petitioners motion for reconsideration was
denied by the trial court on May 21, 1998. Consequently, a writ of possession dated June 16, 1998,
together with the Sheriffs Notice to Vacate dated July 7, 1998, were served upon petitioner.
Petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition with prayer for a
temporary restraining order or preliminary injunction to annul and set aside the March 12, 1998 and May
21, 1998 orders of the trial court, including the writ of possession dated June 16, 1998 and the sheriffs
notice to vacate dated July 7, 1998.[6]
The appellate court summarized the issues involved in the case as follows: (1) whether or not the
mortgagee in an equitable mortgage has the right to retain possession of the property pending actual
payment to him of the amount of indebtedness by the mortgagor; and (b) whether or not petitioner can be
considered a builder in good faith with respect to the improvements he made on the property before the
transaction was declared to be an equitable mortgage.
The Court of Appeals held that petitioner was not entitled to retain possession of the subject property. It
said that the mortgagee merely has to annotate his claim at the back of the certificate of title in
order to protect his rights against third persons and thereby secure the debt. There is
therefore no necessity for him to actually possess the property. Neither should a mortgagee
in an equitable mortgage fear that the contract relied upon is not registered and hence, may
not operate as a mortgage to justify its foreclosure. In Feliza Zubiri v. Lucio Quijano, 74 Phil
47, it was ruled "that when a contract x x x is held as an equitable mortgage, the same shall
be given effect as if it had complied with the formal requisites of mortgage. x x x by its very
nature the lien thereby created ought not to be defeated by requiring compliance with the
formalities necessary to the validity of a voluntary real estate mortgage, as long as the land
remains in the hands of the petitioner (mortgagor) and the rights of innocent parties are not
affected."
Proceeding from the foregoing, petitioners imagined fears that his lien would be lost by
surrendering possession are unfounded.
In the same vein, there is nothing to stop the mortgagor de Lara from acquiring possession
of the property pending actual payment of the indebtedness to petitioner. This does not in
anyway endanger the petitioners right to security since, as pointed out by private
respondents, the petitioner can always have the equitable mortgage annotated in the
Certificate of Title of private respondent and pursue the legal remedies for the collection of
the alleged debt secured by the mortgage. In this case, the remedy would be to foreclose
the mortgage upon failure to pay the debt within the required period.
It is unfortunate however, that the Court of Appeals, in declaring the transaction to be an
equitable mortgage failed to specify in its Decision the period of time within which the
private respondent could settle her account, since such period serves as the reckoning point
by which foreclosure could ensue. As it is, petitioner is now in a dilemma as to how he could
enforce his rights as a mortgagee. ...
Hence, this Court, once and for all resolves the matter by requiring the trial court to
determine the amount of total indebtedness and the period within which payment shall be
made.
Petitioners claims that he was a builder in good faith and entitled to reimbursement for the improvements
he introduced upon the property were rejected by the Court of Appeals. It held that petitioner knew, or at
least had an inkling, that there was a defect or flaw in his mode of acquisition. Nevertheless, the appellate
court declared petitioner to have the following rights:
He is entitled to reimbursement for the necessary expenses which he may have incurred
over the property, in accordance with Art. 526 and Art. 452 of the Civil Code. Moreover,
considering that the transaction was merely an equitable mortgage, then he is entitled to
payment of the amount of indebtedness plus interest, and in the event of non-payment to
foreclose the mortgage. Meanwhile, pending receipt of the total amount of debt, private
respondent is entitled to possession over the disputed property.
The case was finally disposed of by the appellate court in the following manner:
WHERFORE, the Petition is hereby DISMISSED, and this case is ordered remanded to the
Regional Trial Court of Davao City for further proceedings, as follows:
1) The trial court shall determine
a) The period within which the mortgagor must pay his total amount of indebtedness.
b) The total amount of indebtedness owing the petitioner-mortgagee plus interest computed
from the time when the judgment declaring the contract to be an equitable mortgage
became final.
c) The necessary expenses incurred by petitioner over the property. [7]

On March 5, 1999, petitioners motion for reconsideration was denied by the appellate court. [8] Hence, the
present appeal wherein petitioner makes the following assignment of errors:
A.......THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC ACTED
WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING A WRIT OF POSSESSION IN
FAVOR OF RESPONDENT.
A.1......The RTC patently exceeded the scope of its authority and acted with grave abuse of
discretion in ordering the immediate delivery of possession of the Property to respondent as
said order exceeded the parameters of the final and executory decision and constituted a
variance thereof.
B.......THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS NOT
ENTITLED TO THE POSSESSION OF THE PROPERTY PRIOR TO THE PAYMENT OF
RESPONDENTS MORTGAGE LOAN.
C.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER WAS NOT A
BUILDER IN GOOD FAITH.
D.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS ENTITLED
TO INTEREST COMPUTED ONLY FROM THE TIME WHEN THE JUDGMENT DECLARING THE
CONTRACT TO BE AN EQUITABLE MORTGAGE BECAME FINAL. [9]
Basically, petitioner claims that he is entitled to retain possession of the subject property until payment of
the loan and the value of the necessary and useful improvements he made upon such property.
[10]
According to petitioner, neither the Court of Appeals decision in G.R. CV No. 42065 nor this Courts
decision in G.R. No. 120832 ordered immediate delivery of possession of the subject property to
respondent.
The dispositive portion of the March 31, 1995 decision of the Court of Appeals in G.R. CV No. 42065, which
was affirmed by this Court, provides that
IN VIEW OF ALL THE FOREGOING, the judgment appealed from is REVERSED and SET
ASIDE and a new one entered: (1)dismissing the complaint; (2) declaring the "Document of
Sale and Special Cession of Rights and Interests" (Exhibit B) dated February 10, 1960, to be
an equitable mortgage not a sale; (3) upholding the validity of OCT No. P-13038 in the name
of Felicitas de Lara; and (3) declaring null and void OCT No. P-11566 in the name of plaintiff
Cornelio Isaguirre. All other counterclaims for damages are likewise dismissed. Costs against
the appellee.[11]
Petitioner argues that the abovementioned decision merely settled the following matters: (1) that the
transaction between petitioner and respondent was not a sale but an equitable mortgage; (2) that OCT No.
P-13038 in the name of respondent is valid; and (3) that OCT No. P-11566 in the name of petitioner is null
and void. Since the aforementioned decision did not direct the immediate ouster of petitioner from the
subject property and the delivery thereof to respondent, the issuance of the writ of possession by the trial
court on June 16, 1998 constituted an unwarranted modification or addition to the final and executory
decision of this Court in G.R. No. 120832.[12]
We do not agree with petitioners contentions. On the contrary, the March 31, 1995 decision of the
appellate court, which was affirmed by this Court on July 8, 1996, served as more than adequate basis for
the issuance of the writ of possession in favor of respondent since these decisions affirmed respondents
title over the subject property. As the sole owner, respondent has the right to enjoy her property, without
any other limitations than those established by law.[13] Corollary to such right, respondent also has the right
to exclude from the possession of her property any other person to whom she has not transmitted such
property.[14]
It is true that, in some instances, the actual possessor has some valid rights over the property enforceable
even against the owner thereof, such as in the case of a tenant or lessee. [15] Petitioner anchors his own
claim to possession upon his declared status as a mortgagee. In his Memorandum, he argues that
4.8 It was respondent who asserted that her transfer of the Property to petitioner was by
way of an equitable mortgage and not by sale. After her assertion was sustained by the
Courts, respondent cannot now ignore or disregard the legal effects of such judicial
declaration regarding the nature of the transaction.
xxx......xxx......xxx
4.13 Having delivered possession of the Property to petitioner as part of the constitution of
the equitable mortgage thereon, respondent is not entitled to the return of the Property
unless and until the mortgage loan is discharged by full payment thereof. Petitioners right
as mortgagee to retain possession of the Property so long as the mortgage loan remains
unpaid is further supported by the rule that a mortgage may not be extinguished even
though then mortgagor-debtor may have made partial payments on the mortgage loan:
"Art. 2089. A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or the creditor.
"Therefore, the debtors heir who has paid a part of the debt cannot ask for
the proportionate extinguishment of the pledge or mortgage as long as the
debt is not completely satisfied.
"Neither can the creditors heir who has received his share of the debt return
the pledge or cancel the mortgage, to the prejudice of the other heirs who
have not been paid."
(Emphasis supplied.)
4.14 ......To require petitioner to deliver possession of the Property to respondent prior to the
full payment of the latters mortgage loan would be equivalent to the cancellation of the
mortgage. Such effective cancellation would render petitioners rights ineffectual and
nugatory and would constitute unwarranted judicial interference.
4.16 The fact of the present case show that respondent delivered possession of the Property
to petitioner upon the execution of the Deed of Absolute Sale and Special Cession of Rights
and Interest dated 10 February 1960. Hence, transfer of possession of the Property to
petitioner was an essential part of whatever agreement the parties entered into, which, in
this case, the Supreme Court affirmed to be an equitable mortgage.
4.19 Petitioner does not have the mistaken notion that the mortgagee must be in actual
possession of the mortgaged property in order to secure the debt. However, in this particular
case, the delivery of possession of the Property was an integral part of the contract between
petitioner and respondent. After all, it was supposed to be a contract of sale. If delivery was
not part of the agreement entered into by the parties in 1960, why did respondent surrender
possession thereof to petitioner in the first place?
4.20 Now that the Courts have ruled that the transaction was not a sale but a mortgage,
petitioners entitlement to the possession of the Property should be deemed as one of the
provisions of the mortgage, considering that at the time the contract was entered into,
possession of the Property was likewise delivered to petitioner. Thus, until respondent has
fully paid her mortgage loan, petitioner should be allowed to retain possession of the subject
property.[16]
Petitioners position lacks sufficient legal and factual moorings.
A mortgage is a contract entered into in order to secure the fulfillment of a principal obligation. [17] It is
constituted by recording the document in which it appears with the proper Registry of Property, although,
even if it is not recorded, the mortgage is nevertheless binding between the parties. [18] Thus, the only right
granted by law in favor of the mortgagee is to demand the execution and the recording of the document in
which the mortgage is formalized.[19] As a general rule, the mortgagor retains possession of the mortgaged
property since a mortgage is merely a lien and title to the property does not pass to the mortgagee.
[20]
However, even though a mortgagee does not have possession of the property, there is no impairment
of his security since the mortgage directly and immediately subjects the property upon which it is imposed,
whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted.
[21]
If the debtor is unable to pay his debt, the mortgage creditor may institute an action to foreclose the
mortgage, whether judicially or extrajudicially, whereby the mortgaged property will then be sold at a
public auction and the proceeds therefrom given to the creditor to the extent necessary to discharge the
mortgage loan. Apparently, petitioners contention that "[t]o require [him] to deliver possession of the
Property to respondent prior to the full payment of the latters mortgage loan would be equivalent to the
cancellation of the mortgage" is without basis. Regardless of its possessor, the mortgaged property may
still be sold, with the prescribed formalities, in the event of the debtors default in the payment of his loan
obligation.
Moreover, this Court cannot find any justification in the records to uphold petitioners contention that
respondent delivered possession of the subject property upon the execution of the "Deed of Sale and
Special Cession of Rights and Interests" on February 10, 1960 and that the transfer of possession to
petitioner must therefore be considered an essential part of the agreement between the parties. This selfserving assertion of petitioner was directly contradicted by respondent in her pleadings. [22] Furthermore,
nowhere in the Court of Appeals decisions promulgated on March 31, 1995 (G.R. CV No. 42065) and on
October 5, 1998 (G.R. SP No. 48310), or in our own decision promulgated on July 8, 1996 (G.R. No. 120832)
was it ever established that the mortgaged properties were delivered by respondent to petitioner.
In Alvano v. Batoon,[23] this Court held that "[a] simple mortgage does not give the mortgagee a right to the
possession of the property unless the mortgage should contain some special provision to that effect."
Regrettably for petitioner, he has not presented any evidence, other than his own gratuitous statements,
to prove that the real intention of the parties was to allow him to enjoy possession of the mortgaged
property until full payment of the loan.
Therefore, we hold that the trial court correctly issued the writ of possession in favor of respondent. Such
writ was but a necessary consequence of this Courts ruling in G.R. No. 120832 affirming the validity of the
original certificate of title (OCT No. P-13038) in the name of respondent Felicitas de Lara, while at the same
time nullifying the original certificate of title (OCT No. P-11566) in the name of petitioner Cornelio Isaguirre.
Possession is an essential attribute of ownership; thus, it would be redundant for respondent to go back to
court simply to establish her right to possess subject property. Contrary to petitioners claims, the issuance
of the writ of possession by the trial court did not constitute an unwarranted modification of our decision in
G.R. No. 120832, but rather, was a necessary complement thereto. [24] It bears stressing that a judgment is
not confined to what appears upon the face of the decision, but also those necessarily included therein or
necessary thereto.[25]
With regard to the improvements made on the mortgaged property, we confirm the Court of Appeals
characterization of petitioner as a possessor in bad faith. Based on the factual findings of the appellate
court, it is evident that petitioner knew from the very beginning that there was really no sale and that he
held respondents property as mere security for the payment of the loan obligation. Therefore, petitioner
may claim reimbursement only for necessary expenses; however, he is not entitled to reimbursement for
any useful expenses[26] which he may have incurred.[27]
Finally, as correctly pointed out by the Court of Appeals, this case should be remanded to the Regional Trial
Court of Davao City for a determination of the total amount of the loan, the necessary expenses incurred
by petitioner, and the period within which respondent must pay such amount. [28] However, no interest is
due on the loan since there has been no express stipulation in writing. [29]
WHEREFORE, the assailed Decision of the Court of Appeals dated October 5, 1998 and its Resolution
dated March 5, 1999 are hereby AFFIRMED. Respondent is entitled to delivery of possession of the subject
property. This case is hereby REMANDED to the trial court for determination of the amount of the loan, the
necessary expenses incurred by petitioner and the period within which the respondent must pay the same.
[G.R. No. 158682. January 31, 2005]
SPOUSES BIENVENIDO R. MACADANGDANG and VIRGINIA C. MACADANGDANG, petitioners vs.
SPOUSES RAMON MARTINEZ and GLORIA F. MARTINEZ, respondents.
DECISION
CORONA, J.:
Petitioners, spouses Bienvenido and Virginia Macadangdang (Macadangdang spouses), assail the
October 25, 2001 decision[1] of the Court of Appeals in CA-G.R. CV No. 32018, modifying the November 13,
1990 decision[2] of Branch 149 of the Makati Regional Trial Court in Civil Case No. 88-796.
The present controversy involves a house and lot in Lot 6, Block 22-A, Phase 5-A, Parkhomes
Subdivision, Tunasan, Muntinlupa, Metro Manila, covered by TCT No. 146553 in the name of Emma A.
Omalin.
On December 20, 1986, the Macadangdang spouses offered to buy the subject property from Omalin
for P380,000 on installment basis.
On the same date, the Macadangdang spouses made a downpayment of P5,000 through the broker,
Sto. Nino Realty Services, Inc. On January 3, 1987, they paid another P175,000. Thereafter, Omalin
executed a deed of sale with mortgage dated January 5, 1987. The deed provided for the payment of the
balance of P200,000 in three installments.
The Macadangdang spouses took possession of the house and lot on January 18, 1987. On April 22,
1987, they paid P60,000 and on October 1, 1987, another P30,000. After the Macadangdangs had paid a
total of P270,000, the parties agreed that the balance of P110,000 was to be paid upon delivery of the TCT.
On January 29, 1988, Omalin executed a deed of absolute sale in favor of the Macadangdang spouses.
However, the latter did not pay theP110,000 balance because Omalin failed to deliver the TCT. It turned
out that the property was mortgaged to private respondent spouses Ramon and Gloria Martinez (Martinez
spouses).
It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker, offered to mortgage the
subject property to the Martinez spouses for P200,000. Atty. Santos was in possession of a clean TCT No.
146553 and a fire insurance policy covering said property. The spouses Martinez accepted the mortgage
with interest at 36% p.a. and duly recorded it at the Registry of Deeds of Makati. The proper annotation
was made at the back of the title.
From September 1987 to March 9, 1988, Omalin paid the monthly interest of P6,000 but failed to pay
the subsequent interest from April 1988 to October 1989 amounting to P114,000.
The Macadangdang spouses filed a criminal case for estafa against Omalin and a combined action for
specific performance, annulment of contract and damages against the spouses Martinez and Omalin.
After trial, the Makati RTC rendered a decision in favor of the Macadangdang spouses:
WHEREFORE, in view of the foregoing, judgment is rendered as follows:
1.
The defendants Emma A. Omalin, Ramon Martinez and Gloria Martinez are hereby
ordered to deliver to the plaintiffs the owners duplicate copy of TCT No. 146553, free from
the encumbrance under Entry No. 30110 of the Register of Deeds of Makati, upon plaintiffs
payment of the balance of P100.000.
2.
The defendant Emma A. Omalin is hereby ordered to pay plaintiffs the amount
of P30,000 as moral damages and P20,000 as attorneys fees and costs of suit.[3]
On appeal, however, the appellate court modified the decision of the Makati RTC:
Considering that defendant Omalin remains to be the owner of the property despite the existence of a
valid mortgage, she has the right to sell it. Hence, we rule that the sale in favor of plaintiffs-appellee is
likewise valid, subject to the right of defendants-appellants to foreclose the property for failure of
defendant Omalin to pay her indebtedness.
xxx
xxx
xxx
WHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered:

1.
Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith.
2.
Declaring the deed of sale with mortgage in favor of plaintiffs-appellees Bienvenido and Virginia
Macadangdang as valid and ordering them to pay defendant Omalin the balance of the price in the sum
of P110,000.
3.
Ordering defendants-appellants to deliver the owners duplicate copy of TCT No. 146553 to plaintiffsappellees, subject to the existing encumbrance and the right of defendants-appellants to foreclose the
property should defendant Omalin fail to pay her obligation.
4.
Ordering defendant Emma A. Omalin to pay plaintiffs-appellees the amount of P30,000 as moral
damages and P20,000 as attorneys fees and costs of suit.
The Macadangdang spouses are now before the Court with the following assignments of error:
FIRST ASSIGNED ERROR
THE COURT OF APPEALS DECISION OPENLY DISREGARDED AND OVERTURNED EXISTING JURISPRUDENCE
INVOLVING SIMILAR FACTS.
SECOND ASSIGNED ERROR

