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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-8936 October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs-appellants,


vs.
N.M. SALEEBY, defendant-appellee.

Singson, Ledesma and Lim for appellants.


D.R. Williams for appellee.

JOHNSON, J.:

From the record the following facts appear:

First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the city
of Manila.

Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall is
located on the lot of the plaintiffs.

Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the Court of Land Registration
for the registration of their lot. After a consideration of said petition the court, on the 25th day of October, 1906,
decreed that the title of the plaintiffs should be registered and issued to them the original certificate provided for
under the torrens system. Said registration and certificate included the wall.

Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for the
registration of the lot now occupied by him. On the 25th day of March, 1912, the court decreed the registration
of said title and issued the original certificate provided for under the torrens system. The description of the lot
given in the petition of the defendant also included said wall.

Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which had
been included in the certificate granted to them had also been included in the certificate granted to the defendant
.They immediately presented a petition in the Court of Land Registration for an adjustment and correction of the
error committed by including said wall in the registered title of each of said parties. The lower court however,
without notice to the defendant, denied said petition upon the theory that, during the pendency of the petition for
the registration of the defendant's land, they failed to make any objection to the registration of said lot, including
the wall, in the name of the defendant.

Sixth. That the land occupied by the wall is registered in the name of each of the owners of the adjoining lots.
The wall is not a joint wall.

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Under these facts, who is the owner of the wall and the land occupied by it?

The decision of the lower court is based upon the theory that the action for the registration of the lot of the
defendant was a judicial proceeding and that the judgment or decree was binding upon all parties who did not
appear and oppose it. In other words, by reason of the fact that the plaintiffs had not opposed the registration of
that part of the lot on which the wall was situate they had lost it, even though it had been theretofore registered
in their name. Granting that theory to be correct one, and granting even that the wall and the land occupied by it,
in fact, belonged to the defendant and his predecessors, then the same theory should be applied to the defendant
himself. Applying that theory to him, he had already lost whatever right he had therein, by permitting the
plaintiffs to have the same registered in their name, more than six years before. Having thus lost hid right, may
he be permitted to regain it by simply including it in a petition for registration? The plaintiffs having secured the
registration of their lot, including the wall, were they obliged to constantly be on the alert and to watch all the
proceedings in the land court to see that someone else was not having all, or a portion of the same, registered? If
that question is to be answered in the affirmative, then the whole scheme and purpose of the torrens system of
land registration must fail. The real purpose of that system is to quiet title to land; to put a stop forever to any
question of the legality of the title, except claims which were noted at the time of registration, in the certificate,
or which may arise subsequent thereto. That being the purpose of the law, it would seem that once a title is
registered the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the
"mirador de su casa," to avoid the possibility of losing his land. Of course, it cannot be denied that the
proceeding for the registration of land under the torrens system is judicial (Escueta vs. .Director of Lands, 16
Phil. Rep., 482). It is clothed with all the forms of an action and the result is final and binding upon all the
world. It is an action in rem. (Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil. rep., 49
Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American Land Co. vs. Zeiss, 219 U.S.,
47.)

While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the
world are parties, including the government. After the registration is complete and final and there exists no
fraud, there are no innocent third parties who may claim an interest. The rights of all the world are foreclosed by
the decree of registration. The government itself assumes the burden of giving notice to all parties. To permit
persons who are parties in the registration proceeding (and they are all the world) to again litigate the same
questions, and to again cast doubt upon the validity of the registered title, would destroy the very purpose and
intent of the law. The registration, under the Torrens system, does not give the owner any better title than he
had. If he does not already have a perfect title, he cannot have it registered. Fee simple titles only may be
registered. The certificate of registration accumulates in open document a precise and correct statement of the
exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and
shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not
thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding
permitted by law. Otherwise all security in registered titles would be lost. A registered title can not be altered,
modified, enlarged, or diminished in a collateral proceeding and not even by a direct proceeding, after the lapse
of the period prescribed by law.

For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under the
torrens system affords us no remedy. There is no provision in said Act giving the parties relief under conditions
like the present. There is nothing in the Act which indicates who should be the owner of land which has been
registered in the name of two different persons.

The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a bar
to future litigation over the same between the same parties .In view of the fact that all the world are parties, it
must follow that future litigation over the title is forever barred; there can be no persons who are not parties to
the action. This, we think, is the rule, except as to rights which are noted in the certificate or which arise
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subsequently, and with certain other exceptions which need not be dismissed at present. A title once registered
can not be defeated, even by an adverse, open, and notorious possession. Registered title under the torrens
system can not be defeated by prescription (section 46, Act No. 496). The title, once registered, is notice to the
world. All persons must take notice. No one can plead ignorance of the registration.

The question, who is the owner of land registered in the name of two different persons, has been presented to
the courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the
difficulty has been settled by express statutory provision. In others it has been settled by the courts. Hogg, in his
excellent discussion of the "Australian Torrens System," at page 823, says: "The general rule is that in the case
of two certificates of title, purporting to include the same land, the earlier in date prevails, whether the land
comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate.
(Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155; Lloyd vs. Myfield, 7 A.L.T. (V.) 48;
Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs. Esperance Land Co., 1 W.A.R., 118.)" Hogg adds
however that, "if it can be very clearly ascertained by the ordinary rules of construction relating to written
documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be
rectified by holding the latter of the two certificates of title to be conclusive." (See Hogg on the "Australian
torrens System," supra, and cases cited. See also the excellent work of Niblack in his "Analysis of the Torrens
System," page 99.) Niblack, in discussing the general question, said: "Where two certificates purport to include
the same land the earlier in date prevails. ... In successive registrations, where more than one certificate is issued
in respect of a particular estate or interest in land, the person claiming under the prior certificates is entitled to
the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose
claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in
respect thereof. While the acts in this country do not expressly cover the case of the issue of two certificates for
the same land, they provide that a registered owner shall hold the title, and the effect of this undoubtedly is that
where two certificates purport to include the same registered land, the holder of the earlier one continues to hold
the title" (p. 237).

Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against all
persons, including the Insular Government and all the branches thereof, whether mentioned by name in the
application, notice, or citation, or included in the general description "To all whom it may concern." Such
decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby,
nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any
person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in
the Court of Land Registration a petition for review within one year after entry of the decree (of registration),
provided no innocent purchaser for value has acquired an interest.

It will be noted, from said section, that the "decree of registration" shall not be opened, for any reason, in any
court, except for fraud, and not even for fraud, after the lapse of one year. If then the decree of registration can
not be opened for any reason, except for fraud, in a direct proceeding for that purpose, may such decree be
opened or set aside in a collateral proceeding by including a portion of the land in a subsequent certificate or
decree of registration? We do not believe the law contemplated that a person could be deprived of his registered
title in that way.

