CHAPTER 2

[G.R. No. 154409. June 21, 2004]

Spouses NOEL and JULIE

ABRIGO, petitioners, vs. ROMANA DE VERA, respondent.

DECISION
PANGANIBAN, J.:

Between two buyers of the same immovable property registered under

the Torrens system, the law gives ownership priority to (1) the first registrant
in good faith; (2) then, the first possessor in good faith; and (3) finally, the
buyer who in good faith presents the oldest title. This provision, however,
does not apply if the property is not registered under the Torrens system.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court,

seeking to set aside the March 21, 2002 Amended Decision[2] and the July
22, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No.
62391. The Amended Decision disposed as follows:

WHEREFORE, the dispositive part of the original DECISION of this case,

promulgated on November 19, 2001, is SET ASIDE and another one is
entered AFFIRMING in part and REVERSING in part the judgment appealed
from, as follows:

1. Declaring [Respondent] Romana de Vera the rightful owner and with

better right to possess the property in question, being an innocent
purchaser for value therefor;
 2. Declaring Gloria Villafania [liable] to pay the following to [Respondent]
Romana de Vera and to [Petitioner-]Spouses [Noel and Julie] Abrigo,
to wit:

As to [Respondent] Romana de Vera:

1. P300,000.00 plus 6% per annum as actual damages;

2. P50,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P30,000.00 as attorneys fees; and
5. Cost of suit.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo:

1. P50,000.00 as moral damages;

2. P50,000.00 as exemplary damages;
3. P30,000.00 as attorneys fees;
4. Cost of suit.[4]

The assailed Resolution denied reconsideration.

The Facts

Quoting the trial court, the CA narrated the facts as follows:

As culled from the records, the following are the pertinent antecedents amply
summarized by the trial court:

On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang,
Mangaldan, Pangasinan and covered by Tax Declaration No. 1406 to Rosenda
Tigno-Salazar and Rosita Cave-Go. The said sale became a subject of a suit for
annulment of documents between the vendor and the vendees.

On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City

rendered judgment approving the Compromise Agreement submitted by the
parties. In the said Decision, Gloria Villafania was given one year from the date of
the Compromise Agreement to buy back the house and lot, and failure to do so
would mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita
Cave-Go shall remain valid and binding and the plaintiff shall voluntarily vacate
the premises without need of any demand. Gloria Villafania failed to buy back the
house and lot, so the [vendees] declared the lot in their name.

Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria

Villafania obtained a free patent over the parcel of land involved [on March 15,
1988 as evidenced by OCT No. P-30522]. The said free patent was later on
cancelled by TCT No. 212598 on April 11, 1996.

On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house
and lot to the herein [Petitioner-Spouses Noel and Julie Abrigo].

On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de
Vera x x x. Romana de Vera registered the sale and as a consequence, TCT No.
22515 was issued in her name.

On November 12, 1997, Romana de Vera filed an action for Forcible Entry and
Damages against [Spouses Noel and Julie Abrigo] before the Municipal Trial
Court of Mangaldan, Pangasinan docketed as Civil Case No. 1452. On February
25, 1998, the parties therein submitted a Motion for Dismissal in view of their
agreement in the instant case that neither of them can physically take possession of
the property in question until the instant case is terminated. Hence the ejectment
case was dismissed.[5]

Thus, on November 21, 1997, [petitioners] filed the instant case [with
the Regional Trial Court of Dagupan City] for the annulment of documents,
injunction, preliminary injunction, restraining order and damages [against
respondent and Gloria Villafania].

After the trial on the merits, the lower court rendered the assailed Decision
dated January 4, 1999, awarding the properties to [petitioners] as well as damages.
Moreover, x x x Gloria Villafania was ordered to pay [petitioners and private
respondent] damages and attorneys fees.

Not contented with the assailed Decision, both parties [appealed to the CA].[6]

Ruling of the Court of Appeals

In its original Decision promulgated on November 19, 2001, the CA held

that a void title could not give rise to a valid one and hence dismissed the
appeal of Private Respondent Romana de Vera.[7] Since Gloria Villafania had
already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-
Go, the subsequent sale to De Vera was deemed void.
The CA also dismissed the appeal of Petitioner-Spouses Abrigo and
found no sufficient basis to award them moral and exemplary damages and
attorneys fees.
On reconsideration, the CA issued its March 21, 2002 Amended
Decision, finding Respondent De Vera to be a purchaser in good faith and
for value. The appellate court ruled that she had relied in good faith on
the Torrens title of her vendor and must thus be protected.[8]
Hence, this Petition.[9]

Issues

Petitioners raise for our consideration the issues below:

1. Whether or not the deed of sale executed by Gloria Villafania in favor of

[R]espondent Romana de Vera is valid.

2. Whether or not the [R]espondent Romana de Vera is a purchaser for value

in good faith.

3. Who between the petitioners and respondent has a better title over the
property in question.[10]

In the main, the issues boil down to who between petitioner-spouses and
respondent has a better right to the property.

The Courts Ruling

The Petition is bereft of merit.

Main Issue:
Better Right over the Property

Petitioners contend that Gloria Villafania could not have transferred the
property to Respondent De Vera because it no longer belonged to
her.[11] They further claim that the sale could not be validated, since
respondent was not a purchaser in good faith and for value.[12]

Law on Double Sale

The present case involves what in legal contemplation was a double

sale. On May 27, 1993, Gloria Villafania first sold the disputed property to
Rosenda Tigno-Salazar and Rosita Cave-Go, from whom petitioners, in turn,
derived their right. Subsequently, on October 23, 1997, a second sale was
executed by Villafania with Respondent Romana de Vera.
Article 1544 of the Civil Code states the law on double sale thus:

Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.

Otherwise stated, the law provides that a double sale of immovables

transfers ownership to (1) the first registrant in good faith; (2) then, the first
possessor in good faith; and (3) finally, the buyer who in good faith presents
the oldest title.[13] There is no ambiguity in the application of this law with
respect to lands registered under the Torrens system.
This principle is in full accord with Section 51 of PD 1529[14] which
provides that 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 until its registration.[15] Thus, if the sale is
not registered, it is binding only between the seller and the buyer but it does
not affect innocent third persons.[16]
In the instant case, both Petitioners Abrigo and respondent registered the
sale of the property. Since neither petitioners nor their predecessors (Tigno-
Salazar and Cave-Go) knew that the property was covered by
the Torrens system, they registered their respective sales under Act
3344.[17] For her part, respondent registered the transaction under
the Torrens system[18] because, during the sale, Villafania had presented the
transfer certificate of title (TCT) covering the property.[19]
Respondent De Vera contends that her registration under
the Torrens system should prevail over that of petitioners who recorded
theirs under Act 3344. De Vera relies on the following insight of Justice
Edgardo L. Paras:

x x x If the land is registered under the Land Registration Act (and has therefore a
Torrens Title), and it is sold but the subsequent sale is registered not under the
Land Registration Act but under Act 3344, as amended, such sale is not considered
REGISTERED, as the term is used under Art. 1544 x x x.[20]

We agree with respondent. It is undisputed that Villafania had been

issued a free patent registered as Original Certificate of Title (OCT) No. P-
30522.[21] The OCT was later cancelled by Transfer Certificate of Title (TCT)
No. 212598, also in Villafanias name.[22] As a consequence of the sale, TCT
No. 212598 was subsequently cancelled and TCT No. 22515 thereafter
issued to respondent.
Soriano v. Heirs of Magali[23] held that registration must be done in the
proper registry in order to bind the land. Since the property in dispute in the
present case was already registered under the Torrens system, petitioners
registration of the sale under Act 3344 was not effective for purposes of
Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of
Appeals,[24] the Court upheld the right of a party who had registered the sale
of land under the Property Registration Decree, as opposed to another who
had registered a deed of final conveyance under Act 3344. In that case, the
priority in time principle was not applied, because the land was already
covered by the Torrenssystem at the time the conveyance was registered
under Act 3344. For the same reason, inasmuch as the registration of the
sale to Respondent De Vera under the Torrens system was done in good
faith, this sale must be upheld over the sale registered under Act 3344 to
Petitioner-Spouses Abrigo.
Radiowealth Finance Co. v. Palileo[25] explained the difference in the
rules of registration under Act 3344 and those under the Torrens system in
this wise:
Under Act No. 3344, registration of instruments affecting unregistered lands is
without prejudice to a third party with a better right. The aforequoted phrase has
been held by this Court to mean that the mere registration of a sale in ones favor
does not give him any right over the land if the vendor was not anymore the owner
of the land having previously sold the same to somebody else even if the earlier
sale was unrecorded.

The case of Carumba vs. Court of Appeals[26] is a case in point. It was held therein
that Article 1544 of the Civil Code has no application to land not registered under
Act No. 496. Like in the case at bar, Carumba dealt with a double sale of the same
unregistered land. The first sale was made by the original owners and was
unrecorded while the second was an execution sale that resulted from a complaint
for a sum of money filed against the said original owners. Applying [Section 33],
Rule 39 of the Revised Rules of Court,[27] this Court held that Article 1544 of the
Civil Code cannot be invoked to benefit the purchaser at the execution sale though
the latter was a buyer in good faith and even if this second sale was registered. It
was explained that this is because the purchaser of unregistered land at a sheriffs
execution sale only steps into the shoes of the judgment debtor, and merely
acquires the latters interest in the property sold as of the time the property was
levied upon.

Applying this principle, x x x the execution sale of unregistered land in favor of

petitioner is of no effect because the land no longer belonged to the judgment
debtor as of the time of the said execution sale.[28]

Petitioners cannot validly argue that they were fraudulently misled into
believing that the property was unregistered. A Torrens title, once registered,
serves as a notice to the whole world.[29] All persons must take notice, and
no one can plead ignorance of the registration.[30]

Good-Faith Requirement

We have consistently held that Article 1544 requires the second buyer to
acquire the immovable in good faith and to register it in good faith.[31] Mere
registration of title is not enough; good faith must concur with the
registration.[32] We explained the rationale in Uraca v. Court of
Appeals,[33] which we quote:
Under the foregoing, the prior registration of the disputed property by the second
buyer does not by itself confer ownership or a better right over the
property. Article 1544 requires that such registration must be coupled with good
faith. Jurisprudence teaches us that (t)he governing principle is primus tempore,
potior jure (first in time, stronger in right). Knowledge gained by the first buyer of
the second sale cannot defeat the first buyers rights except where the second buyer
registers in good faith the second sale ahead of the first, as provided by the Civil
Code. Such knowledge of the first buyer does not bar her from availing of her
rights under the law, among them, to register first her purchase as against the
second buyer. But in converso, knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the price exacted by
Article 1544 of the Civil Code for the second buyer being able to displace the first
buyer; that before the second buyer can obtain priority over the first, he must show
that he acted in good faith throughout (i.e. in ignorance of the first sale and of the
first buyers rights) ---- from the time of acquisition until the title is transferred to
him by registration, or failing registration, by delivery of possession.[34] (Italics
supplied)

Equally important, under Section 44 of PD 1529, every registered owner

receiving a certificate of title pursuant to a decree of registration, and every
subsequent purchaser of registered land taking such certificate for value and
in good faith shall hold the same free from all encumbrances, except those
noted and enumerated in the certificate.[35] Thus, a person dealing with
registered land is not required to go behind the registry to determine the
condition of the property, since such condition is noted on the face of the
register or certificate of title.[36] Following this principle, this Court has
consistently held as regards registered land that a purchaser in good faith
acquires a good title as against all the transferees thereof whose rights are
not recorded in the Registry of Deeds at the time of the sale.[37]
Citing Santiago v. Court of Appeals,[38] petitioners contend that their prior
registration under Act 3344 is constructive notice to respondent and negates
her good faith at the time she registered the sale. Santiago affirmed the
following commentary of Justice Jose C. Vitug:

The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first
buyer's rights except when the second buyer first registers in good faith the second
sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register, since
such knowledge taints his registration with bad faith (see also Astorga vs. Court of
Appeals, G.R. No 58530, 26 December 1984) In Cruz vs. Cabana (G.R. No.
56232, 22 June 1984; 129 SCRA 656), it was held that it is essential, to merit the
protection of Art. 1544, second paragraph, that the second realty buyer must act in
good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69
SCRA 99, Crisostomo vs. CA, G.R. 95843, 02 September 1992).

xxxxxxxxx

Registration of the second buyer under Act 3344, providing for the registration of
all instruments on land neither covered by the Spanish Mortgage Law nor the
Torrens System (Act 496), cannot improve his standing since Act 3344 itself
expresses that registration thereunder would not prejudice prior rights in good faith
(see Carumba vs. Court of Appeals, 31 SCRA 558). Registration, however, by
the first buyer under Act 3344 can have the effect of constructive notice to the
second buyer that can defeat his right as such buyer in good faith (see Arts.
708-709, Civil Code; see also Revilla vs. Galindez, 107 Phil. 480; Taguba vs.
Peralta,132 SCRA 700). Art. 1544 has been held to be inapplicable to execution
sales of unregistered land, since the purchaser merely steps into the shoes of the
debtor and acquires the latter's interest as of the time the property is sold (Carumba
vs. Court of Appeals, 31 SCRA 558; see also Fabian vs. Smith, Bell & Co., 8 Phil.
496) or when there is only one sale (Remalante vs. Tibe, 158 SCRA
138).[39] (Emphasis supplied)

Santiago was subsequently applied in Bayoca v. Nogales,[40] which held:

Verily, there is absence of prior registration in good faith by petitioners of the

second sale in their favor. As stated in the Santiago case, registration by the first
buyer under Act No. 3344 can have the effect of constructive notice to the second
buyer that can defeat his right as such buyer. On account of the undisputed fact of
registration under Act No. 3344 by [the first buyers], necessarily, there is absent
good faith in the registration of the sale by the [second buyers] for which they had
been issued certificates of title in their names. x x x.[41]