UNLESS REVERSED AND/OR MODIFIED, THE COURT OF APPEALS DECISION, IF EVENTUALLY IMPLEMENTED,
MIGHT GIVE RISE TO ABSURD RESULTS.
THIRD ASSIGNED ERROR
THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE TRIAL COURTS DECISION DATED NOVEMBER
13, 1990.[4]
The petition lacks merit.
The subject matter of the instant petition involves registered land. Unlike the case of unregistered
land, in which an earlier instrument, be it sale or mortgage, prevails over a latter one, and the registration
of any one of them is immaterial,[5] with respect to registered land, the rule is different. Between two
transactions concerning the same parcel of land, the registered transaction prevails over the earlier
unregistered right.[6]The act of registration operates to convey and affect the registered land so that a
bonafide purchaser of such land acquires good title as against a prior transferee, if such prior transfer was
unrecorded.[7]
Sections 51 and 52 of PD 1529, otherwise known as the Property Registration Decree, are pertinent:
Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use
such forms of deeds, mortgages, lease or other voluntary instruments as are sufficient in law. But no deed,
mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land
shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties
and as evidence of authority to the Register of Deeds to make Registration.
The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies.
Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien attachment,
order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the
office of the Register of Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing or entering.
It is clear from the foregoing that the registration of the deed is the effectual act which binds the land
insofar as third persons are concerned. Prior registration of a lien creates a preference as the act of
registration is the operative act that conveys and affects the land. [8] Considering that the prior sale of the
subject property to the Macadangdang spouses was not registered, it was the registered mortgage to the
spouses Martinez that was valid and effective. For sure, it was binding on Omalin and, for that matter,
even on the Macadangdang spouses, the parties to the prior sale.
The rule on prior registration is subject only to one exception, that is, when a party has knowledge of a
prior existing interest which is unregistered at the time he acquires a right to the same land, his knowledge
of that prior unregistered interest has the effect of registration as to him. [9]
The Martinez spouses claimed they had never met the Macadangdang spouses and were unaware that
Omalin had already sold the property to them. Hence, the appellate court declared the Martinez spouses
as mortgagees in good faith and innocent mortgagees for value.
An innocent mortgagee for value is akin to an innocent purchaser for value. The phrase innocent
purchaser for value is deemed to include an innocent lessee, mortgagee or other (beneficiary of an)
encumbrance for value.[10] An innocent purchaser for value is one who buys the property of another without
notice that some other person has a right to or interest in such property and pays a full and fair price for
the same at the time of such purchase or before he has notice of the claim of another person. [11] As a
general rule, where the certificate of title is in the name of the vendor when the land is sold, the vendee
for value has the right to rely on what appears on the face of the title and is not obligated to look beyond
what appears on the face of the certificate of title of the vendor. As an exception, the vendee is required
to make the necessary inquiries if there is anything in the certificate of title which raises any cloud or vice
in the ownership of the property.[12] Otherwise, his mere refusal to believe that such defect exists, or his
willful disregard of the possibility of the existence of a defect in his vendors title will not make him an
innocent purchaser for value if it afterwards develops that the title is in fact defective, and it appears that
he had such notice of the defect as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like situation. [13]
Nothing on record shows that the title of Omalin, the mortgagor, was flawed when it was presented to
the spouses Martinez. Their reliance on the title was therefore reasonable and correct. They were in no
way obliged to go beyond the TCT to determine the legal condition of the property since there was nothing
that should have aroused their suspicion about any defect or problem about the title.
Where innocent third persons rely on the lack of defect of a certificate of title and acquire rights over
the property, the Court cannot disregard such rights. Otherwise, public confidence in the certificate of title
and ultimately, in the entire Torrens system will be impaired, for every one dealing with registered property
will have to inquire at every instance whether the title has been regularly or irregularly issued. [14]
On this note, being innocent registered mortgagees for value, the Martinez spouses acquired a
superior right over the property.
Accordingly, we find no reversible error by the appellate court in upholding the existing encumbrance
over the subject property acquired by the Macadangdang spouses, in declaring the spouses Martinez as
mortgagees in good faith and in recognizing their right to foreclose on the mortgage should Omalin fail to
pay her obligation.
The assailed decision of the appellate court is neither absurd nor unjust. The registered mortgage
contract of the Martinez spouses has given them the superior right, not as owners but only as mortgagees.
Consequently, they are entitled to be paid the amounts due them under the real estate mortgage
registered in their favor. In the event Omalin, as mortgagor, fails to pay the mortgage obligation or, should
any party, for that matter, who may have an interest in the mortgaged property like the petitioners herein
fail to redeem it from the mortgagees, the latter, as declared by the Court of Appeals, may enforce their
rights against the property by foreclosing on the mortgage, regardless of who its owner may be,
considering that the registered mortgage attaches to the property.
WHEREFORE, the instant petition is hereby DENIED and the October 25, 2001 decision of the Court of
Appeals in CA-G.R. CV No. 32018 is AFFIRMED.
[G.R. No. 161861. March 11, 2005]
SPS. WILLIAM and JULIE LIM, SPS. EDGAR and JUDY LIM, STEVENS C. LIM, EDWIN C. LIM,
JOSEPH C. LIM, RAFAEL Y. CHUATOCO, TERESITA Y. CHUATOCO and the REGISTER OF
DEEDS MANILA, petitioners, vs. EDUARDO, JORGE, FELIPE and FRANCISCO, all surnamed
CHUATOCO, respondents.
DECISION
TINGA, J.:
Petitioners assail the Decision[1] of the Court of Appeals, ordering herein petitioners Lim (Spouses
Willim and Julie Lim, Spouses Edgar and Judy Lim, Stevens C. Lim, Edwin C. Lim and Joseph C. Lim) to
reconvey to the extent of four-fifths (4/5) of the property in dispute to the respondents and directing all
petitioners (the Lims, Rafael Y. Chuatoco and Tereista Y. Chuatoco) to pay to respondents moral damages in
the amount of P100,000.00 and attorneys fees in the amount of P50,000.00.
As culled from the records, the factual antecedents which spawned the filing of the instant petition
follow.
Spouses Jose Chuatoco and Leoncia Yap were the registered owners of a 365-square meter land with
improvements located at Calle Veronica St., Binondo, Manila. On the property, the spouses established the
Binondo Maternity Hospital and School of Midwifery, reserving the buildings second floor as the family
residence.
In November 1972, Jose died. His wife Leoncia and five sonsEduardo, Jorge, Rafael, Felipe and
Francisco (herein respondents) proceeded to execute a deed of adjudication and partition. On 20 January
1981, Transfer Certificate of Title (TCT) No. 13935 in the name of the spouses Jose and Leoncia was
replaced by TCT No. 142406 in the names of Leoncia and their children. Soon thereafter, Leoncia died.
Jorge then took over as sole administrator of the school until 1984 when he was joined in this task by
Rafaels wife, Teresita.
Respondents alleged that their brother Rafael had in the meantime succeeded in obtaining title to the
property in his own name by using a fictitious deed of sale dated 27 February 1979, purportedly executed
by them and their deceased mother Leoncia in favor of Rafael. It would later be claimed by respondents
that their signatures, as they appeared on the deed of sale, were forged. On 15 April 1982, TCT No. 142406
was cancelled and TCT No. 148821 was issued in the name of Rafael.
In 1986, respondent Jorge Chuatoco allegedly discovered that the title to the property had been
transferred to Rafaels name and in order to protect his interest as well as those of his brothers who were
then residing in the United States, he convinced Rafael to surrender the certificate of title to him for
safekeeping and Rafael agreed. However, on 8 May 1986, Rafael through his wife filed a petition for
reconstitution of the owners duplicate of TCT No. 148821, alleging therein that their owners duplicate of
the title had been lost.
After obtaining the reconstituted title, Rafael, acting through his wife and attorney-in-fact, Teresita,
executed a Deed of Absolute Sale dated 6 June 1986 to petitioners Lim covering the disputed property for
the sum of P600,000.00. The Lims subsequently caused the cancellation of TCT No. 148821 in the name of
Rafael and TCT No. 169859 was issued in their names.
In 1991, after the Lims refused to heed the demands of respondents for the reconveyance of the
property, a complaint was filed with the Regional Trial Court (RTC), Branch 22, of Manila. Respondents
prayed for the declaration of nullity of the deed of sale [2] purportedly executed by them in favor of Rafael,
as well as the deed of sale[3] executed by Rafael in favor of the Lims; the cancellation of TCT No. 169859 in
the name of the Lims; and for the return of the property to them.
Traversing the complaint, the Lims in their Answer with Compulsory Counterclaim[4] averred that the
property they purchased from Rafael had already been sold to the latter by Leoncia and respondents
sometime in 1979, and that upon execution the deed of sale in favor of Rafael became the exclusive owner
thereof. They alleged that respondents were fully aware of the sale of the property to them and some of
respondents who lived in the premises voluntarily vacated the place right after the execution of the deed
of sale in their favor. Citing respondents failure to question the registration of the property in Rafaels
name for quite a long period of time and the subsequent sale thereof to them, the Lims averred that at
most, respondents claim over the property should be deemed barred by laches and estoppel.
On the other hand, Rafael and Teresita filed their Answer,[5] denying the material allegations of the
complaint. They asseverated that the property had been sold to Rafael by Leoncia and respondents herein
two years prior to Leoncias death in 1981. They argued that respondents have no cause of action against
them and assuming that they have, the cause of action is already barred by prescription.
Assessing the evidence before it, the RTC rendered its Decision[6] on 21 November 2000 dismissing the
complaint. It declared that the deed of sale dated 27 February 1979 was void only with respect to the
undivided shares of Eduardo, Jorge, and Felipe Chuatoco, whose signatures on the questioned deed were
proven to be forged. However, the trial court ruled that since the property was already titled in the name
of Rafael before it was sold to petitioners, the latter had the right to rely upon what appeared on the
certificate of title otherwise the efficacy and conclusiveness of the Torrens Certificate of Title would be
rendered illusory. The trial court also debunked respondents contention that they had no knowledge of
the sale of the property to the Lims in view of their admission that in 1989 they met with Jaime Lim, the
father of petitioners, and asked the latter to return the property to them and in exchange, they would
return the price paid by the Lims for the property.
The Court of Appeals in its now assailed Decision[7] reversed the trial courts decision. The appellate
court found that the Lims were not buyers in good faith as the evidence showed that in 1985 the Lims
went to the United States to make an offer to buy the property to Eduardo, Francisco, and Rafael. This
effort of the Lims to negotiate with the Chuatoco brothers was met with initial reluctance by Eduardo, the
eldest of the siblings, and the latter then instructed Jaime Lim to make a formal offer for the property. The
court also noted Jaimes testimony that he saw the title to the property in the name of Rafael only in 1986
when he started negotiating with Teresita but he should have realized that while the title of Rafael was
issued in 1982, the Chuatocos were still treating the property under their collective ownership.
The appellate court disagreed with the trial courts conclusion that the Chuatocos were aware of the
deed of sale in favor of Rafael in 1979 and did not do anything about it until after the property was sold to
the Lims. It ruled that the conclusion failed to consider that Rafael had assured his brothers that he would
hold the title in trust for them and downplayed the fact that the brothers never intended to relinquish their
interest in the property. Thus, the appellate court ordered the Lims to reconvey the property to the
respondents to the extent of four-fifths (4/5) thereof and to pay respondents moral damages and attorneys
fees.
Petitioners raise the following errors allegedly committed by the appellate court:
I.
THE COURT OF APPEALS ERRED AS A MATTER OF LAW AND JURISPRUDENCE IN NOT HOLDING THAT THE
LIMS ARE BUYERS IN GOOD FAITH AND FOR VALUE, HENCE THEY ARE PROTECTED BY LAW.
II.
10
THE COURT OF APPEALS ERRED IN MAKING THE LIMS SOLIDARILY LIABLE TO PAY RESPONDENTS MORAL
DAMAGES AND ATTORNEYS FEES.[8]
Petitioners impute error on the Court of Appeals in holding that they were not buyers in good faith and
for value. They argue that they were not required to go beyond the four corners of the certificate of title to
ascertain its authenticity and regularity because there was nothing on it that would have put them on
notice of any defect in their sellers title. Still, they saw it fit to go to the Register of Deeds to make further
verification on the actual ownership of the property. They stressed that as innocent purchasers for value
they were entitled to protection under the law.
Petitioners likewise pounce on respondents delay in seeking legal redress despite the fact that they
had knowledge of the transfer of the title in Rafaels name as early as 1981. They argued that
respondents should be deemed estopped by laches from disputing their ownership of the property because
they filed their action only in 1991.
Respondents, on the other hand, point out that the issue of whether petitioners were buyers in good
faith is one of fact and not of law and the instant petition deserves to be dismissed. At any rate, they cite
several facts and circumstances which should have put petitioners on guard and required them to make
further inquiries regarding the ownership of the property.
Among others, they argue that the Lims had initially negotiated for the sale of the property with them
but after failing to obtain a favorable response, the Lims instead saw an opportunity of acquiring the
property by buying it directly from Rafael despite the Lims actual knowledge that the property was owned
by them in common. They claim that the Lims should have been put on guard by the fact that the property
was titled solely in the name of Rafael, despite the fact that the annotations appearing on TCT No. 142406
indicated that all of Leoncias sons are the beneficiaries of the property. They also note the alleged haste in
the sale of the property to petitioners only one day after the order of reconstitution of Rafaels title was
issued by the trial court, and the fact that title to the property was issued only two years after the date of
the Deed of Sale.
Respondents also rebuff petitioners contention that their action is barred by laches arguing that the
moment they learned that Rafael sold the property, they lost no time and asked him to explain his side.
The delay in filing the action, if any, was merely because Rafael had assured them that he was holding the
title in trust for all his brothers and Rafael in fact surrendered the duplicate original of the certificate of title
to Jorge. They add that since Rafaels reconstituted title was obtained by fraud, the same is void, and did
not transmit valid and legal title to petitioners.
Both the RTC and the Court of Appeals concluded that forgery had attended the execution of the Deed
of Sale, albeit in varying degrees. The Court is persuaded by the appellate courts conclusion that all of the
signatures therein were forged, and not just that of Eduardo, Jorge, and Felipe. The RTC had declared that
the forgeries of these three signatures had been established by the document examiner of the National
Bureau of Investigation (NBI).[9] While the NBI expert had not formed an opinion on the genuineness of the
signatures of Leoncia and Francisco, it was merely because the specimen signatures submitted to him
were insufficient. However, the Court of Appeals correctly ruled that even in the absence of expert
testimony, the falsity of the signatures of Leoncia and Francisco had been sufficiently established by
Franciscos direct repudiation of his signature, as well as the denials by Eduardo and Jorge of their mothers
signature.
While the testimony of a person, disavowing the genuineness of his signature may seem self-serving
at first blush, such as that proferred by Francisco, it cannot be ignored that such person is in the best
position to know whether or not the signature on the check was his, and averments he would have on the
matter, if adjudged as truthful, deserve primacy in consideration. [10] On the other hand, the denials of
Eduardo and Jorge of their mothers signature may be properly appreciated in evidence, as Section 50,
Rule 130 allows the opinion of an ordinary witness to be received in evidence regarding a handwriting with
which he has sufficient familiarity. [11] The appellate court committed no error in ruling that Eduardo would
probably be the most reliable witness to testify on the handwriting of his mother because he had worked
closely with and exchanged papers and communications with Leoncia on a regular basis, the latter being
then the administrator of the properties left by Jose.
The fraudulent registration of the property in Rafaels name using the forged deed of sale is not
sufficient to vest title to the entire property in him. Settled is the rule that a certificate is not conclusive
evidence of title;[12] registration does not vest title, it is merely evidence of such title over a particular
property.[13] Certificates of title merely confirm or record title already existing and vested. They cannot be
used to protect a usurper from the true owner, nor can they be used as a shield for the commission of
fraud, nor to permit one to enrich himself at the expense of others. [14] The Torrens sytem has never been
recognized as a mode of acquiring ownership.[15]
However, it is a familiar doctrine that a forged or fraudulent document may become the root of a valid
title,[16] if the property has already been transferred from the name of the owner to that of the forger. This
doctrine serves to emphasize that a person who deals with registered property in good faith will acquire
11
good title from a forger and be absolutely protected by a Torrens title. In the final analysis, the resolution
of this case depends on whether the petitioners are purchasers in good faith.
In analyzing this question, the initial premise should be that the Lims had acted in good faith and
therefore they are innocent purchasers for value. As previously held:
Guided by previous decisions of this Court, good faith consists in the possessor's belief that the person
from whom he received the thing was the owner of the same and could convey his title. Good faith, while it
is always to be presumed in the absence of proof to the contrary, requires a well founded belief that the
person from whom title was received was himself the owner of the land, with the right to convey it. There
is good faith where there is an honest intention to abstain from taking any unconscientious advantage
from another. Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which
is manifested by the acts of the individual concerned. [17]
Consistently, this Court has ruled that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the
certificate to determine the condition of the property. A person is charged with notice only of such burdens
and claims as are annotated on the title. [18] Thus, where there is nothing in 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
defects or inchoate right that may subsequently defeat his right thereto. [19]
This presumption receives primacy in consideration, given the fact that the Court of Appeals and the
RTC arrive at wholly disparate conclusions on this question of fact. The Court of Appeals disagreed with the
RTCs conclusion that the Lims were innocent purchasers for value, based on circumstances which we now
proceed to review. It is settled that this Court has to inquire into questions of fact if the courts below have
conflicting findings.[20]
The Court of Appeals noted that in 1985:
[T]he Lims went to the United States on purpose to offer to buy the property from the Chuatoco brothers,
Eduardo, Francisco and Rafael. The efforts of the Lims to negotiate with the brothers was met with initial
reluctance by Eduardo, the eldest of the siblings, and then by his final instruction to Jaime Lim to make a
formal offer to the family. If we follow Jaimes testimony that he saw the title the next year when he was
negotiating with Teresita, he would have seen that Rafaels title was issued way back in 1982. He could put
two and two together and realize that even as the title to the property was already in Rafaels name, the
Chuatocos were treating it under their collective ownership. A reasonably prudent and careful person
would have under these circumstances taken steps to make further inquiry into the actual ownership of the
property. If the Lims had done so, they would have found out that Rafaels title was fake and that the true
owners of the property were still the heirs of Jose and Leoncia Chuatoco. [21]
Apparently, the Court of Appeals concluded that in 1985, the Lims were already intent on purchasing
the property, even embarking on a trip to the United States for that purpose. However, there is nothing in
the records that indicates that the Lims had gone to the United States precisely for that purpose. Even
Francisco Chuatoco, testifying as to the alleged meeting in the United States, claimed that the Lims had
been there on vacation.[22]
This circumstance proves material given the appreciation made by the Court of Appeals that the Lims
had purposely gone to the United States as the eldest of the Chuatoco brothers who purportedly owned
the properties, Eduardo, was a resident thereof. [23] If such were the case, then credence could be adduced
to the claim that the Lims had known that the Chuatocos collectively owned the property and that the
consent of Eduardo to the sale thereof was essential. However, given the fact that the Lims did not go to
the United States on purpose to meet with Eduardo, but were apparently only there on vacation, it
becomes less clear that their frame of mind at that time was that the Chuatoco siblings owned the
property.
Thus, even though the Lims apparently concede having met with Eduardo in the United States in 1985,
it is not evident that they did so with the intent of negotiating with Eduardo, with the perception that he
was the co-owner of the property whose consent was indispensable to the sale. The Court is less prepared
than the Court of Appeals to deem with any conclusiveness the fact of this meeting. Indeed, it is rather
bothersome that this was the only circumstance, flimsy and self-serving as it is, drawn upon by the Court
of Appeals to conclude that the Lims were not innocent purchasers in good faith. Certainly, the
presumption of good faith cannot be overcome by haphazard conjectures premised on a disputed fact.
[24]
Given the failure to establish that the Lims had known the Chuatoco siblings as the collective owners
of the property prior to 1986, it was error on the Court of Appeals to declare that Jaime should have
become suspicious enough when he discovered a year after his visit to the United States that title over the
property had been issued way back in 1982 to Rafael. There was no demand on the part of the Lims that
12
they become privy to whatever arrangements or transfers the Chuatocos may have had among
themselves. The Lims had no obligation to look beyond the face of the Torrens title.
Section 39 of the Land Registration Act, as amended, is explicit that "every person receiving a certificate of
title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes
certificate of title for value in good faith shall hold the same free of all encumbrance except those noted on
said certificate...."
It has been held:
Every person dealing with registered land may safely rely on the correctness of the certificate of title
issued therefor and the law will in no way oblige him to go behind the certificate to determine the
condition of the property.
Thus, in order that a purchaser may be considered a purchaser in good faith, it is enough that he
examine[s] the latest certificate of title.
In line with this principle, all that Tajonera had to do was to examine his transferor's title which was then in
the name of Juanita David. He did not have to go behind this title and scrutinize each and every title that
preceded it.
Not being required under the law to check on the validity of the sale to the original buyer and being
without knowledge of any defect in the title appearing on its face, Tajonera falls under the definition of a
purchaser in good faith and entitled to protection under the Land Registration Act. [25]
It likewise does not escape our attention that the Lims nonetheless exerted efforts beyond a facial
examination of the title to verify the ownership thereof. As admitted by respondents, William and Edgar
Lim, along with Atty. Apolonio Rivera, went to the Register of Deeds of Manila to verify Rafaels claim over
the property, and saw therein the Deed of Sale executed by respondents and their mother in favor of
Rafael, as well as the certificates of title. They discovered that indeed, TCT No. 148821 was issued solely in
the name of Rafael, canceling TCT No. 142406 issued in the name of Leoncia Chuatoco and her sons.
Respondents make issue of the fact that TCT No. 142406 has an annotation of an encumbrance noting
the probate of the will of Leoncia Chuatoco dated in 1952 and denominating her children as the heirs to
the said property. Such probate proceeding was an ante mortem probate undertaken during the lifetime of
Leoncia Chuatoco,[26] and it should be remembered that an order of probate is conclusive only as to the
due execution and capacity of the testator, and not the status and rights of persons to inherit. It cannot be
denied that during her lifetime, and notwithstanding her probated will, Leoncia had the capacity to dispose
of her shares in her property, as the rights thereto of her heirs remain inchoate until the time of her death,
which is the only instance when succession to her properties opens.
Respondents also argue that TCT No. 142406 in the name of the Chuatocos was released only on 20
January 1981, while the deed of sale was dated February of 1979. Had there truly been a deed of sale,
according to respondents, then why was the annotation of Leoncias last will and testament still carried
over in the title issued in 1981? This fact is understandable, considering that the deed of sale was
registered only in 1982, or after the issuance of TCT No. 142406. Prior to such registration of the deed of
sale, there would not have been cause for the Register of Deeds to cancel this annotation of Leoncias last
will and testament. In fact, the registration of this deed of sale caused the cancellation of TCT No. 142406
and the corresponding issuance of TCT No. 148821 in the name of Rafael.
The Court of Appeals, in disputing the validity of the deed of sale, makes reference to the fact that the
deed of sale was registered only in 1982, or three years after its execution and one year after the death of
Leoncia. Respondents cite this circumstance in further maintaining that the Lims should have been
sufficiently alerted as to the validity of the transfer, so as to require the Lims to inquire from the
respondents on this matter.
If we adopt this suggestion, however practical it may sound, it would unduly raise the legal bar by
which an innocent purchaser for value will be adjudged. The general rule remains that the purchaser is not
obligated to look beyond the title. This long entrenched rule cannot be dispensed with by the occasion of a
mere shadow of a doubt. It may be gainsaid that there is nothing unusually suspicious with the mere fact
that a deed of transfer or conveyance over titled property is registered three years after the execution of
the deed. In fact, there is nothing in our land registration law that requires the registration or recording of
such deeds within a definite prescribed period of time. The only legal effect of such non-registration is that
implied under Section 51 of the Property Registration Decree, which provides that the act of registration
becomes the operative act to convey or affect the land insofar as third persons are concerned, though
prior to registration, it operates as a contract between the parties and as evidence of authority to the
Register of Deeds to make registration.[27]
13
Thus, the mere fact that the deed of sale was recorded with the Register of Deeds only three years
after its date of execution did not, in itself, impugn the validity of the instrument. Those aspects of the
deed of sale which did affect its validity, involving as they did the forgery of the signatures thereupon,
could not have been ascertained by the Lims upon examination of the deed of sale. In fact, it required a
full blown trial and the testimony of NBI experts, among others, to conclusively rule that the signatures on
the deed of sale were forged.
Moreover, even as the deed of sale was subsequently proven a forgery, the Lims had every reason to
rely upon it due to the fact that it is a notarized document. Notarized documents, as public documents, are
entitled to full faith and credit upon these face when appreciated by the courts, [28] and so much more when
relied upon by the layman.
Thus, when the Lims endeavored to look beyond the title shown to them by Teresita Chuatoco, they
discovered at the Registry of Deeds the following: (1) cancelled TCT No. 142406 which while in the name of
Leoncia and her sons, was cancelled by reason of the registration of a deed of sale in favor of Rafael; (2)
existing TCT No. 148821, in the name of Rafael and deriving from the cancelled TCT No. 142406; and (3)
the deed of sale dated February of 1979 and duly notarized on 27 February 1979. These three documents
are public documents imbued with the presumption of regularity. There is no inconsistency with these
documents and the dates of conveyance evidenced therein, as well as with the identities of the parties
effecting the conveyance.
Accordingly, the Court concludes that the Lims were innocent purchasers for value, as the allegation to
the contrary is based merely on conjecture and, therefore, cannot overcome the presumption of good faith.
In fact, a good deal of respondents claims on this matter rest upon the proposition that the Lims should
have known that the transfer to Rafael was not valid, rather than proof of actual knowledge of its supposed
invalidity. We are satisfied that the Lims had exerted perhaps a greater effort than that required by law to
ascertain the validity of TCT No. 148821, and that nothing on the face of the documents they examined
should have led to indubitable knowledge that TCT No. 148821 was derived from an infirm or spurious
source.
It may not be a pleasant task for the Court to uphold the effects of a transaction that is rooted in
falsity. Yet whatever sympathies may be judicially appreciated for the deceived party must be balanced in
deference to the protection afforded by law to the innocent purchaser for value. If such innocence or good
faith is established by the evidence, or insufficiently rebutted by the disputant, then the corresponding
duty of the Court is simply to affirm the rights of the purchaser in good faith. It is mischief at worse, and
error at least, for a court to misread or inflate the facts to justify a ruling for the defrauded party, no matter
how wronged he or she may be. Relief for such injury should be obtainable instead in a proper proceeding
against the malfeasant transferor, and not the innocent transferee.
The other significantly debated proposition in this petition is whether the Chuatoco siblings had
actually known well beforehand before the sale to the Lims that the property had been transferred in the
name of Rafael. In light of our previous disquisitions, there is no need to delve into this question, as it will
not affect the central question as to whether the Lims were innocent purchasers for value. This matter may
be relevant in possible litigation that may be lodged against Rafael by his siblings in relation to the
fraudulent transfer of the property, but is of no moment for the matter currently at hand.
WHEREFORE, the instant petition is hereby GRANTED. The appealed Decision of the Court of Appeals
Seventeenth Division, is hereby REVERSED, and the Decision of the Regional Trial Court of Manila, Branch
22 is REINSTATED. Costs against respondents.
[G.R. No. 149844. October 13, 2004]
MIGUEL CUENCO, Substituted by MARIETTA C. CUYEGKENG, petitioner, vs. CONCEPCION CUENCO
Vda. DE MANGUERRA, respondent.
DECISION
PANGANIBAN, J.:
Inasmuch as the facts indubitably and eloquently show an implied trust in favor of respondent, the
Court of Appeals did not err in affirming the Decision of the Regional Trial Court ordering petitioner to
convey the subject property to her. That Decision satisfied the demands of justice and prevented unjust
enrichment.
The Case
Before us is a Petition for Review [1] under Rule 45 of the Rules of Court, challenging the August 22,
2001 Decision[2] of the Court of Appeals (CA) in CA-GR CV No. 54852. The assailed Decision disposed as
follows:
14
WHEREFORE, the decision appealed from is AFFIRMED.[3]