We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when
the same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code
provides, among other things, that when one piece of real property had been sold to two different persons it
shall belong to the person acquiring it, who first inscribes it in the registry. This rule, of course, presupposes that
each of the vendees or purchasers has acquired title to the land. The real ownership in such a case depends upon
priority of registration. While we do not now decide that the general provisions of the Civil Code are applicable
to the Land Registration Act, even though we see no objection thereto, yet we think, in the absence of other
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express provisions, they should have a persuasive influence in adopting a rule for governing the effect of a
double registration under said Act. Adopting the rule which we believe to be more in consonance with the
purposes and the real intent of the torrens system, we are of the opinion and so decree that in case land has been
registered under the Land Registration Act in the name of two different persons, the earlier in date shall prevail.

In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says,
among other things; "When Prieto et al. were served with notice of the application of Teus (the predecessor of
the defendant) they became defendants in a proceeding wherein he, Teus, was seeking to foreclose their right,
and that of orders, to the parcel of land described in his application. Through their failure to appear and contest
his right thereto, and the subsequent entry of a default judgment against them, they became irrevocably bound
by the decree adjudicating such land to Teus. They had their day in court and can not set up their own omission
as ground for impugning the validity of a judgment duly entered by a court of competent jurisdiction. To decide
otherwise would be to hold that lands with torrens titles are above the law and beyond the jurisdiction of the
courts".

As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the holder of a
certificate cannot rest secure in this registered title then the purpose of the law is defeated. If those dealing with
registered land cannot rely upon the certificate, then nothing has been gained by the registration and the expense
incurred thereby has been in vain. If the holder may lose a strip of his registered land by the method adopted in
the present case, he may lose it all. Suppose within the six years which elapsed after the plaintiff had secured
their title, they had mortgaged or sold their right, what would be the position or right of the mortgagee or
vendee? That mistakes are bound to occur cannot be denied, and sometimes the damage done thereby is
irreparable. It is the duty of the courts to adjust the rights of the parties under such circumstances so as to
minimize such damages, taking into consideration al of the conditions and the diligence of the respective parties
to avoid them. In the present case, the appellee was the first negligent (granting that he was the real owner, and
if he was not the real owner he can not complain) in not opposing the registration in the name of the appellants.
He was a party-defendant in an action for the registration of the lot in question, in the name of the appellants, in
1906. "Through his failure to appear and to oppose such registration, and the subsequent entry of a default
judgment against him, he became irrevocably bound by the decree adjudicating such land to the appellants. He
had his day in court and should not be permitted to set up his own omissions as the ground for impugning the
validity of a judgment duly entered by a court of competent jurisdiction." Granting that he was the owner of the
land upon which the wall is located, his failure to oppose the registration of the same in the name of the
appellants, in the absence of fraud, forever closes his mouth against impugning the validity of that judgment.
There is no more reason why the doctrine invoked by the appellee should be applied to the appellants than to
him.

We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest
certificate is the owner of the land. That is the rule between original parties. May this rule be applied to
successive vendees of the owners of such certificates? Suppose that one or the other of the parties, before the
error is discovered, transfers his original certificate to an "innocent purchaser." The general rule is that the
vendee of land has no greater right, title, or interest than his vendor; that he acquires the right which his vendor
had, only. Under that rule the vendee of the earlier certificate would be the owner as against the vendee of the
owner of the later certificate.

We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the vendee
acquires the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may
acquire rights and be protected against defenses which the vendor would not. Said sections speak of available
rights in favor of third parties which are cut off by virtue of the sale of the land to an "innocent purchaser." That
is to say, persons who had had a right or interest in land wrongfully included in an original certificate would be
unable to enforce such rights against an "innocent purchaser," by virtue of the provisions of said sections. In the
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present case Teus had his land, including the wall, registered in his name. He subsequently sold the same to the
appellee. Is the appellee an "innocent purchaser," as that phrase is used in said sections? May those who have
been deprived of their land by reason of a mistake in the original certificate in favor of Teus be deprived of their
right to the same, by virtue of the sale by him to the appellee? Suppose the appellants had sold their lot,
including the wall, to an "innocent purchaser," would such purchaser be included in the phrase "innocent
purchaser," as the same is used in said sections? Under these examples there would be two innocent purchasers
of the same land, is said sections are to be applied .Which of the two innocent purchasers, if they are both to be
regarded as innocent purchasers, should be protected under the provisions of said sections? These questions
indicate the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser," in
said sections.

May the purchaser of land which has been included in a "second original certificate" ever be regarded as an
"innocent purchaser," as against the rights or interest of the owner of the first original certificate, his heirs,
assigns, or vendee? The first original certificate is recorded in the public registry. It is never issued until it is
recorded. The record notice to all the world. All persons are charged with the knowledge of what it contains. All
persons dealing with the land so recorded, or any portion of it, must be charged with notice of whatever it
contains. The purchaser is charged with notice of every fact shown by the record and is presumed to know every
fact which the record discloses .This rule is so well established that it is scarcely necessary to cite authorities in
its support (Northwestern National Bank vs. Freeman, 171 U.S., 620, 629; Delvin on Real Estate, sections 710,
710 [a]).

When a conveyance has been properly recorded such record is constructive notice of its contents and all
interests, legal and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289;
Orvis vs. Newell, 17 Conn., 97; Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351;
McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne, 7 House of Lords Cases, 341.)

Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the
title. Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is
presumed to know every fact which an examination of the record would have disclosed. This presumption
cannot be overcome by proof of innocence or good faith. Otherwise the very purpose and object of the law
requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of
what the record contains any more than one may be permitted to show that he was ignorant of the provisions of
the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law.
The rule must be absolute. Any variation would lead to endless confusion and useless litigation.

While there is no statutory provision in force here requiring that original deeds of conveyance of real property
be recorded, yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.) The
record of a mortgage is indispensable to its validity. (Art .1875.) In the face of that statute would the courts
allow a mortgage to be valid which had not been recorded, upon the plea of ignorance of the statutory provision,
when third parties were interested? May a purchaser of land, subsequent to the recorded mortgage, plead
ignorance of its existence, and by reason of such ignorance have the land released from such lien? Could a
purchaser of land, after the recorded mortgage, be relieved from the mortgage lien by the plea that he was
a bona fide purchaser? May there be a bona fide purchaser of said land, bona fide in the sense that he had no
knowledge of the existence of the mortgage? We believe the rule that all persons must take notice of what the
public record contains in just as obligatory upon all persons as the rule that all men must know the law; that no
one can plead ignorance of the law. The fact that all men know the law is contrary to the presumption. The
conduct of men, at times, shows clearly that they do not know the law. The rule, however, is mandatory and
obligatory, notwithstanding. It would be just as logical to allow the defense of ignorance of the existence and
contents of a public record.