Santiago and Bayoca are not in point. In Santiago, the first buyers
registered the sale under the Torrens system, as can be inferred from the
issuance of the TCT in their names.[42] There was no registration under Act
3344. In Bayoca, when the first buyer registered the sale under Act 3344,
the property was still unregistered land.[43] Such registration was therefore
considered effectual.
 Furthermore, Revilla and Taguba, which are cited in Santiago, are not on
all fours with the present case. In Revilla, the first buyer did not register the
sale.[44] In Taguba, registration was not an issue.[45]
As can be gathered from the foregoing, constructive notice to the second
buyer through registration under Act 3344 does not apply if the property is
registered under the Torrens system, as in this case.
We quote below the additional commentary of Justice Vitug, which was
omitted in Santiago. This omission was evidently the reason why petitioner
misunderstood the context of the citation therein:

"The registration contemplated under Art. 1544 has been held to refer to
registration under Act 496 Land Registration Act (now PD 1529) which considers
the act of registration as the operative act that binds the land (see Mediante vs.
Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by
the Torrens System, the purchaser acquires such rights and interest as they appear
in the certificate of title, unaffected by any prior lien or encumbrance not noted
therein. The purchaser is not required to explore farther than what the Torrens title,
upon its face, indicates. The only exception is where the purchaser has actual
knowledge of a flaw or defect in the title of the seller or of such liens or
encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act
496; Bernales vs. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil
744; Tajonera vs. Court of Appeals, L-26677, 27 March 1981),"[46]

Respondent
in Good Faith

The Court of Appeals examined the facts to determine whether

respondent was an innocent purchaser for value.[47] After its factual findings
revealed that Respondent De Vera was in good faith, it explained thus:

x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the

registered owner. The subject land was, and still is, registered in the name of
Gloria Villafania. There is nothing in her certificate of title and in the
circumstances of the transaction or sale which warrant [Respondent] De Vera in
supposing that she need[ed] to look beyond the title. She had no notice of the
earlier sale of the land to [petitioners]. She ascertained and verified that her vendor
was the sole owner and in possession of the subject property by examining her
vendors title in the Registry of Deeds and actually going to the premises. There is
no evidence in the record showing that when she bought the land on October 23,
1997, she knew or had the slightest notice that the same was under litigation in
Civil Case No. D-10638 of the Regional Trial Court of Dagupan City, Branch 40,
between Gloria Villafania and [Petitioners] Abrigo. She was not even a party to
said case. In sum, she testified clearly and positively, without any contrary
evidence presented by the [petitioners], that she did not know anything about the
earlier sale and claim of the spouses Abrigo, until after she had bought the same,
and only then when she bought the same, and only then when she brought an
ejectment case with the x x x Municipal Court of Mangaldan, known as Civil Case
No. 1452. To the [Respondent] De Vera, the only legal truth upon which she had to
rely was that the land is registered in the name of Gloria Villafania, her
vendor, and that her title under the law, is absolute and indefeasible. x x x.[48]

We find no reason to disturb these findings, which petitioners have not

rebutted. Spouses Abrigo base their position only on the general averment
that respondent should have been more vigilant prior to consummating the
sale. They argue that had she inspected the property, she would have found
petitioners to be in possession.[49]
This argument is contradicted, however, by the spouses own admission
that the parents and the sister of Villafania were still the actual occupants in
October 1997, when Respondent De Vera purchased the property.[50] The
family members may reasonably be assumed to be Villafanias agents, who
had not been shown to have notified respondent of the first sale when she
conducted an ocular inspection. Thus, good faith on respondents part
stands.
WHEREFORE, the Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
GUARANTEED HOMES, INC., G.R. No. 171531
Petitioner,
- versus - Present:
HEIRS OF MARIA P. VALDEZ, QUISUMBING, J.,
(EMILIA V. YUMUL and VICTORIA Chairperson,
V. MOLINO), HEIRS OF SEVERINA CORONA,*
P. TUGADE (ILUMINADA and CARPIO MORALES,
LEONORA P. TUGADE, HEIRS OF TINGA, and
ETANG P. GATMIN (LUDIVINA BRION, JJ.
G. DELA CRUZ (by and through
ALFONSO G. DELA CRUZ), HILARIA
G. COBERO and ALFREDO G. COBERO) Promulgated:
and SIONY G. TEPOL (by and through
ELENA T. RIVAS and ELESIO TEPOL,
JR.), AS HEIRS OF DECEDENT PABLO January 30, 2009
PASCUA,
Respondents.
x ------------------------------------------------------------------------------------------------- x

DECISION

TINGA, J.:

This is a petition for review[1] under Rule 45 of the Rules of Court of the Court of
Appeals Decision dated 22 March 2005[2] and Resolution dated 9 February
2006[3] in CA-G.R. CV No. 67462. The Court of Appeals reversed the 12 November
1999 Order of the Regional Trial Court (RTC) of Olongapo City, Branch 73[4] which
granted the motion to dismiss filed by Guaranteed Homes, Inc. (petitioner). The
appellate court denied petitioners motion for reconsideration.

The factual antecedents are as follows:

Respondents, who are the descendants of Pablo Pascua (Pablo), filed a

complaint seeking reconveyance of a parcel of land with an area of 23.7229 hectares
situated in Cabitaugan, Subic, Zambales and covered by Original Certificate of Title
(OCT) No. 404 in the name of Pablo.[5] In the alternative, the respondents prayed
that damages be awarded in their favor.[6]
 OCT No. 404[7] was attached as one of the annexes of respondents complaint.
It contained several annotations in the memorandum of encumbrances which showed
that the property had already been sold by Pablo during his lifetime to Alejandria
Marquinez and Restituto Morales. Respondents also attached copies of the following
documents as integral parts of their complaint: Transfer Certificate of Title (TCT)
No. T-8241,[8] TCT No. T-8242,[9] TCT No. T-10863,[10] the Extrajudicial
Settlement of a Sole Heir and Confirmation of Sales[11]executed by Cipriano Pascua,
Sr. (Cipriano), and the Deed of Sale with Mortgage[12] between spouses Albino
Rodolfo and Fabia Rodolfo (spouses Rodolfo) and petitioner.

In their complaint,[13] respondents alleged that Pablo died intestate sometime

in June 1945 and was survived by his four children, one of whom was the deceased
Cipriano.[14] On13 February 1967, Cipriano executed a document denominated as
Extrajudicial Settlement of a Sole Heir and Confirmation of Sales, [15] wherein he
declared himself as the only heir of Pablo and confirmed the sales made by the
decedent during his lifetime, including the alleged sale of the disputed property to
spouses Rodolfo.

Respondents likewise averred that on the following day 14 February 1967,

TCT No. T-8241[16] was issued in the name of Cipriano without OCT No. 404 having
been cancelled.[17] However, TCT No. T-8241 was not signed by the Register of
Deeds. On the same day, TCT No. T-8242 was issued in the name of the spouses
Rodolfo and TCT No. T-8241 was thereby cancelled.[18] Subsequently, on 31
October 1969, the spouses Rodolfo sold the disputed property to petitioner by virtue
of a Deed of Sale with Mortgage. Consequently, on 5 November 1969, TCT No. T-
8242 was cancelled and TCT No. T-10863[19] was issued in the name of petitioner.[20]

It was further averred in the complaint that Jorge Pascua, Sr., son of Cipriano, filed
on 24 January 1997 a petition before the RTC of Olongapo City, Branch 75, for the
issuance of a new owners duplicate of OCT No. 404, docketed as Other Case No.
04-0-97.[21] The RTC denied the petition.[22] The trial court held that petitioner was
already the owner of the land, noting that the failure to annotate the subsequent
transfer of the property to it at the back of OCT No. 404 did not affect its title to the
property.
 Petitioner filed a motion to dismiss [23] the complaint on the grounds that the
action is barred by the Statute of Limitations, more than 28 years having elapsed
from the issuance of TCT No. T-10863 up to the filing of the complaint, and that the
complaint states no cause of action as it is an innocent purchaser for value, it having
relied on the clean title of the spouses Rodolfo.

Impleaded as defendants, the heirs of Cipriano filed an answer to the

complaint in which they denied knowledge of the existence of the extrajudicial
settlement allegedly executed by Cipriano and averred that the latter, during his
lifetime, did not execute any document transferring ownership of the property.[24]

The Register of Deeds and the National Treasurer filed, through the Office of
the Solicitor General, an answer averring that the six (6)-year period fixed in Section
102 of Presidential Decree (P.D.) No. 1529 for the filing of an action against the
Assurance Fund had long prescribed since the transfer of ownership over the
property was registered through the issuance of TCT No. T-10863 in favor of
petitioner as early as 1969. They also claimed that respondents have no cause of
action against the Assurance Fund since they were not actually deprived of
ownership over the property, as they could have recovered the property had it not
been for their inaction for over 28 years.[25]

The RTC granted petitioners motion to dismiss.[26] Noting that respondents had never
claimed nor established that they have been in possession of the property and that
they did not present any evidence to show that petitioner has not been in possession
of the property either, the RTC applied the doctrine that an action to quiet title
prescribes where the plaintiff is not in possession of the property.

The trial court found that the complaint per its allegations presented a case of
implied or constructive trust on the part of Cipriano who had inaccurately claimed to
be the sole heir of Pablo in the deed of extrajudicial settlement of estate which led to
the issuance of TCT No. T- 8241 in his favor. As the prescriptive period for
reconveyance of a fraudulently registered real property is ten (10) years reckoned
from the date of the issuance of the title, the trial court held that the action for
reconveyance had already prescribed with the lapse of more than 28 years from the
issuance of TCT No. T-10863 on 5 November 1969 as of the filing of the complaint
on 21 November 1997.

The RTC added that it is an enshrined rule that even a registered owner of property
may be barred from recovering possession of property by virtue of laches.

The RTC further held that petitioner had the right to rely on TCT No. T- 8242 in the
name of spouses Rodolfo. Petitioner is not obliged to go beyond the title considering
that there were no circumstances surrounding the sale sufficient to put it into inquiry.

Concerning the Assurance Fund, the RTC held that the claim against it had long
prescribed since Section 102 of P.D. No. 1529 provides for a six-year period within
which a plaintiff may file an action against the fund and in this case the period should
be counted from the time of the issuance of the challenged TCT No. T-10863 on 5
November 1969 and thus expired in 1975.

Undaunted, respondents appealed to the Court of Appeals.[27]

The Court of Appeals reversed the RTCs order.[28] In ordering the reinstatement of
the complaint, the appellate court ruled that the averments in respondents complaint
before the RTC make out a case for quieting of title which has not prescribed.
Respondents did not have to prove possession over the property since petitioner as
the movant in a motion to dismiss hypothetically admitted the truth of the allegations
in the complaint. The appellate court found that possession over the property was
sufficiently alleged in the complaint which stated that neither petitioner nor the
Rodolfo spouses ever had possession of the disputed property as a number of the
Pascua heirs either had been (still are) in actual, continuous and adverse possession
thereof or had been enjoying (still are enjoying) the use thereof.[29] By the same
token, laches had not set in, the Court of Appeals added.

The appellate court further held that the ruling of the RTC that petitioner is an
innocent purchaser for value is contrary to the allegations in respondents complaint.

Hence, the present petition for review.

The sole issue before this Court revolves around the propriety of the RTCs granting
of the motion to dismiss and conversely the tenability of the Court of Appeals
reversal of the RTCs ruling.

The petition is meritorious.

It is well-settled that to sustain a dismissal on the ground that the complaint

states no cause of action, the insufficiency of the cause of action must appear on the
face of the complaint, and the test of the sufficiency of the facts alleged in the
complaint to constitute a cause of action is whether or not, admitting the facts
alleged, the court could render a valid judgment upon the same in accordance with
the prayer of the complaint. For the purpose, the motion to dismiss must
hypothetically admit the truth of the facts alleged in the complaint.[30]The admission,
however, is limited only to all material and relevant facts which are well pleaded in
the complaint.[31]

The factual allegations in respondents complaint should be considered in tandem

with the statements and inscriptions on the documents attached to it as annexes or
integral parts. In a number of cases, the Court held that in addition to the complaint,
other pleadings submitted by the parties should be considered in deciding whether
or not the complaint should be dismissed for lack of cause of action. [32] Likewise,
other facts not alleged in the complaint may be considered where the motion to
dismiss was heard with the submission of evidence, or if documentary evidence
admitted by stipulation discloses facts sufficient to defeat the claim.[33] For while the
court must accept as true all well pleaded facts in the complaint, the motion does not
admit allegations of which the court will take judicial notice are not true, nor does
the rule apply to legally impossible facts, nor to facts inadmissible in evidence, nor
to facts which appear by record or document included in the pleadings to be
unfounded.[34]

In the case at bar, the trial court conducted a hearing on the motion to dismiss. At
the hearing, the parties presented documentary evidence. Among the documents
marked and offered in evidence are the annexes of the complaint.[35]

Based on the standards set by this Court in relation to the factual allegations and
documentary annexes of the complaint as well as the exhibits offered at the hearing
of the motion to dismiss, the inescapable conclusion is that respondents complaint
does not state a cause of action against petitioner.