On the other hand, the Regional Trial Court (RTC) Decision affirmed by the CA disposed as follows:
WHEREFORE, considering that this action is essentially one for reconveyance or enforcement of a trust,
judgment is hereby rendered ordering the substituted defendant Marietta Cuenco Cuyegkeng to reconvey
or transfer, in a duly registrable public instrument, Lot No 903-A-6 under TCT No. 113781 of the Registry of
Deeds of Cebu City, of the Banilad Estate with an area of 834 square meters, in favor of plaintiff
Concepcion Cuenco Vda. De Manguerra; or should the substituted defendant, for one reason or another,
fail to execute the necessary instrument once the decision becomes final, the Clerk of Court of this Court
(RTC) is hereby instructed, in accordance with the Rules of Court, to prepare and execute the appropriate
and requisite conveyance and instrument in favor of herein plaintiff which, in either case, shall be
registered with the Office of the Register of Deeds of Cebu City.
Without costs in this instance.[4]
The Facts
The facts were summarized by the appellate court as follows:
On September 19, 1970, the [respondent] filed the initiatory complaint herein for specific performance
against her uncle [Petitioner] Miguel Cuenco which averred, inter alia that her father, the late Don Mariano
Jesus Cuenco (who became Senator) and said [petitioner] formed the Cuenco and Cuenco Law Offices;
that on or around August 4, 1931, the Cuenco and Cuenco Law Offices served as lawyers in two (2) cases
entitled Valeriano Solon versus Zoilo Solon (Civil Case 9037) and Valeriano Solon versus Apolonia Solon
(Civil Case 9040) involving a dispute among relatives over ownership of lot 903 of the Banilad Estate which
is near the Cebu Provincial Capitol; that records of said cases indicate the name of the [petitioner] alone
as counsel of record, but in truth and in fact, the real lawyer behind the success of said cases was the
influential Don Mariano Jesus Cuenco; that after winning said cases, the awardees of Lot 903 subdivided
said lot into three (3) parts as follows:
Lot 903-A: 5,000 [square meters]: Mariano Cuencos attorneys fees
Lot 903-B: 5,000 [square meters]: Miguel Cuencos attorneys fees
Lot 903-C: 54,000 [square meters]: Solons retention
That at the time of distribution of said three (3) lots in Cebu, Mariano Jesus Cuenco was actively practicing
law in Manila, and so he entrusted his share (Lot 903-A) to his brother law partner (the [petitioner]); that
on September 10, 1938, the [petitioner] was able to obtain in his own name a title for Lot 903-A (Transfer
Certificate of Title [TCT] RT-6999 [T-21108]); that he was under the obligation to hold the title in trust for
his brother Marianos children by first marriage; that sometime in 1947, the Cuenco family was anticipating
Marianos second marriage, and so on February 1, 1947, they partitioned Lot 903-A into six (6) sub-lots
(Lots 903-A-1 to 903-A-6) to correspond to the six (6) children of Marianos first marriage (Teresita, Manuel,
Lourdes, Carmen, Consuelo, and Concepcion); that the [petitioner] did not object nor oppose the partition
plan; that on June 4, 1947, the [petitioner] executed four (4) deeds of donation in favor of Marianos four
(4) children: Teresita, Manuel, Lourdes, and Carmen, pursuant to the partition plan (per notary documents
183, 184, 185, 186, Book III, Series 1947 of Cebu City Notary Public Candido Vasquez); that on June 24,
1947, the [petitioner] executed the fifth deed of donation in favor of Marianos fifth child Consuelo (per
notary document 214, Book III, Series 1947 of Cebu City Notary Public Candido Vasquez) (Exhibits 2 to
5); that said five (5) deeds of donation left out Marianos sixth child Concepcion who later became the
[respondent] in this case; that in 1949, [respondent] occupied and fenced a portion of Lot 903-A-6 for
taxation purposes (Exhibit F, Exhibit 6); that she also paid the taxes thereon (Exhibit G); that her father
died on February 25, 1964 with a Last Will and Testament; that the pertinent portion of her fathers Last
Will and Testament bequeaths the lot.
near the Cebu provincial capitol, which were my attorneys fees from my clients, Victoria Rallos and
Zoilo Solon, respectively have already long been disposed of, and distributed by me, through my brother,
Miguel, to all my said children in the first marriage;
That on June 3, 1966, the [petitioner] wrote a letter petitioning the Register of Deeds of Cebu to transfer
Lot 903-A-6 to his name on the ground that Lot 903-A-6 is a portion of Lot 903-A; that on April 6, 1967, the
[respondent] requested the Register of Deeds to annotate an affidavit of adverse claim against the
[petitioners] TCT RT-6999 (T-21108) which covers Lot 903-A; that on June 3, 1967, the Register of Deeds
issued TCT 35275 covering Lot 903-A-6 in the name of the [petitioner] but carrying the earlier annotation
of adverse claim; that in 1969, the [petitioner] tore down the wire fence which the [respondent]
constructed on Lot 903-A-6 which compelled the latter to institute the instant complaint dated August 20,
1970 on September 19, 1970.
15
On December 5, 1970, the answer with counterclaim dated December 3, 1970 of [petitioner] Miguel
Cuenco was filed where he alleged that he was the absolute owner of Lot 903-A-6; that this lot was a
portion of Lot 903-A which in turn was part of Lot 903 which was the subject matter of litigation; that he
was alone in defending the cases involving Lot 903 without the participation of his brother Mariano
Cuenco; that he donated five (5) of the six (6) portions of Lot 903-A to the five (5) children of his brother
Mariano out of gratitude for the love and care they exhibited to him (Miguel) during the time of his long
sickness; that he did not give or donate any portion of the lot to the [respondent] because she never
visited him nor took care of him during his long sickness; that he became critically ill on February 11, 1946
and was confined at the Singians Clinic in Manila and then transferred to Cebu where he nearly died in
1946; that his wife Fara Remia Ledesma Cuenco had an operation on January 1951 and was confined at the
University of Santo Tomas Hospital and John Hopkins Hospital in the United States; that two of his children
died at the University of Santo Tomas Hospital in 1951 and 1952; and that his wife was blind for many
months due to malignant hypertension but [respondent] never remembered her nor did she commiserate
with him and his wife in their long period of sorrow.
[Petitioner] Miguel Cuenco took the witness stand as early as September 13, 1974. His self-conducted
direct examination lasted until 1985, the last one on November 22, 1985. Unfortunately, he died[5] before
he was able to submit himself for cross-examination and so his testimony had to be stricken off the record.
His only surviving daughter, Marietta Cuyegkeng, stood as the substitute [petitioner] in this case. She
testified that she purchased Lot 903-A-6 (the property subject matter of this case) from her late father
sometime in 1990 and constructed a house thereon in the same year; that she became aware of this case
because her late father used to commute to Cebu City to attend to this case; and that Lot 903-A-6 is in her
name per Transfer Certificate of Title #113781 of the Registry of Deeds for Cebu. [6]
Ruling of the Court of Appeals
The CA found respondents action not barred by res judicata, because there was no identity of causes
of action between the Petition for cancellation of adverse claim in L.R.C. Records 5988 and the Complaint
for specific performance to resolve the issue of ownership in Civil Case No. R-11891.
The appellate court further found no reason to disturb the findings of the trial court that respondent
has the legal right of ownership over lot 903-A-6. The CA ruled that the subject land is part of the
attorneys fees of Don Mariano Cuenco, predecessor-in-interest of [Respondent] Concepcion Cuenco vda.
de Manguerra and [petitioner] merely holds such property in trust for [her], his title there[to]
notwithstanding.
Finally, the CA held that the right of action of respondent has not yet prescribed as she was in
possession of the lot in dispute and the prescriptive period to file the case commences to run only from the
time she acquired knowledge of an adverse claim over [her] possession.
Hence, this Petition.[7]
The Issues
In her Memorandum, petitioner raises the following issues for our consideration:
I.
On question of law, the Court of Appeals failed to consider facts of substance and significance which, if
considered, will show that the preponderance of evidence is in favor of the petitioner.
II.
On question of law, the Court of Appeals failed to appreciate the proposition that, contrary to the
position taken by the trial court, no constructive or implied trust exists between the parties, and
neither is the action one for reconveyance based upon a constructive or implied trust.
III.
On question of law, the Court of Appeals erred in not finding that even where implied trust is admitted
to exist the respondents action for relief is barred by laches and prescription.
IV.
On question of law, the trial court and the appellate court erred in expunging from the records the
testimony of Miguel Cuenco.[8]
This Courts Ruling
16
The Petition has no merit.
First Issue:
Evaluation of Evidence
Petitioner asks us to appreciate and weigh the evidence offered in support of the finding that Lot 903A-6 constituted a part of Mariano Cuencos share in the attorneys fees. In other words, she seeks to
involve us in a reevaluation of the veracity and probative value of the evidence submitted to the lower
court. What she wants us to do is contrary to the dictates of Rule 45 that only questions of law may be
raised and resolved in a petition for review. Absent any whimsical or capricious exercise of judgment, and
unless the lack of any basis for the conclusions made by the lower courts be amply demonstrated, the
Supreme Court will not disturb such factual findings.[9]
As a rule, findings of fact of the Court of Appeals affirming those of the trial court are binding and
conclusive. Normally, such factual findings are not disturbed by this Court, to which only questions of law
may be raised in an appeal by certiorari.[10] This Court has consistently ruled that these questions must
involve no examination of the probative value of the evidence presented by the litigants or any of
them.[11] Emphasizing the difference between the two types of question, it has explained that there is a
question of law in a given case when the doubt or difference arises as to what the law is pertaining to a
certain state of facts, and there is a question of fact when the doubt arises as the truth or the falsity of
alleged facts.[12]
Indeed, after going over the records of the present case, we are not inclined to disturb the factual
findings of the trial and the appellate courts, just because of the insistent claim of petitioner. His witnesses
allegedly testified that Civil Case No. 9040 involving Lot 903 had not been handled by Mariano for
defendants therein -- Apolonia Solon, Zoilo Solon, et al. It has sufficiently been proven, however, that
these defendants were represented by the Cuenco and Cuenco Law Office, composed of Partners Mariano
Cuenco and Miguel Cuenco.
Given as attorneys fees was one hectare of Lot 903, of which two five-thousand square meter portions
were identified as Lot 903-A and Lot 903-B. That only Miguel handled Civil Case No. 9040 does not mean
that he alone is entitled to the attorneys fees in the said cases. When a client employs the services of a
law firm, he does not employ the services of the lawyer who is assigned to personally handle the case.
Rather, he employs the entire law firm. [13] Being a partner in the law firm, Mariano -- like Miguel -- was
likewise entitled[14] to a share in the attorneys fees from the firms clients. Hence, the lower courts finding
that Lot 903-A was a part of Mariano Cuencos attorneys fees has ample support.
Second Issue:
Implied Trust
Petitioner then contends that no constructive or implied trust exists between the parties.
A trust is a legal relationship between one having an equitable ownership in a property and another
having legal title to it.[15]
Trust relations between parties may either be express or implied. [16] Express trusts are created by the
direct and positive acts of the parties, indicated through some writing, deed, will, or words evidencing an
intention to create a trust. [17] On the other hand, implied trusts are those that, without being express, are
deducible from the nature of the transaction as matters of intent[;] or which are superinduced on the
transaction by operation of law as a matter of equity, independently of the particular intention of the
parties. Implied trusts may either be resulting or constructive trusts, both coming into being by operation
of law.[18]
Resulting trusts are presumed to have been contemplated by the parties and are based on the
equitable doctrine that valuable consideration, not legal title, determines the equitable title or interest.
[19]
These trusts arise from the nature of or the circumstances involved in a transaction, [20] whereby legal
title becomes vested in one person, who is obligated in equity to hold that title for the benefit of another.
Constructive trusts are created by the construction of equity in order to satisfy the demands of justice
and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or
abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good
conscience, to hold.[21]
A review of the records shows that indeed there is an implied trust between the parties.
17
Although Lot 903-A was titled in Miguels name, the circumstances surrounding the acquisition and the
subsequent partial dispositions of this property eloquently speak of the intent that the equitable or
beneficial ownership of the property should belong to Mariano and his heirs.
First, Lot 903-A was one half of the one-hectare portion of Lot 903 given as attorneys fees by a client
of the law firm of Partners Miguel and Mariano Cuenco. It constituted the latters share in the attorneys
fees and thus equitably belonged to him, as correctly found by the CA. That Lot 903-A had been titled in
the name of Miguel gave rise to an implied trust between him and Mariano, specifically, the former holds
the property in trust for the latter. In the present case, it is of no moment that the implied trust arose from
the circumstance -- a share in the attorneys fees -- that does not categorically fall under Articles 1448 to
1456 of the Civil Code. The cases of implied trust enumerated therein does not exclude others
established by the general law of trust.[22]
Second, from the time it was titled in his name in 1938, [23] Lot 903-A remained undivided and
untouched[24] by Miguel. Only on February 3, 1947, did Lourdes Cuenco, [25] upon the instruction of Mariano,
have it surveyed and subdivided into six almost equal portions -- 903-A-1 to 903-A-6. Each portion was
specifically allocated to each of the six children of Mariano with his first wife. [26]
Third, Miguel readily surrendered his Certificate of Title [27] and interposed no objection[28] to the
subdivision and the allocation of the property to Marianos six children, including Concepcion.
Fourth, Marianos children, including Concepcion, [29] were the ones who shouldered the expenses
incurred for the subdivision of the property.
Fifth, after the subdivision of the property, Marianos children -- including Concepcion [30] -- took
possession of their respective portions thereof.
Sixth, the legal titles to five portions of the property were transferred via a gratuitous deed of
conveyance to Marianos five children, following the allocations specified in the subdivision plan prepared
for Lourdes Cuenco.[31]
With respect to Lot 903-A-6 in particular, the existence of Concepcions equitable ownership thereof is
bolstered, not just by the above circumstances, but also by the fact that respondent fenced the portion
allocated to her and planted trees thereon.[32]
More significantly, she also paid real property taxes on Lot 903-A-6 yearly, from 1956 until 1969 [33] -the year when she was dispossessed of the property. Although tax declarations or realty tax payments of
property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the
concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual
or at least constructive possession.[34] Such realty tax payments constitute proof that the holder has a
claim of title over the property.
Tellingly, Miguel started paying real property taxes on Lot 903-A-6 only on April 4, 1964, [35] after the
death of Mariano.[36] This fact shows that it was only in that year that he was emboldened to claim the
property as his own and to stop recognizing Marianos, and subsequently Concepcions, ownership rights
over it. It was only by then that the one who could have easily refuted his claim had already been silenced
by death. Such a situation cannot be permitted to arise, as will be explained below.
Estoppel
From the time Lot 903-A was subdivided and Marianos six children -- including Concepcion -- took
possession as owners of their respective portions, no whimper of protest from petitioner was heard until
1963. By his acts as well as by his omissions, Miguel led Mariano and the latters heirs, including
Concepcion, to believe that Petitioner Cuenco respected the ownership rights of respondent over Lot 903A-6. That Mariano acted and relied on Miguels tacit recognition of his ownership thereof is evident from
his will, executed in 1963, which states:
I hereby make it known and declare that x x x all properties which my first wife and I had brought to, or
acquired during our marriage, or which I had acquired during the years I was a widower including jewelry,
war damage compensation, and two other lots also located at Cebu City, one near the South-Western
University and the other near the Cebu provincial capitol, which were my attorneys fees from
my clients, Victoria Rallos and Zoilo Solon, respectively have already long been disposed of, and
distributed by me, through my brother, Miguel, to all my said six children in the first
marriage.[37] (emphasis supplied)
Indeed, as early as 1947, long before Mariano made his will in 1963, Lot 903-A -- situated along Juana
Osmea Extension, Kamputhaw, Cebu City, [38] near the Cebu Provincial Capitol -- had been subdivided and
distributed to his six children in his first marriage. Having induced him and his heirs to believe that Lot
18
903-A-6 had already been distributed to Concepcion as her own, petitioner is estopped from asserting the
contrary and claiming ownership thereof.
The principle of estoppel in pais applies when -- by ones acts, representations, admissions, or silence
when there is a need to speak out -- one, intentionally or through culpable negligence, induces another to
believe certain facts to exist; and the latter rightfully relies and acts on such belief, so as to be prejudiced
if the former is permitted to deny the existence of those facts. [39]
Third Issue:
Laches
Petitioner claims that respondents action is already barred by laches.
We are not persuaded. Laches is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to it has either abandoned or declined to assert it. [40] In
the present case, respondent has persistently asserted her right to Lot 903-A-6 against petitioner.
Concepcion was in possession as owner of the property from 1949 to 1969. [41] When Miguel took steps
to have it separately titled in his name, despite the fact that she had the owners duplicate copy of TCT No.
RT-6999 -- the title covering the entire Lot 903-A -- she had her adverse claim annotated on the title in
1967. When petitioner ousted her from her possession of the lot by tearing down her wire fence in 1969,
[42]
she commenced the present action on September 19, 1970, [43] to protect and assert her rights to the
property. We find that she cannot be held guilty of laches, as she did not sleep on her rights.
Fourth Issue:
Expunging of Testimony
Petitioner Cuyegkeng questions the expunging of the direct testimony of Miguel Cuenco. Respondent
points out that this issue was not raised before the CA. Neither had petitioner asked the trial court to
reconsider its Order expunging the testimony. Hence, this issue cannot for the first time be raised at this
point of the appeal. Issues, arguments and errors not adequately and seriously brought below cannot be
raised for the first time on appeal.[44] Basic considerations of due process impel this rule.[45]
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against petitioner.
THE ESTATE OF PEDRO C. GONZALES

and HEIRS OF PEDRO C. GONZALES,
Petitioners,
- versus THE HEIRS OF MARCOS PEREZ,
Respondents.
G.R. No. 169681

Present:
QUISUMBING,* J.,
CARPIO, J., Chairperson,
CHICO-NAZARIO,
PERALTA, and
ABAD,** JJ.
Promulgated:
November 5, 2009
ECISION
PERALTA, J.:
This resolves the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court
praying for the nullification of the Decision [1] of the Court of Appeals (CA) dated April 25, 2005 in CA-G.R.
CV No. 60998 and its Resolution [2] dated September 14, 2005. The challenged Decision of the CA reversed
19
and set aside the judgment of the Regional Trial Court (RTC) of Marikina City, Branch 272 in Civil Case No.
94-57-MK while its assailed Resolution denied petitioners' motion for reconsideration.
The antecedent facts are as follows:
The former Municipality of Marikina in the Province of Rizal (now City of Marikina, Metro Manila) used
to own a parcel of land located in Barrio Concepcion of the said municipality covered by Original Certificate
of Title (OCT) No. 629 [3] of the Register of Deeds of Rizal. The said property was subdivided into three (3)
lots, namely, lots A, B and C, per subdivision plan (LRC) Psd-4571. [4]
On January 14, 1966, the Municipal Council of Marikina passed Resolution No. 9, series of 1966
which authorized the sale through public bidding of Municipal Lots A and C.
On April 25, 1966, a public bidding was conducted wherein Pedro Gonzales was the highest bidder.
Two days thereafter, or on April 27, 1966, the Municipal Council of Marikina issued Resolution No. 75
accepting the bid of Pedro. Thereafter, a deed of sale was executed in favor of the latter which was later
forwarded to the Provincial Governor of Rizal for his approval. The Governor, however, did not act upon the
said deed.
Sometime in September 1966, Pedro sold to Marcos Perez a portion of Lot C, denominated as Lot C3, which contains an area of 375 square meters. The contract of sale was embodied in a Deed of
Sale[5] which, however, was not notarized. To segregate the subject property from the remaining portions
of Lot C, Marcos had the same surveyed wherein a technical description of the subject lot was prepared by
a surveyor.[6]
Subsequently, Pedro and Marcos died.
On February 7, 1992, the Municipality of Marikina, through its then Mayor Rodolfo Valentino,
executed a Deed of Absolute Transfer of Real Property over Lots A and C in favor of the Estate of Pedro C.
Gonzales.[7] On June 25, 1992, Transfer Certificate of Title (TCT) No. 223361, covering Lot C, was issued in
the name of the said estate.[8]
Subsequently, herein petitioners executed an extra-judicial partition wherein Lot C was subdivided
into three lots. As a result of the subdivision, new titles were issued wherein the 370-square-meter portion
of Lot C-3 is now denominated as Lot C-1 and is covered by TCT No. 244447 [9] and the remaining 5 square
meters of the subject lot (Lot C-3) now forms a portion of another lot denominated as Lot C-2 and is now
covered by TCT No. 244448.[10]
On October 1, 1992, herein respondents sent a demand letter to one of herein petitioners asking for
the reconveyance of the subject property. [11] However, petitioners refused to reconvey the said lot. As a
consequence, respondents filed an action for Annulment and/or Rescission of Deed of Absolute Transfer of
Real Property x x x and for Reconveyance with Damages.[12]
On February 2, 1998, the RTC rendered its Decision with the following dispositive portion:
WHEREFORE, foregoing premises, judgment is hereby rendered as follows:
20
1.
2.
3.
DISMISSING the complaint subject of the case in caption for lack of merit;
DECLARING VALID both Transfer Certificates of Title Nos. 244447 and 244448
issued by the Register of Deeds of Marikina;
DISMISSING the defendants' counterclaim.
No pronouncement as to costs.
SO ORDERED.[13]
The RTC ruled that since the Deed of Sale executed between Pedro and Marcos was not notarized,
the same is considered void and of no effect. In addition, the trial court also held that Pedro became the
owner of the subject lot only on February 7, 1992; as such, he could not have lawfully transferred
ownership thereof to Marcos in 1966.
Herein respondents appealed the RTC Decision to the CA contending that the RTC erred in relying
only on Articles 1356 and 1358 of the Civil Code. Instead, respondents assert that the RTC should also
have applied the provisions of Articles 1357, 1403 (2), 1405 and 1406 of the same Code.
On April 25, 2005, the CA rendered its presently assailed Decision disposing as follows:
WHEREFORE, premises considered, the instant Appeal is hereby GRANTED and the
assailed Decision dated February 2, 1998 isREVERSED and SET ASIDE. TCT No. 244447 and
partially, TCT No. 244448, with respect to five (5) square meters, are declared NULL and VOID
and defendants-appellees are ordered to reconvey in favor of the plaintiffs-appellants the
subject property covered by said Transfer Certificates of Title (five square meters only with
respect to TCT No. 244448). The trial court's dismissal of defendants-appellees' counterclaim
is, however,AFFIRMED.
SO ORDERED.[14]
The CA held that a sale of real property, though not consigned in a public instrument, is nevertheless
valid and binding among the parties and that the form required in Article 1358 of the Civil Code is not
essential to the validity or enforceability of the transactions but only for convenience.
Petitioners filed a motion for reconsideration, but the same was denied by the CA in its Resolution of
September 14, 2005 on the ground that the said motion was filed out of time.
Hence, the present petition with the following assignment of errors:
WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, ITS FINDINGS OF FACT
RUN COUNTER TO THOSE OF THE TRIAL COURT,
THUS, IT HAS DECIDED THE
CASE IN A WAY NOT IN ACCORD WITH LAW AND JURISPRUDENCE.
WITH DUE RESPECT, THE ALLEGED DEED OF SALE IS SUSPECT AND RIDDEN WITH
INCONSISTENCIES. IN FACT, THE LOWER COURT HELD THAT THE DEED OF SALE FAILED
TO MEET THE SOLEMNITY REQUIREMENTS PROVIDED UNDER THE LAW FOR ITS
VALIDITY.
WITH DUE RESPECT, THE COURT OF APPEALS ERRED IN DISREGARDING THE FINDINGS
OF FACT AND THE APPLICATION OF LAW BY THE REGIONAL TRIAL COURT THAT UNDER
THE PURPORTED DEED OF SALE THE VENDOR COULD NOT HAVE TRANSFERRED
OWNERSHIP.[15]
21
In their first and last assigned errors, petitioners contend that Marcos, who is respondents'
predecessor-in-interest, could not have legally bought the disputed parcel of land from petitioners'
predecessor-in-interest, Pedro, in September 1966 because, during that time, Pedro had not yet acquired
ownership of the subject lot. Petitioners' assertion is based on the premise that as of February 29, 1968,
the Deed of Sale between Pedro and the Municipality of Marikina was still subject to approval by the
Provincial Governor of Rizal, as required under Section 2196 of the Revised Administrative Code.
Considering that on the supposed date of sale in favor of Marcos, the requisite approval of the Provincial
Governor was not yet secured, petitioners conclude that Pedro could not be considered as the owner of the
subject property and, as such, he did not yet possess the right to transfer ownership thereof and, thus,
could not have lawfully sold the same to Marcos.
The Court does not agree.
Section 2196 of the Revised Administrative Code provides:
SECTION 2196. Execution of deeds. When the government of a municipality is a party
to a deed or an instrument which conveys real property or any interest therein or which
creates a lien upon the same, such deed or instrument shall be executed on behalf of the
municipal government by the mayor, upon resolution of the council, with the approval of the
governor.
In Municipality of Camiling v. Lopez,[16] the Court found occasion to expound on the nature and effect
of the provincial governor's power to approve contracts entered into by a municipal government as
provided for under Section 2196 of the Revised Administrative Code. The Court held, thus:
x x x The approval by the provincial governor of contracts entered into and executed by a
municipal council, as required in [S]ection 2196 of the Revised Administrative Code, is part of
the system of supervision that the provincial government exercises over the municipal
governments. It is not a prohibition against municipal councils entering into contracts
regarding municipal properties subject of municipal administration or control. It does not deny
the power, right or capacity of municipal councils to enter into such contracts; such power or
capacity is recognized. Only the exercise thereof is subject to supervision by approval or
disapproval, i.e., contracts entered in pursuance of the power would ordinarily be approved if
entered into in good faith and for the best interests of the municipality; they would be denied
approval if found illegal or unfavorable to public or municipal interest.The absence of the
approval, therefore, does not per se make the contracts null and void.[17]
This pronouncement was later reiterated in Pechueco Sons Company v. Provincial Board of Antique,
[18]
where the Court ruled more emphatically that:

In other words, as regards the municipal transactions specified in Section 2196 of the Revised
Administrative Code, the Provincial Governor has two courses of action to take either to
approve or disapprove the same. And since absence of such approval does not
necessarily render the contract entered into by the municipality null and void, the
transaction remains voidable until such time when by subsequent unfavorable
action of the governor, for reasons of public interest, the contract is thereby
invalidated.[19]
It is clear from the above-quoted pronouncements of the Court that, pending approval or disapproval
by the Provincial Governor of a contract entered into by a municipality which falls under the provisions of
Section 2196 of the Revised Administrative Code, such contract is considered voidable. In the instant
case, there is no showing that the contract of sale entered into between Pedro and the Municipality of
Marikina was ever acted upon by the Provincial Governor. Hence, consistent with the rulings enunciated
22
above, the subject contract should be considered voidable. Voidable or annullable contracts, before they
are set aside, are existent, valid, and binding, and are effective and obligatory between the parties. [20]
In the present case, since the contract was never annulled or set aside, it had the effect of
transferring ownership of the subject property to Pedro. Having lawfully acquired ownership of Lots A and
C, Pedro, in turn, had the full capacity to transfer ownership of these parcels of land or parts
thereof, including the subject property which comprises a portion of Lot C.
It is wrong for petitioners to argue that it was only on June 25, 1992, when TCT No. 223361 covering
Lot C was issued in the name of the estate of Pedro, that he became the owner thereof.
Article 1496 of the Civil Code provides:
The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the vendee.
In conjunction with the above-stated provision, Article 1497 of the Civil Code states that:
The thing sold shall be understood as delivered when it is placed in the control and
possession of the vendee.
In the present case, there is no dispute that Pedro took control and possession of the said lot
immediately after his bid was accepted by the Municipal Government of Marikina. In fact, herein
petitioners, in their Answer with Compulsory Counterclaim admit that both Pedro and Marcos, together
with their respective heirs, were already occupying the subject property even before the same was sold to
Pedro and that, after buying the same, Pedro allowed Marcos and his family to stay thereon. [21] This only
shows that upon perfection of the contract of sale between the Municipality of Marikina and Pedro, the
latter acquired ownership of the subject property by means of delivery of the same to him.
Hence, the issuance of TCT No. 223361, as well as the execution of the Deed of Absolute Transfer of
Real Property on February 7, 1992 by the Municipal Mayor of Marikina, could not be considered as the
operative acts which transferred ownership of Lot C to Pedro. Pedro already acquired ownership of the
subject property as early as 1966 when the same was delivered to him by the Municipality of Marikina, and
the execution of the Deed of Absolute Transfer of Real Property as well as the consequent issuance of TCT
No. 223316 are simply a confirmation of such ownership.
It may not be amiss to point out at this juncture that the Deed of Absolute Transfer of Real Property
executed by the Mayor of Marikina was no longer subject to approval by the Provincial Governor of Rizal
because Marikina already became part of Metro Manila on November 7, 1975. [22] On December 8, 1996,
Marikina became a chartered city.[23]
In their second assignment of error, petitioners question the authenticity and due execution of the
Deed of Sale executed by Pedro in favor of Marcos. Petitioners also argue that even assuming that Pedro
actually executed the subject Deed of Sale, the same is not valid because it was not notarized as required
under the provisions of Articles 1403 and 1358 of the Civil Code.
The Court is not persuaded.
23
The RTC, in its abbreviated discussion of the questions raised before it, did not touch on the issue of
whether the Deed of Sale between Pedro and Marcos is authentic and duly executed. However, the CA, in
its presently assailed Decision, adequately discussed this issue and ruled as follows:
x x x In the present case, We are convinced that plaintiffs-appellants [herein respondents]
have substantially proven that Pedro, indeed, sold the subject property to Marcos
for P9,378.75. The fact that no receipt was presented to prove actual payment of
consideration, in itself, the absence of receipts, or any proof of consideration, would not be
conclusive since consideration is always presumed. Likewise, the categorical statement in the
trial court of Manuel P. Bernardo, one of the witnesses in the Deed of Sale, that he himself
saw Pedro sign such Deed lends credence. This was corroborated by another witness,
Guillermo Flores. Although the defendants-appellees [herein petitioners] are assailing the
genuineness of the signatures of their parents on the said Deed, they presented no evidence
of the genuine signatures of their parents as would give this Court a chance to scrutinize and
compare it with the assailed signatures. Bare allegations, unsubstantiated by evidence, are
not equivalent to proof under our Rules.[24]
In the instant petition, petitioners would have us review the factual determinations of the CA.
However, settled is the rule that the Court is not a trier of facts and only questions of law are the proper
subject of a petition for review on certiorari in this Court.[25] While there are exceptions to this rule, [26] the
Court finds that the instant case does not fall under any of them. Hence, the Court sees no reason to
disturb the findings of the CA, which are supported by evidence on record.
On the question of whether the
subject Deed of Sale is invalid on the ground that it does not
appear in a public document, Article 1358 of the same Code enumerates the acts and contracts that
should be embodied in a public document, to wit:
Art. 1358. The following must appear in a public document:
(1)
Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable
property; sales of real property or of an interest therein are governed by Articles
1403, No. 2 and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;
(3) The power to administer property, or any other power which has for its object an
act appearing or which should appear in a public document, or should prejudice a third
person; and
(4) The cession of actions or rights proceeding from an act appearing in a public
document.
All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles 1403, No. 2 and 1405.
On the other hand, pertinent portions of Article 1403 of the Civil Code provide as follows:
Art. 1403. The following contracts are unenforceable, unless they are ratified:
xxxx
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by
action, unless the same, or some note or memorandum thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a secondary evidence of its contents:
(a)
An agreement that by its terms is not to be performed within a year from the
making thereof;
24
xxxx
(e) An agreement for the leasing for a longer period than one year,
of real property or of an interest therein; x x x[27]
or for the sale
Under Article 1403(2), the sale of real property should be in writing and subscribed by the party
charged for it to be enforceable. [28] In the case before the Court, the Deed of Sale between Pedro and
Marcos is in writing and subscribed by Pedro and his wife Francisca; hence, it is enforceable under the
Statute of Frauds.
However, not having been subscribed and sworn to before a notary public, the Deed of Sale is not a
public document and, therefore, does not comply with Article 1358 of the Civil Code.
Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358
does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form
required under the said Article is not essential to the validity or enforceability of the transaction, but
merely for convenience.[29] The Court agrees with the CA in holding that a sale of real property, though not
consigned in a public instrument or formal writing, is, nevertheless, valid and binding among the parties,
for the time-honored rule is that even a verbal contract of sale of real estate produces legal effects
between the parties.[30] Stated differently, although a conveyance of land is not made in a public
document, it does not affect the validity of such conveyance. Article 1358 does not require the
accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but
only to insure its efficacy.[31] Thus, based on the foregoing, the Court finds that the CA did not err in ruling
that the contract of sale between Pedro and Marcos is valid and binding.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 60998 are AFFIRMED.
[G.R. No. 142441. November 10, 2004]

PEDRO BONGALON now substituted by FILIPINA BONGALON, petitioner, vs. COURT OF APPEALS,
CECILIO BONGALON and AMPARO BONGALON, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the Decision[2] dated 27 November 1992 of the Court of Appeals and its
Resolution dated 23 February 2000. The 27 November 1992 Decision reversed the Decision[3] dated 28
June 1991 of the Regional Trial Court, Branch 17, Tabaco, Albay (RTC) while the 23 February
2000 Resolution denied the motion for reconsideration.
The Facts
Pedro Bongalon, the late husband of petitioner Filipina Bongalon (petitioner), respondents Cecilio
Bongalon (Cecilio) and Amparo Bongalon (Amparo) and four [4] others are the children of the late Cirila
Bonga (Cirila) and Bernabe Bongalon (Bernabe). Cirila is one of the five children of Rosalia Buenaflor
(Rosalia) and Cornelio Bonga (Cornelio). The other children of Rosalia and Cornelio are Trinidad Bonga
Bobier (Trinidad), Jacoba Bonga Faustino (Jacoba), Emilio Bonga (Emilio) and Benito Bonga
(Benito). Jacoba had three children, namely, Conchita Faustino Base (Conchita), Catalina Faustino
Conlo (Catalina), and Leonardo Faustino (Leonardo). Emilio also had three children, namely, Teodora
Bonga Bien (Teodora), Francisca Bonga Camba (Francisca), and Maxima Bonga Diaz (Maxima). It
appears that Jacoba and Emilio predeceased their children. [5]
25
Rosalia was the owner of Lot No. 525-A in A. A. Berces St., Tabaco, Albay measuring 149 square meters
and covered by Original Certificate of Title No. RO-17402 (23825) (OCT No. RO-17402) issued in her
name. OCT No. RO-17402 was later cancelled and replaced by Transfer Certificate of Title No. T-67656
(TCT No. T-67656) also issued in Rosalias name. [6] Rosalia died intestate in 1940, survived by her
husband and five children.
On 26 July 1943, Trinidad, Conchita, and Teodora executed a Deed of Absolute Sale (Exhibit 2)
conveying to Cirila a part of Lot No. 525-A for P100. On the same day, Cirila, and again Trinidad,
Conchita, and Teodora, executed a Deed of Absolute Sale (Exhibit B) [8]conveying to Pedro Bongalon a
part of Lot No. 525-A also for P100. The same notary public notarized both deeds of sale on that same
day. On 22 February 1971, Cirila executed another Deed of Absolute Sale (22 February 1971 Deed
of Sale)[9] conveying Lot No. 525-A to Amparo for P4,500. Amparo subsequently declared Lot No. 525-A in
her name for tax purposes and paid the real estate taxes in 1977 and 1978. Even before the execution of
the 22 February 1971 Deed of Sale, Amparo and her family were already occupying a 32-square meter
portion of Lot No. 525-A where her house stands.[10]
[7]
Meanwhile, on 30 January 1979, Pedro Bongalon executed an Extrajudicial Settlement of Estate

(Extrajudicial Settlement) declaring that Cirila is the only heir of Rosalia and that he (Pedro Bongalon) is,
in turn, the only heir of Cirila. Based on this Extrajudicial Settlement, Pedro Bongalon secured the
cancellation of TCT No. T-67656 and obtained Transfer Certificate of Title No. T-67780 (TCT No. T-67780)
issued in his name.
In March 1988, Pedro Bongalon sued respondents in the RTC for Quieting of Title, Recovery of Portion
of Property and Damages. Pedro Bongalon alleged in his complaint that: (1) he is the registered owner
of Lot No. 525-A under TCT No. T-67780; (2) respondents occupied Lot No. 525-A through his tolerance; (3)
he had several times asked respondents to vacate Lot No. 525-A but they refused to do so; and (4)
respondents occupancy of Lot No. 525-A and their claim of ownership over the property cast a cloud over
his title. Pedro Bongalon prayed that the RTC declare his title free of any cloud and order respondents to
vacate Lot No. 525-A and pay him damages and litigation expenses. [11]
In their Answer with Counterclaim, respondents denied Pedro Bongalons allegations. Respondents
claimed that Pedro Bongalon fraudulently obtained TCT No. T-67780 by executing the Extrajudicial
Settlement. Amparo claimed that on the contrary, she is the owner of Lot No. 525-A based on the 22
February 1971 Deed of Sale. As counterclaim, respondents sought the nullification of the Extrajudicial
Settlement and of TCT No. T-67780. Respondents also prayed for the award of damages and attorneys
fees.[12]
During the trial, Pedro Bongalon introduced in evidence other documents to prove his ownership
of Lot No. 525-A, such as (1) Exhibit B and (2) Conchitas Affidavit dated 22 May 1978 (Exhibit C)
[13]
confirming the sale under Exhibit B. The RTC admitted these documents in evidence over the objection
of respondents.
For their part, respondents also presented in evidence Exhibit 2 to prove that Cirila owned the entire
Lot No. 525-A which she later sold to Amparo in the 22 February 1971 Deed of Sale.
Before the RTC could render judgment, Amparo died and her surviving spouse and six children
substituted for her.[14]
The Trial Courts Ruling
On 28 June 1991, the RTC rendered judgment (RTC Decision) the dispositive portion of which
provides:
WHEREFORE, summing up the evidence, oral and documentary, presented by both parties, Judgment is
rendered for the plaintiff and against the defendants.
The Court orders, as it is hereby ordered, that the plaintiff is declared the rightful registered owner of the
land consisting of One Hundred Forty Nine (149) square meters, more or less, located at A. A. Berces St.,
Tabaco, Albay, under Transfer Certificate of Title No. T-67780, in the name of Pedro Bongalon, said title is
free from defect, flaw and cloud of doubt, therefore, indefeasible.
The defendants are likewise ordered to vacate and to deliver the portion of the land in question they have
occupied to the plaintiff peacefully. And to pay the costs proportionately. [15]
The RTC Decision reads:
From the documentary evidence adduced during the hearing by both parties, it appeared that the real
property/land in question was formerly and originally owned by Rosalia Buenaflor, covered by Original
Certificate of Title No.[RO-17402 (23825)], then to [T-]67656, then to [T-67780], containing an area of One
26
Hundred Forty Nine (149) square meters, more or less, located at then Taylor Street now A. A. Berces
Street, Tabaco, Albay. Rosalia Buenaflor married Cornelio Bonga and begot children, namely:
Cirila, Trinidad, Jacoba, Emilio and Benito, all surnamed Bonga. Daughter Cirila Bonga got married to
Bernabe Bongalon and begot seven (7) children, namely: Pedro, Cecilio, Amparo, Eleuteria and others, all
surnamed Bongalon.
On July 26, 1943, two (2) documents were executed over the same parcel of land, this in question (sic).
First document, Exhibit-2 defendants, Absolute Deed of Sale was executed and signed by vendors
Trinidad Bonga, Conchita Faustino, Teodora Bonga, heirs and children of Rosalia Buenaflor Bonga,
[conveying] a part of the property in question xxx in favor of vendee Cirila Bonga xxx. Said Absolute Deed
of Sale was notarized and acknowledged on July 26, 1943 by a notary public and entered as Doc. No. 2,
Page 15, Book No. 1, Series of 1943.
Second document, Exhibit B plaintiff, Absolute Deed of Sale was executed and signed by vendors
Trinidad Bonga, Cirila Bonga, Conchita B. Faustino (sic) and Teodora Bonga, heirs and children of Rosalia
Buenaflor Bonga, [conveying] a part of the property in question in favor of vendee Pedro Bongalon (son of
Cirila Bonga Bongalon), xxxx Said document was notarized and acknowledged on July 26, 1943 by a Notary
Public and entered as Doc. No. 2, Page No. 15, Book No. 1, Series of 1943.
The Exhibit-2 for the defendants and the Exhibit-B for the plaintiff, contained a handwritten insertion,
to wit, a part of and initialled, which is unclear, found in the first paragraph, later portion. Both
documents are (sic) prepared/executed/signed by the same persons/ signatories, acknowledged and
notarized by the same Notary Public, Zosimo R. Almonte. Both documents, Absolute Deed of Sale, printed
and expressed particular same boundaries and description of the whole area which is One Hundred Forty
Nine (149) square meters, more or less, but did not contain expressly the part/portion of said property
[sold].
Circumstances surrounding the execution of these two (2) documents is concluded (sic) and construed that
Exhibit-B for the plaintiff has to be given weight and effect. This, the entire area of 149 square meters,
more or less, is the subject of the sale as Cirila Bonga is now one of the four (4) vendors. Each vendor
shared or owned at least 37 square meters and 25 centimeters of this land in question, to be candid and
clear.
In possession of the Deed of Absolute Sale, vendee Pedro Bongalon applied, processed and managed to
have the ownership of said property transferred in his name by submitting an Affidavit of Confirmation, by
Conchita F. Base, one of the vendors, dated May 22, 1978 duly subscribed and sworn to by Notary Public
Julian C. Cargullo, entered as Doc. No. 92, Page No. 21, Book No. VII, Series of 1978 and an Extrajudicial
Settlement of Estate, this is a requirement. Finally, Transfer Certificate of Title No. T-67780 in the name of
Pedro Bongalon was issued on [January] 25, 1985. This is an indefeasible title of ownership in favor of the
plaintiff.
On February 22, 1971, again Cirila Bonga, vendor again (sic), executed and signed another Deed of
Absolute Sale, Exhibit-1 for the defendants, in favor of Amparo Bongalon Cortezano, vendee, married to
Atenogenes A. Cortezano of the same entire parcel of land in question of 149 square meters, more or less,
acknowledged and notarized by Notary Public Joel C. Atadero, entered as Doc. No. 1031, Page No. 77, Book
No. VII, Series of 1971. By virtue of this instrument, Cortezano, Amparo procured Tax Declaration No.
0020 in her name declaring the entire 149 square meters for taxation purposes for the year 1985 in her
name and where a 32 square meters of a house (sic) is constructed thereon.
Exhibit-1 for the defendants, Deed of Absolute Sale by vendor Cirila Bonga to the latters daughter
vendee Amparo Bonga Cortezano is defective having a flaw or cloud in the rights of an owner. She, Cirila
Bonga, is not the only owner of said land. Previously on July 26, 1943 said parcel of land was a subject of
Absolute Deed of Sale in favor of Pedro Bongalon, the brother of vendee of Exhibit-1 Amparo Bongalon
Cortezano, by the rightful owners/vendors of the land in question.
Yet it can be argued that the plaintiffs Extrajudicial Settlement of Estate is a defect, a minor one, but what
is controlling is Exhibit-B, Absolute Deed of Sale in his favor dated July 26, 1943, and the Affidavit of
Confirmation of Conchita F. Base.
xxxx
Considering the evidence, and with careful perusal of the same adduced by both parties at the hearing,
the Court honestly believes, so holds and is of the strong opinion, that the plaintiffs cause of action is
sufficiently impressed with merit supporting his claim of possession, as well as ownership of the land. [16]
Respondents appealed to the Court of Appeals.
The Court of Appeals Ruling
27
In its 27 November 1992 Decision, the Court of Appeals reversed the RTC Decision. The Court of
Appeals held:
PREDICATED on the evidence and the law in point, the appeal in this case is sufficiently impressed with
merit.
IN THE FIRST PLACE, the basis of the complaint filed by the plaintiff-appellee is that he acquired the
property in question by inheritance from his predecessors-in-interest and not by purchase. This fact is
shown by the Annotation xxx of the Extrajudicial Settlement of Estate xxx which was the supporting
document that authorized the cancellation of TCT No. T-67656 xxx in the name of the original registered
owner Rosalia Buenaflor and the issuance of TCT No. T-67780 in favor of and in the name of plaintiffappellee Pedro Bongalon. In other words, the Extrajudicial Settlement of Estate (which is by inheritance) is
the basis of both the complaint and the transfer of the certificate of title from the original owner to the
plaintiff-appellee.
SECONDLY, in the trial of the case, what was introduced in evidence were the Deed of Absolute Sale
(Exhibit B) and the Affidavit of Confirmation (Exhibit C), though these were never alleged in the
complaint. What was alleged in the complaint was the Extrajudicial Settlement of Estate xxx or the mode
of inheritance (sic). That is why, the defendants-appellants counsel vigorously objected of (sic) the
admission of Exhibit B and Exhibit C on the ground that no evidence can be introduced in support of
allegation not found in the pleadings xxx. Consequently, the trial court should not have admitted Exhibits
B and C as part of the evidence.
THIRDLY, the only ground upon which plaintiff-appellee can base his stand is the Deed of Absolute Sale
(Exh. B) and the Deed of Confirmation (Exh. C) after suppressing the presentation and submission of
xxx the Extrajudicial Settlement of Estate. Since Exhibit B and Exhibit C should not have been
considered or admitted because the same were not alleged in the complaint xxx, the only remaining issue
is TCT No. T-67780.
FOURTHLY, plaintiff-appellee Pedro Bongalon, as already stated, executed the Extrajudicial Settlement of
Estate xxx falsely alleging that the original registered owner Rosalia Buenaflor and husband were survived
by their only daughter Cirila Bonga Bongalon, mother of the plaintiff-appellee, when in fact Cirila Bonga
Bongalon was survived by her seven (7) children namely: Amparo, Cecilio, Eleuterio (sic), Jose, Gloria,
Anastacio and Pedro. The first two names are the defendants-appellants and the last one is the plaintiffappellee. Consequently, the Extrajudicial Settlement of Estate is tainted with fraud, brazen lies and grave
misrepresentation which the lower court recognized as a defect, though a minor one, in view of Exhibit B
and Exhibit C. It is inevitable that the trial court should have correctly nullified TCT No. T-67780 on the
aforecited grounds. For well-settled is the rule that when a party resorts to falsehood to advance his suit,
it is presumed that he knows perfectly well that his cause is groundless and this presumption affects the
whole mass of evidence presented by such party xxx.
AFTER a careful review of the entire evidence, We perceive no difficulties in sustaining the validity of
defendants-appellants claim or posture.
ACCORDINGLY, in the light of the foregoing disquisitions, the decision of the Court a quo is hereby
REVERSED and SET ASIDE and a new one is rendered dismissing the case, with costs against the plaintiffappellee.[17] (Capitalization and underlining in the original)
Pedro Bongalon sought reconsideration but the Court of Appeals denied his motion in its 23 February
2000 Resolution.[18]
Hence, this petition.[19]
The Issues
Petitioner raises the following issues for resolution:
I. WHETHER THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE DECISION OF THE
TRIAL COURT;
II. WHETHER THE DECISION OF THE COURT OF APPEALS IS IN ACCORD WITH THE FACTS,
EVIDENCE AND THE PERTINENT LAWS, PARTICULARLY THE PROVISIONS OF THE CIVIL CODE
ON SALE, POSSESSION AND OWNERSHIP.[20]
In their Comment, Cecilio and the heirs of Amparo reiterate their prayer to nullify TCT No. T- 67780 and
the Extrajudicial Settlement.
The Ruling of the Court
28
The petition is partly meritorious.