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In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second
original certificate be an "innocent purchaser," when a part or all of such land had theretofore been registered in
the name of another, not the vendor? We are of the opinion that said sections 38, 55, and 112 should not be
applied to such purchasers. We do not believe that the phrase "innocent purchaser should be applied to such a
purchaser. He cannot be regarded as an "innocent purchaser" because of the facts contained in the record of the
first original certificate. The rule should not be applied to the purchaser of a parcel of land the vendor of which
is not the owner of the original certificate, or his successors. He, in nonsense, can be an "innocent purchaser" of
the portion of the land included in another earlier original certificate. The rule of notice of what the record
contains precludes the idea of innocence. By reason of the prior registry there cannot be an innocent purchaser
of land included in a prior original certificate and in a name other than that of the vendor, or his successors. In
order to minimize the difficulties we think this is the safe rule to establish. We believe the phrase "innocent
purchaser," used in said sections, should be limited only to cases where unregistered land has been wrongfully
included in a certificate under the torrens system. When land is once brought under the torrens system, the
record of the original certificate and all subsequent transfers thereof is notice to all the world. That being the
rule, could Teus even regarded as the holder in good fifth of that part of the land included in his certificate of the
appellants? We think not. Suppose, for example, that Teus had never had his lot registered under the torrens
system. Suppose he had sold his lot to the appellee and had included in his deed of transfer the very strip of land
now in question. Could his vendee be regarded as an "innocent purchaser" of said strip? Would his vendee be an
"innocent purchaser" of said strip? Certainly not. The record of the original certificate of the appellants
precludes the possibility. Has the appellee gained any right by reason of the registration of the strip of land in
the name of his vendor? Applying the rule of notice resulting from the record of the title of the appellants, the
question must be answered in the negative. We are of the opinion that these rules are more in harmony with the
purpose of Act No. 496 than the rule contended for by the appellee. We believe that the purchaser from the
owner of the later certificate, and his successors, should be required to resort to his vendor for damages, in case
of a mistake like the present, rather than to molest the holder of the first certificate who has been guilty of no
negligence. The holder of the first original certificate and his successors should be permitted to rest secure in
their title, against one who had acquired rights in conflict therewith and who had full and complete knowledge
of their rights. The purchaser of land included in the second original certificate, by reason of the facts contained
in the public record and the knowledge with which he is charged and by reason of his negligence, should suffer
the loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who was
innocent of any act of negligence.

The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double registration
under the torrens system and the subsequent transfer of the land. Neither do we now attempt to decide the effect
of the former registration in the ordinary registry upon the registration under the torrens system. We are inclined
to the view, without deciding it, that the record under the torrens system, supersede all other registries. If that
view is correct then it will be sufficient, in dealing with land registered and recorded alone. Once land is
registered and recorded under the torrens system, that record alone can be examined for the purpose of
ascertaining the real status of the title to the land.

It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to
hold that the one who acquired it first and who has complied with all the requirements of the law should be
protected.

In view of our conclusions, above stated, the judgment of the lower court should be and is hereby revoked. The
record is hereby returned to the court now having and exercising the jurisdiction heretofore exercised by the
land court, with direction to make such orders and decrees in the premises as may correct the error heretofore
made in including the land in the second original certificate issued in favour of the predecessor of the appellee,
as well as in all other duplicate certificates issued.

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Without any findings as to costs, it is so ordered.

Arellano, C.J., Torrens, and Araullo, JJ., concur.

Separate Opinions

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 80687 April 10, 1989

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner,


vs.
HONORABLE MARIANO M. UMALI, in his capacity as Presiding Judge, Regional Trial Court, Fourth
Judicial Region, Branch 23, Trece Martires City, REMEDIOS MICLAT, JUAN C. PULIDO, ROSALINA
NAVAL, and the REGISTER OF DEEDS OF CAVITE, respondents.

CRUZ, J.:

The petitioner seeks reversion of a parcel of land on the ground that the original sale thereof from the
government was tainted with fraud because based on a forgery and therefore void ab initio. The present holders
of the property claiming to be innocent purchasers for value and not privy to the alleged forgery, contend that
the action cannot lie against them.

The land in question is situated in Tanza, Cavite, and consists of 78,865 square meters. 1 It was originally
purchased on installment from the government on July 1, 1910 by Florentina Bobadilla, who allegedly
transferred her rights thereto in favor of Martina, Tomasa, Gregorio and Julio, all surnamed Cenizal, in
1922.2 Tomasa and Julio assigned their shares to Martina, Maria and Gregorio. 3 In 1971 these three assignees
purportedly signed a joint affidavit which was filed with the Bureau of Lands to support their claim that they
were entitled to the issuance of a certificate of title over the said land on which they said they had already made
full payment. 4 On the basis of this affidavit, the Secretary of Agriculture and Natural Resources executed Deed
No. V-10910 (Sale Certificate No. 1280) on September 10, 1971, in favor of the said affiants. 5 Subsequently, on
October 13, 1971, TCT No. 55044 (replacing Bobadilla's OCT No. 180) was issued by the register of deeds of
Cavite in favor of Maria Cenizal, Gregorio Cenizal, and (in lieu of Martina Cenizal) Rosalina Naval, Luz Naval,
and Enrique Naval. 6

When the complaint for reversion was filed on October 10, 1985, the registered owners of the land, following
several transfers, were Remedios Miclat under TCT No. 80392, Juan C. Pulido under TCT No. 80393, and
Rosalina, Luz and Enrique Naval under TCT No. 80394. 7 They were named as defendants and asked to return
the property to the State on the aforestated grounds of forgery and fraud. The plaintiff claimed that Gregorio
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Cenizal having died on February 25, 1943, and Maria Cenizal on January 8, 1959, they could not have signed
the joint affidavit dated August 9, 1971, on which Deed No. V-10910 (Sale Certificate No. 1280) was based. 8

In their answer, Pulido and the Navals denied any participation in the joint affidavit and said they had all
acquired the property in good faith and for value. By way of affirmative defenses, they invoked estoppel, laches,
prescription and res judicata. 9 For her part, Miclat moved to dismiss the complaint, contending that the
government had no cause of action against her because there was no allegation that she had violated the
plaintiff's right, that the government was not the real party-in-interest because the subject land was already
covered by the Torrens system, and that in any event the action was barred by prescription or laches. 10

The respondent court, in its order dated October 2, 1987, granted the motion. 11 The petitioner, contesting this
order, now insists that it has a valid cause of action and that it is not barred by either prescription or res judicata.