Firstly, the complaint does not allege any defect with TCT No. T-8242 in the
name of the spouses Rodolfo, who were petitioners predecessors-in-interest, or any
circumstance from which it could reasonably be inferred that petitioner had any
actual knowledge of facts that would impel it to make further inquiry into the title of
the spouses Rodolfo.[36] It is basic that a person dealing with registered property need
not go beyond, but only has to rely on, the title of his predecessor-in-interest. Since
"the act of registration is the operative act to convey or affect the land insofar as
third persons are concerned, it follows that 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 farther than what the
Torrens title upon its face indicates in quest for any hidden defect or inchoate right
that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy
and conclusiveness of the certificate of title which the Torrens system seeks to insure
would entirely be futile and nugatory. The public shall then be denied of its foremost
motivation for respecting and observing the Torrens system of registration. In the
end, the business community stands to be inconvenienced and prejudiced
immeasurably.[37]

Contrary to the assertion of respondents, OCT No. 404 was expressly

cancelled by TCT No. T-8241. The alleged non-signature by the Register of Deeds
Soliman Achacoso, , does not affect the validity of TCT No. T-8241 since he signed
TCT No. T- 8242 and issued both titles on the same day. There is a presumption of
regularity in the performance of official duty. The presumption is further bolstered
by the fact that TCT No. T-8241 was certified to be on file with the Registry of
Deeds and registered in the name of Cipriano. It is enough that petitioner had
examined the latest certificate of title which in this case was issued in the name of
the immediate transferor, the spouses Rodolfo. The purchaser is not bound by the
original certificate but only by the certificate of title of the person from whom he
had purchased the property.[38]

Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation

of Sales executed by Cipriano alone despite the existence of the other heirs of Pablo,
is not binding on such other heirs, nevertheless, it has operative effect under Section
44 of the Property Registration Decree, which provides that:

SEC. 44. Statutory Liens Affecting Title. Every registered owner

receiving a certificate of title in pursuance of a decree of registration, and
every subsequent purchaser of registered land taking a certificate of title
for value and in good faith, shall hold the same free from all encumbrances
except those noted on said certificate and any of the following
encumbrances which may be subsisting, namely:
xxxx

Even assuming arguendo that the extrajudicial settlement was a forgery, the
Court still has to uphold the title of petitioner. The case law is that although generally
a forged or fraudulent deed is a nullity and conveys no title, there are instances when
such a fraudulent document may become the root of a valid title.[39] And one such
instance is where the certificate of title was already transferred from the name of the
true owner to the forger, and while it remained that way, the land was subsequently
sold to an innocent purchaser. For then, the vendee had the right to rely upon what
appeared in the certificate.[40]

The Court cannot give credence to respondents claims that the Extrajudicial
Settlement of a Sole Heir and Confirmation of Sales was not registered and that OCT
No. 404 was not cancelled by the Register of Deeds. The Register of Deeds of
Zambales certified that the extrajudicial settlement was recorded on 14 February
1967, per Entry No. 18590. This is in compliance with Section 56 of Act No.
496,[41] the applicable law at the time of registration, which provides that:

Sec. 56. Each register of deeds shall keep an entry book in which
he shall enter in the order of their reception all deeds and other voluntary
instruments, and all copies of writs and other process filed with him
relating to registered land. He shall note in such book the year, month,
day, hour, and minute of reception of all instruments, in the order in which
they are received. They shall be regarded as registered from the time
so noted, and the memorandum of each instrument when made on the
certificate of title to which it refers shall bear the same date. [Emphasis
supplied]
 Registration in the public registry is notice to the whole world. Every
conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall be, if registered, filed or entered in the Office of the
Register of Deeds of 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.[42]

Thirdly, respondents cannot make out a case for quieting of title since OCT
No. 404 had already been cancelled. Respondents have no title to anchor their
complaint on.[43] Title to real property refers to that upon which ownership is
based. It is the evidence of the right of the owner or the extent of his interest, by
which means he can maintain control and, as a rule, assert right to exclusive
possession and enjoyment of the property.[44]

Moreover, there is nothing in the complaint which specified that the

respondents were in possession of the property. They merely alleged that the
occupants or possessors are others not defendant Spouses Rodolfo[45] who could be
anybody, and that the property is in actual possession of a number of the Pascua
heirs[46] who could either be the respondents or the heirs of Cipriano. The admission
of the truth of material and relevant facts well pleaded does not extend to render a
demurrer an admission of inferences or conclusions drawn therefrom, even if alleged
in the pleading; nor mere inferences or conclusions from

facts not stated; nor conclusions of law; nor matters of evidence; nor
surplusage and irrelevant matters.[47]

The other heirs of Pablo should have filed an action for reconveyance based
on implied or constructive trust within ten (10) years from the date of registration of
the deed or the date of the issuance of the certificate of title over the property.[48] The
legal relationship between Cipriano and the other heirs of Pablo is governed by
Article 1456 of the Civil Code which provides that if a property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the property comes.
From the above discussion, there is no question that petitioner is an innocent
purchaser for value; hence, no cause of action for cancellation of title will lie against
it.[49] The RTC was correct in granting petitioners motion to dismiss.
Lastly, respondents claim against the Assurance Fund also cannot prosper.
Section 101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be
liable for any loss, damage or deprivation of any right or interest in land which may
have been caused by a breach of trust, whether express, implied or constructive.
Even assuming arguendo that they are entitled to claim against the Assurance Fund,
the respondents claim has already prescribed since any action for compensation
against the Assurance Fund must be brought within a period of six (6) years from
the time the right to bring such action first occurred, which in this case was in 1967.

WHEREFORE, the petition is GRANTED. The decision of the Court of

Appeals in CA-G.R. CV No. 67462 is REVERSED and SET ASIDE. The 12
November 1999 Order of the Regional Trial Court of Olongapo City, Branch 73 in
Civil Case No. 432-097 is REINSTATED.

SO ORDERED.
G.R. No. 81163 September 26, 1988

EDUARDO S. BARANDA and ALFONSO HITALIA, petitioners,

vs.
HONORABLE JUDGE TITO GUSTILO, ACTING REGISTER OF DEEDS AVITO SACLAUSO,
HONORABLE COURT OF APPEALS, and ATTY. HECTOR P. TEODOSIO, respondents.

Eduardo S. Baranda for petitioners.

Rico & Associates for private respondents.

GUTIERREZ, JR., J.:

Eduardo S. Baranda and Alfonso Hitalia were the petitioners in G.R. No. 64432 and the private respondents in G.R. No. 62042. The subject
matter of these two (2) cases and the instant case is the same a parcel of land designated as Lot No. 4517 of the Cadastral Survey of Sta.
Barbara, Iloilo covered by Original Certificate of Title No. 6406.

The present petition arose from the same facts and events which triggered the filing of the earlier
petitions. These facts and events are cited in our resolution dated December 29, 1983 in G.R. No.
64432, as follows:

. . . This case has its origins in a petition for reconstitution of title filed with the Court
of First Instance of Iloilo involving a parcel of land known as Lot No. 4517 of the Sta.
Barbara Cadastre covered by Original Certificate of Title No. 6406 in the name of
Romana Hitalia. Eventually, Original Certificate of Title No. 6406 was cancelled and
Transfer Certificate of Title No. 106098 was issued in the names of Alfonso Hitalia
and Eduardo S. Baranda The Court issued a writ of possession which Gregorio
Perez, Maria P. Gotera and Susana Silao refused to honor on the ground that they
also have TCT No. 25772 over the same Lot No. 4517. The Court, after considering
the private respondents' opposition and finding TCT No. 25772 fraudulently acquired,
ordered that the writ of possession be carried out. A motion for reconsideration
having been denied, a writ of demolition was issued on March 29, 1982. Perez and
Gotera filed a petition for certiorari and prohibition with the Court of Appeals. On
August 6, 1982, the Court of Appeals denied the petition. Perez and Gotera filed the
petition for review on certiorari denominated as G.R. No. 62042 before the Supreme
Court. As earlier stated the petition was denied in a resolution dated January 7,1983.
The motion for reconsideration was denied in another resolution dated March 25,
1983, which also stated that the denial is final. This decision in G.R. No. 62042, in
accordance with the entry of judgment, became final on March 25, 1983. The
petitioners in the instant case G.R. No. 64432--contend that the writs of possession
and demolition issued in the respondent court should now be implemented; that Civil
Case No. 00827 before the Intermediate Appellate Court was filed only to delay the
implementation of the writ; that counsel for the respondent should be held in
contempt of court for engaging in a concerted but futile effort to delay the execution
of the writs of possession and demolition and that petitioners are entitled to damages
because of prejudice caused by the filing of this petition before the Intermediate
Appellate Court. On September 26, 1983, this Court issued a Temporary Restraining
Order ' to maintain the status quo, both in the Intermediate Appellate Court and in the
Regional Trial Court of Iloilo. Considering that (l)there is merit in the instant petition
for indeed the issues discussed in G.R. No. 64432 as raised in Civil Case No. 00827
before the respondent court have already been passed upon in G.R. No. 62042; and
 (2) the Temporary Restraining Order issued by the Intermediate Appellate Court was
only intended not to render the petition moot and academic pending the Court's
consideration of the issues, the Court RESOLVED to DIRECT the respondent
Intermediate Appellate Court not to take cognizance of issues already resolved by
this Court and accordingly DISMISS the petition in Civil Case No. 00827. Immediate
implementation of the writs of possession and demolition is likewise ordered. (pp.
107-108, Rollo G.R. No. 64432)

On May 9, 1984, the Court issued a resolution denying with finality a motion for reconsideration of
the December 29, 1983 resolution in G.R. No. 64432. On this same date, another resolution was
issued, this time in G.R. No. 62042, referring to the Regional Trial Court of Iloilo the ex-parte motion
of the private respondents (Baranda and Hitalia) for execution of the judgment in the resolutions
dated January 7, 1983 and March 9, 1983. In the meantime, the then Intermediate Appellate Court
issued a resolution dated February 10, 1984, dismissing Civil Case No. 00827 which covered the
same subject matter as the Resolutions above cited pursuant to our Resolution dated December 29,
1983. The resolution dated December 29, 1983 in G.R. No. 64432 became final on May 20, 1984.

Upon motions of the petitioners, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito
G. Gustilo issued the following order:

Submitted are the following motions filed by movants Eduardo S. Baranda and
Alfonso Hitalia through counsel dated August 28, 1984:

(a) Reiterating Motion for Execution of Judgment of Resolutions dated January 7,

1983 and March 9, 1983 Promulgated by Honorable Supreme Court (First Division)
in G.R. No. 62042;

(b) Motion for Execution of Judgment of Resolution dated December 29, 1983
Promulgated by Honorable Supreme Court (First Division) in G.R. No. 64432;

(c) The Duties of the Register of Deeds are purely ministerial under Act 496,
therefore she must register all orders, judgment, resolutions of this Court and that of
Honorable Supreme Court.

Finding the said motions meritorious and there being no opposition thereto, the same
is hereby GRANTED.

WHEREFORE, Transfer Certificate of Title No. T-25772 is hereby declared null and
void and Transfer Certificate of Title No. T-106098 is hereby declared valid and
subsisting title concerning the ownership of Eduardo S. Baranda and Alfonso Hitalia,
all of Sta. Barbara Cadastre.

The Acting Register of Deeds of Iloilo is further ordered to register the Subdivision
Agreement of Eduardo S. Baranda and Alfonso Hitalia as prayed for." (p. 466, Rollo--
G.R. No. 64432)

The above order was set aside on October 8, 1984 upon a motion for reconsideration and
manifestation filed by the Acting Registrar of Deeds of Iloilo, Atty. Helen P. Sornito, on the ground
that there was a pending case before this Court, an Action for Mandamus, Prohibition, Injunction
under G.R. No. 67661 filed by Atty. Eduardo Baranda, against the former which remained
unresolved.
In view of this development, the petitioners filed in G.R. No. 62042 and G.R. No. 64432 ex-parte
motions for issuance of an order directing the Regional Trial Court and Acting Register of Deeds to
execute and implement the judgments of this Court. They prayed that an order be issued:

1. Ordering both the Regional Trial Court of Iloilo Branch XXIII, under Hon. Judge
Tito G. Gustilo and the acting Register of Deeds Helen P. Sornito to register the
Order dated September 5, 1984 of the lower court;

2. To cancel No.T-25772. Likewise to cancel No.T-106098 and once cancelled to

issue new certificates of title to each of Eduardo S. Baranda and Alfonso Hitalia;

Plus other relief and remedies equitable under the premises. (p. 473, 64432 Rollo)

Acting on these motions, we issued on September 17,1986 a Resolution in G.R. No. 62042 and G.R.
No. 64432 granting the motions as prayed for. Acting on another motion of the same nature filed by
the petitioners, we issued another Resolution dated October 8, 1986 referring the same to the Court
Administrator for implementation by the judge below.

In compliance with our resolutions, the Regional Trial Court of Iloilo, Branch 23 presided by Judge
Tito G. Gustilo issued two (2) orders dated November 6,1986 and January 6,1987 respectively, to
wit:

ORDER

This is an Ex-parte Motion and Manifestation submitted by the movants through

counsel on October 20, 1986; the Manifestation of Atty. Helen Sornito, Register of
Deeds of the City of Iloilo, and formerly acting register of deeds for the Province of
Iloilo dated October 23, 1986 and the Manifestation of Atty. Avito S. Saclauso, Acting
Register of Deeds, Province of Iloilo dated November 5, 1986.

Considering that the motion of movants Atty. Eduardo S. Baranda and Alfonso Hitalia
dated August 12, 1986 seeking the full implementation of the writ of possession was
granted by the Honorable Supreme Court, Second Division per its Resolution dated
September 17,1986, the present motion is hereby GRANTED.

WHEREFORE, the Acting Register of Deeds, Province of Iloilo, is hereby ordered to

register the Order of this Court dated September 5, 1984 as prayed for.

xxx xxx xxx

ORDER

This is a Manifestation and Urgent Petition for the Surrender of Transfer Certificate of
Title No. T-25772 submitted by the petitioners Atty. Eduardo S. Baranda and Alfonso
Hitalia on December 2, 1986, in compliance with the order of this Court dated
November 25, 1 986, a Motion for Extension of Time to File Opposition filed by Maria
Provido Gotera through counsel on December 4, 1986 which was granted by the
Court pursuant to its order dated December 15, 1986. Considering that no
Opposition was filed within the thirty (30) days period granted by the Court finding the
petition tenable, the same is hereby GRANTED.
 WHEREFORE, Maria Provido Gotera is hereby ordered to surrender Transfer
Certificate of Title No. T-25772 to this Court within ten (10) days from the date of this
order, after which period, Transfer Certificate of Title No. T-25772 is hereby declared
annulled and the Register of Deeds of Iloilo is ordered to issue a new Certificate of
Title in lieu thereof in the name of petitioners Atty. Eduardo S. Baranda and Alfonso
Hitalia, which certificate shall contain a memorandum of the annulment of the
outstanding duplicate. (pp. 286-287, Rollo 64432)

On February 9, 1987, Atty. Hector Teodosio, the counsel of Gregorio Perez, private respondent in
G.R. No. 64432 and petitioner in G.R. No. 62042, filed a motion for explanation in relation to the
resolution dated September 17, 1986 and manifestation asking for clarification on the following
points:

a. As to the prayer of Atty. Eduardo Baranda for the cancellation of TCT T-25772,
should the same be referred to the Court of Appeals (as mentioned in the Resolution
of November 27, 1985) or is it already deemed granted by implication (by virtue of
the Resolution dated September 17, 1986)?

b. Does the Resolution dated September 17, 1986 include not only the
implementation of the writ of possession but also the cancellation of TCT T-25772
and the subdivision of Lot 4517? (p. 536, Rollo 4432)

Acting on this motion and the other motions filed by the parties, we issued a resolution dated May
25, 1987 noting all these motions and stating therein:

xxx xxx xxx

Since entry of judgment in G.R. No. 62042 was made on January 7, 1983 and in
G.R. No. 64432 on May 30, 1984, and all that remains is the implementation of our
resolutions, this COURT RESOLVED to refer the matters concerning the execution
of the decisions to the Regional Trial Court of Iloilo City for appropriate action and to
apply disciplinary sanctions upon whoever attempts to trifle with the implementation
of the resolutions of this Court. No further motions in these cases will be entertained
by this Court. (p. 615, Rollo-64432)

In the meantime, in compliance with the Regional Trial Court's orders dated November 6, 1986 and
January 6, 1987, Acting Register of Deeds AvitoSaclauso annotated the order declaring Transfer
Certificate of Title No. T-25772 as null and void, cancelled the same and issued new certificates of
titles numbers T-111560, T-111561 and T-111562 in the name of petitioners Eduardo S. Baranda
and Alfonso Hitalia in lieu of Transfer Certificate of TItle No. T-106098.