On the Admissibility of Exhibits B and C
It was error for the Court of Appeals to rule that the RTC should not have admitted in evidence Exhibits
B and C because Pedro Bongalon failed to allege these documents in his complaint. What was at issue
before the RTC, as raised in the pleadings filed by the parties, was the ownership of Lot No. 525-A. Pedro
Bongalon offered the pieces of evidence in question to support his claim of ownership over Lot No. 525A. The fact that Pedro Bongalon did not mention Exhibits B and C in his complaint is not a reason to rule
them inadmissible. While TCT No. T-67780 was Pedro Bongalons principal proof of ownership, it did not
preclude him from presenting other pieces of evidence to prove his claim. This is especially relevant
because of his testimony that he executed the Extrajudicial Settlement only because the Register of Deeds
of Albay required it for the issuance of TCT No. T-67780.[21]
The Basis and Extent of Pedro Bongalons
Interest in Lot No. 525-A
There is no dispute that Lot No. 525-A was Rosalias paraphernal property. Thus, when Rosalia died
intestate, she passed on this piece of property to her surviving spouse Cornelio and their five children,
namely, Cirila, Trinidad, Jacoba, Emilio, and Benito. These heirs inherited Lot No. 525-A in co-ownership, at
1/6 undivided share each.[22] After Cornelio died, his 1/6 undivided share passed to his surviving five
children per stirpes, thus increasing their undivided shares to 1/5 each. The 1/5 undivided share of
Jacoba, who apparently predeceased her children Conchita, Catalina, and Leonardo, passed to Jacobas
children as co-owners in equal shares. Likewise, the undivided 1/5 share of Emilio, who also apparently
predeceased his children Teodora, Francisca, and Maxima, passed to Emilios children as co-owners in
equal shares.
Under Exhibit 2, Trinidad, Teodora, and Conchita sold to Cirila a part of Lot No. 525-A on 26 July
1943.[23] Since these co-owners could alienate their undivided shares, [24] they sold under Exhibit 2 their
undivided shares in Lot No. 525-A to Cirila. Similarly, on the same day, Cirila (and again Trinidad, Teodora,
and Conchita), executed Exhibit B conveying to Pedro Bongalon a part of Lot No. 525-A. Thus, Cirila sold
to Pedro Bongalon her original 1/5 share and the combined undivided shares of Trinidad, Teodora and
Conchita she earlier acquired under Exhibit 2.[25] The participation of Trinidad, Teodora and Conchita in
Exhibit B, while superfluous (as they had earlier sold their undivided shares to Cirila), does not detract from
the validity of Exhibit B. In sum, Pedro Bongalons interest in Lot No. 525-A covers only the undivided
shares of Cirila, Trinidad, Teodora, and Conchita.
Thus, contrary to the RTC Decision, Pedro Bongalon did not acquire ownership of the entire Lot No.
525-A under Exhibit B. As the other co-owners, namely, the heirs of Benito Bongalon, and the other
children of Jacoba (Catalina and Leonardo) and Emilio (Francisca and Maxima) did not sign either Exhibit B
or Exhibit 2, they remained co-owners of Lot No. 525-A. While each co-owner has full ownership of his part
and may alienate it, the alienation affects only the portion which pertains to him in the division upon the
termination of the co-ownership.[26]
Neither can petitioner invoke Exhibit C to support her claim that Pedro Bongalon owns the entire Lot
No. 525-A. Conchita stated in that document that all the children and descendants of Rosalia (except for
Cirila)[27] sold their respective undivided shares to Pedro Bongalon under Exhibit B. This statement,
however, is obviously false since only Cirila, Trinidad, Teodora and Conchita signed Exhibit B. The other
co-owners of Lot No. 525-A who did not affix their signatures in such document did not sell their shares to
Pedro Bongalon.
On Whether the 22 February 1971 Deed
of Sale Casts a Cloud on Pedro Bongalons Title
A cloud on title to real property or any interest therein is any instrument, record, claim, encumbrance
or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title. [28] The Court finds that the 22 February 1971 Deed
of Sale casts a cloud on Pedro Bongalons interest over Lot No. 525-A. While apparently valid, the 22
February 1971Deed of Sale is in fact void and prejudicial to the interest of Pedro Bongalon and his heirs.
This document purports to show that Amparo was the owner of such property when in fact she was not.
This document is void because at the time of its execution, Cirila had no more interest to sell in Lot No.
525-A because she had sold all her interest in that property to Pedro Bongalon in 1943 under Exhibit B.
Thus, Cirilas other children, including Amparo and Cecilio, cannot claim any interest over Lot No. 525-A,
either by contract, in the case of Amparo, or by hereditary rights, in the case of Cecilio. Amparos
subsequent declaration of Lot No. 525-A under her name for tax purposes (and her payment of the real
estate taxes in 1977 and 1978) did not change her status as a stranger to that property. Cecilio and the
29
heirs of Amparo have no right to remain in Lot No. 525-A much less construct improvements on that
property.
On the Validity of the Extrajudicial Settlement
and of TCT No. T-67780
Respondents squarely raised in the RTC and in the Court of Appeals the issue of the validity of the
Extrajudicial Settlement and of TCT No. T-67780. It was thus incumbent upon these courts to resolve this
issue. The RTC failed to do so. On the other hand, the Court of Appeals stated in its 27 November
1992 Decision that the Extrajudicial Settlement contained material misrepresentations which nullified TCT
No. T-67780. However, the Court of Appeals inexplicably failed to make a ruling on the status of these two
documents in the dispositive portion of its ruling. This is error. Having taken cognizance of an action for
quieting of title, both courts should have adjust[ed] all equities of all the parties to the action and
determine[d] the status of all controverted claims to or against the property. [29]
There is no question that Pedro Bongalon falsely stated in the Extrajudicial Settlement that Cirila was
the only heir of Rosalia and that he (Pedro Bongalon), in turn, was the sole heir of Cirila. As the Court of
Appeals correctly noted, this is not a minor defect but in fact renders the document void. Consequently,
TCT No. T-67780, which the Register of Deeds of Albay issued based on the Extrajudicial Settlement, must
be cancelled. In Ramirez v. CA,[30] also involving a case for quieting of title, this Court annulled several
Transfer Certificates of Title on the ground that they were issued based on void documents.
The cancellation of the Extrajudicial Settlement and TCT No. T-67780 does not deprive Pedro Bongalon
or his heirs of the right to maintain this action for quieting of title. Under Article 477 of the Civil Code, it is
sufficient that the plaintiff has legal or equitable title to or interest in the real property which is the subject
matter of the action. Pedro Bongalons acquisition of the shares of Cirila, Trinidad, Conchita, and Teodora
vested him with the necessary legal interest over Lot No. 525-A.
WHEREFORE, we GRANT the petition in part. We SET ASIDE the Decision dated 27 November
1992 and the Resolution dated 23 February 2000 of the Court of Appeals. We enter a new judgment as
follows:
(1) The Deed of Sale dated 22 February 1971 and the Deed of Extrajudicial Settlement dated 30
January 1979 are ANNULLED.
(2) Transfer Certificate of Title No. T-67780 is CANCELLED. The Register of Deeds of Albay is
ordered to restore Transfer Certificate of Title No. T-67656 in the name of Rosalia Buenaflor,
without prejudice to the issuance of another Transfer Certificate of Title in the name of Pedro
Bongalon and the other co-owners of Lot No. 525-A, namely, Benito Bongalon, Catalina
Faustino Conlo, Leonardo Faustino, Francisca Bonga Camba, and Maxima Bonga Diaz.
(3) Respondent Cecilio Bongalon and the heirs of Amparo Bongalon are ordered to vacate Lot No.
525-A and to remove all the improvements they have constructed on Lot No. 525-A.
SO ORDERED.
J. CASIM
INC.,
CONSTRUCTION
SUPPLIES,
G.R. No. 168655
Petitioner,
-versusREGISTRAR OF DEEDS OF LAS PIAS,

Respondent.
INTESTATE ESTATE OF BRUNEO F. CASIM,
(Purported) Intervenor.
Present:
CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:
July 2, 2010
x------------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:
30
This is a petition for review under Rule 45 of the Rules of Court, taken directly on a pure question of
law from the April 14, 2005 Resolution [1] and June 24, 2005 Order[2] issued by the Regional Trial Court (RTC)
of Las Pias City, Branch 253 in Civil Case No. LP-04-0071 [3] one for cancellation of notice of lis
pendens. The assailed Resolution dismissed for lack of jurisdiction the petition filed by J. Casim
Construction Supplies Inc. for cancellation of notice of lis pendens annotated on its certificate of title,
whereas the assailed Order denied reconsideration.
The facts follow.
Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation [4] in
whose name Transfer Certificate of Title (TCT) No. 49936, [5] covering a 10,715-square meter land was
registered. Sometime in 1982, petitioner acquired the covered property by virtue of a Deed of Absolute
Sale[6] and as a result the mother title, TCT No. 30459 was cancelled and TCT No. 49936 was issued in its
stead.[7]
On March 22, 2004, petitioner filed with the RTC of Las Pias City, Branch 253 an original petition for
the cancellation of the notice of lis pendens, as well as of all the other entries of involuntary encumbrances
annotated on the original copy of TCT No. 49936. Invoking the inherent power of the trial court to grant
relief according to the petition, petitioner prayed that the notice of lis pendens as well as all the other
annotations on the said title be cancelled. Petitioner claimed that its owners duplicate copy of the TCT
was clean at the time of its delivery and that it was surprised to learn later on that the original copy of its
TCT, on file with the Register of Deeds, contained several entries which all signified that the covered
property had been subjected to various claims. The subject notice of lis pendens is one of such entries.
[8]
The notations appearing on the titles memorandum of encumbrances are as follows:

Entry No. 81-8334/T-30459 ADVERSE CLAIM In an affidavit duly subscribed and sworn to,
BRUNO F. CASIM claims, among other things, that he has the right and interest over the
property described herein in accordance with Doc. No. 336; Page No. 69; Book No. 1; s. of
1981 of Not. Pub. of Makati, M.M., Romarie G. Villonco, dated August 4, 1981.
Date of inscription Aug. 5, 1981 2:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds
Entry No. 82-4676/T-49936 CANCELLATION OF ADVERSE CLAIM inscribed hereon under
Entry No. 81-8334/T-30459 in accordance with Doc. No. 247; Page 50; Book No. CXLI; s. of
1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.
Date of inscription April 21, 1982 8:40 a.m.
Entry No. 82-4678/T-49936 AFFIDAVIT In accordance with the affidavit duly executed by
the herein registered owners, this title is hereby cancelled and in lieu thereof TCT No.
49936/T-228 has been issued in accordance with Doc. No. 249; Page No. 80; Book No. CXLI;
s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.
Date of inscription April 21, 1982 8:44 a.m.
Entry No. 81-12423/T-30459 NOTICE OF LIS PENDENS: By virtue of the notice of Lis
Pendens presented and filed by CESAR P. MANALAYSAY, counsel for the plaintiff, notice is
hereby given that a petition for review has been commenced and now pending in the Court
of First Instance of Rizal, Branch XXIX, Pasay, M.M, in Civil Case No. LP-9438-P, BRUNEO F.
CASIM, Plaintiff, vs. SPS. JESUS A. CASIM & MARGARITA CHAVEZ and Sps. Urbano Nobleza
and Cristita J. Nobleza, and Filomena C. Antonio, Defendants, involving the property
described herein.
Date of the instrument - Sept. 17, 1981
Date of the inscription - Sept. 18, 1981 - 3:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds [9]
31
To justify the cancellation, petitioner alleged that the notice of lis pendens, in particular, was a
forgery judging from the inconsistencies in the inscribers signature as well as from the fact that the notice
was entered non-chronologically, that is, the date thereof is much earlier than that of the preceding
entry. In this regard, it noted the lack of any transaction record on file with the Register of Deeds that
would support the notice of lis pendens annotation.[10]
Petitioner also stated that while Section 59 of Presidential Decree (P.D.) No. 1529 requires the carryover of subsisting encumbrances in the new issuances of TCTs, petitioners duplicate copy of the title did
not contain any such carry-over, which means that it was an innocent purchaser for value, especially since
it was never a party to the civil case referred to in the notice of lis pendens. Lastly, it alludes to the
indefeasibility of its title despite the fact that the mother title, TCT No. 30459, might have suffered from
certain defects and constraints.[11]
The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant case
and filed a Comment/Opposition[12] in which it maintained that the RTC of Las Pias did not have jurisdiction
over the present action, because the matter of canceling a notice of lis pendens lies within the jurisdiction
of the court before which the main action referred to in the notice is pending. In this regard, it emphasized
that the case referred to in the said notice had already attained finality as the Supreme Court had issued
an entry of judgment therein and that the RTC of Makati City had ordered execution in that case. [13] It cited
the lack of legal basis for the petition in that nothing in the allegations hints at any of the legal grounds for
the cancellation of notice of lis pendens.[14] And, as opposed to petitioners claim that there was no carryover of encumbrances made in TCT No. 49936 from the mother title TCT No. 30459, the latter would show
that it also had the same inscriptions as those found in TCT No. 49936 only that they were entered in the
original copy on file with the Register of Deeds. Also, as per Certification[15] issued by the Register of
Deeds, petitioners claim of lack of transaction record could not stand, because the said certification stated
merely that the corresponding transaction record could no longer be retrieved and might, therefore, be
considered as either lost or destroyed.
On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to
dismiss the petition and declared that the action must have been filed before the same court and in the
same action in relation to which the annotation of the notice of lis pendens had been sought. Anent the
allegation that the entries in the TCT were forged, the trial court pointed out that not only did petitioner
resort to the wrong forum to determine the existence of forgery, but also that forgery could not be
presumed merely from the alleged non-chronological entries in the TCT but instead must be positively
proved. In this connection, the trial court noted petitioners failure to name exactly who had committed
the forgery, as well as the lack of evidence on which the allegation could be based. [16] The petition was
disposed of as follows:
IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED.
SO ORDERED.[17]
Petitioner moved for reconsideration,[18] but it was denied in the trial courts June 24, 2005 Order. [19]
Now, raising the purely legal question of whether the RTC of Las Pias City, Branch 253 has
jurisdiction in an original action to cancel the notice of lis pendens annotated on the subject title as an
incident in a previous case, petitioner, in this present petition, ascribes error to the trial court in dismissing
32
its petition for cancellation. An action for cancellation of notice of lis pendens,petitioner believes, is not
always ancillary to an existing main action because a trial court has the inherent power to cause such
cancellation, especially in this case that petitioner was never a party to the litigation to which the notice
of lis pendens relates.[20] Petitioner further posits that the trial court has committed an error in declining to
rule on the allegation of forgery, especially since there is no transaction record on file with the Register of
Deeds relative to said entries. It likewise points out that granting the notice of lis pendens has been
properly annotated on the title, the fact that its owners duplicate title is clean suggests that it was never a
party to the civil case referred to in the notice.[21] Finally, petitioner posits that TCT No. 49936 is
indefeasible and holds it free from any liens and encumbrances which its mother title, TCT No. 30459,
might have suffered.[22]
The Intestate Estate of Bruneo F. Casim (intervenor), in its Comment on the present petition,
reiterates that the court a quodoes not have jurisdiction to order the cancellation of the subject notice
of lis pendens because it is only the court exercising jurisdiction over the property which may order the
same that is, the court having jurisdiction over the main action in relation to which the registration of the
notice has been sought. Also, it notes that even on the assumption that the trial court had such
jurisdiction, the petition for cancellation still has no legal basis as petitioner failed to establish the grounds
therefor. Also, the subject notice of lis pendens was validly carried over to TCT No. 49936 from the mother
title, TCT No. 30459.
In its Reply,[23] petitioner, in a semantic slur, dealt primarily with the supposed inconsistencies in
intervenors arguments. Yet the core of its contention is that the non-chronological annotation of the notice
stands to be the best evidence of forgery. From this, it advances the notion that forgery of the notice of lis
pendens suffices as a ground for the cancellation thereof which may be availed of in an independent action
by the aggrieved party.
The petition is utterly unmeritorious.
Lis pendens which literally means pending suit refers to the jurisdiction, power or control which
a court acquires over the property involved in a suit, pending the continuance of the action, and until final
judgment.[24] Founded upon public policy and necessity, lis pendens is intended to keep the properties in
litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the
judgment or decree by subsequent alienation.[25] Its notice is an announcement to the whole world that a
particular property is in litigation and serves as a warning that one who acquires an interest over said
property does so at his own risk, or that he gambles on the result of the litigation over said property. [26]
A notice of lis pendens, once duly registered, may be cancelled by the trial court before which the
action involving the property is pending. This power is said to be inherent in the trial court and is exercised
only under express provisions of law. [27] Accordingly, Section 14, Rule 13 of the 1997 Rules of Civil
Procedure authorizes the trial court to cancel a notice of lis pendenswhere it is properly shown that the
purpose of its annotation is for molesting the adverse party, or that it is not necessary to protect the rights
of the party who caused it to be annotated. Be that as it may, the power to cancel a notice of lis pendens is
exercised only under exceptional circumstances, such as: where such circumstances are imputable to the
party who caused the annotation; where the litigation was unduly prolonged to the prejudice of the other
party because of several continuances procured by petitioner; where the case which is the basis for the lis
pendens notation was dismissed for non prosequitur on the part of the plaintiff; or where judgment was
33
rendered against the party who caused such a notation. In such instances, said notice is deemed ipso
facto cancelled.[28]
In theorizing that the RTC of Las Pias City, Branch 253 has the inherent power to cancel the notice
of lis pendens that was incidentally registered in relation to Civil Case No. 2137, a case which had been
decided by the RTC of Makati City, Branch 62 and affirmed by the Supreme Court on appeal, petitioner
advocates that the cancellation of such a notice is not always ancillary to a main action.
The argument fails.
From the available records, it appears that the subject notice of lis pendens had been recorded at
the instance of Bruneo F. Casim (Bruneo) in relation to Civil Case No. 2137 [29] one for annulment of sale
and recovery of real property which he filed before the RTC of Makati City, Branch 62 against the
spouses
Jesus
and
Margarita
Casim,
predecessors-in-interest
and
stockholders
of
petitioner
corporation. That case involved the property subject of the present case, then covered by TCT No. 30459.
At the close of the trial on the merits therein, the RTC of Makati rendered a decision adverse to Bruneo and
dismissed the complaint for lack of merit.[30] Aggrieved, Bruneo lodged an appeal with the Court of
Appeals, docketed as CA-G.R. CV No. 54204, which reversed and set aside the trial courts decision.
[31]
Expectedly, the spouses Jesus and Margarita Casim elevated the case to the Supreme Court, docketed
as G.R. No. 151957, but their appeal was dismissed for being filed out of time. [32]
A necessary incident of registering a notice of lis pendens is that the property covered thereby is
effectively placed, until the litigation attains finality, under the power and control of the court having
jurisdiction over the case to which the notice relates. [33] In this sense, parties dealing with the given
property are charged with the knowledge of the existence of the action and are deemed to take the
property subject to the outcome of the litigation. [34] It is also in this sense that the power possessed by a
trial court to cancel the notice of lis pendens is said to be inherent as the same is merely ancillary to the
main action.[35]
Thus, in Vda. de Kilayko v. Judge Tengco,[36] Heirs of Maria Marasigan v. Intermediate Appellate
Court[37] andTanchoco v. Aquino,[38] it was held that the precautionary notice of lis pendens may be ordered
cancelled at any time by the court having jurisdiction over the main action inasmuch as the same is merely
an
incident
to
the
said
action.
The
pronouncement
in Heirs
of
Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of Appeals,
[39]
Eugenio
Lopez,
Sr.
v.
is equally instructive
The notice of lis pendens x x x is ordinarily recorded without the intervention of the
court where the action is pending. The notice is but an incident in an action, an extrajudicial
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. 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. x x x [40]
Clearly, the action for cancellation of the notice of lis pendens in this case must have been filed not
before the court a quo via an original action but rather, before the RTC of Makati City, Branch 62 as an
incident of the annulment case in relation to which its registration was sought. Thus, it is the latter court
34
that has jurisdiction over the main case referred to in the notice and it is that same court which exercises
power and control over the real property subject of the notice.
But even so, the petition could no longer be expected to pursue before the proper forum inasmuch
as the decision rendered in the annulment case has already attained finality before both the Court of
Appeals and the Supreme Court on the appellate level, unless of course there exists substantial and
genuine claims against the parties relative to the main case subject of the notice of lis pendens.[41] There
is none in this case. It is thus well to note that the precautionary notice that has been registered relative
to the annulment case then pending before the RTC of Makati City, Branch 62 has served its purpose. With
the finality of the decision therein on appeal, the notice has already been rendered functus officio. The
rights of the parties, as well as of their successors-in-interest, petitioner included, in relation to the subject
property, are hence to be decided according the said final decision.
To be sure, petitioner is not altogether precluded from pursuing a specific remedy, only that the
suitable course of action legally available is not judicial but rather administrative. Section 77 of P.D. No.
1529 provides the appropriate measure to have a notice of lis pendens cancelled out from the title, that is
by presenting to the Register of Deeds, after finality of the judgment rendered in the main action, a
certificate executed by the clerk of court before which the main action was pending to the effect that the
case has already been finally decided by the court, stating the manner of the disposal thereof. Section 77
materially states:
SEC. 77. Cancellation of lis pendens. Before final judgment, a notice of lis
pendens may be cancelled upon order of the court, after proper showing that the notice is
for the purpose of molesting the adverse party, or that it is not necessary to protect the
rights of the party who caused it to be registered. It may also be cancelled by the Register
of Deeds upon verified petition of the party who caused the registration thereof.
At any time after final judgment in favor of the defendant, or other disposition of
the action such as to terminate finally all rights of the plaintiff in and to the land
and/or buildings involved, in any case in which a memorandum or notice of lis
pendens has been registered as provided in the preceding section, the notice
of lis pendens shall be deemed cancelled upon the registration of a certificate of
the clerk of court in which the action or proceeding was pending stating the
manner of disposal thereof. [42]
Lastly, petitioner tends to make an issue out of the fact that while the original TCT on file with the
Register of Deeds does contain the annotations and notice referred to in this petition, its owners duplicate
copy of the title nevertheless does not reflect the same non-chronological inscriptions. From this,
petitioner submits its puerile argument that the said annotations appearing on the original copy of the TCT
are all a forgery, and goes on to assert the indefeasibility of its Torrens title as well as its supposed status
as an innocent purchaser for value in good faith. Yet we decline to rule on these assumptions principally
because they raise matters that call for factual determination which certainly are beyond the competence
of the Court to dispose of in this petition.
All told, we find that the RTC of Las Pias City, Branch 253 has committed no reversible error in
issuing the assailed Resolution and Order dismissing for lack of jurisdiction the petition for cancellation of
notice of lis pendens filed by petitioner, and in denying reconsideration.
35
WHEREFORE, the petition is DENIED. The April 14, 2005 Resolution and the June 24, 2005 Order
issued by the Regional Trial Court of Las Pias City, Branch 253, in Civil Case No. LP-04-0071, are
hereby AFFIRMED.
G.R. No. 148225
March 3, 2010
CARMEN
DEL
vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.
PRADO, Petitioner,
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the decision 1 of the Court of Appeals (CA) dated September 26,
2000 and its resolution denying the motion for reconsideration thereof.
The facts are as follows:
In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y.
Reyes of the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L.
Caballero and Leonarda B. Caballero several parcels of land situated in Guba, Cebu City, one of which was
Cadastral Lot No. 11909, the subject of this controversy. 2 On May 21, 1987, Antonio Caballero moved for
the issuance of the final decree of registration for their lots. 3 Consequently, on May 25, 1987, the same
court, through then Presiding Judge Renato C. Dacudao, ordered the National Land Titles and Deeds
Registration Administration to issue the decree of registration and the corresponding titles of the lots in
favor of the Caballeros.4
On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax
declaration covering the property. The pertinent portion of the deed of sale reads as follows:
That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and
residents of Talamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND
PESOS (P40,000.00), Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a
resident of Sikatuna St., Cebu City, Philippines, the receipt of which is full is hereby acknowledged, do by
these presents SELL, CEDE, TRANSFER, ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs,
assigns and/or successors-in-interest, one (1) unregistered parcel of land, situated at Guba, Cebu City,
Philippines, and more particularly described and bounded, as follows:
"A parcel of land known as Cad. Lot No. 11909, bounded as follows:
North : Lot 11903
East : Lot 11908
West : Lot 11910
South : Lot 11858 & 11912
containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City
Assessors Office, Cebu City." of which parcel of land we are the absolute and lawful owners.
Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15,
1990, and entered in the "Registration Book" of the City of Cebu on December 19, 1990. 5 Therein, the
technical description of Lot No. 11909 states that said lot measures about 14,457 square meters, more or
less.6
On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of
Document Under Presidential Decree (P.D.) 1529"7 in order that a certificate of title be issued in her name,
covering the whole Lot No. 11909. In the petition, petitioner alleged that the tenor of the instrument of
sale indicated that the sale was for a lump sum or cuerpo cierto, in which case, the vendor was bound to
deliver all that was included within said boundaries even when it exceeded the area specified in the
contract. Respondents opposed, on the main ground that only 4,000 sq m of Lot No. 11909 was sold to
petitioner. They claimed that the sale was not for a cuerpo cierto. They moved for the outright dismissal of
the petition on grounds of prescription and lack of jurisdiction.
36
After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No.
11909. The intended sale between the parties was for a lump sum, since there was no evidence presented
that the property was sold for a price per unit. It was apparent that the subject matter of the sale was the
parcel of land, known as Cadastral Lot No. 11909, and not only a portion thereof. 8
Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:
WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in
favor of herein petitioner. The Register of Deeds of the City of Cebu is hereby ordered and directed to
effect the registration in his office of the Deed of Absolute Sale between Spouses Antonio Caballero and
Leonarda Caballero and Petitioner, Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after
payment of all fees prescribed by law. Additionally, the Register of Deeds of the City of Cebu is hereby
ordered to cancel Original Certificate No. 1305 in the name of Antonio Caballero and Leonarda Caballero
and the Transfer Certificate of Title be issued in the name of Petitioner Carmen del Prado covering the
entire parcel of land known as Cadastral Lot No. 11909.9
An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and
setting aside the decision of the RTC.
The CA no longer touched on the character of the sale, because it found that petitioner availed herself of
an improper remedy. The "petition for registration of document" is not one of the remedies provided under
P.D. No. 1529, after the original registration has been effected. Thus, the CA ruled that the lower court
committed an error when it assumed jurisdiction over the petition, which prayed for a remedy not
sanctioned under the Property Registration Decree. Accordingly, the CA disposed, as follows:
IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one
entered dismissing the petition for lack of jurisdiction. No pronouncement as to costs. 10
Aggrieved, petitioner filed the instant petition, raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT
CONTRARY TO THAT OF THE TRIAL COURT[;]
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE
SALE OF THE LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]
III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION OF
THE DEED OF ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND
RESPONDENTS[.]11
The core issue in this case is whether or not the sale of the land was for a lump sum or not.
Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a
lump sum, governed under Article 1542 of the Civil Code. 12 In the contract, it was stated that the land
contains an area of 4,000 sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot
No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. When the OCT
was issued, the area of Lot No. 11909 was declared to be 14,475 sq m, with an excess of 10,475 sq m. In
accordance with Article 1542, respondents are, therefore, duty-bound to deliver the whole area within the
boundaries stated, without any corresponding increase in the price. Thus, petitioner concludes that she is
entitled to have the certificate of title, covering the whole Lot No. 11909, which was originally issued in the
names of respondents, transferred to her name.
We do not agree.
In Esguerra v. Trinidad, 13 the Court had occasion to discuss the matter of sales involving real estates. The
Courts pronouncement is quite instructive:
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price
contract wherein the purchase price is determined by way of reference to a stated rate per unit area
(e.g., P1,000 per square meter), or a lump sum contract which states a full purchase price for an
immovable the area of which may be declared based on the estimate or where both the area and
boundaries are stated (e.g., P1 million for 1,000 square meters, etc.). In Rudolf Lietz, Inc. v. Court of
Appeals (478 SCRA 451), the Court discussed the distinction:
"In a unit price contract, the statement of area of immovable is not conclusive and the price may be
reduced or increased depending on the area actually delivered. If the vendor delivers less than the area
agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or
demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor
37
delivers more than the area stated in the contract, the vendee has the option to accept only the amount
agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.
xxxx
In the case where the area of an immovable is stated in the contract based on an estimate, the actual area
delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the
Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price, although there be a greater or less
areas or number than that stated in the contract. . . .
xxxx
Where both the area and the boundaries of the immovable are declared, the area covered within the
boundaries of the immovable prevails over the stated area. In cases of conflict between areas and
boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area,
calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down,
as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established
that the specific boundaries stated in the contract must control over any statement with respect to the
area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land
should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated
with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus,
the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety
thereof that distinguishes the determinate object.14
The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an
exception. It held:
A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers
only a reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less"
with reference to its area does not thereby ipso facto take all risk of quantity in the land..
Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area.
Courts must consider a host of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the
Court found substantial discrepancy in area due to contemporaneous circumstances. Citing change in the
physical nature of the property, it was therein established that the excess area at the southern portion was
a product of reclamation, which explained why the lands technical description in the deed of sale
indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed area was declared
unreasonable.15
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase
price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No.
11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No.
11910. In a contract of sale of land in a mass, the specific boundaries stated in the contract must control
over any other statement, with respect to the area contained within its boundaries. 161avvphi1
Blacks Law Dictionary17 defines the phrase "more or less" to mean:
About; substantially; or approximately; implying that both parties assume the risk of any ordinary
discrepancy. The words are intended to cover slight or unimportant inaccuracies in quantity, Carter v.
Finch, 186 Ark. 954, 57 S.W.2d 408; and are ordinarily to be interpreted as taking care of unsubstantial
differences or differences of small importance compared to the whole number of items transferred.
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference
in the area is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or
deficiency that should be deemed included in the deed of sale.
We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of
the records, we lend credence to respondents claim that they intended to sell only 4,000 sq m of the
whole Lot No. 11909, contrary to the findings of the lower court. The records reveal that when the parties
made an ocular inspection, petitioner specifically pointed to that portion of the lot, which she preferred to
purchase, since there were mango trees planted and a deep well thereon. After the sale, respondents
delivered and segregated the area of 4,000 sq m in favor of petitioner by fencing off the area of 10,475 sq
m belonging to them.18
Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract,
because it is perfected by mere consent. The essential elements of a contract of sale are the following: (a)
consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
38
determinate subject matter; and (c) price certain in money or its equivalent. All these elements are
present in the instant case.19
More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by filing the
petition for registration in the same cadastral case, was improper. It is a fundamental principle in land
registration that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein. Such indefeasibility commences after one
year from the date of entry of the decree of registration. 20 Inasmuch as the petition for registration of
document did not interrupt the running of the period to file the appropriate petition for review and
considering that the prescribed one-year period had long since expired, the decree of registration, as well
as the certificate of title issued in favor of respondents, had become incontrovertible. 21
WHEREFORE, the petition is DENIED.
SEVERINO
M.
MANOTOK
IV,
FROILAN M. MANOTOK, FERNANDO
M. MANOTOK III, MA. MAMERTA M.
MANOTOK, PATRICIA L. TIONGSON,
PACITA L. GO, ROBERTO LAPERAL
III,
MICHAEL
MARSHALL
V.
MANOTOK, MARYANN MANOTOK,
FELISA
MYLENE
V.
MANOTOK,
IGNACIO
V.
MANOTOK,
JR.,
MILAGROS
V.
MANOTOK,
SEVERINO MANOTOK
III,
ROSA
R.
MANOTOK,
MIGUEL
A.B.
SISON,
GEORGE
M. BOCANEGRA, MA. CRISTINA E.
SISON, PHILIPP L. MANOTOK, JOSE
CLEMENTE L. MANOTOK, RAMON
SEVERINO L. MANOTOK, THELMA R.
MANOTOK, JOSE MARIA MANOTOK,
JESUS JUDE MANOTOK, JR. and MA.
THERESA
L.
MANOTOK,
represented by their Attorneyin-fact, Rosa R. Manotok,
Petitioners,
G.R. Nos. 162335 & 162605

Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.
- versus HEIRS
OF
HOMER
L.
Promulgated:
BARQUE, represented by
TERESITA
BARQUE HERNANDEZ,
March 6, 2012
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
RESOLUTION
VILLARAMA, JR., J.:
At bar are the motions for reconsideration separately filed by the Manotoks, Barques and Manahans
of our Decision promulgated on August 24, 2010, the dispositive portion of which reads:
WHEREFORE, the petitions filed by the Manotoks under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, as well as the petition-in-intervention of the Manahans, are
DENIED. The petition for reconstitution of title filed by the Barques is likewise DENIED. TCT
No. RT-22481 (372302) in the name of Severino Manotok IV, et al., TCT No. 210177 in the
name of Homer L. Barque and Deed of Conveyance No. V-200022 issued to Felicitas B.
Manahan, are all hereby declared NULL and VOID. The Register of Deeds of Caloocan City
and/or Quezon City are hereby ordered to CANCEL the said titles. The Court hereby
DECLARES that Lot 823 of the Piedad Estate, Quezon City legally belongs to the NATIONAL
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, without prejudice to the institution of
REVERSION proceedings by the State through the Office of the Solicitor General.
With costs against the petitioners.
SO ORDERED.
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The Manotoks raised the following grounds in their motion for reconsideration with motion for oral
arguments:
1. It is unjust and oppressive to deprive the Manotoks of property they have long
held and acquired from the State, on consideration fully paid and received, and under
registered title issued by the State itself, on nothing more than the assumed failure of the
States agents to inscribe a ministerial approval on the transaction deeds.
2. The annulment of Friar Land sales, simply because physical evidence of the
Secretarys ministerial approval can no longer be found, may void transactions involving
thousands of hectares of land, and affect possibly millions of people to whom the lands may
have since been parceled out, sold and resold.
3. The Manotoks were given no due notice of the issue of reversion, which this case
on appeal did not include, and which was thrust upon the Manotoks only in the final
resolution disposing of the appeal.
It would be error for the Honorable Court to let this matter go without a serious and
full re-examination. This can be accomplished, among others, by allowing this motion for
reconsideration to be heard on oral argument, to try to permit all pertinent considerations to
be aired before the Court and taken into account.
4. These G.R. Nos. 162335 and 162605 were an appeal from administrative
reconstitution proceedings before LRA Reconstitution officer Benjamin Bustos. But the
Resolution dated 18 December 2008 which finally reversed the CAs rulings, affirmed the
denial by Bustos of the application for administrative reconstitution of the Barques
purported transfer certificate of title, and terminated the appeal introduced a new case on
the Manotok property. It ordered evidence-taking at the CA, on which the Supreme Court
proposed itself to decide, in the first instance, an alleged ownership controversy over the
Manotok property.
5. The Manotoks objected to the remand on jurisdictional and due process
grounds. The original and exclusive jurisdiction over the subject matter of the case is vested
by law on the regional trial courts.
6. The Honorable Court erred in proceeding to judgment divesting the Manotoks of
their title to Lot 823 of the Piedad Estate, without a trial in the courts of original and
exclusive jurisdiction, and in disregard of process which the law accords to all owners-inpossession.
7. The Honorable Court erred in concluding that the Manotoks, despite being owners
in possession under a registered title, may be compelled to produce the deeds by which the
Government had transferred the property to them, and failing which can be divested of
their ownership in favor of the Government, even if the latter has not demanded a reversion
or brought suit for that purpose.
8. The Honorable Court erred in imposing on the Manotoks, contrary to Art. 541 of
the Civil Code, the obligation to prove their ownership of the subject property, and in
awarding their title to the Government who has not even sued to contest that ownership.
9. The Honorable Court erred in finding that Sale Certificate No. 1054, which
Severino Manotok acquired by assignment in 1923, was not approved by the Director of
Lands and the Secretary of Agriculture and Natural Resources, and in finding that a Sale
Certificate without the Secretarys approval is void.
10. The Honorable Court erred in concluding that the Manotoks had no valid Deed of
Conveyance of Lot 823 from the Government The original of Deed of Conveyance No.
29204 gave the register of deeds the authority to issue the transfer certificate of title in the
name of the buyer Severino Manotok, which is required by law to be filed with and retained
in the custody of the register of deeds.We presume that the copy thereof actually
transmitted to and received by the register of deeds did contain the Secretarys
signature because he in fact issued the TCT. And we rely on this presumption because the
document itself can no longer be found.
11. Assuming arguendo that the original Deed of Conveyance No. 29204 the register
of deeds received did not bear the Department Secretarys signature, DENR Memorandum
Order No. 16-05 dated October 27, 2005 cured the defect. To deny the Manotoks the benefit
of ratification under said MO, on the erroneous interpretation that it covered only those
found in the records of the field offices of the DENR and LMB, would be discriminatory. The
Department Secretarys (assumed) failure to affix his signature on the deed of conveyance
could not defeat the Manotoks right to the lot after they had fully paid for it.
40
Republic Act No. 9443 must be applied, mutatis mutandis, to the Manotoks and the
Piedad Estate.
12. The Honorable Court erred in denying their right to be informed of the CAs
report and be heard thereon prior to judgment, as basic requirements of due process.
The Barques anchor their motion for reconsideration on the following:

I
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DENYING THE PETITION FOR
RECONSTITUTION FILED BY RESPONDENTS HEIRS OF BARQUE WITHOUT STATING THE
GROUNDS FOR SUCH DENIAL.
II
THE HONORABLE SUPREME COURT GRAVELY ERRED IN INSTANTLY DECLARING IN THE
DISPOSITIVE PORTION OF THE DECISION THAT ALONG WITH FELICITAS B. MANAHANS TITLE,
RESPONDENTS HEIRS OF BARQUES TITLE TCT NO. 210177 IS LIKEWISE NULL AND VOID,
WITHOUT STATING A CLEAR AND DEFINITE BASIS THEREFOR.
III
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DECLARING TRANSFER CERTIFICATE
OF TITLE NO. 210177 IN THE NAME OF HOMER L. BARQUE NULL AND VOID.
IV
THE HONORABLE COURT OF APPEALS FACTUAL FINDINGS, ADOPTED BY THE HONORABLE
SUPREME COURT IN THE DECISION DATED 24 AUGUST 2010, ARE CONTRARY TO THE
EVIDENCE PRESENTED.
V
THE HONORABLE SUPREME COURTS FINDINGS IN THE DECISION DATED 24 AUGUST 2010
ARE CONTRARY TO LAW.
As to the Manahans, they seek a partial reconsideration and to allow further reception of evidence,
stating the following grounds:
I.
As the original of Sale Certificate No. 511 could not be found in the files of the LMB or
the DENR-NCR at the time of the hearings before the Commissioners, the existence of
the certificate was proven by secondary evidence. The Commissioners erred in ignoring
secondary evidence of the contents of Sale Certificate No. 511 because of mere doubt
and suspicion as to its authenticity and in the absence of contradicting evidence.
II.
The OSG which has been tasked by the Honorable Court to obtain documents from the
LMB and DENR-NCR relative to the conveyance of Lot 823, Piedad Estate, furnished
intevenors with a certified true copy of Sale Certificate No. 511 which it obtained from
the DENR-NCR on September 11, 2010, together with the explanation of DENR-NCR
why the document is available only now. (Certified true copy of Sale Certificate No.
511 and Sworn Explanation of Evelyn G. Celzo attached as Annexes I and II.
III.
When Valentin Manahan offered to purchase Lot 823, Piedad Estate, being the actual
settler and occupant who under the law enjoyed preference to buy the lot, his status
as actual settler and occupant must have been verified by the Bureau of Public Lands
because the presumption is that official duty has been regularly performed. The
administrative determination of the status of Valentin Manahan as actual settler and
occupant can not now be reviewed after the lapse of about eight (8) decades when
parties, witnesses, documents and other evidence are hardly or no longer available.
IV.
Abundant evidence was submitted by intervenors that they and their predecessors-ininterest occupied and possessed Lot 823 up to 1948 when they were dispossessed by
armed men. It was error for the Commissioners to ignore the evidence of the
intervenors, there being no contradicting proof.
V.
The Commissioners committed palpable error in not according evidentiary value to the
Investigation Report of Evelyn dela Rosa because it is allegedly practically a replica or
41
summation of Felicitas B. Manahans allegations embodied in her petition.