The Court will observe at the outset that the joint affidavit is indeed a forgery. Apart from the fact that two of
the supposed affiants were already dead at the time they were supposed to have signed the sworn statement,
even the most cursory examination of the document will show that the three signatures affixed thereto were
written by one and the same hand. 12 There is no doubt about it. It is indeed difficult to understand how such an
obvious forgery could have deceived the people in the Bureau of Lands who processed the papers of this case
and made possible the fraudulent transfer of the land.

But given such deception, would the sale itself be considered null and void from the start, as the petitioner
insists, so as to make all titles derived therefrom also ineffectual ab initio?

We agree with the contention that there is no allegation in the complaint 13 filed by the petitioner that any one of
the defendants was privy to the forged joint affidavit or that they had acquired the subject land in bad faith.
Their status as innocent transferees for value was never questioned in that pleading. Not having been disproved,
that status now accords to them the protection of the Torrens System and renders the titles obtained by them
thereunder indefeasible and conclusive. The rule will not change despite the flaw in TCT No. 55044.

Section 39 of the Land Registration Act clearly provided:

Sec. 39. Every person receiving a certificate of title in pursuance of a decree of


registration, and every subsequent purchaser of registered land who takes a
certificate of title for value in good faith shall hold the same free of all
encumbrance except those noted on said certificate.

The rulings on this provision are indeed as numerous as they are consistent:

Thus, under Section 44 of P.D. 1529 (then Sec. 39 of the Land Reg. Act), 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 the certificate and any of the
encumbrances which may be subsisting, and enumerated in the law. Under said provision, claims
and liens of whatever character, except those mentioned by law as existing against the land prior
to the issuance of certificate of title, are cut off by such certificate if not noted thereon, and the
certificate so issued binds the whole world, including the government. 14

xxx xxx xxx

A holder in bad faith is not entitled to the protection of Sec. 39 of the Land Registration Act. 15
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xxx xxx xxx

The real purpose of the Torrens System of land registration is to quiet title to land; to put a stop
forever to any question of the legality of the title, except claims which were noted at the time of
registration in the certificate, or which may arise subsequent thereto. That being the purpose of
the law, it would seem that once the title was registered, the owner might rest secure, without the
necessity of waiting in the portals of the court, or sitting in the "mirador de su casa," to avoid the
possibility of losing his land. 16

The decision in Piero v. Director of Lands 17 is not applicable to the present proceeding because the lands
involved in that case had not yet passed to the hands of an innocent purchaser for value. They were still held by
the Pineros. The action for reversion was filed by the government against them as the original transferees of the
properties in question. They were the direct grantees of the free patents issued by the government pursuant to
which the corresponding certificates of title were issued under the Torrens system. The fraud alleged by the
government as a ground for the reversion sought was imputable directly to the Pineros, who could not plead the
status of innocent purchasers for value.

The difference between them and the private respondents is that the latter acquired the land in question not by
direct grant but in fact after several transfers following the original sale thereof to Bobadilla in 1910. The
presumption is that they are innocent transferees for value in the absence of evidence to the contrary. The
petitioner contends that it was Pedro Miclat who caused the falsification of the joint affidavit, but that is a bare
and hardly persuasive allegation, and indeed, even if true, would still not prove any collusion between him and
the private respondents. The mere fact that Remedios Miclat was the daughter and heiress of Miclat, without
more, would not necessarily visit upon her the alleged sins of her father.

The Solicitor General also argues that Remedios is an extension of the juridical personality of her father and so
cannot claim to be an innocent purchaser for value because she is charged with knowledge of her father's deceit.
Such conclusion has no basis in fact or law. Moreover, there is evidence that Remedios did not merely inherit
the land but actually purchased it for valuable consideration and without knowledge of its original defect. The
agreement to subdivide, 18 which she presented to show that she had acquired the land for valuable
confederation, is more acceptable than the conjectures of the petitioner. It is also consonant with the
presumption of good faith.

The land being now registered under the Torrens system in the names of the private respondents, the
government has no more control or jurisdiction over it. It is no longer part of the public domain or, as the
Solicitor General contends as if it made any difference of the Friar Lands. The subject property ceased to
be public land when OCT No. 180 was issued to Florentina Bobadilla in 1910 or at the latest from the date it
was sold to the Cenizals in 1971 upon full payment of the purchase price. As private registered land, it is
governed by the provisions of the Land Registration Act, now denominated the Property Registration Decree,
which applies even to the government.

The pertinent provision of the Land Registration Act was Section 122, which read as follows:

Sec. 122. Whenever public lands in the Philippine Islands belonging to the Government of the
United States or to the Government of the Philippine Islands are alienated, granted, or conveyed
to persons or to public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands. 19

This should be related to Section 12 of the Friar Lands Act, providing thus:

9
Sec. 12. . . . upon the payment of the final installment together with all accrued interest, the
Government will convey to such settler and occupant the said land so held by him by proper
instrument of conveyance, which shall be issued and become effective in the manner provided in
section one hundred and twenty-two (Sec. 122) of the Land Registration Act.

The petitioner claims that it is not barred by the statute of limitations because the original transfer of the land
was null and void ab initio and did not give rise to any legal right. The land therefore continued to be part of the
public domain and the action for this reversion could be filed at any time. The answer to that is the statement
made by the Court in Heirs of Tanak Pangawaran Patiwayan v. Martinez 20 that "even if respondent Tagwalan
eventually is proven to have procured the patent and the original certificate of title by means of fraud, the land
would not revert back to the State," precisely because it has become private land. Moreover, the petitioner errs
in arguing that the original transfer was null and void ab initio, for the fact is that it is not so. It was only
voidable. The land remained private as long as the title thereto had not been voided, but it is too late to do that
now. As the Court has held in Ramirez vs. Court of Appeals. 21

A certificate of title fraudulently secured is not null and void ab initio, unless the fraud consisted
in misrepresenting that the land is part of the public domain, although it is not. In such case the
nullity arises, not from the fraud or deceit, but from the fact that the land is not under the
jurisdiction of the Bureau of Lands. Inasmuch as the land involved in the present case does not
belong to such category, OCT No. 282-A would be merely voidable or reviewable (Vda. de
Cuaycong vs. Vda. de Sengbengco, 110 Phil. 113): (1) upon proof of actual fraud; (2) although
valid and effective, until annulled or reviewed in a direct proceeding therefor (Legarda vs.
Saleeby, 31 Phil. 590), not collaterally (Sorongon vs. Makalintal, 80 Phil. 259, 262; Director of
Lands vs. Gan Tan, 89 Phil. 184; Henderson vs. Garrido, 90 Phil. 624,630; Samonte vs.
Sambilon, 107 Phil. 198,200); (3) within the statutory period therefor (Sec. 38, Act 496; Velasco
vs. Gochuico 33 Phil. 363; Delos Reyes vs. Paterno, 34 Phil. 420; Snyder vs. Provincial Fiscal,
42 Phil. 761, 764; Reyes vs. Borbon, 50 Phil. 791; Clemente vs. Lukban, 53 Phil. 931; Sugayan
vs. Solis, 56 Phil. 276, 279; Heirs of Lichauco vs. Director of Lands, 70 Phil. 69); (4) after
which, the title would be conclusive against the whole world, including the Government
(Legarda vs. Saleeby, 31 Phil. 590, 596; Central Capiz vs. Ramirez, 40 Phil. 883; J. M. Tuason
vs. Santiago, 99 Phil. 615).