However, a notice of lis pendens "on account of or by reason of a separate case (Civil Case No.
15871) still pending in the Court of Appeals" was carried out and annotated in the new certificates of
titles issued to the petitioners. This was upheld by the trial court after setting aside its earlier order
dated February 12, 1987 ordering the cancellation of lis pendens.

This prompted the petitioners to file another motion in G.R, No. 62042 and G.R. No. 64432 to order
the trial court to reinstate its order dated February 12, 1987 directing the Acting Register of Deeds to
cancel the notice of lis pendensin the new certificates of titles.

In a resolution dated August 17, 1987, we resolved to refer the said motion to the Regional Trial
Court of Iloilo City, Branch 23 for appropriate action.
Since respondent Judge Tito Gustilo of the Regional Trial Court of Iloilo, Branch 23 denied the
petitioners' motion to reinstate the February 12, 1987 order in another order dated September 17,
1987, the petitioners filed this petition for certiorari, prohibition and mandamus with preliminary
injunction to compel the respondent judge to reinstate his order dated February l2, 1987 directing the
Acting Register of Deeds to cancel the notice of lis pendens annotated in the new certificates of titles
issued in the name of the petitioners.

The records show that after the Acting Register of Deeds annotated a notice of is pendens on the
new certificates of titles issued in the name of the petitioners, the petitioners filed in the
reconstitution case an urgent ex-parte motion to immediately cancel notice of lis pendens annotated
thereon.

In his order dated February 12, 1987, respondent Judge Gustilo granted the motion and directed the
Acting Register of Deeds of Iloilo to cancel the lis pendens found on Transfer Certificate of Title Nos.
T-106098; T-111560; T-111561 and T-111562.

Respondent Acting Register of Deeds Avito Saclauso filed a motion for reconsideration of the
February 12, 1987 order stating therein:

That the undersigned hereby asks for a reconsideration of the said order based on
the second paragraph of Section 77 of P.D. 1529, to wit:

"At any time after final judgment in favor of the defendant or other
disposition of the action such as to terminate finally all rights of the
plaintiff in and to the land and/or buildings involved, in any case in
which a memorandum or notice of Lis Pendens has been registered
as provided in the preceding section, the notice of Lis Pendens shall
be deemed cancelled upon the registration of a certificate of the clerk
of court in which the action or proceeding was pending stating the
manner of disposal thereof."

That the lis pendens under Entry No. 427183 was annotated on T-106098, T-
111560, T-111561 and T-111562 by virtue of a case docketed as Civil Case No.
15871, now pending with the Intermediate Court of Appeals, entitled, "Calixta
Provido, Ricardo Provido, Sr., Maria Provido and Perfecto Provido, Plaintiffs, versus
Eduardo Baranda and Alfonso Hitalia, Respondents."

That under the above-quoted provisions of P.D. 152, the cancellation of subject
Notice of Lis Pendens can only be made or deemed cancelled upon the registration
of the certificate of the Clerk of Court in which the action or proceeding was pending,
stating the manner of disposal thereof.

Considering that Civil Case No. 1587, upon which the Notice of Lis Pendens was
based is still pending with the Intermediate Court of Appeals, only the Intermediate
Court of Appeals and not this Honorable Court in a mere cadastral proceedings can
order the cancellation of the Notice of Lis Pendens. (pp. 68-69, Rollo)

Adopting these arguments and on the ground that some if not all of the plaintiffs in Civil Case No.
15871 were not privies to the case affected by the Supreme Court resolutions, respondent Judge
Tito Gustilo set aside his February 12, 1987 order and granted the Acting Register of Deeds' motion
for reconsideration.
The issue hinges on whether or not the pendency of the appeal in Civil Case No. 15871 with the
Court of Appeals prevents the court from cancelling the notice of lis pendens in the certificates of
titles of the petitioners which were earlier declared valid and subsisting by this Court in G.R. No.
62042 and G.R. No. 64432. A corollary issue is on the nature of the duty of a Register of Deeds to
annotate or annul a notice of lis pendens in a torrens certificate of title.

Civil Case No. 15871 was a complaint to seek recovery of Lot No. 4517 of Sta. Barbara Cadastre
Iloilo, (the same subject matter of G.R. No 62042 and G.R. No. 64432) from petitioners Baranda and
Hitalia filed by Calixta Provido, Ricardo Provido, Maxima Provido and Perfecta Provido before the
Regional Trial Court of Iloilo, Branch 23. At the instance of Atty. Hector P. Teodosio, the Provides'
counsel, a notice of is pendens was annotated on petitioners' Certificate of Title No. T-106098
covering Lot No. 4517, Sta. Barbara Cadastre.

Acting on a motion to dismiss filed by the petitioners, the court issued an order dated October 24,
1984 dismissing Civil Case No. 15871.

The order was then appealed to the Court of Appeals. This appeal is the reason why respondent
Judge Gustilo recalled the February 12, 1987 order directing the Acting Register of Deeds to cancel
the notice of lis pendens annotated on the certificates of titles of the petitioners.

This petition is impressed with merit.

Maria Provido Gotera was one of the petitioners in G.R. No. 62042. Although Calixta Provido,
Ricardo Provido, Maxima Provido and Perfecta Provido, the plaintiffs in Civil Case No. 15871 were
not impleaded as parties, it is very clear in the petition that Maria Provido was acting on behalf of the
Providos who allegedly are her co-owners in Lot No. 4517, Sta. Barbara Cadastre as shown by
Transfer Certificate of Title No. T-25772 issued in her name and the names of the plaintiffs in Civil
Case No. 15871, among others. (Annex "E" G.R. No. 62042, p. 51, Rollo) In fact, one of the issues
raised by petitioners Maria Provido Gotera and Gregoria Perez in G.R. No. 62042 was as follows:

xxx xxx xxx

2. Whether or not, in the same reconstitution proceedings, respondent Judge

Midpantao L. Adil had the authority to declare as null and void the transfer certificate
of title in the name of petitioner Maria Provido Gotera and her other co-owners. (p. 3,
Rollo; Emphasis supplied)

It thus appears that the plaintiffs in Civil Case No. 15871 were privies to G.R. No. 62042 contrary to
the trial court's findings that they were not.

G.R. No. 62042 affirmed the order of the then Court of First Instance of Iloilo in the reconstitution
proceedings declaring TCT No. 25772 in the name of Providos over Lot No. 4517, Sta. Barbara
Cadastre null and void for being fraudulently obtained and declaring TCT No. 106098 over the same
parcel Lot No. 4517, Sta. Barbara Cadastre in the name of petitioners Eduardo Baranda and Alfonso
Hitalia valid and subsisting.

The decision in G.R. No. 62042 became final and executory on March 25,1983 long before Civil
Case No. 15871 was filed.

Under these circumstances, it is crystal clear that the Providos, private respondents herein, in filing
Civil Case No. 15871 were trying to delay the full implementation of the final decisions in G.R. No.
62042 as well as G.R. No. 64432 wherein this Court ordered immediate implementation of the writs
of possession and demolition in the reconstitution proceedings involving Lot No. 4517, Sta. Barbara
Cadastre.

The purpose of a notice of lis pendens is defined in the following manner:

Lis pendens has been conceived to protect the real rights of the party causing the
registration thereof With the lis pendens duly recorded, he could rest secure that he
would not lose the property or any part of it. For, notice of lis pendens serves as a
warning to a prospective purchaser or incumbrancer that the particular property is in
litigation; and that he should keep his hands off the same, unless of course he
intends to gamble on the results of the litigation. (Section 24, Rule 14, RuIes of
Court; Jamora v. Duran, et al., 69 Phil. 3, 11; I Martin, Rules of Court, p. 415,
footnote 3, citing cases.) (Natanov. Esteban, 18 SCRA 481, 485-486)

The private respondents are not entitled to this protection. The facts obtaining in this case
necessitate the application of the rule enunciated in the cases of Victoriano v. Rovila (55 Phil.
1000), Municipal Council of Paranaque v. Court of First Instance of Rizal (70 Phil., 363) and
Sarmiento v. Ortiz (10 SCRA 158), to the effect that:

We have once held that while ordinarily a notice of pendency which has been filed in
a proper case, cannot be cancelled while the action is pending and undetermined,
the proper court has the discretionary power to cancel it under peculiar
circumstances, as for instance, where the evidence so far presented by the plaintiff
does not bear out the main allegations of his complaint, and where the continuances
of the trial, for which the plaintiff is responsible, are unnecessarily delaying the
determination of the case to the prejudice of the defendant. (Victoriano v.
Rovira, supra; The Municipal Council of Paranaque v. Court of First Instance of
Rizal, supra)

The facts of this case in relation to the earlier cases brought all the way to the Supreme Court
illustrate how the private respondents tried to block but unsuccessfuly the already final decisions in
G.R. No. 62042 and G.R. No. 64432.

Parenthetically, respondent Judge Tito Gustilo abused his discretion in sustaining the respondent
Acting Register of Deeds' stand that, the notice of lis pendens in the certificates of titles of the
petitioners over Lot No. 4571, Barbara Cadastre cannot be cancelled on the ground of pendency of
Civil Case No. 15871 with the Court of Appeals. In upholding the position of the Acting Register of
Deeds based on Section 77 of Presidential Decree No. 1529, he conveniently forgot the first
paragraph thereof which provides:

Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be
cancelled upon Order of the Court after proper showing that the notice is for the
purpose of molesting the adverse party, or that it is not necessary to protect the
rights of the party who caused it to be registered. It may also be cancelled by the
Register of Deeds upon verified petition of the party who caused the registration
thereof.

This Court cannot understand how respondent Judge Gustilo could have been misled by the
respondent Acting Register of Deeds on this matter when in fact he was the same Judge who issued
the order dismissing Civil Case No. 15871 prompting the private respondents to appeal said order
dated October 10, 1984 to the Court of Appeals. The records of the main case are still with the court
below but based on the order, it can be safely assumed that the various pleadings filed by the
parties subsequent to the motion to dismiss filed by the petitioners (the defendants therein) touched
on the issue of the validity of TCT No. 25772 in the name of the Providos over Lot Number 4571,
Sta. Barbara Cadastre in the light of the final decisions in G.R. No. 62042 and G.R. No. 64432.

The next question to be determined is on the nature of the duty of the Register of Deeds to annotate
and/or cancel the notice of lis pendens in a torrens certificate of title.

Section 10, Presidential Decree No. 1529 states that "It shall be the duty of the Register of Deeds to
immediately register an instrument presented for registration dealing with real or personal property
which complies with all the requisites for registration. ... . If the instrument is not registrable, he shall
forthwith deny registration thereof and inform the presentor of such denial in writing, stating the
ground or reasons therefore, and advising him of his right to appeal by consulta in accordance with
Section 117 of this Decree."

Section 117 provides that "When the Register of Deeds is in doubt with regard to the proper step to
be taken or memoranda to be made in pursuance of any deed, mortgage or other instrument
presented to him for registration or where any party in interest does not agree with the action taken
by the Register of Deeds with reference to any such instrument, the question shall be submitted to
the Commission of Land Registration by the Register of Deeds, or by the party in interest thru the
Register of Deeds. ... ."

The elementary rule in statutory construction is that when the words and phrases of the statute are
clear and unequivocal, their meaning must be determined from the language employed and the
statute must be taken to mean exactly what it says. (Aparri v. Court of Appeals, 127 SCRA 231;
Insular Bank of Asia and America Employees' Union [IBAAEU] v. Inciong, 132 SCRA 663) The
statute concerning the function of the Register of Deeds to register instruments in a torrens
certificate of title is clear and leaves no room for construction. According to Webster's Third
International Dictionary of the English Language the word shall means "ought to, must,
...obligation used to express a command or exhortation, used in laws, regulations or directives to
express what is mandatory." Hence, the function of a Register of Deeds with reference to the
registration of deeds encumbrances, instruments and the like is ministerial in nature. The respondent
Acting Register of Deeds did not have any legal standing to file a motion for reconsideration of the
respondent Judge's Order directing him to cancel the notice of lis pendens annotated in the
certificates of titles of the petitioners over the subject parcel of land. In case of doubt as to the proper
step to be taken in pursuance of any deed ... or other instrument presented to him, he should have
asked the opinion of the Commissioner of Land Registration now, the Administrator of the National
Land Title and Deeds Registration Administration in accordance with Section 117 of Presidential
Decree No. 1529.

In the ultimate analysis, however, the responsibility for the delays in the full implementation of this
Court's already final resolutions in G.R. No. 62042 and G.R. No. 64432 which includes the
cancellation of the notice of lis pendensannotated in the certificates of titles of the petitioners over
Lot No. 4517 of the Sta. Barbara Cadastre falls on the respondent Judge. He should never have
allowed himself to become part of dilatory tactics, giving as excuse the wrong impression that Civil
Case No. 15871 filed by the private respondents involves another set of parties claiming Lot No.
4517 under their own Torrens Certificate of Title.