Examination of the dates of the documents will show that the Investigation Report
preceded the Petition. The Petition, therefore, is based on the Investigation Report,
and not the other way around.
VI.
The pronouncement of the Commissioners that Sale Certificate No. 511 is stale is
incorrect. Intervenors made continuing efforts to secure a deed of conveyance based
on Sale Certificate No. 511. Defense of staleness or laches belongs to the party
against whom the claim is asserted; it is only that party who can raise it. It can also be
waived, as in this case when the LMB which had the sole authority under Act No. 1120
to convey friar lands, issued to intervenor Felicitas B. Manahan Deed of Conveyance
No. V-2000-22.
VII.
The requirement of Act No. 1120 that a deed of conveyance of friar land must be
signed by the Secretary of Interior was dispensed with pursuant to law and Presidential
issuances which have the force of law.
VIII. Deeds of conveyance lacking the signature of the Department Secretary were ratified by
President Joseph Estrada and DENR Secretary Michael T. Defensor.
The motions are bereft of merit.
Upon the theory that this Court had no power to cancel their certificate of title over Lot 823, Piedad
Estate in the resolution of the present controversy, the Manotoks contend that our Resolution of December
18, 2008 terminated the appeal from the Land Registration Authority (LRA) administrative reconstitution
proceedings by reversing the CAs rulings and affirming the denial by LRA Reconstitution Officer Benjamin
M. Bustos of the application for administrative reconstitution of the Barques Transfer Certificate of Title
(TCT) No. 210177. The appeal having been terminated, the Manotoks argued that the remand to the CA
for evidence-taking had introduced a new case in which this Court will decide, in the first instance, an
alleged ownership issue over the property. Such action is legally infirm since the law has vested
exclusive original jurisdiction over civil actions involving title to real property on the trial courts.
The argument is untenable.
In our December 18, 2008 Resolution, we set aside the December 12, 2005 Decision rendered by
the First Division and recalled the entry of judgment. We ruled that neither the CA nor the LRA had
jurisdiction to cancel the Manotok title, a relief sought by the Barques in the administrative reconstitution
proceedings. The Court En Banc proceeded with the reevaluation of the cases on a pro hac
vice basis. During the oral arguments, there were controversial factual matters which emerged as the
parties fully ventilated their respective claims, in the course of which the Barques claim of ownership was
found to be exceedingly weak. Indeed, both the LRA and CA erred in ruling that the Barques had the right
to seek reconstitution of their purported title. Reevaluation of the evidence on record likewise indicated
that the Manotoks claim to title is just as flawed as that of the Barques. Following the approach inAlonso
v. Cebu Country Club, Inc.[1] also involving a Friar Land, Republic v. Court of Appeals[2] and Manotok Realty
Inc. v. CLT Realty Development Corporation,[3] the majority resolved to remand this case for reception of
evidence on the parties competing claims of ownership over Lot 823 of the Piedad Estate. Given the
contentious factual issues, it was necessary for this Court to resolve the same for the complete
determination of the present controversy involving a huge tract of friar land. It was thus not the first time
the Court had actually resorted to referring a factual matter pending before it to the CA.
Maintaining their objection to the order for reception of evidence on remand, the Manotoks argue
that as owners in possession, they had no further duty to defend their title pursuant to Article 541 of
the Civil Code which states that: [a] possessor in the concept of owner has in his favor the legal
presumption that he possesses with a just title and he cannot be obliged to show or prove it. But such
presumption is prima facie, and therefore it prevails until the contrary is proved.[4]In the light of serious
flaws in the title of Severino Manotok which were brought to light during the reconstitution proceedings,
the Court deemed it proper to give all the parties full opportunity to adduce further evidence, and in
particular, for the Manotoks to prove their presumed just title over the property also claimed by the
Barques and the Manahans. As it turned out, none of the parties were able to establish by clear and
42
convincing evidence a valid alienation from the Government of the subject friar land. The declaration of
ownership in favor of the Government was but the logical consequence of such finding.
We have ruled that the existence of Sale Certificate No. 1054 in the records of the DENR-LMB was
not duly established. No officer of the DENR-NCR or LMB having official custody of sale certificates
covering friar lands testified as to the issuance and authenticity of Exh. 10 submitted by the Manotoks.
And even assuming that Exh. 10 was actually sourced from the DENR-LMB, there was no showing that it
was duly issued by the Director of Lands and approved by the Secretary of Agriculture and Natural
Resources (DENR). On this point, the Manotoks hinted that the LMBs certifying the document (Exh. 10) at
the Manotoks request was a deliberate fraud in order to give them either a false document, the usual
unsigned copy of the signed original, or a fake copy.
The Manotoks further assert that this would imply that the LMB either did not produce the genuine
article, or could not produce it. This could only mean that the document which the NBI found to be fake
or spurious, if this Court accepts that finding, was planted evidenceor evidence inserted in the LMB files
to discredit the Manotok title. Nonetheless, the Manotoks insist there were independent evidence which
supposedly established the prior existence of Sale Certificate No. 1054. These documents are: (a)
photocopy of Assignment of Sale Certificate No. 1054 dated 1929; (b) official receipt of payment for said
certified copy; (c) photocopies of the other assignment deeds dated 1923; (d) official receipts of
installment payments on Lot 823 issued to Severino Manotok; (e) file copies in the National Archives of the
Deed of Conveyance No. 29204; and (f) the notarial registers in which the said Deed of Conveyance, as
well as the assignment documents, were entered.
The contentions have no merit, and at best speculative. As this Court categorically ruled in Alonso
v. Cebu Country Club,Inc.,[5] approval by the Secretary of Agriculture and Commerce of the sale of friar
lands is indispensable for its validity, hence, the absence of such approval made the sale null and void ab
initio. In that case, the majority declared that no valid titles can be issued on the basis of the sale or
assignment made in favor of petitioners father due to the absence of signature of the Director of Lands
and the Secretary of the Interior, and the approval of the Secretary of Natural Resources in the Sale
Certificate and Assignment of Sale Certificate. Applying the Alonso ruling to these cases, we thus held that
no legal right over the subject friar land can be recognized in favor of the Manotoks under the assignment
documents in the absence of the certificate of sale duly signed by the Director of Lands and approved by
the Secretary of Agriculture and Natural Resources.
That a valid certificate of sale was issued to Severino Manotoks assignors cannot simply
be presumed from the execution of assignment documents in his favor. Neither can it be deduced from
the alleged issuance of the half-torn TCT No. 22813, itself a doubtful document as its authenticity was not
established, much less the veracity of its recitals because the name of the registered owner and date of
issuance do not appear at all. The Manotoks until now has not offered any explanation as to such
condition of the alleged title of Severino Manotok; they assert that it is the Register of Deeds himself who
should be in a position to explain that condition of the TCT in his custody. But then, no Register of Deeds
had testified and attested to the fact that the original of TCT No. 22813 was under his/her custody, nor that
said certificate of title in the name of Severino Manotok existed in the files of the Registry of Deeds of
Caloocan or Quezon City. The Manotoks consistently evaded having to explain the circumstances as to
how and where TCT No. 22813 came about. Instead, they urge this Court to validate their alleged title on
the basis of the disputable presumption of regularity in the performance of official duty. Such stance
hardly satisfies the standard of clear and convincing evidence in these cases. Even the existence of the
official receipts showing payment of the price to the land by Severino Manotok does not prove that the
land was legally conveyed to him without any contract of sale having been executed by the government in
his favor. Neither did the alleged issuance of TCT No. 22183 in his favor vest ownership upon him over the
land nor did it validate the alleged purchase of Lot 283, which is null and void. The absence of the
Secretarys approval in Certificate of Sale No. 1054 made the supposed sale null and void ab initio.[6]
In the light of the foregoing, the claim of the Barques who, just like the Manahans, were unable to
produce an authentic and genuine sale certificate, must likewise fail. The Decision discussed extensively
the findings of the CA that the Barques documentary evidence were either spurious or irregularly
procured, which even buttressed the earlier findings mentioned in the December 18, 2008
43
Resolution. The CAs findings and recommendations with respect to the claims of all parties, have been
fully adopted by this Court, as evident in our disquisitions on the indispensable requirement of a validly
issued Certificate of Sale over Lot 823, Piedad Estate.
As to the motion of the Manahans to admit an alleged certified true copy of Sale Certificate No. 511
dated June 23, 1913 in the name of Valentin Manahan which, as alleged in the attached Sworn Explanation
of Evelyn G. Celzo, the latter hadinadvertently failed to attach to her Investigation Report forwarded to the
CENRO, this Court cannot grant said motion.
This belatedly submitted copy of Sale Certificate No. 511 was not among those official documents
which the Office of the Solicitor General (OSG) offered as evidence, as in fact no copy thereof can be found
in the records of either the DENR-NCR or LMB. Moreover, the sudden emergence of this unauthenticated
document is suspicious, considering that Celzo who testified, as witness for both the OSG and the
Manahans, categorically admitted that she never actually saw the application to purchase and alleged Sale
Certificate No. 511 of the Manahans. The relevant portions of the transcript of stenographic notes of the
cross- examination of said witness during the hearing before the CA are herein quoted:
In view of the above admission, Celzos explanation that the copy of Sale Certificate No. 511 signed
by the Director of Lands and Secretary of the Interior was originally attached to her Investigation Report,
cannot be given credence. Even her testimony regarding the conduct of her investigation of Lot 823,
Piedad Estate and the Investigation Report she submitted thereafter, failed to impress the CA on the
validity of the Manahans claim. Indeed, records showed that Celzos findings in her report were merely
based on what Felicitas Manahan told her about the alleged occupation and possession by Valentin
Manahan of the subject land.
In their Offer of Additional Evidence, the Manahans submitted a photocopy of a letter dated
December 21, 2010 allegedly sent by Atty. Allan V. Barcena (OIC, Director) to their counsel, Atty. Romeo C.
dela Cruz, which reads:
This has reference to your letter dated August 20, 2010 addressed to the Secretary of
the Department of Environment and Natural Resources (DENR) requesting that Deed of
Conveyance No. V-200022 issued on October 30, 2000 over Lot 823 of the Piedad Estate in
favor of Felicitas B. Manahan be ratified or confirmed for reasons stated therein. The Office
of the DENR Secretary in turn referred the letter to us for appropriate action.
Records of this Office on Lot 823 of the Piedad Estate, show that the Deed of
Conveyance No. V-200022 covering said lot in favor of Felicitas Manahan was
issued by then Director of the Land Management Bureau (LMB), now
Undersecretary Ernesto D. Adobo, Jr., on October 30, 2000. The Deed was issued
based on General Memorandum Order (GMO) No. 1 issued by then Secretary Jose J. Leido, Jr.
of the Department of Natural Resources on January 17, 1977, which authorized the Director
of Lands, now Director of LMB, to approve contracts of sale and deeds of conveyance
affecting Friar Lands.
It is stressed that the confirmation of the Deed by this office is only as to the execution
and issuance based on the authority of LMB Director under GMO No. 1. This is without
prejudice to the final decision of the Supreme Court as to its validity in the case of Severino
Manotok IV, et al. versus Heirs of Homer L, Barque (G.R. No. 162335 & 162605).
Please be guided accordingly.[8] (Emphasis supplied.)
However, in the absence of a valid certificate of sale duly signed by the Secretary of Interior or
Agriculture and Natural Resources, such alleged confirmation of the execution and issuance by the DENRLMB of Deed of Conveyance No V-00022 in favor of Felicitas Manahan on October 30, 2000 is still
insufficient to prove the Manahans claim over the subject land.
In a Supplemental Manifestation dated November 18, 2010, the Manotoks submitted an
affidavit supposedlyexecuted on November 11, 2010 by former DENR Secretary Michael T.
Defensor(Defensor Affidavit) clarifying that MO 16-05 applies to allDeeds of Conveyance that do not bear
the signature of the Secretary of Natural Resources, contrary to the CA and this Courts statement that
said issuance refers only to those deeds of conveyance on file with the records of the DENR field offices.
44
By its express terms, however, MO 16-05 covered only deeds of conveyances and not unsigned
certificates of sale. The explanation of Secretary Defensor stated theavowed purpose behind the issuance,
which is to remove doubts or dispel objections as to the validity of all Torrens transfer certificates of title
issued over friar lands thereby ratifying the deeds of conveyance to the friar land buyers who have fully
paid the purchase price, and are otherwise not shown to have committed any wrong or illegality in
acquiring such lands.
The Manahans propounded the same theory that contracts of sale over friar lands without the
approval of the Secretary of Natural Resources may be subsequently ratified, but pointed out that unlike
the Manotoks Deed of Conveyance No. 29204 (1932), their Deed of Conveyance No. V-2000-22 (2000) was
issued and approved by the Director of Lands upon prior authority granted by the Secretary.
In their Consolidated Memorandum dated December 19, 2010, the Manahans reiterated their earlier
argument that the LMB Director himself had the authority to approve contracts of sale and deeds of
conveyance over friar lands on the basis of General Memorandum Order No. 1 issued in 1977 by then
Secretary of Natural Resources Jose J. Leido, Jr. delegating such function to the Director of Lands. This
delegated power can also be gleaned from Sec. 15, Chapter 1, Title XIV of the Administrative Code of 1987
which provides that the Director of Lands shall perform such other functions as may be provided by law or
assigned by the Secretary. Moreover, former President Corazon C. Aquino issued Executive Order No.
131 dated January 20, 1987 reorganizing the LMB and providing that the LMB Director shall, among others,
perform other functions as may be assigned by the Minister of Natural Resources.
On the basis of Art. 1317 [9] of the Civil Code, the Manahans contend that deeds of conveyance not
bearing the signature of the Secretary can also be ratified. Further, they cite Proclamation No. 172 issued
by former President Joseph Ejercito Estrada which declared that there should be no legal impediment for
the LMB to issue such deeds of conveyance since the applicants/purchasers have already paid the
purchase price of the lot, and as sellers in good faith, it is the obligation of the Government to deliver to
said applicants/purchasers the friar lands sold free of any lien or encumbrance whatsoever. Eventually,
when MO 16-05 was issued by Secretary Defensor, all these deeds of conveyance lacking the signature of
the Secretary of Natural Resources are thus deemed signed or otherwise ratified. The CA accordingly erred
in holding that MO 16-05 cannot override Act No. 1120 which requires that a deed of conveyance must be
signed by the Secretary, considering that MO 16-05 is based on law and presidential issuances, particularly
EO 131, which have the force of law.
Meanwhile, in compliance with our directive, the Solicitor General filed his Comment on the
Defensor Affidavit submitted by the Manotoks. The Solicitor General contends that said document is
hearsay evidence, hence inadmissible and without probative value. He points out that former DENR
Secretary Defensor was not presented as a witness during the hearings at the CA, thus depriving the
parties including the government of the right to cross-examine him regarding his allegations therein. And
even assuming arguendo that such affidavit is admissible as evidence, the Solicitor General is of the view
that the Manotoks, Barques and Manahans still cannot benefit from the remedial effect of MO 16-05 in
view of the decision rendered by this Court which ruled that none of the parties in this case has
established a valid alienation from the Government of Lot 823 of the Piedad Estate, and also because the
curative effect of MO 16-05 is intended only for friar land buyers whose deeds of conveyance lack the
signature of the Secretary of the Interior or Agriculture and Natural Resources, have fully paid the purchase
price and are otherwise not shown to have committed any wrong or illegality in acquiring the friar
lands. He then emphasizes that this Court has ruled that it is not only the deed of conveyance which must
be signed by the Secretary but also the certificate of sale itself. Since none of the parties has shown a
valid disposition to any of them of Lot 823 of the Piedad Estate, this Court therefore correctly held that said
friar land is still part of the patrimonial property of the national government.
The Court is not persuaded by the ratification theory espoused by the Manotoks and Manahans.
The argument that the Director of Lands had delegated authority to approve contracts of sale and
deeds of conveyances over friar landsignores the consistent ruling of this Court in controversies involving
friar lands. The aforementioned presidential/executive issuances notwithstanding, this Court held
45
in Solid State Multi-Products Corporation v. CA, [10] Liao v. Court of Appeals,[11]and Alonso v. Cebu Country
Club[12] that approval of the Secretary of Agriculture and Commerce (later the Natural Resources) is
indispensable to the validity of sale of friar land pursuant to Sec. 18 of Act No. 1120 and that the procedure
laid down by said law must be strictly complied with.
As to the applicability of Art. 1317 of the Civil Code, we maintain that contracts of sale lacking the
approval of the Secretary fall under the class of void and inexistent contracts enumerated in Art.
1409[13] which cannot be ratified. Section 18 of Act No. 1120 mandated the approval by the Secretary for a
sale of friar land to be valid.
In his dissenting opinion, Justice Antonio T. Carpio disagreed with the majoritys interpretation of
Section 18 of Act No. 1120, and proposed that based on Section 12 of the same Act, it is the Deed of
Conveyance that must bear the signature of the Secretary of Interior/Agriculture and Natural Resources
because it is only when the final installment is paid that the Secretary can approve the sale, the purchase
price having been fully paid. It was pointed out that the majority itself expressly admit that it is only
a ministerial duty on the part of the Secretary to sign the Deed of Conveyance once the applicant had
made full payment on the purchase price of the land, citing jurisprudence to the effect that
notwithstanding the failure of the government to issue the proper instrument of conveyance when the
purchaser finally pays the final installment of the purchase price, the purchase of the friar land still
acquired ownership.
We are unable to agree with the view that it is only the Director of Lands who signs the Certificate of
Sale.
The official document denominated as Sale Certificate clearly required both the signatures of the
Director of Lands who issued such sale certificate to an applicant settler/occupant and the Secretary of the
Interior/Agriculture and Natural Resources indicating his approval of the sale. These forms had been
prepared and issued by the Chief of the Bureau of Public Lands under the supervision of the Secretary of
the Interior, consistent with Act No. 1120 as may be necessary x x x to carry into effect all the provisions
[thereof] that are to be administered by or under [his] direction, and for the conduct of all proceedings
arising under such provisions.[14]
We reiterate that Section 18 of Act No. 1120, as amended, is plain and categorical in stating that:
SECTION 18. No lease or sale made by the Chief of the Bureau of Public Lands under
the provisions of this Act shall be valid untilapproved by the Secretary of the Interior.
Section 12 did not mention the requirement of signature or approval of the Secretary in the sale
certificate and deed of conveyance.
SECTION 12.
It shall be the duty of the Chief of the Bureau of Public Lands by
proper investigation to ascertain what is the actual value of the parcel of land held by each
settler and occupant, taking into consideration the location and quality of each holding of
land, and any other circumstances giving [it] value. The basis of valuation shall likewise be,
so far as practicable, such [as] the aggregate of the values of all the holdings included in
each particular tract shall be equal to the cost to the Government to the entire tract,
including the cost of surveys, administration and interest upon the purchase money to the
time of sale. When the cost thereof shall have been thus ascertained, the Chief of the
Bureau of Public Lands shall give the said settler and occupant a certificate which shall set
forth in detail that the Government has agreed to sell to such settler and occupant the
amount of land so held by him, at the price so fixed, payable as provided in this Act at the
office of the Chief of Bureau of Public Lands, in gold coin of the United States or its
equivalent in Philippine currency, and that upon the payment of the final installment
together with [the] accrued interest the Government will convey to such settler and
occupant the said land so held by him by proper instrument of conveyance, which shall be
issued and become effective in the manner provided in section one hundred and twenty-two
of the Land Registration Act. The Chief of the Bureau of Public Lands shall, in each instance
where a certificate is given to the settler and occupant of any holding, take his formal
receipt showing the delivery of such certificate, signed by said settler and occupant.
46
On the other hand, the first paragraph of Section 15 provides for the reservation of title in the
Government only for the purpose of ensuring payment of the purchase price, which means that the sale
was subject only to the resolutory condition of non-payment, while the second paragraph states that the
purchaser thereby acquires the right of possession and purchase by virtue of a certificate of sale signed
under the provisions [thereof]. The certificate of sale evidences the meeting of the minds between the
Government and the applicant regarding the price, the specific parcel of friar land, and terms of
payment. In Dela Torre v. Court of Appeals,[15]we explained that the non-payment of the full purchase price
is the only recognized resolutory condition in the case of sale of friar lands. We have also held that it is the
execution of the contract to sell and delivery of the certificate of sale that vests title and ownership to the
purchaser of friar land.[16] Where there is no certificate of sale issued, the purchaser does not acquire any
right of possession and purchase, as implied from Section 15. By the mandatory language of Section 18,
the absence of approval of the Secretary of Interior/Agriculture and Natural Resources in the lease or sale
of friar land would invalidate the sale. These provisions read together indicate that the approval of the
Secretary is required in both the certificate of sale and deed of conveyance, although the lack of signature
of the Secretary in the latter may not defeat the rights of the applicant who had fully paid the purchase
price.
Justice Conchita Carpio Morales dissent asserted that case law does not categorically state that the
required approval must be in the form of a signature on the Certificate of Sale, and that there is no
statutory basis for the requirement of the Secretarys signature on the Certificate of Sale apart from a
strained deduction of Section 18.
As already stated, the official forms being used by the Government for this purpose clearly show
that the Director of Lands signs every certificate of sale issued covering a specific parcel of friar land in
favor of the applicant/purchaser while the Secretary of Interior/Natural Resources signs the document
indicating that the sale was approved by him. To approve is to be satisfied with; to confirm, ratify,
sanction, or consent to some act or thing done by another; to sanction officially. [17] The Secretary of
Interior/Natural Resources signs and approves the Certificate of Sale to confirm and officially sanction the
conveyance of friar lands executed by the Chief of the Bureau of Public Lands (later Director of Lands). It is
worth mentioning thatSale Certificate No. 651 in the name of one Ambrosio Berones dated June 23, 1913,
[18]
also covering Lot 823 of the Piedad Estate and forming part of the official documents on file with the
DENR-LMB which was formally offered by the OSG as part of the official records on file with the DENR and
LMB pertaining to Lot 823, contains the signature of both the Director of Lands and Secretary of the
Interior. The Assignment of Sale Certificate No. 651 dated April 19, 1930 was also signed by the Director of
Lands.[19]
Following the dissents interpretation that the Secretary is not required to sign the certificate of sale
while his signature in the Deed of Conveyance may also appear although merely a ministerial act, it would
result in the absurd situation wherein thecertificate of sale and deed of conveyance both lacked the
signature and approval of the Secretary, and yet the purchasers ownership is ratified, courtesy of DENR
Memorandum Order (MO) No. 16-05. It is also not farfetched that greater chaos will arise from conflicting
claims over friar lands, which could not be definitively settled until the genuine and official manifestation
of the Secretarys approval of the sale is discerned from the records and documents presented. This state
of things is simply not envisioned under the orderly and proper distribution of friar lands to bona
fide occupants and settlers whom the Chief of the Bureau of Public Lands was tasked to identify. [20]
The existence of a valid certificate of sale therefore must first be established with clear and
convincing evidence before a purchaser is deemed to have acquired ownership over a friar
land notwithstanding the non-issuance by the Government, for some reason or another, of a deed of
conveyance after completing the installment payments. In the absence of such certificate of sale duly
signed by the Secretary, no right can be recognized in favor of the applicant. Neither would any assignee
or transferee acquire any right over the subject land.
In Alonso v. Cebu Country Club, Inc.,[21] the Court categorically ruled that the absence of approval
by the Secretary of Agriculture and Commerce in the sale certificate and assignment of sale certificate
made the sale null and void ab initio. Necessarily, there can be no valid titles issued on the basis of such
sale or assignment.[22]
47
Justice Carpio, however, opined that the ruling in Alonso was superseded with the issuance by then
Department of [Environment] and Natural Resources (DENR) Secretary Michael T. Defensor of DENR
Memorandum Order No. 16-05. It was argued that the majority had construed a limited application
when it declared that the Manotoks could not benefit from said memorandum order because the latter
refers only to deeds of conveyance on file with the records of the DENR field offices.
We disagree with the view that Alonso is no longer applicable to this controversy after the issuance
of DENR MO No. 16-05 which supposedly cured the defect in the Manotoks title.
First, DENR MO No. 16-05 explicitly makes reference only to Deeds of Conveyances, not to Sale
Certificates by which, under the express language of Section 15, the purchaser of friar land acquires the
right of possession and purchase pending final payment and the issuance of title, such certificate being
duly signed under the provisions of Act No. 1120. Although the whereas clause of MO No. 16-05 correctly
stated that it was only a ministerial duty on the part of the Secretary to sign the Deed of Conveyance once
the applicant had made full payment on the purchase price of the land, it must be stressed that in those
instances where the formality of the Secretarys approval and signature is dispensed with, there was a
valid certificate of sale issued to the purchaser or transferor. In this case, there is no indication in the
records that a certificate of sale was actually issued to the assignors of Severino Manotok, allegedly the
original claimants of Lot 823, Piedad Estate.
Second, it is basic that an administrative issuance like DENR Memorandum Order No. 16-05 must
conform to and not contravene existing laws. In the interpretation and construction of the statutes
entrusted to them for implementation, administrative agencies may not make rules and regulations which
are inconsistent with the statute it is administering, or which are in derogation of, or defeat its purpose. In
case of conflict between a statute and an administrative order, the former must prevail. [23] DENR
Memorandum Order No. 16-05 cannot supersede or amend the clear mandate of Section 18, Act No.
1120 as to dispense with the requirement of approval by the Secretary of the Interior/Agriculture and
Natural Resources of every lease or sale of friar lands.
But what is worse, as the dissent suggests, is that MO 16-05 would apply even to those deeds of
conveyances not found in the records of DENR or its field offices, such as the Manotoks Deed of
Conveyance No. 29204 sourced from the National Archives. It would then cover cases of claimants who
have not been issued any certificate of sale but were able to produce a deed of conveyance in their
names. The Bureau of Lands was originally charged with the administration of all laws relative to friar
lands, pursuant to Act No. 2657 and Act No. 2711. Under Executive Order No. 192, [24] the functions and
powers previously held by the Bureau of Lands were absorbed by the Lands Management Bureau (LMB) of
the DENR, while those functions and powers not absorbed by the LMB were transferred to the regional field
offices.[25] As pointed out by the Solicitor General in the Memorandum submitted to the CA, since the LMB
and DENR-NCR exercise sole authority over friar lands, they are naturally the sole repository of
documents and records relative to Lot No. 823 of the Piedad Estate. [26]
Third, the perceived disquieting effects on titles over friar lands long held by generations of
landowners cannot be invoked as justification for legitimizing any claim or acquisition of these lands
obtained through fraud or without strict compliance with the procedure laid down in Act No. 1120. This
Court, in denying with finality the motion for reconsideration filed by petitioner in Alonso v. Cebu Country
Club, Inc.[27] reiterated the settled rule that [a]pproval by the Secretary of the Interior cannot simply be
presumed or inferred from certain acts since the law is explicit in its mandate. [28] Petitioners failed to
discharge their burden of proving their acquisition of title by clear and convincing evidence, considering
the nature of the land involved.
As consistently held by this Court, friar lands can be alienated only upon proper compliance with the
requirements of Act No. 1120. The issuance of a valid certificate of sale is a condition sine qua non for
acquisition of ownership under the Friar Lands Act. Otherwise, DENR Memorandum Order No. 16-05 would
serve as administrative imprimatur to holders of deeds of conveyance whose acquisition may have been
obtained through irregularity or fraud.
48
Contrary to the dissent of Justice Maria Lourdes P. A. Sereno that our decision has created dangers
for the system of property rights in the Philippines, the Court simply adhered strictly to the letter and
spirit of the Friar Lands Act and jurisprudence interpreting its provisions. Such imagined scenario of
instability and chaos in the established property regime, suggesting several other owners of lands formerly
comprising the Piedad Estate who are supposedly similarly situated, remains in the realm of
speculation. Apart from their bare allegations, petitioners (Manotoks) failed to demonstrate how the
awardees or present owners of around more than 2,000 hectares of land in the Piedad Estate can be
embroiled in legal disputes arising from unsigned certificates of sale.
On the other hand, this Court must take on the task of scrutinizing even certificates of title held for
decades involving lands of the public domain and those lands which form part of the Governments
patrimonial property, whenever necessary in the complete adjudication of the controversy before it or
where apparent irregularities and anomalies are shown by the evidence on record. There is nothing
sacrosanct about the landholdings in the Piedad Estate as even prior to the years when Lot 823 could have
been possibly sold or disposed by the Bureau of Lands, there were already reported anomalies in the
distribution of friar lands in general.[29]
Significantly, subsequent to the promulgation of our decision in Alonso, Republic Act No. (RA) 9443
was passed by Congress confirming and declaring, subject to certain exceptions, the validity of existing
TCTs and reconstituted certificates of title covering the Banilad Friar Lands Estate situated in
Cebu. Alonso involved a friar land already titled but without a sale certificate, and upon that ground we
declared the registered owner as not having acquired ownership of the land. RA 9443 validated the titles
notwithstanding the lack of signatures and/or approval of the then Secretary of Interior (later Secretary of
Agriculture and Natural Resources) and/or the then Chief of the Bureau of Public lands (later Director of
Public Lands) in the copies of the duly executed Sale Certificate and Assignments of Sale Certificates, as
the case may be, now on file with the Community Environment and Natural Resources Office (CENRO),
Cebu City.
The enactment of RA 9443 signifies the legislatures recognition of the statutory basis of
the Alonso ruling to the effect that in the absence of signature and/or approval of the Secretary of
Interior/Natural Resources in the Certificates of Sale on file with the CENRO, the sale is not valid and the
purchaser has not acquired ownership of the friar land. Indeed, Congress found it imperative to pass a
new law in order to exempt the already titled portions of the Banilad Friar Lands Estate from the operation
of Section 18. This runs counter to the dissents main thesis that a mere administrative issuance (DENR
MO No. 16-05) would be sufficient to cure the lack of signature and approval by the Secretary in Certificate
of Sale No. 1054 covering Lot 823 of the Piedad Estate.
In any event, the Manotoks now seek the application of RA 9443 to the Piedad Estate, arguing that
for said law to be constitutionally valid, its continued operation must be interpreted in a manner that does
not collide with the equal protection clause. Considering that the facts in Alonso from which RA 9443
sprung are similar to those in this case, it is contended that there is no reason to exclude the Piedad Estate
from the ambit of RA 9443.
Justice Carpios dissent concurs with this view, stating that to limit its application to the Banilad
Friar Lands Estate will result in class legislation. RA 9443 supposedly should be extended to lands
similarly situated, citing the case of Central Bank Employees Association, Inc. v. Bangko Sentral ng
Pilipinas.[30]
In the aforesaid case, the Court extended the benefits of subsequent laws exempting all rank-andfile employees of other government financing institutions (GFIs) from the Salary Standardization Law (SSL)
to the rank-and-file employees of the BSP. We upheld the position of petitioner association that the
continued operation of Section 15 (c), Article II of RA 7653 (the New Central Bank Act), which provides that
the compensation and wage structure of employees whose position fall under salary grade 19 and below
shall be in accordance with the rates prescribed under RA 6758 (SSL), constitutes invidious discrimination
on the 2,994 rank-and-file employees of the [BSP]. Thus, as regards the exemption from the SSL, we
declared that there were no characteristics peculiar only to the seven GFIs or their rank-and-file so as to
justify the exemption from the SSL which BSP rank-and-file employees were denied. The distinction made
49
by the law is superficial, arbitrary and not based on substantial distinctions that make real differences
between BSP rank-and-file and the seven other GFIs.[31]
We are of the opinion that the provisions of RA 9443 may not be applied to the present case as to
cure the lack of signature of the Director of Lands and approval by the Secretary of Agriculture and Natural
Resources in Sale Certificate No. 1054.
The Court has explained the nature of equal protection guarantee in this manner:
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not
intended to prohibit legislation which is limited either in the object to which it is
directed or by territory within which it is to operate. It does not demand absolute
equality among residents; it merely requires that all persons shall be treated
alike,under like circumstances and conditions both as to privileges conferred and
liabilities enforced. The equal protection clause is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all persons
within such class, and reasonable grounds exist for making a distinction between those who
fall within such class and those who do not.[32] (Emphasis and underscoring supplied.)
Section 1 of RA 9443 provides:

Section 1. All existing Transfer Certificates of Title and Reconstituted
Certificates of Title duly issued by the Register of Deedsof Cebu Province and/or
Cebu City covering any portion of the Banilad Friar Lands Estate, notwithstanding the lack of
signatures and/or approval of the then Secretary of the Interior (later Secretary of
Agriculture and Natural Resources) and/or the then Chief of the Bureau of Public Lands (later
Director of Public Lands) in the copies of the duly executed Sale Certificates and
Assignments of Sales Certificates, as the case may be,now on file with the
Community Environment and Natural Resources Office (CENRO), Cebu City, are
hereby confirmed and declared as valid titles and the registered owners recognized as
absolute owners thereof.
This confirmation and declaration of validity shall in all respects be entitled to like
effect and credit as a decree of registration, binding the land and quieting the title thereto
and shall be conclusive upon and against all persons, including the national government and
al1 branches thereof; except when, in a given case involving a certificate of title or
areconstituted certificate of title, there is clear evidence that such certificate of
title or reconstituted certificate of title was obtained through fraud, in which case
the solicitor general or his duly designated representative shall institute the necessary
judicial proceeding to cancel the certificate of title or reconstituted certificate of title as the
case may be, obtained through such fraud.(Emphasis supplied.)
Without ruling on the issue of violation of equal protection guarantee if the curative effect of RA
9443 is not made applicable to all titled lands of the Piedad Estate, it is clear that the Manotoks cannot
invoke this law to confirm and validate their alleged title over Lot 823. It must be stressed that
the existence and due issuance of TCT No. 22813 in the name of Severino Manotok was not established by
the evidence on record. There is likewise no copy of a duly executed certificate of sale on file with the
DENR regional office. In the absence of an existing certificate of title in the name of the predecessor-ininterest of the Manotoks and certificate of sale on file with the DENR/CENRO, there is nothing to confirm
and validate through the application of RA 9443.
Moreover, RA 9443 expressly excludes from its coverage those cases involving certificates of title
which were shown to have been fraudulently or irregularly issued. As the reconstitution and remand
proceedings in these cases revealed, the Manotoks title to the subject friar land, just like the Barques and
Manahans, is seriously flawed. The Court cannot allow them now to invoke the benefit of confirmation and
validation of ownership of friar lands under duly executed documents, which they never had in the first
place. Strict application by the courts of the mandatory provisions of the Friar Lands Act is justified by the
laudable policy behind its enactment -- to ensure that the lands acquired by the government would go to
the actual occupants and settlers who were given preference in their distribution. [33]
50
The dissent reiterates that the existence of Sale Certificate No. 1054 was clearly and convincingly
established by the original of Assignment of Sale Certificate No. 1054 dated May 4, 1923 between M.
Teodoro and Severino Manotok as assignors and Severino Manotok as assignee (approved by the Director
of Lands on June 23, 1923), which is on file with the LMB, as well as the Deed of Conveyance No. 29204
secured from the National Archives which is the repository of government and official documents, the
original of Official Receipt No. 675257 dated 20 February 1920 for certified copy of Assignment of Sale
Certificate No. 1054 on Lot 823 and the original of the Provincial Assessors declaration of title in Severino
Manotoks name for tax purposes on August 9, 1933 assessing him beginning with the year 1933. The
dissent further listed some of those alleged sale certificates, assignment deeds and deeds of conveyance
either signed by the Director of Lands only or unsigned by both Director of Lands and Secretary of
Interior/Natural Resources, gathered by the Manotoks from the LMB. It was stressed that if MO 16-05 is not
applied to these huge tracts of land within and outside Metro Manila, [H]undreds of thousands, if not
millions, of landowners would surely be dispossessed of their lands in these areas, a blow to the
integrity of our Torrens system and the stability of land titles in this country.
The Court has thoroughly examined the evidence on record and exhaustively discussed the merits
of the Manotoks ownership claim over Lot 823, in the light of established precedents interpreting the
provisions of the Friar Lands Act. The dissent even accused the majority of mistakenly denigrating the
records of the National Archives which, under R.A. No. 9470 enacted on May 21, 2007, is mandated to
store and preserve any public archive transferred to the National Archives and tasked with issuing
certified true copies or certifications on public archives and for extracts thereof.
The Friar Lands Act mandated a system of recording all sale contracts to be implemented by the
Director of Lands, which has come to be known as the Friar Lands Sales Registry.
SEC. 6. The title, deeds and instruments of conveyance pertaining to the lands in
each province, when executed and delivered by said grantors to the Government and placed
in the keeping of the Chief of the Bureau of Public Lands, as above provided, shall be by him
transmitted to the register of deeds of each province in which any part of said lands lies, for
registration in accordance with law. But before transmitting the title, deeds, and
instruments of conveyance in this section mentioned to the register of deeds of
each province for registration, the Chief of the Bureau of Public Lands shall record
all such deeds and instruments at length in one or more books to be provided by
him for that purpose and retained in the Bureau of Public Lands, when duly certified
by him shall be received in all courts of the Philippine Islands as sufficient evidence of the
contents of the instrument so recorded whenever it is not practicable to produce the
originals
in
court.
(Section
1,
Act
No.
1287).
It is thus the primary duty of the Chief of the Bureau of Public Lands to record all these deeds and
instruments in sales registry books which shall be retained in the Bureau of Public Lands. Unfortunately,
the LMB failed to produce the sales registry book in court, which could have clearly shown the names of
claimants, the particular lots and areas applied for, the sale certificates issued and other pertinent
information on the sale of friar lands within the Piedad Estate. Witness Teresita J. Reyes, a retired Assistant
Chief of the Records Management Division (RMD), LMB who was presented by the Manahans, testified that
when the LMB was decentralized, the sales registry books pertaining to friar lands were supposedly turned
over to the regional offices. These consisted of copies of the appropriate pages of the sales registry books
in the LMB RMD main office which has an inventory of lots subject of deeds of conveyance and sales
certificates. However, Reyes said that the sales registry book itself is no longer with the RMD. On the
other hand, the alleged affidavit of Secretary Defensor dated November 11, 2010 states that MO 16-05
was intended to address situations when deeds of conveyance lacked the signature of the Secretary of
Agriculture and Commerce, or such deeds or records from which the Secretarys signature or approval may
be verified were lost or unavailable.
Whether the friar lands registry book is still available in the LMB or properly turned over to the
regional offices remains unclear. With the statutorily prescribed record-keeping of sales of friar lands
apparently in disarray, it behooves on the courts to be more judicious in settling conflicting claims over
friar lands. Titles with serious flaws must still be carefully scrutinized in each case. Thus, we find that the
approach in Alonso remains as the more rational and prudent course than the wholesale ratification
introduced by MO 16-05.
51
The prospect of litigants losing friar lands they have possessed for years or decades had never
deterred courts from upholding the stringent requirements of the law for a valid acquisition of these
lands. The courts duty is to apply the law. Petitioners concern for other landowners which may be
similarly affected by our ruling is, without doubt, a legitimate one. The remedy though lies elsewhere -- in
the legislature, as what R.A. 9443 sought to rectify.
WHEREFORE, the present motions for reconsideration are all hereby DENIED withFINALITY.The
motions for oral arguments and further reception of evidence are likewise DENIED.
Let entry of judgment be made in due course.
RABAJA
RANCH
DEVELOPMENTG.R. No. 177181
CORPORATION,
Petitioner,
Present:
- versus -
AFP RETIREMENT AND

SEPARATION BENEFITS SYSTEM,
Respondent.
YNARES-SANTIAGO, J.,
Chairperson,
CORONA,*
CHICO-NAZARIO,
VELASCO, JR., and
NACHURA, JJ
Promulgated:
July 7, 2009
x-------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before this Court is a Petition [1] for Review on Certiorari under Rule 45 of the Rules of Civil Procedure,
seeking the reversal of the Court of Appeals (CA) Decision[2] dated June 29, 2006, which reversed and
set aside the Decision[3] of the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro, Branch
41, dated June 3, 2004.
The Facts
Petitioner Rabaja Ranch Development Corporation (petitioner), a domestic corporation, is a holder of
Transfer Certificate of Title (TCT) No. T-88513 [4] covering the subject property particularly identified
as Lot 395, Pls 47, with an area of 211,372 square meters more or less, and located at Barangay (Brgy.)
Conrazon, Bansud, Bongabon, Oriental Mindoro (subject property).
Respondent Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS)
is a government corporation, which manages the pension fund of the Armed Forces of the Philippines
(AFP), and is duly organized under Presidential Decree (P.D.) No. 361, [5] as amended by P.D. No.
1656[6] (respondent). Respondent is a holder of TCT No. T-51382[7] covering the same subject property.
On September 1, 1998, petitioner filed a Complaint [8] for Quieting of Title and/or Removal of Cloud
from Title before the RTC. Trial on the merits ensued.
Petitioner averred that on September 6, 1955, Free Patent No. V-19535 [9] (Free Patent) was issued in
the name of Jose Castromero (Jose). On June 1, 1982, the Free Patent was registered, and Original
52
Certificate of Title (OCT) No. P-2612 [10] covering the subject property was issued in the name of Jose.
Sometime in the first half of 1982, Jose sold the subject property to Spouses Sigfriedo and Josephine
Veloso[11] (spouses Veloso), and TCT No. T-17104 [12] was issued in favor of the latter. Spouses Veloso, in
turn, sold the subject property to petitioner for the sum of P634,116.00 on January 17, 1997, [13] and TCT
No. T-88513 was issued in petitioners name. Petitioner alleged that it was the lawful owner and possessor
of the subject property.
Traversing the complaint, respondent, in its Answer,[14] claimed that its title over the subject property
was protected by theTorrens system, as it was a buyer in good faith and for value; and that it had been in
continuous possession of the subject property since November 1989, way ahead of petitioner's alleged
possession in February 1997.
Respondent stated that on April 30, 1966, Homestead Patent No. 113074 (Homestead Patent) was
issued in the name of Charles Soguilon (Charles). On May 27, 1966, the Homestead Patent was
registered[15] and OCT No. RP-110 (P-6339)[16] was issued in Charles's name, covering the same property.
On October 18, 1982, Charles sold the subject property to JMC Farm Incorporated (JMC), which was then
issued TCT No. 18529.[17] On August 30, 1985, JMC obtained a loan from respondent in the amount
of P7,000,000.00, with real estate mortgage over several parcels of land including the subject property.
[18]
JMC failed to pay; hence, after extra-judicial foreclosure and public sale, respondent, being the highest
bidder, acquired the subject property and was issued TCT No. T-51382 in its name. Respondent contended
that from the time it was issued a title, it took possession of the subject property until petitioner disturbed
respondent's possession thereof sometime in 1997. Thus, respondent sent petitioner a Demand
Letter[19] asking the latter to vacate the subject property. Petitioner replied that it was not aware of
respondent's claim.[20] Presently, the subject property is in the possession of the petitioner. [21]
The RTC's Ruling
On June 3, 2004, the RTC ruled in favor of the petitioner on the ground that petitioner's title
emanated from a title older than that of the respondent. Moreover, the RTC held that there were
substantial and numerous infirmities in the Homestead Patent of Charles. The RTC found that there was no
record in the Bureau of Lands that Charles was a homestead applicant or a grantee of Homestead Patent
No. 113074. Upon inquiry, the RTC also found that a similar Homestead Patent bearing No. V-113074 was
actually issued in favor of one Mariano Costales over a parcel of land with an area of 8.7171 hectares and
located in Bunawan, Agusan in Mindanao, per Certification[22] issued by the Lands Management Bureau
dated February 18, 1998. Thus, the RTC held that Charles's Homestead Patent was fraudulent and
spurious, and respondent could not invoke the protection of the Torrens system, because the system does
not protect one who committed fraud or misrepresentation and holds title in bad faith. The RTC disposed of
the case in this wise:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff
and against the defendant, as follows:
1.
DECLARING as valid OCT No. P-2612, in the name of Jose Castromero, and
the subsequent TCT No. T-17104
in the name of the spouses, Siegfriedo A.
Veloso and
Josephine Sison Veloso and TCT No. T-88513, in the
name of
plaintiff Rabaja Ranch & Development
Corporation;
2.
DECLARING plaintiff as the true and lawful owner of the
covered by TCT No. T-88513;
lot in
question
3.
DECLARING as null and void OCT No. RP-110 (P-6339),
in the name of
Charles Soguilon and its derivative titles, TCT No. T18529 registered in the
53
name of J.M.C.
Farm Incorporated and TCT No. T-51392, in the name of the
defendant AFP Retirement Separation and Benefits
System;
4.
DIRECTING the Register of Deeds, City of Calapan,
Oriental Mindoro, to
cancel TCT No. T-51392, in the
name of defendant
AFP Retirement Separation
&
Benefits System and its registration from the Records of the Registry of
Deeds;
5.
NO PRONOUNCEMENT as to damages and attorney's
defendant's counterclaim is hereby dismissed. No Cost.
fees for plaintiff and
SO ORDERED.
Aggrieved, respondent appealed to the CA.[23]
The CA's Ruling
On June 29, 2006, the CA reversed and set aside the RTC's Decision upon the finding that Charles's
Homestead Patent was earlier registered than Jose's Free Patent. The CA held that Jose slept on his rights,
and thus, respondent had a better right over the subject property. Further, the CA opined that while it is
interesting to note that petitioner's claim that Homestead Patent No. V-113074 was issued to Mariano
Costales, per Certification issued by the Lands Management Bureau, there is nothing on record which
would show that said Homestead Patent No. V-113074 and Homestead Patent No. 113074 granted to
Charles were one and the same.
Petitioner
filed
Motion
for
Reconsideration, [24] which
the
CA,
however,
denied
in
its
Resolution[25] dated March 26, 2007.
The Issues
Hence, this Petition based on the following grounds:
a) The CA decided a question of substance not in accordance with existing law and jurisprudence.
b) The CA Decision was based on a gross misapprehension or non-apprehension of facts.
Petitioner asseverates that Homestead Patent No. 113074 is not found in the files of the Land
Management Bureau, nor does Charles's name appear as an applicant or a patentee; that, similarly,
Homestead Patent No. V-113074 was actually issued to Mariano Costales over a parcel of land in Mindanao
and not in Mindoro; that, being fake and spurious, Charles's Homestead Patent is void ab initio and, as
such, does not produce or transmit any right; that the CA completely ignored the RTC's factual findings
based on documentary and testimonial evidence, particularly of the invalidity and infirmities of the
Homestead Patent; that said Homestead Patent does not legally exist, hence, is not registrable; that
respondent's assertion -- that since the issuance of the Homestead Patent in 1966, records and documents
have not been properly kept -- should be discarded, as petitioner's Free Patent which was issued way back
in 1955 is still intact and is of record; that a Homestead Patent, being a contract between the Government
and the grantee, must bear the consent of the Government; and, Charles's Homestead Patent being a
simulation, cannot transmit any right; that the earlier registration of the Homestead Patent has no legal
effect,
as
the
same
is
merely
simulated;
and
that
OCT
No.
No.
RP-110
(P-6339)
and
54
all derivative titles issued, including respondent's title, are null and void. Petitioner submits that it has
a better right over the subject property than respondent.[26]
Respondent takes issue with petitioners claim that the Homestead Patent is spurious or fake, the
same
being
question
of
fact
not
proper
in
petition
for
review
on certiorari before
this
Court. Respondent also posits that the factual findings of the CA are conclusive and binding on this Court,
as such findings are based on record; that respondent has a better right over the subject property because
only the certified copy and not the original copy of the Free Patent was transcribed and registered with the
Register of Deeds of Calapan, Oriental Mindoro; that the Homestead Patent was duly transcribed on May
27, 1966, way ahead of the registration of the Free Patent on June 1, 1982; that the CA was correct in
ruling that Section 122[27] of Act No. 496 (The Land Registration Act) as amended by Section 103 [28] of P.D.
No. 1529 (The Property Registration Decree) provides that registration of the Patent with the Register of
Deeds is the operative act to affect and convey the land; and that the fact that the Homestead Patent was
duly registered, said Patent became indefeasible as a Torrens Title. Moreover, respondent avers that the
petitioner failed to prove by preponderance of evidence that the Homestead Patent is spurious or fake.
Respondent maintains that it is the Free Patent which is spurious since what was registered was only the
certified and not the original copy of the Free Patent.[29]
The issues may, thus, be summed up in the sole question of
WHETHER OR NOT RESPONDENT'S TITLE WHICH ORIGINATED FROM A FAKE AND
SPURIOUS HOMESTEAD PATENT, ISSUPERIOR TO PETITIONER'S TITLE WHICH ORIGINATED
FROM A VALID AND EXISTING FREE PATENT.[30]
Simply put, the issue is who, between the petitioner and respondent, has a better right over the
subject property.
Our Ruling
The instant Petition is bereft of merit.
While this Court, is not a trier of facts and is not required to examine or contrast the oral and
documentary evidence de novo, nonetheless, it may review and, in proper cases, reverse the factual
findings of lower courts when the findings of fact of the trial court are in conflict with those of the appellate
court.[31] In this case, we see the need to review the records.
The special circumstances attending this case cannot be disregarded. Two certificates of title were
issued covering the very same property, deriving their respective authorities from two different special
patents granted by the Government. The Free Patent was issued to Jose on September 6, 1955 as opposed
to the Homestead Patent which was issued to Charles on April 30, 1966. The latter was registered on May
27, 1966, ahead of the former which was registered only on June 1, 1982. Each patent generated a
certificate of title issued to a different set of individuals. Over the years, the subject property was
eventually sold to the contending parties herein, who both appear to be buyers in good faith and for value.
Petitioner now seeks relief before this Court on the main contention that the registered Homestead
Patent from which respondent derived its title, is fake and spurious, and is, therefore, void ab
initio because it was not issued, at all, by the Government.
55
We are not convinced.

Our ruling in Republic v. Guerrero,[32] is instructive:
Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an
intentional deception practiced by means of the misrepresentation or concealment of a
material fact. Constructive fraud is construed as a fraud because of its detrimental effect
upon public interests and public or private confidence, even though the act is not done with
an actual design to commit positive fraud or injury upon other persons.
Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the
fraudulent acts pertain to an issue involved in the original action, or where the acts
constituting the fraud were or could have been litigated therein. The fraud is extrinsic if it is
employed to deprive parties of their day in court and thus prevent them from asserting their
right to the property registered in the name of the applicant.
The distinctions assume significance because only actual and extrinsic fraud had been
accepted and is contemplated by the law as a ground to review or reopen a
decree of registration. Thus, relief is granted to a party deprived of his interest in land
where the fraud consists in a deliberate misrepresentation that the lots are not contested
when in fact they are; or in willfully misrepresenting that there are no other claims; or in
deliberately failing to notify the party entitled to notice; or in inducing him not to oppose an
application; or in misrepresenting about the identity of the lot to the true owner by the
applicant causing the former to withdraw his application. In all these examples, the
overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a
party from having his day in court or from presenting his case. The fraud, therefore, is one
that affects and goes into the jurisdiction of the court.
We have repeatedly held that relief on the ground of fraud will not be granted where the
alleged fraud goes into the merits of the case, is intrinsic and not collateral, and has been
controverted and decided. Thus, we have underscored the denial of relief where it appears
that the fraud consisted in the presentation at the trial of a supposed forged document, or a
false and perjured testimony, or in basing the judgment on a fraudulent compromise
agreement, or in the alleged fraudulent acts or omissions of the counsel which prevented
the petitioner from properly presenting the case.[33]
No actual and extrinsic fraud existed in this case. In our jurisdiction, fraud is never presumed.
[34]
Mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right,
or in some manner, injure him must be specifically alleged and proved. [35] The burden of proof rests on
petitioner, and the petitioner failed to discharge the burden. Petitioner did not convincingly show that the
Homestead Patent issued to Charles is indeed spurious. More importantly, petitioner failed to prove that
respondent took part in the alleged fraud which dated back as early as 1966 when Charles supposedly
secured the fake and spurious Homestead Patent.
In Estate of the Late Jesus S. Yujuico v. Republic,[36] citing Republic v. Court of Appeals,[37] this Court
stressed the fact that it was never proven that private respondent St. Jude was a party to the fraud that
led to the increase in the area of the property after it was sub-divided. In the same case, citing Republic v.
Umali,[38] we held that, in a reversion case, even if the original grantee of a patent and title has obtained
the same through fraud, reversion will no longer prosper as the land had become private land and the
fraudulent acquisition cannot affect the titles of innocent purchasers for value.
This conclusion rests very firmly on Section 32 of P.D. No. 1529, which states:
SECTION 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence, minority, or
other disability of any person adversely affected thereby, nor by any proceeding in any court
for reversing judgment, subject, however, to the right of any person, including the
government and the branches thereof, deprived of land or of any estate or interest therein
by such adjudication or confirmation of title obtained by actual fraud, to file in the proper
56

Court of First Instance a petition for reopening and review of the decree of registration not
later than one year from and after the date of the entry of such decree of registration, but
in no case shall such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein whose rights may
be prejudiced. Whenever the phrase "innocent purchaser for value" or an
equivalent phrase occurs in this Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the
certificate of title issued shall become incontrovertible. Any person aggrieved by such
decree of registration in any case may pursue his remedy by action for damages against the
applicant or any other person responsible for the fraud. (Underscoring ours)
Settled is the rule that no valid TCT can issue from a void TCT, unless an innocent purchaser for value
had intervened. An innocent purchaser for value is one who buys the property of another, without notice
that some other person has a right to or interest in the property, for which a full and fair price is paid by
the buyer at the time of the purchase or before receipt of any notice of the claims or interest of some other
person in the property. The protection given to innocent purchasers for value is necessary to uphold a
certificate of title's efficacy and conclusiveness, which the Torrens system ensures.[39]
Clearly, respondent is an innocent purchaser in good faith and for value. Thus, as far as respondent
is concerned, TCT No. 18529, shown to it by JMC, was free from any flaw or defect that could give rise to
any iota of doubt that it was fake and spurious, or that it was derived from a fake or spurious Homestead
Patent. Likewise, respondent was not under any obligation to make an inquiry beyond the TCT itself when,
significantly, a foreclosure sale was conducted and respondent emerged as the highest bidder.
In Republic v. Court of Appeals,[40] this Court distinguished a Homestead Patent from a Free Patent, to
wit:
Homestead Patent and Free Patent are some of the land patents granted by the
government under the Public Land Act. While similar, they are not exactly the same. A
Homestead Patent is one issued to: any citizen of this country; over the age of 18 years or
the head of a family; who is not the owner of more than twenty-four (24) hectares of land in
the Philippines or has not had the benefit of any gratuitous allotment of more than twentyfour (24) hectares of land since the occupation of the Philippines by the United States. The
applicant must show that he has complied with the residence and cultivation requirements
of the law; must have resided continuously for at least one year in the municipality where
the land is situated; and must have cultivated at least one-fifth of the land applied for.
On the other hand, a Free Patent may be issued where the applicant is a naturalborn citizen of the Philippines; not the owner of more than twelve (12) hectares of land; that
he has continuously occupied and cultivated, either by himself or through his
predecessors-in-interests, a tract or tracts of agricultural public lands subject to disposition
for at least 30 years prior to the effectivity of Republic Act No. 6940; and that he has paid
the real taxes thereon while the same has not been occupied by any person. [41]
It bears stressing that a Homestead Patent, once registered under the Land Registration Act,
becomes as indefeasible as a Torrens Title.[42] Verily, Section 103 of P.D. No. 1529 mandates the
registration of patents, and such registration is the operative act to convey the land to the patentee, thus:
Sec. 103.
. . . . . The deed, grant, patent or instrument of conveyance from the
Government to the grantee shall not take effect as a conveyance or bind the land but shall
operate only as a contract between the Government and the grantee and as evidence of
authority to the Register of Deeds to make registration. It is the act of registration that
shall be the operative act to affect and convey the land, and in all cases under
this Decree, registration shall be made in the office of the Register of Deeds of
the province or city where the land lies. The fees for registration shall be paid by
the grantee. After due registration and issuance of the certificate of title, such
land shall be deemed to be registered land to all intents and purposes under this
Decree. (Emphasis supplied)
57
The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of
titles to lands. However, justice and equity demand that the titleholder should not be made to bear the
unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of his
complicity in a fraud or of manifest damage to third persons. The real purpose of theTorrens system is to
quiet title to land and put a stop forever to any question as to the legality of the title, except claims that
were noted in the certificate at the time of the registration or that may arise subsequent
thereto. Otherwise, the integrity of the Torrenssystem shall forever be sullied by the ineptitude and
inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their
duties.[43]
The general rule that the direct result of a previous void contract cannot be valid will not apply in this
case as it will directly contravene the Torrens system of registration. Where innocent third persons, relying
on the correctness of the certificate of title thus issued, acquire rights over the property, this Court cannot
disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation
will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be
preserved; otherwise, everyone dealing with the property registered under the system will have to inquire
in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law. Every person dealing with the registered land may safely rely on the correctness of
the certificate of title issued therefor, and the law will, in no way, oblige him to go behind the certificate to
determine the condition of the property. [44]
Respondent's transfer certificate of title, having been derived from the Homestead Patent which was
registered under the Torrens system on May 27, 1966, was thus vested with the habiliments of
indefeasibility.
WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision
is AFFIRMED. No costs.

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[G.R. No. 138053. May 31, 2000]

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c) The necessary expenses incurred by petitioner over the property. [7]

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WHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered:

Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith.

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SECOND ASSIGNED ERROR

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WHEREFORE, the decision appealed from is AFFIRMED.[3]

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THE ESTATE OF PEDRO C. GONZALES

G.R. No. 169681

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where the Court ruled more emphatically that:

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subject Deed of Sale is invalid on the ground that it does not

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or for the sale

[G.R. No. 142441. November 10, 2004]

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Meanwhile, on 30 January 1979, Pedro Bongalon executed an Extrajudicial Settlement of Estate

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The petition is partly meritorious.

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G.R. No. 168655

-versusREGISTRAR OF DEEDS OF LAS PIAS,

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The notations appearing on the titles memorandum of encumbrances are as follows:

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Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of Appeals,

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G.R. Nos. 162335 & 162605

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The Barques anchor their motion for reconsideration on the following:

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summation of Felicitas B. Manahans allegations embodied in her petition.

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