And as we declared in Municipality of Hagonoy vs. Secretary of Agriculture and Natural Resources: 22

. . . Once a patent is registered and the corresponding certificate of title is issued, the land
ceases to be part of public domain and becomes private property over which the director of
Lands has neither control nor jurisdiction. A public land patent, when registered in the
corresponding Register of Deeds, is a veritable Torrens Title, and becomes as indefeasible as
Torrens Title upon the expiration of one (1) year from the date of issuance thereof. Said title is,
like one issued pursuant to a judicial decree, subject to review within one (1) year from the date
of the issuance of the patent. Beyond said period, the action for the annulment of the certificate
of title issued upon the land grant can no longer be entertained. (Emphasis supplied).

It is worth observing here that in two earlier cases, the private respondents were challenged by the heirs of
Matilde Cenizal Arguson but both were dismissed and the titles of the registered owners were confirmed by the
trial court. 23This decision was later sustained by this Court. 24 While this is not to say that the present petition is
barred by res judicata, as the government was not a party in these cases, it does suggest that the issue it wants to
rake up now has long been settled. It should not be the subject of further judicial inquiry, especially at this late
hour. Litigation must stop at some point instead of dragging on interminably.

10
The Torrens system was adopted in this country because it was believed to be the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is
valid, he should not run the risk of being told later that his acquisition was ineffectual after all. This would not
only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be
eroded and land transactions would have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be that land conflicts could be even more
numerous and complex than they are now and possibly also more abrasive if not even violent. The government,
recognizing the worthy purposes of the Torrens system, should be the first to accept the validity of titles issued
thereunder once the conditions laid down by the law are satisfied. As in this case.

We find that the private respondents are transferees in good faith and for value of the subject property and that
the original acquisition thereof, although fraudulent, did not affect their own titles. These are valid against the
whole world, including the government.

ACCORDINGLY, the petition is DENIED, without any pronouncement as to costs. It is so ordered.

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 114299 September 24, 1999

TRADERS ROYAL BANK, petitioner,


vs.
HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA
JOY, all surnamed CAPAY and RAMON A. GONZALES, respondents.

G.R. No. 118862 September 24, 1999

PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY, and
RAMON A. GONZALES, petitioners,
vs.
SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS. CECILIO L. PE and
JOSEFINA L. PE, FLORA LARON WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA R.
ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI MAGDAMO FERNANDO,
REMEDIOS OCA, DEVELOPMENT BANK OF THE PHILIPPINES and TRADERS ROYAL
BANK, respondents.

KAPUNAN, J.:

11
The present controversy has its roots in a mortgage executed by the spouses Maximo and Patria Capay in favor
of Traders Royal Bank (TRB) pursuant to a loan extended by the latter to the former. The mortgage covered
several properties, including a parcel of land, the subject of the present
1
dispute. The loan became due on January 8, 1964 and the same having remained unpaid, TRB instituted extra-
judicial foreclosure proceedings upon the mortgaged property.

To prevent the property's sale by public auction, the Capays, on September 22, 1966, filed a petition for
prohibition with preliminary injunction (Civil Case No. Q-10453) before the Court of First Instance (CFI) of
Rizal, alleging that the mortgage was void since they did not receive the proceeds of the loan. The trial court
initially granted the Capays' prayer for preliminary injunction.

On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a notice of lis
pendens over the disputed property. Said notice was entered in the Day Book, as well as in the Capays'
certificate of title.

Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure sale to proceed.
Foreclosure proceedings were initiated and on October 17, 1968, the property was sold to TRB which was the
highest bidder at the auction sale. A sheriff certificate of sale was issued in its name on the same day. On
February 25, 1970, the property was consolidated in the name of TRB, the sole bidder in the sale. TCT No. T-
6595 in the name of the Capay spouses was then cancelled and a new one, TCT No. T-16272, 2 was entered in
the bank's name. The notice of lis pendens, however, was not carried over in the certificate of title issued in the
name TRB.

Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of the property
with damages and attorney's fees. Trial in Civil Case No. Q-10453 proceeded and, on October 3, 1977, the CFI
rendered its decision declaring the mortgage void for want of consideration. The CFI ordered, among other
things, the cancellation of TCT No. T-16272 in the name of TRB and the issuance of new certificates of title in
the name of the Capay spouses.

TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals, TRB on March 17,
1982 sold the land to Emelita Santiago in whose name a new certificate of title, TCT No. 33774, 3 was issued,
also, without any notice of lis pendens annotated thereon. Santiago in turn divided the land into six (6) lots and
sold these to Marcial Alcantara, Armando Cruz and Artemio Sanchez, who became co-owners
thereof. 4 Alcantara and his co-owners developed the property and thereafter sold the six (6) lots to seperate
buyers who issued seperate titles, again, bearing no notice of lis pendens. 5

On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial court as to the
award of damages but affirming the same in all other respects.

For having been filed out of time and for lack of merit, the petition for certiorari filed by TRB before this
Court 6 was denied in a Resolution dated September 12, 1983. TRB's motion for reconsideration was similarly
denied in a Resolution dated October 12, 1983. The Court's September 12, 1983 Resolution having become
final and executory on November 9, 1983, the trial court issued a writ of execution directing the Register of
Deeds of Baguio City to cancel TCT No. 16272 in the name of TRB, and to issue a new one in the name of the
Capay spouses.