WHEREFORE, the instant petition is GRANTED. The February 12, 1987 order of the Regional Trial
Court of Iloilo, Branch 23 is REINSTATED. All subsequent orders issued by the trial court which
annulled the February 12, 1987 order are SET ASIDE. Costs against the private respondents.
SPS. LITA DE LEON and G.R. No. 185063
FELIX RIO TARROSA,
Petitioners, Present:
- versus -
YNARES-SANTIAGO, Chairperson,
CHICO-NAZARIO,
ANITA B. DE LEON, DANILO B. VELASCO, JR.,
DE LEON, and VILMA B. NACHURA, and
DE LEON, PERALTA, JJ.
Respondents.
Promulgated:

July 23, 2009

x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

Before us is a Petition for Review on Certiorari under Rule 45 assailing and seeking
to set aside the Decision[1] and Resolution[2] dated August 27, 2008 and October 20,
2008, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 88571. The
CA affirmed with modification the October 4, 2006 Decision[3] in Civil Case No.
Q04-51595 of the Regional Trial Court (RTC), Branch 22 in Quezon City.

The Facts

On July 20, 1965, Bonifacio O. De Leon, then single, and the Peoples Homesite and
Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the
purchase on installment of a 191.30 square-meter lot situated in Fairview, Quezon
City. Subsequently, on April 24, 1968, Bonifacio married Anita de Leon in a civil
rite officiated by the Municipal Mayor of Zaragosa, Nueva Ecija. To this union were
born Danilo and Vilma.

Following the full payment of the cost price for the lot thus purchased, PHHC
executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio. Accordingly,
Transfer Certificate of Title (TCT) No. 173677 was issued on February 24, 1972 in
the name of Bonifacio, single.
Subsequently, Bonifacio, for PhP 19,000, sold the subject lot to her sister, Lita, and
husband Felix Rio Tarrosa (Tarrosas), petitioners herein. The conveying Deed of
Sale dated January 12, 1974 (Deed of Sale) did not bear the written consent and
signature of Anita.

Thereafter, or on May 23, 1977, Bonifacio and Anita renewed their vows in a church
wedding at St. John the Baptist Parish in San Juan, Manila.

On February 29, 1996, Bonifacio died.

Three months later, the Tarrosas registered the Deed of Sale and had TCT No.
173677 canceled. They secured the issuance in their names of TCT No. N-173911
from the Quezon CityRegister of Deeds.

Getting wind of the cancellation of their fathers title and the issuance of TCT No. N-
173911, Danilo and Vilma filed on May 19, 2003 a Notice of Adverse Claim before
the Register of Deeds of Quezon City to protect their rights over the subject
property. Very much later, Anita, Danilo, and Vilma filed a reconveyance suit before
the RTC in Quezon City. In their complaint, Anita and her children alleged, among
other things, that fraud attended the execution of the Deed of Sale and that
subsequent acts of Bonifacio would show that he was still the owner of the parcel of
land. In support of their case, they presented, inter alia, the following documents:

a. A Real Estate Mortgage execution by Bonifacio in favor of spouses Cesar

Diankinay and Filomena Almero on July 22, 1977.

b. A Civil Complaint filed by Bonifacio against spouses Cesar Diankinay

and Filomena Almero on November 27, 1979 for nullification of the Real Estate
Mortgage.

c. The Decision issued by the Court of First Instance of Rizal, Quezon City,
promulgated on July 30, 1982, nullifying the Real Estate Mortgage.[4]

The Tarrosas, in their Answer with Compulsory Counterclaim, averred that

the lot Bonifacio sold to them was his exclusive property inasmuch as he was still
single when he acquired it from PHHC. As further alleged, they were not aware of
the supposed marriage between Bonifacio and Anita at the time of the execution of
the Deed of Sale.
 After several scheduled hearings, both parties, assisted by their respective
counsels, submitted a Joint Stipulation of Facts with Motion, to wit:
1. The parties have agreed to admit the following facts:

a. Bonifacio O. De Leon, while still single x x x, purchased from the

[PHHC] through a Conditional Contract to Sell on July 20, 1965 a parcel of land
with an area of 191.30 square meters situated in Fairview, Quezon City for P841.72;

b. On April 24, 1968, Bonifacio O. De Leon married plaintiff Anita B. De

Leon before the Municipal Mayor of Zaragosa, Nueva Ecija. Both parties stipulate
that said marriage is valid and binding under the laws of the Philippines;

c. On June 22, 1970, Bonifacio O. De Leon paid [PHHC] the total amount
of P1,023.74 x x x. The right of ownership over the subject parcel of land was
transferred to the late Bonifacio O. De Leon on June 22, 1970, upon the full
payment of the total [price] of P1,023.74 and upon execution of the Final Deed of
Sale;

d. After full payment, Bonifacio O. De Leon was issued [TCT] No. 173677
on February 24, 1972;

e. On January 12, 1974, Bonifacio O. De Leon executed a Deed of Sale in

favor of defendants-spouses Felix Rio Tarrosa and Lita O. De Leon disposing the
parcel of land under TCT No. 173677 for valuable consideration amount of
P19,000.00 and subscribed before Atty. Salvador R. Aguinaldo who was
commissioned to [notarize] documents on said date. The parties stipulate that
the Deed of Sale is valid and genuine. However, plaintiff Anita De Leon was not a
signatory to the Deed of Sale executed on January 12, 1974;

f. That plaintiff Anita B. De Leon and the late Bonifacio O. De Leon were
married in church rites on May 23, 1977 x x x;

g. The late Bonifacio O. De Leon died on February 29, 1996 at

the UST Hospital, Espaa, Manila;

h. The said Deed of Sale executed on January 12, 1974 was registered on
May 8, 1996 before the Office of the Register of Deeds of Quezon City and [TCT]
No. N-173911 was issued to Lita O. De Leon and Felix Rio Tarrosa.[5]

The Ruling of the Trial Court

On October 4, 2006, the RTC, on the finding that the lot in question was the conjugal
property of Bonifacio and Anita, rendered judgment in favor of Anita and her
children. The dispositive portion of the decision reads:
 WHEREFORE, premises considered, judgment is hereby rendered in favor of
plaintiffs and against defendants in the following manner:

(1) Declaring the Deed of Sale dated January 12, 1974 executed by the late
Bonifacio O. De Leon in favor of defendants-spouses Lita De Leon and Felix Rio
Tarrosa void ab initio;

(2) Directing the Register of Deed of Quezon City to cancel Transfer

Certificate of Title No. N-173911 in the name of Lita O. De Leon, married to Felix
Rio Tarrosa and restore Transfer Certificate of Title No. 173667 in the name of
Bonifacio O. De Leon;

(3) Ordering the defendants-spouses to pay plaintiffs the following sums:

(a) P25,000.00 as moral damages;

(b) P20,000.00 as exemplary damages;
(c) P50,000.00 as attorneys fees plus appearance fee of P2,500.00 per court
appearance;
(d) Costs of this suit.

SO ORDERED.
Aggrieved, the Tarrosas appealed to the CA. As they would submit, the RTC erred:

(1) in finding for the plaintiffs-appellees by declaring that the land subject
matter of the case is conjugal property;
(2) in not declaring the land as the exclusive property of Bonifacio O. De Leon
when sold to defendant-appellants;
(3) in ruling that defendant-appellants did not adduce any proof that the
property was acquired solely by the efforts of Bonifacio O. De Leon;
(4) in declaring that one-half of the conjugal assets does not vest to Bonifacio
O. De Leon because of the absence of liquidation;
(5) in cancelling TCT No. N-173911 and restored TCT No. [173677] in the
name of Bonifacio O. De Leon;
(6) in awarding moral and exemplary damages and attorneys fees to the
plaintiffs-appellees.[6]

The Ruling of the Appellate Court

On August 27, 2008, the CA rendered a decision affirmatory of that of the RTC,
save for the award of damages, attorneys fees, and costs of suit which the appellate
court ordered deleted.The fallo of the CA decision reads:
 WHEREFORE, in view of the foregoing, the assailed decision dated October 4,
2006, of the Regional Trial Court, Branch 22, Quezon City in Civil Case No. Q-04-
51595 is hereby AFFIRMED with MODIFICATION, in that the award of moral
and exemplary damages as well as attorneys fees, appearance fee and costs of suit
are hereby DELETED.

SO ORDERED.

Just like the RTC, the CA held that the Tarrosas failed to overthrow the legal
presumption that the parcel of land in dispute was conjugal. The appellate court held
further that the cases they cited were inapplicable.

As to the deletion of the grant of moral and exemplary damages, the CA, in gist, held
that no evidence was adduced to justify the award. Based on the same reason, it also
deleted the award of attorneys fees and costs of suit.

The Tarrosas moved but was denied reconsideration by the CA in its equally assailed
resolution of October 20, 2008.

Hence, they filed this petition.

The Issues

Whether the [CA] gravely erred in concluding that the land purchased on
installment by Bonifacio O. De Leon before marriage although some installments
were paid during the marriage is conjugal and not his exclusive property.

II

Whether the [CA] gravely erred in ruling that the Lorenzo, et al. vs. Nicolas, et al.,
and Alvarez vs. Espiritu cases do not apply in the case at bar because in the latter
the land involved is not a friar land unlike in the former.

III

Whether the [CA] gravely erred in affirming the decision of the trial court a quo
which ruled that petitioners did not adduce any proof that the land was acquired
solely by the efforts of Bonifacio O. De Leon.

IV
 Whether the court of appeals gravely erred in affirming the decision of the trial
court which ruled that one-half (1/2) of the conjugal assets do not vest to Bonifacio
O. De Leon because of the absence of liquidation.

Our Ruling

The petition lacks merit.

The Subject Property is the

Conjugal Property of Bonifacio and Anita

The first three issues thus raised can be summed up to the question of whether or not
the subject property is conjugal.

Petitioners assert that, since Bonifacio purchased the lot from PHHC on installment
before he married Anita, the land was Bonifacios exclusive property and not
conjugal, even though some installments were paid and the title was issued to
Bonifacio during the marriage. In support of their position, petitioners cite Lorenzo
v. Nicolas[7] and Alvarez v. Espiritu.[8]

We disagree.

Article 160 of the 1950 Civil Code, the governing provision in effect at the time
Bonifacio and Anita contracted marriage, provides that all property of the marriage
is presumed to belong to the conjugal partnership unless it is proved that it pertains
exclusively to the husband or the wife. For the presumption to arise, it is not, as Tan
v. Court of Appeals[9] teaches, even necessary to prove that the property was acquired
with funds of the partnership. Only proof of acquisition during the marriage is
needed to raise the presumption that the property is conjugal. In fact, even when the
manner in which the properties were acquired does not appear, the presumption will
still apply, and the properties will still be considered conjugal.[10]

In the case at bar, ownership over what was once a PHHC lot and covered by the
PHHC-Bonifacio Conditional Contract to Sell was only transferred during the
marriage of Bonifacio and Anita. It is well settled that a conditional sale is akin, if
not equivalent, to a contract to sell. In both types of contract, the efficacy or
obligatory force of the vendors obligation to transfer title is subordinated to the
happening of a future and uncertain event, usually the full payment of the purchase
price, so that if the suspensive condition does not take place, the parties would stand
as if the conditional obligation had never existed.[11] In other words, in a contract to
sell ownership is retained by the seller and is not passed to the buyer until full
payment of the price, unlike in a contract of sale where title passes upon delivery of
the thing sold.[12]

Such is the situation obtaining in the instant case. The conditional contract to sell
executed by and between Bonifacio and PHHC on July 20, 1965 provided that
ownership over and title to the property will vest on Bonifacio only upon execution
of the final deed of sale which, in turn, will be effected upon payment of the full
purchase price, to wit:

14. Titles to the property subject of this contract remains with the CORPORATION
and shall pass to, and be transferred in the name of the APPLICANT only upon the
execution of the final Deed of Sale provided for in the next succeeding paragraph.

15. Upon the full payment by the APPLICANT of the price of the lot above referred
to together with all the interest due thereon, taxes and other charges, and upon his
faithful compliance with all the conditions of this contract the CORPORATION
agrees to execute in favor of the APPLICANT a final deed of sale of the aforesaid
land, and the APPLICANT agrees to accept said deed, as full performance by the
CORPORATION of its covenants and undertakings hereunder.[13] x x x

Evidently, title to the property in question only passed to Bonifacio after he

had fully paid the purchase price on June 22, 1970. This full payment, to stress, was
made more than two (2) years after his marriage to Anita on April 24, 1968. In net
effect, the property was acquired during the existence of the marriage; as such,
ownership to the property is, by law, presumed to belong to the conjugal partnership.

Such presumption is rebuttable only with strong, clear, categorical, and

convincing evidence.[14] There must be clear evidence of the exclusive ownership of
one of the spouses,[15]and the burden of proof rests upon the party asserting it.[16]

Petitioners argument that the disputed lot was Bonifacios exclusive property,
since it was registered solely in his name, is untenable. The mere registration of a
property in the name of one spouse does not destroy its conjugal nature. [17] What is
material is the time when the property was acquired.

Thus, the question of whether petitioners were able to adduce proof to

overthrow the presumption is a factual issue best addressed by the trial court. As a
matter of long and sound practice, factual determinations of the trial
courts,[18] especially when confirmed by the appellate court, are accorded great
weight by the Court and, as rule, will not be disturbed on appeal, except for the most
compelling reasons.[19] Petitioners have not, as they really cannot, rebut the
presumptive conjugal nature of the lot in question. In this regard, the Court notes
and quotes with approval the following excerpts from the trial courts disposition:

The defendants, however, did not adduce any proof that the property in
question was acquired solely by the efforts of [Bonifacio]. The established
jurisprudence on the matter leads this Court to the conclusion that the property
involved in this dispute is indeed the conjugal property of the deceased [Bonifacio]
De Leon.

In fact, defendant even admitted that [Bonifacio] brought into his marriage
with plaintiff Anita the said land, albeit in the concept of a possessor only as it was
not yet registered in his name. The property was registered only in 1972 during the
existence of the marriage. However, the absence of evidence on the source of
funding has called for the application of the presumption under Article 160 in favor
of the plaintiffs.[20]

The cases petitioners cited are without governing applicability to this case simply
because they involved a law specifically enacted to govern the disposition of and
ownership of friar lands.In Lorenzo, the Court held that the pervading legislative
intent of Act No. 1120 is to sell the friar lands acquired by the Government to actual
settlers and occupants of the same.[21] The Court went on further to say
in Alvarez that under the Friar Lands Act of 1120, the equitable and beneficial title
to the land passes to the purchaser the moment the first installment is paid and a
certificate of sale is issued.[22] Plainly, the said cases are not applicable here
considering that the disputed property is not friar land.

There can be no quibbling that Anitas conformity to the sale of the disputed lot to
petitioners was never obtained or at least not formally expressed in the conveying
deed. The parties admitted as much in their Joint Stipulation of Facts with Motion
earlier reproduced. Not lost on the Court of course is the fact that petitioners went to
the process of registering the deed after Bonifacios death in 1996, some 22 years
after its execution. In the interim, petitioners could have had workbut did nottowards
securing Anitas marital consent to the sale.

It cannot be over-emphasized that the 1950 Civil Code is very explicit on the
consequence of the husband alienating or encumbering any real property of the
conjugal partnership without the wifes consent.[23] To a specific point, the sale of a
conjugal piece of land by the husband, as administrator, must, as a rule, be with the
wifes consent. Else, the sale is not valid. So it is that in several cases we ruled that
the sale by the husband of property belonging to the conjugal partnership without
the consent of the wife is void ab initio, absent any showing that the latter is
incapacitated, under civil interdiction, or like causes. The nullity, as we have
explained, proceeds from the fact that sale is in contravention of the mandatory
requirements of Art. 166 of the Code.[24] Since Art. 166 of the Code requires the
consent of the wife before the husband may alienate or encumber any real property
of the conjugal partnership, it follows that the acts or transactions executed against
this mandatory provision are void except when the law itself authorized their
validity.[25]

Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and
the Tarrosas covering the PHHC lot is void.

Interest in the Conjugal Partnership Is

Merely Inchoate until Liquidation

As a final consideration, the Court agrees with the CA that the sale of one-half of
the conjugal property without liquidation of the partnership is void. Prior to the
liquidation of the conjugal partnership, the interest of each spouse in the conjugal
assets is inchoate, a mere expectancy, which constitutes neither a legal nor an
equitable estate, and does not ripen into a title until it appears that there are assets in
the community as a result of the liquidation and settlement.[26] The interest of each
spouse is limited to the net remainder or remanente liquido (haber ganancial)
resulting from the liquidation of the affairs of the partnership after its
dissolution.[27] Thus, the right of the husband or wife to one-half of the conjugal
assets does not vest until the dissolution and liquidation of the conjugal partnership,
or after dissolution of the marriage, when it is finally determined that, after
settlement of conjugal obligations, there are net assets left which can be divided
between the spouses or their respective heirs.[28]

Therefore, even on the supposition that Bonifacio only sold his portion of the
conjugal partnership, the sale is still theoretically void, for, as previously stated, the
right of the husband or the wife to one-half of the conjugal assets does not vest until
the liquidation of the conjugal partnership.

Nevertheless, this Court is mindful of the fact that the Tarrosas paid a valuable
consideration in the amount of PhP 19,000 for the property in question. Thus, as a
matter of fairness and equity, the share of Bonifacio after the liquidation of the
partnership should be liable to reimburse the amount paid by the Tarrosas. It is a
well-settled principle that no person should unjustly enrich himself at the expense of
another.[29]

WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CV No.

88571 is AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. 150091 April 2, 2007

YOLANDA O. ALFONSO, Petitioner,

vs.
OFFICE OF THE PRESIDENT and PHIL-VILLE DEVELOPMENT AND
HOUSING CORPORATION, Respondents.

DECISION

CARPIO MORALES, J.:

The present controversy traces its roots to the purportedly irregular

issuance of several transfer certificates of title (TCTs), which has resulted
in two sets of derivative titles, one set bearing the date of registration of
Original Certificate of Title (OCT) No. 994 as May 3, 1917; the other, as
April 19, 1917. OCT No. 994 is one of five OCTs covering the vast Maysilo
estate.

In the midst of this land-titling irregularity, petitioner Yolanda O. Alfonso

(petitioner), then the register of deeds of Caloocan City, was found
administratively liable for allegedly "acquiescing" to the change of the date
of the registration of OCT No. 994 from May 3, 1917 to April 19, 1917, and
for making it appear that there were two OCT Nos. 994. Consequently, she
was dismissed from government service for grave misconduct and
dishonesty.

Petitioner has come to this Court to seek a reversal of the Court of Appeals
(CA) Decision1 of July 27, 2001 and its Resolution2 of September 21, 2001
in CA-G.R. SP No. 61082, affirming the dismissal ordered by herein public
respondent Office of the President (OP).

From the labyrinthine twists and turns that the facts have taken, the
following are relevant to the disposition of this administrative case:

OCT No. 994 was issued by the Register of Deeds of Rizal in the name of
Maria de la Concepcion Vidal pursuant to the December 3, 1912 Decision
of then Judge Norberto Romualdez in C.L.R. Case No. 4429. In
accordance with this decision, the Court of Land Registration issued on
April 19, 1917 Decree No. 36455, which was received for transcription by
the Registry of Deeds of Rizal on May 3, 1917. OCT No. 994 covered 34
lots located in Caloocan City with an aggregate area of 13,312,618.89
square meters.3

In an Order of May 25, 1962, the then Court of First Instance of Pasig,
Rizal, in Civil Case No. 4557, "In Re: Petition for Substitution of Names,"
directed the Register of Deeds of Rizal to cancel the name of Maria de la
Concepcion Vidal in OCT No. 994 and to substitute the names of her
alleged grandchildren/heirs: Bartolome Rivera, Eleuteria Rivera (Rivera),
Josefa R. Aquino, Gregorio R. Aquino, Rosauro Aquino, Pelagia R.
Angeles, Modesta R. Angeles, Venancio R. Angeles, Felipe R. Angeles
and Fidela R. Angeles.4

An action for partition and accounting was subsequently filed by the alleged
heirs sometime in 1965 before the Regional Trial Court (RTC), Caloocan
City, against Isabel Gil de Sola, et al. Then RTC Branch 120 Judge
Fernando A. Cruz granted the action for partition in a Decision of
December 29, 1965, which became final and executory per the courts
certification of June 7, 1966.5

Three commissioners were appointed by the Caloocan RTC to submit their

recommendations on the partition prayed for. It appeared, though, that the
commissioners failed to comply with their duties, prompting the registered
owners to file a motion to cite them in contempt of court, on which no action
was shown to have been taken.6

In the meantime, the different lots of OCT No. 994 were acquired by
several persons and/or entities, which led to the issuance of several TCTs.
Three of these titles, TCT Nos. 270921,7 2709228 and 2709239 covering
Lots 1-G-1, 1-G-2 and 1-G-3, were issued to private respondent Phil-Ville
Development and Housing Corporation (Phil-Ville) on September 15, 1993.
On Phil-Villes TCTs, it was stated that OCT No. 994 was registered on
May 3, 1917, and that the same was a transfer from TCT No. C-14603/T-
73.10

On May 22, 1996, Rivera, one of the substituted owners of OCT No. 994,
filed with the Caloocan RTC, Branch 120, in Civil Case No. C-424, a motion
for partition and segregation of lots 23-A, 24, 25-A, 26, 28, 29 and 31
(covering an area of 1,572,324.45 square meters), praying that the lots be
awarded in her favor and titled in her name.11
By Order of September 9, 1996, Judge Jaime D. Discaya approved the
recommendation12 made by the court-appointed commissioners that Lots
23, 28-A-1 and 28-A-2 be segregated from OCT No. 994, and ordered the
Register of Deeds of Caloocan City "to issue new certificates of title in the
name of Eleuteria Rivera x x x."13 In the courts Order of September 17,
1996, the surrender of the owners duplicate certificate of title of OCT No.
994 "if the same is no longer available, lost or otherwise" was dispensed
with.14

It appears that another order of November 28, 199615 was issued by Judge
Discaya directing petitioner to implement the September 9, 1996 Order for
the issuance of the three new certificates of title in the name of Rivera.

Petitioner thus issued TCT Nos. C-31453516 for Lot No. 28-A-1, C-
31453617 for Lot No. 28-A-2, and C-31453718 for Lot No. 23, based on the
technical descriptions mentioned in the September 9, 1996 Order, and all in
the name of Rivera. It was uniformly stated in these TCTs that Riveras
titles were derived from OCT No. 994, which was registered on the "19th
day of April" in the year 1917.

Upon learning of this development, Phil-Ville requested then Land

Registration Authority (LRA) Administrator Reynaldo Y. Maulit to
investigate the discrepancies in the date of registration of OCT No. 994, as
reflected in its TCTs and those of Rivera.19 Phil-Ville invited attention to
petitioners letter of September 20, 1996 informing it that there was only
one OCT No. 994, which was transcribed or registered on May 3, 1917, as
well as to the LRA Administrators certification of October 31, 1996
confirming that OCT No. 994 was issued on May 3, 1917.

Phil-Ville maintained that the issuance of the three TCTs in favor of Rivera
was "highly irregular as they cover[ed] lots already owned by Phil-Ville,
LCM Theatrical Enterprises and Bonifacio Shopping Center, Inc."

Phil-Villes letter-complaint led to the conduct of an inquiry by the Senate

Committees on Justice and Human Rights, and on Urban Planning,
Housing and Resettlement. On May 25, 1998, the joint committees
submitted Senate Committee Report No. 103120 which found, among other
things, that (1) "there is only one Original Certificate of Title (OCT) No. 994
and this was issued or registered on May 3, 1917," (2) OCT No. 994 dated
April 19, 1917 is "non-existent" for being "a fabrication perpetrated by Mr.
Norberto Vasquez, Jr. [(Vasquez, Jr.)], former Deputy Registrar of Deeds of
Caloocan City," and (3) petitioner "acted maliciously, fraudulently and in
bad faith, when she signed the TCTs issued in the name of Rivera which
bear a wrong date of registration x x x." The Senate committees
recommended that administrative cases be filed against petitioner,
Vasquez, Jr. and "all those involved in illegal and irregular land titling."

On the basis of Senate Committee Report No. 1031 and Phil-Villes

complaint, the LRA initiated Administrative Case No. 98-07 for grave
misconduct and dishonesty against petitioner and Vasquez, Jr. who, as
directed, filed separate explanations/comments to the charges against
them.

During the pre-trial conferences, the parties presented documentary

evidence and marked their exhibits, and a pre-trial Order was issued on
September 3, 1998.21

At the scheduled start of the formal hearing on September 6, 1998, the

parties agreed to dispense with the presentation of oral evidence, in lieu of
which they filed their respective memoranda. The case was then
considered submitted for resolution.

On February 4, 1999, the LRA, through then Administrator Alfredo R.

Enriquez, issued a Decision adopting in toto the findings and
recommendation of LRA Hearing Officer Atty. Rhandolfo Amansec, as
follows:

Consequent to the foregoing findings, the inescapable conclusion is that

the issuance by respondent Norberto Vasquez, Jr. of the Dimson titles
which bear a wrong date of registration of OCT 994 constitute Grave
Misconduct, and his subsequent insistence that April 19, 1917 is the correct
date of registration of OCT 994 constitute[s] Dishonesty in the service. On
the other hand, respondent Atty. Yolanda Alfonsos acquiescence in the
alteration of the date of registration of OCT No. 994 in the titles of Eleuteria
Rivera as well as her act of deliberately ignoring the safeguards enunciated
under the law, specially her failure to require the presentation of a
subdivision plan duly approved by the Land Registration Authority or by the
Land [M]anagement Bureau, for the titles of Eleuteria, are sufficient basis to
find her guilty of Grave Misconduct.
Considering the pervasive adverse consequences of respondents acts,
which impaired the very integrity of the Torrens System which they are duty
bound to protect, the extreme penalty of dismissal is hereby recommended
for both respondents Atty. Yolanda O. Alfonso and Mr. Norberto Vasquez,
Jr.22 (Underscoring supplied)

Subsequently, the records of Administrative Case No. 98-07 were elevated

to the Department of Justice (DOJ) for review. On June 14, 1999, then
Justice Secretary Serafin R. Cuevas recommended to the OP that
petitioner, a presidential appointee, "be found guilty of Grave Misconduct
and Dishonesty" and be "dismissed from the service."23 Pertinent portions
of the letter-recommendation read:

Respondent Alfonso maintains that the said alteration of the date of

registration of OCT 994 was the sole responsibility of respondent Norberto
Vasquez, Jr. who ordered the alteration pursuant to the Supreme Court
decision in Metropolitan Waterworks and Sewerage System vs. The Court
of Appeals, et al., GR No. 103556, 17 November 1992. She claims that the
preparation of transfer certificates of titles is essentially a mechanical
endeavor with the typist automatically adopting the entries in the titles to be
canceled. To examine the entry according to her is no different from proof
reading which can be best left to subordinates citing the case of Arias v.
Sandiganbayan [180 SCRA 309]. To further support her claim of innocence
in the alteration, respondent Alfonso said that upon discovery thereof, she
issued several memoranda requiring her subordinates who have
participated in the Rivera titles to explain why the alteration was made. It
should be noted however that the memoranda were issued after she signed
the Rivera titles.

It is true that respondent Alfonso could not be faulted for carrying over to
TCT No. 312804 an erroneous date of registration of OCT 994 inasmuch
as the title from which it was derived from likewise bear the said erroneous
date of registration. However, the mere fact that she consented to the
acquisition of the property by and signed and issued on 12 August 1996
TCT 312804 in the name of her children adopting 19 April 1917 as the date
of registration of OCT 994 knowing the same to be erroneous as shown by
her 20 March 1996 referral of Ms. Roqueta Dimsons application for
issuance of certificate of title citing therein the LRA Verification Committee
report is a clear case of dishonesty, malice and bad faith. This is also a
clear violation of the Code of Conduct for Public Officials and
Employees prohibiting government officials and employees from having
any interest in a transaction requiring their approval.

xxxx

Moreover, respondent Alfonso also violated the provisions of Sections 50,

58 and 92 of P.D. 1529 for failure to require the presentation of (1) the
subdivision plan duly approved by the Land Registration Authority or by the
Land Management Bureau; and (2) proof of payment of estate of
inheritance tax.

The non-presentation of the owners duplicate of OCT 994 has been

satisfactorily explained by respondent Alfonso as the said presentation was
dispensed with by an order of the court.