Said writ, however, could not be implemented because of the successive subsequent transfers of the subdivided
property to buyers who obtained separate titles thereto. Thus, a complaint for recovery of possession ownership
dated 8 June 1985 was filed before the Quezon City Regional Trial Court against TRB and the subsequent
transferees of the property, the respondents in G.R. No. 118862 (hereinafter, "the non-bank respondents").
12
Plaintiffs in said case were Patria Capay, her children by Maximo 7 who succeeded him upon his death on
August 25, 1976, and Ramon Gonzales, counsel of the spouses in Civil Case No. Q-10453 who become co-
owner of the property to the extent of 35% thereof as his attorney's fees (collectively, "the Capays"). On March
27, 1991, the trial court rendered its decision, the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the


defendants and ordering the Register of Deeds for Baguio to cancel TCT No. T-36177,
Books 198, Page 177 in the names of defendants Spouses Honorato D. Santos and Maria
Cristina Santos; to cancel TCT No. 36707, Book 201, Page 107 in the names of defendant
Spouses Cecilio Pe and Josefina L. Pe; to cancel TCT No. T-36051, Book 198, Page 51 in
the name of Flora Laron Wescombe, married to Kevin Lind Wescombe (now deceased);
to cancel TCT No. 36147, Book 198, page 147 in the names of Spouses Telesforo P.
Alfelor II and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201, Page 130 in the
names of Spouses Dean Roderick Fernando and Laarni Magdamo Fernando; to cancel
TCT No. 37437, Book 205, Page 37 in the name of Remedios Oca, and issue new ones
free from all liens and encumbrances, together with all the improvements therein in the
names of plaintiffs sharing pro indiviso as follows: 35% to Ramon A. Gonzales, married
to Lilia Y. Gonzales, of legal age, with postal address at 23 Sunrise Hill, New Manila,
Quezon City 37.92% to Patria B. Capay, of legal age, widow, Filipino; 5.41% each to
Ruby Ann Capay, of legal age, Filipino married to Pokka Vainio, Finnish citizen; Chona
Margarita Capay, of legal age, Filipino, married to Waldo Flores; Rosario Capay of legal
age, Filipino, married to Jose Cuaycong, Jr.; Cynthia Capay, of legal age, Filipino,
married to Raul Flores; Linda Joy Capay, of legal age, Filipino, married to Pedro Duran,
all with postal address at 37 Sampaguita St., Capitolville Subd., Bacolod City, ordering
said defendants to vacate the premises in question and restoring plaintiffs thereto and for
defendant Traders Royal Bank to pay each of the plaintiffs moral damages in the amount
of P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney's fees, all
with legal interest from the filing of the complaint, with costs against defendants.

SO ORDERED. 8

TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision promulgated on February
24, 1994 in CA-G.R. CV No. 33920, the appellate court affirmed the decision of the trial court in toto. 9 It ruled
that the non-bank respondents cannot be considered as purchasers for value and in good faith, having purchased
the property subsequent to the action in Civil Case No. Q-10453 and that while the notice of lis pendens was not
carried over to TRB's certificate of title, as well as to the subsequent transferees' titles, it was entered in the Day
Book which is sufficient to constitute registration and notice to all persons of such adverse claim, citing the
cases of Villasor vs. Camon, 10 Levin vs. Bass 11 and Director of Lands vs. Reyes. 12

As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the property knowing that
it was under the litigation and without informing the buyer of that fact.

On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision, docketed herein
as G.R. No. 114299, invoking the following grounds:

I.

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED


GRAVE AND SERIOUS ERROR OF LAW IN PROMULGATING THE
DISPUTED DECISION AND THEREBY DECIDED A QUESTION OF
13
SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND
TOTALLY NOT IN ACCORD WITH APPLICABLE DECISION OF THIS
HONORABLE SUPREME COURT.

II.

THE RESPONDENT HONORABLE COURT OF APPEALS HAS


COMMITTED SO GRAVE AND SERIOUS ERRORS OF LAW IN
SANCTIONING A DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDING AS TO CALL FOR THE EXERCISE
OF THE POWER OF BY THIS HONORABLE SUPREME COURT.

a) The public respondent has plainly and manifestly acted whimsically, arbitrarily,
capriciously, with grave abuse of discretion, in excess of jurisdiction tantamount
to lack of jurisdiction.

xxx xxx xxx

b) The public respondent erred in not finding that it was not the fault of petitioner
when the notice of lis pendens was not carried over to its new title.

xxx xxx xxx

c) The public respondent erred in not finding that PD No. 1271 had legally caused
the invalidation of the Capay's property and the subsequent validation of TRB's
title over the same property was effective even as against the Capays. 13

Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals' decision. Convinced
of the movants' arguments, the Court of Appeals in a Resolution promulgated on August 10, 1994 granted the
motion for reconsideration and dismissed the complaint as against them. The dispositive portion of the
resolution states:

ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the motion for
reconsideration, the same is hereby GRANTED. Consequently, the decision of this Court,
promulgated on February 24, 1994, is hereby RECONSIDERED. The complaint filed against
defendants-appellants with the court a quo is hereby ordered DISMISSED, and the certificate of
titles originally issued to them in their individual names are hereby ordered restored and duly
respected. We make no pronouncement as to costs.

SO ORDERED. 14

The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862 to set aside the
resolution of the Court of Appeals raising the following errors:

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT TUAZON VS. REYES, 48 PHIL. 814 AND RIVERA VS. MORAN, 48 PHIL.
836 ARE NOT APPLICABLE HEREOF, WHILE PINO VS. COURT OF APPEALS, 198 SCRA
436, IS APPLICABLE.
14
II

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT ATUN VS. MUNOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134 SCRA 34,
ARE NOT APPLICABLE.

III

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 VILLASOR VS. CAMON, 89 PHIL. 404 AND
DIRECTOR OF LANDS VS. REYES, 68 SCRA 73, ARE NOT APPLICABLE HEREOF.

IV

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT PETITIONERS ARE GUILTY OF LACHES.

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT THERE IS NO DISTINCTION IN THE REGISTRATION OF VOLUNTARY
INSTRUMENTS VIS-A-VISINVOLUNTARY INSTRUMENTS.

VI

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW


HOLDING THAT RESPONDENTS WHO ARE LAWYERS, RESPONSIBLE CITIZENS AND
WELL-RESPECTED RESIDENTS IN THE COMMUNITY, ARE EXEMPTED FROM THE
EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING FROM REGISTRATION.

VII

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH REGARDS


TO TRADERS ROYAL BANK, AFTER THE LATTER HAS PERFECTED ITS APPEAL TO
THE SUPREME COURT.

VIII

THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE COUNTER-


ASSIGNMENT OF ERROR THAT:

B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS


ARE BOUND BY THE DECISION IN CIVIL CASE NO. Q-10453.

Subsequently, G.R. No. 118862 was consolidated with G.R No. 114299, pursuant to this Court's Resolution
dated July 3, 1996. 15

15
The consolidated cases primarily involve two issues: (1) who, as between the Capays and the non-bank
respondents, has a better right to the disputed property, and (2) whether or not TRB is liable to the Capays for
damages.

On the first issue, we rule for the non-bank respondents.