For her failure to require the presentation of a subdivision plan for the three
titles of Eleuteria Rivera, respondent Alfonso claims that inasmuch as the
issuance of the titles is pursuant to a court order, Sections 50 and 58 of
P.D. 1529 do not apply. Said contention of respondent Alfonso is without
merit as said sections apply as long as the title to be issued covers only a
portion of a bigger tract of land. The presentation of a duly approved
subdivision plan is necessary in order to delineate the particular portion of
the lot being covered by the new title. Had respondent Alfonso required the
presentation of an approved subdivision plan, she could have discovered
the defects in the titling of the Rivera property and could have manifested
the same in court.

As to the question regarding the presentation of proof of payment of

inheritance tax, respondent Alfonso claims that no inheritance tax is due on
the estate simply because there is no inheritance involved as the titles were
issued pursuant to a court order in a judicial partition and the adjudicatee
Eleuteria Rivera is very much alive at the time of issuance. Again, this
deserves scant consideration. It does not matter whether Eleuteria Rivera
is alive or not because the subject matter of inheritance tax is not the estate
of Eleuteria Rivera but the transfer of property covered by the subject titles
by way of inheritance from the predecessor and alleged parent Maria
Concepcion Vidal to the heir who is Eleuteria Rivera.

x x x x (Emphasis and underscoring supplied)

On November 29, 1999, the OP issued Administrative Order (A.O.) No.
99,24 ordering the dismissal of petitioner. It found that petitioner had
undermined the integrity of the Torrens system by disregarding certain
provisions of the law and had virtually compelled certain individuals holding
separate titles to litigate to protect their rights. In addition, it was noted that
petitioner "prima facie appears to have exacted a substantial sum from one
Danilo Bonifacio to expedite the release [of] a certificate of title."25

Petitioner filed a motion for reconsideration before the OP but the same
was denied by Resolution of September 8, 2000.26

In due time, petitioner appealed the decision of the OP, as embodied in

A.O. No. 99, to the CA. She contended that the order of dismissal had no
factual and legal bases and that she was not afforded due process
especially because issues and matters, which were not agreed upon in the
pre-trial conferences and subsequently embodied in the pre-trial order,
were admitted and considered.

On July 27, 2001, the CA issued the assailed Decision discrediting

petitioners claim that she was denied due process, it noting that during the
hearing of her administrative case before the LRA, she was given the
chance to explain her side, and to submit voluminous documents in her
defense, which documentary evidence the DOJ and the OP considered in
arriving at their decisions.

Its own examination of the records, the CA added, did not justify a
departure from the rule that factual findings of lower courts and quasi-
judicial bodies command great respect on appeal. Thus, with a lone
dissent, that of CA Justice Oswaldo D. Agcaoili, it affirmed A.O. No. 99. 27

Hence, this present Petition for review on certiorari.28

Having brought this petition under Rule 45 of the Rules of Court, petitioner
must be aware that only questions of law may be considered for
resolution.29 It is a well-settled principle that this Court is not a trier of facts,
and that respect is generally accorded to the determinations made by
administrative bodies,30 especially where, as in this case, the findings and
conclusions of the administrative and executive offices concerned (the
LRA, the DOJ and the OP) and those of the CA are similar.
However, to lay the matter to rest and in the interest of justice, this Court
shall set aside the procedural barrier to a re-examination of the facts to
resolve the legal issues, which pertain to (1) the alleged violation of
petitioners right to due process and (2) the propriety of the order of her
dismissal.

In deciding this administrative case, this Court deems it fit, though, to steer
clear from discussing or passing judgment on the validity of the derivative
titles of OCT No. 994, which have spawned a number of cases.31Reference
to OCT No. 994 is made only to determine the circumstances surrounding
the dismissal of petitioner.

In the landmark case of Ang Tibay v. Court of Industrial Relations,32 this

Court laid down the cardinal primary requirements of due process in
administrative proceedings. Foremost of these requisites is the right to a
hearing, including the right to present ones case and submit evidence in
support thereof.33 The essence of due process in administrative
proceedings is the opportunity to explain ones side or to seek a
reconsideration of the action or ruling complained of.34

As aptly observed by the CA, petitioner was given every opportunity to

explain her side and to present evidence in her defense during the
administrative investigation conducted by the LRA. Records sufficiently
show that in compliance with the "show-cause" letter of the LRA
Administrator, she submitted her written explanation, and that during the
pre-trial conferences, she presented documentary evidence.

Moreover, petitioner moved without fail for the reconsideration of the LRA
Decision, the DOJs recommendation on review, the OPs order of
dismissal, and the CA Decision affirming her dismissal from government
service. At no instance, therefore, was she deprived of the chance to
question the assailed recommendations, order or decision.

Respecting petitioners contention that the LRA, the DOJ and the OP had
digressed from the issues and matters agreed upon during the pre-trial
conferences and thereafter embodied in the pre-trial order, suffice it to point
out that technical rules of procedure and evidence are not strictly applied in
administrative proceedings.35 At any event, these matters and issues were
seasonably addressed by petitioners motions for reconsideration. Hence,
the possibility of surprise and maneuvering, which the rule on pre-trial is
designed to prevent,36 has altogether been obviated.

Now, the quantum of proof required in an administrative proceeding is only

substantial evidence or that amount of relevant evidence that a reasonable
mind might accept as adequate to support a conclusion.37 The standard of
substantial evidence is satisfied when there is reasonable ground to believe
that the person indicted was responsible for the alleged wrongdoing or
misconduct.38

It bears stressing that petitioner stood charged not for changing the date of
registration of OCT No. 994 in TCT Nos. 314535 to 314537, which was
established to have been made upon the instructions of then Deputy
Register of Deeds Vasquez, Jr. Rather, she was indicted for acquiescing to
the change by (1) issuing conflicting "certifications" on the date of issuance
of OCT No. 994; and (2) for making it appear that there were two OCT Nos.
994. Thus, her protestations that she had no hand in the alteration are
unavailing.

Petitioner herself admits that she had signed TCT Nos. 314535 to 314537,
which were issued in the name of Rivera, with the following statement on
the lower portion thereof:

IT IS FURTHER CERTIFIED that said land was originally registered on

the 19th day of April, in the year nineteen hundred and seventeen in the
Registration Book of the Office of the Register of Deeds of Rizal,
Volume A-9, page 224, as Original Certificate of Title No. 994, pursuant to
Decree No. 36455 issued in L.R.C. ________ Record No. 4429, in the
name of __________.

This certificate is a transfer from ORIGINAL Certificate of Title No. 994,

which is cancelled by virtue hereof in so far as the above-described land is
concerned.

xxxx

However, she argued that the so-called "certifications" were mere entries
forming part of the titles. Whether it was a "certification" or a mere
statement that she had issued is unnecessary as it does not alter the fact
that she signed several TCTs, some reflecting the date of registration of
OCT No. 994 as May 3, 1917 and the others as April 19, 1917.
The facts on record, moreover, show that petitioner had knowledge of
circumstances that suggested the existence of an irregularity.

First. On March 20, 1996, petitioner had, by letter, referred to the LRA
Legal Department the application of Ms. Roqueta Dimson for the issuance
of the certificate of title on Lot 23-A of the Maysilo estate, in which Dimson
had contended that all previously-issued titles which were derived from
OCT No. 994 dated May 3, 1917 were void ab initio.

In a subsequent letter to the LRA Administrator dated May 2, 1996,39 she

raised serious doubts over Dimsons request for annotation of a Notice of
Lis Pendens on the certificates of titles of Mt. Carmel Farms, Inc., which
were also derived from OCT No. 994. She pointedly stated in her letter, as
follows:

If we allow the registration of the Notice of Lis Pendens of Dimson, what

will prevent her to question all titles derived from OCT No. 994 issued on
May 3, 1917.

To prevent the proliferation of similar request and nuisance suits, may we

request this Authority for its official stand on OCT No. 994 and the Dimson
titles. To date, the Dimson titles and their derivative titles [are] still existing
and on file at the Registries of Deeds of Kalookan and Malabon despite the
Verification Committees findings that they were issued void ab initio.40

Second. Petitioner wrote Phil-Ville a letter dated September 20, 199641 in

which she categorically stated that OCT No. 994 was issued pursuant to
Decree No. 36455 dated April 19, 1917, and the date of transcription of
said decree at the Office of the Register of Deeds of Pasig, Rizal was May
3, 1917.

Third. As CA Justice Agcaoili had correctly observed in his dissent,

"petitioner had previously issued certificates of title in the names of other
individuals reflecting the true date of issue of OCT No. 994, the mother title,
i.e., May 3, 1917."42

In light of these facts, it was indeed surprising that petitioner consented to

the acquisition by her children in July 1996 of a property titled in the name
of Norma Dimson Tirado. As a consequence of this acquisition, she issued
on August 12, 1996 TCT No. 312804, to which April 19, 1917 was carried
over as the date of registration of OCT No. 994.
Considering the proximity of the issuance of TCT No. 312804 to her letters
of March 20, 1996 and May 2, 1996, it is highly inconceivable that petitioner
was unaware of the supposedly altered date of registration of OCT No. 994
that was reflected in her childrens TCT.

Parenthetically, it was because of the issuance of the TCT in her childrens

favor that petitioner was found by the DOJ to have additionally violated the
Code of Conduct and Ethical Standards for Public Officials and
Employees,43which prohibits government officials and employees from
having any interest in a transaction requiring their approval.

Even her contention that she was without a remedy to correct an erroneous
entry that had been carried over to the derivative TCT was belied by her
filing before the RTC, Branch 120, Caloocan City, in Civil Case No. C-424,
of a Petition dated January 199744 for the correction of the erroneous
entries of "19th" and "April" on the blank spaces in the "certification" portion
of Riveras titles. Invoking Section 10845 of P.D. No. 1529, she manifested
that the correct dates were "3rd" and "May" because these "are the dates
appearing in the original of OCT No. 994" on file in the registry.

As for petitioners next contention that the issuance of Riveras titles merely
involved the mechanical procedure of transferring the dates contained in
the derivative titles which she, as head of office, had every right to rely on
the bona fides of her subordinates, the same deserves scant consideration.

Unlike in Arias v. Sandiganbayan,46 upon which petitioner relies for

jurisprudential support, petitioners foreknowledge of facts and
circumstances that suggested an irregularity constituted added reason47 for
her to exercise a greater degree of circumspection before signing and
issuing the titles.1awphi1.nt

Arias and the subsequent case of Magsuci v. Sandiganbayan48 were held

inapplicable in Escara v. People49because the person indicted therein had
foreknowledge of the existence of an anomaly that should have put him on
guard regarding the transaction.

It may not be amiss to mention that even Justice Agcaoili, in his dissent to
the assailed CA Decision, observed petitioners failure to take
precautionary measures, thus:
x x x Considering the notoriety of the Maysilo estate as the "mother of all
land titling scams," the irregularity attending the issuance of the titles could
have been avoided had petitioner exercised a little more due care and
circumspection before she affixed her signature [on the Rivera titles]. The
fact that the Maysilo estate has spawned conflicting claims of ownership
which invariably reached the courts, a fact which petitioner cannot ignore
on account of her long exposure and experience as a register of deeds,
should have impelled petitioner to be more prudent even to the extent of
deliberately holding action on the papers submitted to her relative to the
estate until she shall have fully satisfied herself that everything was above
board. x x x

xxxx

If petitioner had made further investigation (in the light of her previous
certifications and the notoriety of the Maysilo estate as a potential breeding
ground of titling irregularities) and, thus, made a timely discovery of the
error in the questioned entry, but still was in doubt on how to proceed, she
could have easily referred the matter to the LRA Administrator en consulta
as authorized by Section 117 of PD No. 1529 x x x.50 (Emphasis in the
original)

Petitioners claim that the issuance of Riveras TCTs was her ministerial
duty in accordance with the final and executory order of the trial court,
deserves scant consideration too insofar as the carrying over of the
technical descriptions contained in Judge Discayas order was concerned.

The date of registration of OCT No. 994, however, was a different matter.
To note, Riveras owners duplicate certificates of title were not submitted to
the register of deeds for cancellation as required in Section 5351 of P.D. No.
1529 because Judge Discayas Order of September 17, 1996 had excused
the submission of the duplicate certificates. Hence, it was left to petitioners
office to supply the date of registration of OCT No. 994 upon verification of
the copy it had on file.

For this reason, Deputy Register of Deeds Vasquez, Jr. wrote in pencil the
missing information on the blank spaces, according to clerk Nelda
Zacarias.52 Vasquez, Jr. admitted in his February 21, 1997 reply-
memorandum to petitioner that he had "instructed one of the employees to
change [the date] from May 3, 1917 to April 19, 1917." 53
The observations of the LRA and the DOJ on petitioners failure to require
the presentation of the subdivision plan for Riveras three titles are in
keeping with the provisions of Sections 50 and 58 of P.D. No. 1529, as
follows:

SEC. 50. Subdivision and consolidation plans. Any owner subdividing a

tract of registered land into lots which do not constitute a subdivision
project as defined and provided for under P.D. 957, shall file with the
Commissioner of Land Registration or with the Bureau of Lands a
subdivision plan of such land on which all boundaries, streets,
passageways and waterways, if any, shall be distinctly and accurately
delineated.

If a subdivision plan, be it simple or complex, duly approved by the

Commissioner of Land Registration or the Bureau of Lands together with
the approved technical descriptions and the corresponding owners
duplicate certificate of title is presented for registration, the Register of
Deeds shall, without requiring further court approval of said plan, register
the same in accordance with the provisions of the Land Registration Act, as
amended. x x x1a\^/phi1.net

xxxx

SEC. 58. Procedure where conveyance involves portion of land. If a deed

of conveyance is for a part of the land described in a certificate of title, the
Register of Deeds shall not enter any transfer certificate of title to the
grantee until a plan of such land showing all the portions or lots into which it
has been subdivided and the corresponding technical descriptions shall
have been verified and approved pursuant to Section 50 of this Decree. x x
x

Upon the approval of the plan and technical descriptions, the original of the
plan, together with a certified copy of the technical descriptions shall be
filed with the Register of Deeds for annotation in the corresponding
certificate of title and thereupon said officer shall issue a new certificate of
title to the grantee for the portion conveyed, and at the same time cancel
the grantors certificate partially with respect only to the said portion
conveyed. x x x

(Emphasis and underscoring supplied)

It is clearly evident from the above provisions that for petitioner- register of
deeds to issue a new certificate of title, she must require the submission of
the approved subdivision plan together with the approved technical
descriptions and the corresponding owners duplicate certificate of title.
Therefore, she could not have dispensed with the submission of the
subdivision plan and relied solely on the technical descriptions provided in
the courts Order.