First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that the Capays caused
to be annotated on their certificate of title was not carried to the new one issued to TRB. Neither did the
certificate of title of Emelita Santiago, who purchased the property from TRB, contain any such notice. When
Santiago caused the property to be divided, six (6) new certificates of title were issued, none of which contained
any notice of lis pendens. Santiago then sold the lots to Marcial Alcantara and his co-owners who next sold each
of these to the non-bank respondents. The non-bank respondents, therefore, could not have been aware that the
property in question was the subject of litigation when they acquired their respective portions of said property.
There was nothing in the certificates of title or respective predecessors-in-interest that could have aroused their
suspicion. The non-bank respondents had a right to rely on what appeared on the face of the title of their
respective predecessors-in-interest, and were not bound to go beyond the same. To hold otherwise would defeat
one of the principal objects of the Torrens system of land registration, that is, to facilitate transactions involving
lands.

The main purpose of the Torrens system is to avoid possible conflicts of title to real estate
and to facilitate transactions relative thereto by giving the public the right to rely upon the
face of a Torrens certificate of title and to dispense with the need of inquiring further,
except when the party concerned has actual knowledge of facts and circumstances that
should impel a reasonably cautious man to make such further inquiry. Where innocent
third persons, relying on the correctness of the certificate of title thus issued, acquire
rights over the property, the court cannot disregard such rights and order the total
cancellation of the certificate. The effect of such an outright cancellation would be to
impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as to whether
the title has been regularly or irregularly issued by the court. Every person dealing with
registered land may safely rely on the correctness of the certificate of title issued therefor
and the law will in no way oblige him to go beyond the certificate to determine the
condition of the property.

The Torrens system was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller's title thereto is valid, he should
not run the risk of being told later that his acquisition was ineffectual after all. This would
not only be unfair to him. What is worse is that if this were permitted, public confidence
in the system would be eroded and land transactions would have to be attended by
complicated and not necessarily conclusive investigations and proof of ownership. The
further consequence would be that land conflicts could be even more numerous and
complex than they are now and possibly also more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens system, should be the first
to accept the validity of titles issued thereunder once the conditions laid down by the law
are satisfied. 16

16
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless physically inspected the
properties and inquired from the register of Deeds to ascertain the absence of any defect in the title of the
property they were purchasing an exercise of diligence above that required by law.

Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean, testified:

Q How did you come to live in Baguio City, particulary in Kim. 2.5 San Luis,
Baguio City?

A In one of my visits to my sister who has been residing here for twelve (12)
years now, I got interested in buying a property here.

Q How did you come to know of this property at Asin Road where you now
reside?

A My sister, Ruth Ann Valdez, sir.

Q When this particular property was bought by you, when was that?

A I do not remember the exact date, but it was in 1984, sir.

Q At the time when you went to see the place where you now reside, how did it
look?

A This particular property that I bought was then a small one (1) room structure, it
is a two (2)-storey one (1) bedroom structure.

Q What kind of structure with regards to material?

A It is a semi-concrete structure, sir.

Q And aside from this two (2)-storey one (1)-room structure, how did the
surrounding area look like at the time you visited?

A There were stone walls from the road and there were stone walls in front of the
property and beside the property.

Q At the time you went to see the property with your agent, rather your sister
Ruth Ann Valdez did you come to know the owner?

A We did because at the time we went there, Mr. Alcantara was there supervising
the workers.

Q And who?

A Amado Cruz sir.

Q After you saw this property, what else did you do?

17
A My first concern then was am I buying a property with a clean title.

Q In regards to this concern of yours, did you find an answer to this concern of
yours?

A At first; I asked Mr. Alcantara and I was answered by him.

Q What was his answer?

A That it was a property with a clean title, that he has shown me the mother title
and it is a clean title.

Q Aside from being informed that it is a property with a clean title, did you do
anything to answer your question?

A Yes, sit.

Q What did you do?

A Well, the first step I did was to go to the Land Registration Office.

Q Are you referring to the City Hall of Baguio?

A Yes, the City Hall of Baguio.

Q And what did you do in the Registry of Deeds?

A We looked for the title, the original title, sir.

Q When you say we, who was your companion?

A Mr. Alcantara and my present husband, sir.

Q The three (3) of you?

A Yes, sir.

Q What title did you see there?

A We saw the title that was made up in favor of Amado Cruz, sir.

Q And what was the result of your looking up for this title in the name of Amado
Cruz?

A We had to be reassured that it was a genuine one, so we asked Atty. Diomampo


who heads the office. We showed him a copy of that title and we were also
reassured by him that anything that was signed by him was as good as it is.

Q Did this Atty. Diomampo reassure you that the title was good?

18
A He did.

Q After your conversation with the Register of Deeds, what did you do?

A The second step we did was to confer with our lawyer, a friend from RCBC
Binondo, Manila this is Atty. Nelson Waje.

Q What is your purpose in going to this lawyer?

A We wanted an assurance that we were getting a valid title just in case we think
of buying the property.

Q What was the result of your conference with this lawyer?

A He was absolutely certain that was a valid title.

Q Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking
at the title and seeing your lawyer friend, what decision did you finally make
regarding the property?

A We wanted more reassurances, so we proceeded to Banaue, as advised by that


same lawyer, there is another office of the Bureau of Lands. I cannot recall the
office but it has something to do with registration of the old.

Q What is your purpose in going to this Office in Banaue?

A I wanted more reassuances that I was getting a valid title.

Q What was the result of your visit to the Banaue Office?

A We found the title of this property and there was reassurance that it was a clean
title and we saw the mother title under the Hilario family.

Q Mrs. Meeks, when you say Banaue, what particular place is this Banaue?

A It is in Banaue Street in Quezon City, sir.

Q And when you saw the title to this property and the mother title, what was the
result of your investigation, the investigation that you made?

A We were reassured that we were purchasing a valid title, we had a genuine title.

Q When you were able to determine that you had a valid, authentic or genuine
title, what did you do?

A That is when I finally thought of purchasing the property. 17

Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:

19
Q How did you come to know of this place as Asin Road where you are presently
residing?

A It was actually through Mrs. Flory Recto who is presently the Branch Manager
of CocoBank. She informed my wife that there is a property for sale at Asin Road,
and she was the one who introduced to us Mr. Alcantara, sir.

Q When you were informed by Mrs. Recto and when you met with Mr. Alcantara,
did you see the property that was being offered for sale?

A Yes, sir.

Q When did you specifically see the property, if you can recall?

A I would say it is around the third quarter of 1983, sir.

Q When you went to see the place, could you please describe what you saw at that
time?

A When we went there the area is still being developed by Mr. Alcantara. As a
matter of fact the road leading to the property is still not passable considering that
during that time it was rainy season and it was muddy, we fell on our way going
to the property and walked to have an ocular inspection and physical check on the
area, sir.

xxx xxx xxx

Q What was the improvement, if any, that was in that parcel which you are going
to purchase?

A During that time, the riprap of the property is already there, the one-half of the
riprap sir.

Q Do you know who was making this improvement at the time that you went
there?

A I would understand that it was Marcial Alcantara, sir.