Likewise, this Court holds that petitioner should have required proof of
payment of inheritance tax over the portions that were transferred to Rivera
because these lots were conveyances from the estate of her alleged
grandmother, Maria Consolacion Vidal, in whose name the lots were
originally registered under OCT No. 994.

The following disquisition of the DOJ is thus noted with approval:

As to the question regarding the presentation of proof of payment of

inheritance tax, respondent Alfonso claims that no inheritance tax is due on
the estate simply because there is no inheritance involved as the titles were
issued pursuant to a court order in a judicial partition and the adjudicatee
Eleuteria Rivera is very much alive at the time of issuance. Again, this
deserves scant consideration. It does not matter whether Eleuteria Rivera
is alive or not because the subject matter of inheritance tax is not the estate
of Eleuteria Rivera but the transfer of property covered by the subject titles
by way of inheritance from the predecessor and alleged parent Maria
Concepcion Vidal to the heir who is Eleuteria Rivera. (Underscoring
supplied)

The alleged iniquity between the penalty of dismissal meted on petitioner

and the one-year suspension of Vasquez, Jr. is an issue that cannot be
resolved in this petition in the absence of facts concerning the
administrative proceedings against the latter.

A final matter. In light of the Affidavit of Desistance executed by Danilo

Bonifacio54 before the DOJ, the additional circumstance (which the OP had
considered in its Decision) that petitioner had allegedly accepted money in
exchange for the issuance of a title has become a non-issue against her.

"Serious misconduct," as a valid cause for the dismissal of an employee, is

improper or wrong conduct; the transgression of some established and
definite rule of action; a forbidden act or dereliction of duty, which is willful
and intentional neglect and not mere error in judgment.55 It must be grave
and aggravated in character and not merely trivial or unimportant.56 In
addition, it must be directly related and/or connected to the performance of
official duties.57 Without question, all of these requisites are present in this
case. Petitioner is thus administratively liable for serious misconduct.

Petitioner is liable too for dishonesty defined in Civil Service Commission v.

Cayobit58 as ". . . the concealment or distortion of truth in a matter of fact
relevant to ones office or connected with the performance of his duty."

It goes without saying that by failing to prevent the irregularity that she had
reason to suspect all along or to take immediate steps to rectify it, petitioner
had tolerated the same and allowed it to wreak havoc on our land-titling
system. Sadly, that confusion continues to rear its ugly head to this day.

WHEREFORE, the petition is DENIED. The Decision of the Court of

Appeals is AFFIRMED.

Costs against petitioner.

SO ORDERED.
 [G.R. No. 128573. January 13, 2003]

NAAWAN COMMUNITY RURAL BANK INC., petitioner, vs. THE COURT

OF APPEALS and SPOUSES ALFREDO AND ANNABELLE
LUMO, respondents.

DECISION
CORONA, J.:

Under the established principles of land registration, a person dealing with

registered land may generally rely on the correctness of a certificate of title and
the law will in no way oblige him to go beyond it to determine the legal status of
the property.
Before us is a Petition for Review on Certiorari challenging the February 7,
1997 Decision of the Court of Appeals in CA-G.R. CV No. 55149, which in turn
[1]

affirmed the decision of the Regional Trial Court of Misamis Oriental, Branch
[2]

18 as follows:
WHEREFORE, the plaintiffs-spouses are adjudged the absolute owners and
possessors of the properties in question (Lot 18583, under TCT No. T-50134,
and all improvements thereon) and quieting title thereto as against any and all
adverse claims of the defendant. Further, the sheriffs certificate of sale,
Exhibit 4; 4-A; Sheriffs deed of final conveyance, Exhibit 5, 5-A; Tax
Declarations No. 71211, Exhibit 7, and any and all instrument, record, claim,
encumbrance or proceeding in favor of the defendant, as against the plaintiffs,
and their predecessor-in-interest, which may be extant in the office of the
Register of Deeds of Province of Misamis Oriental, and of Cagayan de Oro
City, and in the City Assessors Office of Cagayan de Oro City, are declared as
invalid and ineffective as against the plaintiffs title.
The counterclaim is dismissed for lack of merit.
SO ORDERED. [3]

The facts of the case, as culled from the records, are as follows:
On April 30, 1988, a certain Guillermo Comayas offered to sell to private
respondent-spouses Alfredo and Annabelle Lumo, a house and lot measuring
340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro City.
Wanting to buy said house and lot, private respondents made inquiries at
the Office of the Register of Deeds of Cagayan de Oro City where the property
is located and the Bureau of Lands on the legal status of the vendors title. They
found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo
and that the owners copy of the Certificate of Title to said property was in her
possession.
Private respondents directed Guillermo Comayas to redeem the property
from Galupo at their expense, giving the amount of P10,000 to Comayas for
that purpose.
On May 30, 1988, a release of the adverse claim of Galupo was annotated
on TCT No. T-41499 which covered the subject property.
In the meantime, on May 17, 1988, even before the release of Galupos
adverse claim, private respondents and Guillermo Comayas, executed a deed
of absolute sale. The subject property was allegedly sold for P125,000 but the
deed of sale reflected the amount of only P30,000 which was the amount
private respondents were ready to pay at the time of the execution of said deed,
the balance payable by installment.
On June 9, 1988, the deed of absolute sale was registered and inscribed on
TCT No. T-41499 and, on even date, TCT No. T-50134 was issued in favor of
private respondents.
After obtaining their TCT, private respondents requested the issuance of a
new tax declaration certificate in their names. However, they were surprised to
learn from the City Assessors Office that the property was also declared for tax
purposes in the name of petitioner Naawan Community Rural Bank
Inc. Records in the City Assessors Office revealed that, for the lot covered by
TCT No. T-50134, Alfredo Lumos T/D # 83324 bore the note: This lot is also
declared in the name of Naawan Community Rural Bank Inc. under T/D #
71210.
Apparently, on February 7, 1983, Guillermo Comayas obtained a P15,000
loan from petitioner Bank using the subject property as security. At the time said
contract of mortgage was entered into, the subject property was then an
unregistered parcel of residential land, tax-declared in the name of a certain
Sergio A. Balibay while the residential one-storey house was tax-declared in
the name of Comayas.
Balibay executed a special power of attorney authorizing Comayas to
borrow money and use the subject lot as security. But the Deed of Real Estate
Mortgage and the Special Power of Attorney were recorded in the registration
book of the Province of Misamis Oriental, not in the registration book of
Cagayan de Oro City. It appears that, when the registration was made, there
was only one Register of Deeds for the entire province of Misamis Oriental,
including Cagayan de Oro City. It was only in 1985 when the Office of the
Register of Deeds for Cagayan de Oro City was established separately from
the Office of the Register of Deeds for the Province of Misamis Oriental.
For failure of Comayas to pay, the real estate mortgage was foreclosed and
the subject property sold at a public auction to the mortgagee Naawan
Community Rural Bank as the highest bidder in the amount
of P16,031.35. Thereafter, the sheriffs certificate of sale was issued and
registered under Act 3344 in the Register of Deeds of the Province of Misamis
Oriental.
On April 17, 1984, the subject property was registered in original
proceedings under the Land Registration Act. Title was entered in the
registration book of the Register of Deeds of Cagayan de Oro City as Original
Certificate of Title No. 0-820, pursuant to Decree No. N-189413.
On July 23, 1984, Transfer Certificate of Title No. T-41499 in the name of
Guillermo P. Comayas was entered in the Register of Deeds of Cagayan de
Oro City.
Meanwhile, on September 5, 1986, the period for redemption of the
foreclosed subject property lapsed and the MTCC Deputy Sheriff of Cagayan
de Oro City issued and delivered to petitioner bank the sheriffs deed of final
conveyance. This time, the deed was registered under Act 3344 and recorded
in the registration book of the Register of Deeds of Cagayan de Oro City.
By virtue of said deed, petitioner Bank obtained a tax declaration for the
subject house and lot.
Thereafter, petitioner Bank instituted an action for ejectment against
Comayas before the MTCC which decided in its favor. On appeal, the Regional
Trial Court affirmed the decision of the MTCC in a decision dated April 13, 1988.
On January 27, 1989, the Regional Trial Court issued an order for the
issuance of a writ of execution of its judgment. The MTCC, being the court of
origin, promptly issued said writ.
However, when the writ was served, the property was no longer occupied
by Comayas but herein private respondents, the spouses Lumo who had, as
earlier mentioned, bought it from Comayas on May 17, 1988
Alarmed by the prospect of being ejected from their home, private
respondents filed an action for quieting of title which was docketed as Civil Case
No. 89-138. After trial, the Regional Trial Court rendered a decision declaring
private respondents as purchasers for value and in good faith,
and consequently declaring them as the absolute owners and possessors of
the subject house and lot.
 Petitioner appealed to the Court of Appeals which in turn affirmed the trial
courts decision.
Hence, this petition.
Petitioner raises the following issues:
I. WHETHER OR NOT THE SHERIFFS DEED OF FINAL CONVEYANCE WAS DULY
EXECUTED AND REGISTERED IN THE REGISTER OF DEEDS OF CAGAYAN DE
ORO CITY ON DECEMBER 2, 1986;
II. WHETHER OR NOT REGISTRATION OF SHERIFFS DEED OF FINAL
CONVEYANCE IN THE PROPER REGISTRY OF DEEDS COULD BE EFFECTIVE
AS AGAINST SPOUSES LUMO.

Both parties cite Article 1544 of the Civil Code which governs the double
sale of immovable property.
Article 1544 provides:
x x x. Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of
Property.
Petitioner bank contends that the earlier registration of the sheriffs deed of
final conveyance in the day book under Act 3344 should prevail over the later
registration of private respondents deed of absolute sale under Act 496, as [4]

amended by the Property Registration Decree, PD 1529.

This contention has no leg to stand on. It has been held that, where a person
claims to have superior proprietary rights over another on the ground that he
derived his title from a sheriffs sale registered in the Registry of Property, Article
1473 (now Article 1544) of the Civil Code will apply only if said execution sale
of real estate is registered under Act 496. [5]

Unfortunately, the subject property was still untitled when it was acquired by
petitioner bank by virtue of a final deed of conveyance. On the other hand, when
private respondents purchased the same property, it was already covered by
the Torrens System.
Petitioner also relies on the case of Bautista vs. Fule where the Court ruled
[6]

that the registration of an instrument involving unregistered land in the Registry

of Deeds creates constructive notice and binds third person who may
subsequently deal with the same property.
However, a close scrutiny of the records reveals that, at the time of the
execution and delivery of the sheriffs deed of final conveyance on September
5, 1986, the disputed property was already covered by the Land Registration
Act and Original Certificate of Title No. 0-820 pursuant to Decree No. N189413
was likewise already entered in the registration book of the Register of Deeds
of Cagayan De Oro City as of April 17, 1984.
Thus, from April 17, 1984, the subject property was already under the
operation of the Torrens System. Under the said system, registration is the
operative act that gives validity to the transfer or creates a lien upon the land.
Moreover, the issuance of a certificate of title had the effect of relieving the
land of all claims except those noted thereon. Accordingly, private respondents,
in dealing with the subject registered land, were not required by law to go
beyond the register to determine the legal condition of the property. They were
only charged with notice of such burdens on the property as were noted on the
register or the certificate of title. To have required them to do more would have
been to defeat the primary object of the Torrens System which is to make the
Torrens Title indefeasible and valid against the whole world.
Private respondents posit that, even assuming that the sheriffs deed of final
conveyance in favor of petitioner bank was duly recorded in the day book of the
Register of Deeds under Act 3344, ownership of the subject real property would
still be theirs as purchasers in good faith because they registered the sale first
under the Property Registration Decree.
The rights created by the above-stated statute of course do not and cannot
accrue under an inscription in bad faith. Mere registration of title in case of
double sale is not enough; good faith must concur with the registration. [7]

Petitioner contends that the due and proper registration of the sheriffs deed
of final conveyance on December 2, 1986 amounted to constructive notice to
private respondents. Thus, when private respondents bought the subject
property on May 17, 1988, they were deemed to have purchased the said
property with the knowledge that it was already registered in the name of
petitioner bank.
Thus, the only issue left to be resolved is whether or not private respondents
could be considered as buyers in good faith.
The priority in time principle being invoked by petitioner bank is misplaced
because its registration referred to land not within the Torrens System but under
Act 3344. On the other hand, when private respondents bought the subject
property, the same was already registered under the Torrens System. It is a
well-known rule in this jurisdiction that persons dealing with registered land
have the legal right to rely on the face of the Torrens Certificate of Title and to
dispense with the need to inquire further, except when the party concerned has
actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry. [8]
 Did private respondents exercise the required diligence in ascertaining the
legal condition of the title to the subject property so as to be considered as
innocent purchasers for value and in good faith?
We answer in the affirmative.
Before private respondents bought the subject property from Guillermo
Comayas, inquiries were made with the Registry of Deeds and the Bureau of
Lands regarding the status of the vendors title. No liens or encumbrances were
found to have been annotated on the certificate of title. Neither were private
respondents aware of any adverse claim or lien on the property other than the
adverse claim of a certain Geneva Galupo to whom Guillermo Comayas had
mortgaged the subject property. But, as already mentioned, the claim of Galupo
was eventually settled and the adverse claim previously annotated on the title
cancelled. Thus, having made the necessary inquiries, private respondents did
not have to go beyond the certificate of title. Otherwise, the efficacy and
conclusiveness of the Torrens Certificate of Title would be rendered futile and
nugatory.
Considering therefore that private respondents exercised the diligence
required by law in ascertaining the legal status of the Torrens title of Guillermo
Comayas over the subject property and found no flaws therein, they should be
considered as innocent purchasers for value and in good faith.
Accordingly, the appealed judgment of the appellate court upholding private
respondents Alfredo and Annabelle Lumo as the true and rightful owners of the
disputed property is affirmed.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.