Q After you saw the place riprap and you were in the course of deciding to
purchase this property, what else did you do?

A First, I have to consider that the property is clean.

Q How did you go about determining whether the title of the property is clean?

A Considering that Marcial Alcantara is a real estate broker, I went to his office
and checked the documents he has regarding the property.

20
Q And what was the result of your checking as to whether the title of the property
is clean?

A He showed me the copy of the title and it was clean, sir.

Q Aside from going to Mr. Alcantara to check up the title of the property, what
else did you do?

A Well, the next thing is I requested his wife to accompany me to the Bureau of
Lands or rather the Registry of Deeds, sir.

Q What registry of Deeds are you referring to?

A The Registry of Deeds of Baguio City, sir.

Q And were you able to see the Register of Deeds regarding what you would like
to know?

A Yes, and we were given a certification regarding this particular area that it was
clean, sir.

Q What Certification are you referring to?

A It is a Certification duly signed by the employee of the Registry of Deeds


Adelina Tabangin, sir.

Q Do you have a copy of that Certification?

A Yes, I have, sir. 18

The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same effect.

The non-bank respondent predecessor-in-interest, Marcial Alcantara, was less thorough:

Q And will you give a brief description of what you do?


A I normally acquire land, quite big tract of land and subdivide it into smaller lots
and sold it to some interested parties.
Q Specifically, Mr. Alcantara will you please inform the Court in what place in
Baguio have you acquired and subdivided and sold lots?
A Dominican Hill, Leonila Hill, Cristal Cave and Asin Road, sir.
Q You mentioned Asin Road, what particular place in Asin Road are you
referring?
A That property I bought from Emelita Santiago, sir.
Q When you say you bought it from Emelita Santiago, how did you come to know
that Emelita Santiago is disposing of the property?

21
A Because of the father, he is the one who offered me the property, sir, Armando
Gabriel.
Q Is he also a resident of Baguio?
A He is from Buyagan, La Trinidad sir,
Q How did you come to know of this Armando Gabriel wanting to sell a property
in Asin?
A He approached me in the house, sir. He has acquired a title from the Traders
Royal Bank.
Q Can you inform the Honorable Court when you had this conversation with
Armando Gabriel on the sale of the property at Asin Road?
A Later part of March, 1983, sir.
Q Now, when this Armando Gabriel informed you that he wants his property to be
sold, what did you do?
A I went to the place with the agent, sir.
Q When you say you went to the place with the agent, what place?
A Kilometer 2, Asin Road sir.
Q And when you went there to see the place, did you actually go there to see the
place?
A By walking, I parked my car a kilometer away, sir.
Q Is it my understanding that when you went to see the property there were no
roads?
A None, sir.
xxx xxx xxx
Q Mr. Alcantara, when you went to see this place at Asin Road last week of
March, 1983, will you please briefly describe how this place looked like at that
time?
A The place was mountainous, grassy, there were cogon trees, some of the roads
were eroding already, so we cannot possibly enter the property, sir.
Q At the time you entered the place, was there any visible sign of claim by
anyone?
A None, sir.
Q In terms of fence in the area?
A There is no such, sir.
xxx xxx xxx
Q Aside from looking or going to the property, what else did you do to this
property prior to your purchase?

22
A I investigated it with the Register of Deeds, sir.
Q What is your purpose in investigating it with the Register of Deeds?
A To see if the paper in clean and there are no encumbrances, sir.
Q To whom did you talk?
A To Atty. Ernesto Diomampo, sir.
Q And when you went to the Registry of Deeds to investigate and check, did you
have occasion to talk with Atty. Diomampo?
A Yes, sir.
Q And what was the result of your talk with Atty. Diomampo?
A The papers are clean except to the annotation at the back with the road right of
way, sir.
Q After making this investigation with the Register of Deeds and talking with
Atty. Diomampo, what else transpired?
A We bought the property, sir.
Q After purchasing the property from Emelita Santiago, could you please tell the
Honorable Court what you did with that deed of sale?
A We registered it with the Register of Deeds for the Certificate of Title because
at that time when we bought the property, Emelita Santiago had it subdivided into
six (6) lots, sir.
Q Is it our understanding that prior to your purchase the property was subdivided
into six (6) parcels?
A Yes, sir.
Q Could you please inform the Honorable Court if you have any buyers in the
subdivision of this property prior to your purchase?
A Yes, I have.
Q This subdivision of this property, to what office was it brought for action?
A Bureau of Lands, San Fernando, La Union, sir.
Q Now, Mr. Alcantara, at the time that you had this property subdivided by the
owner, could you please inform the Court if there was any claim by any other
party opposing the subdivision or claiming the property?
A None, sir.
Q When the Deed of Sale was executed and you said that you presented it to the
Register of Deeds and after the subdivision already, what action did the Register
of Deeds have regarding the matter?
A They approved it and registered it already in six (6) titles, sir.
Q In whose names?

23
A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
Q Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire
area of One Thousand Five Hundred Ninety One (1,591) Square Meters. Now,
you are informing this Honorable Court that one Amado Cruz and one Dr.
Sanchez were also issued two (2) titles. Could you explain how these titles came
into their possession?
A Actually, two (2) are our co-owners, sir.
Q So, is it our understanding that the Deed of Sale from Emelita Santiago is in
favor of these two (2) Atty. Cruz and Dr. Sanchez?
A Yes, sir. 21

Third, between two innocent persons, the one who made it possible for the wrong to be done should be the one
to bear the resulting loss. 22 The Capays filed the notice of lis pendens way back on March 17, 1967 but the
same was not TRB's title. The Capays and their counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-
judicial foreclosure sale of the property to TRB and the consolidation of title in the bank's name following the
lapse of the one-year period of redemption. But in the next fifteen (15) years or so, they did not bother to find
out the status of their title or whether the liens noted on the original certificate of title were still existing
considering that the property had already been foreclosed. In the meantime, the subject property had undergone
a series of transfers to buyers in good and for value. It was not until after the land was subdivided and
developed with the buyers building their houses on the other lots when the Capays suddenly appeared and
questioned the occupants' titles. At the very least, the Capays are guilty of laches. Laches has been defined as
the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due
diligence could nor should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting presumption that the party entitled to it either has abandoned it or declined to assert
it. 23

Verily, the principle on prescription of actions is designed to cover situations such as the case at
bar, where there have been a series of transfers to innocent purchasers for value. To set aside
these transactions only to accommodate a party who has slept on his rights is anathema to good
order.

Independently of the principle of prescription of actions working against petitioners, the doctrine
of laches may further be counted against them, which latter tenet finds application even to
imprescriptible
actions. . . . 24

In De La Calzada-Cierras vs. Court of Appeals, 25 we held:

While it is true that under the law it is the act of registration of the deed of conveyance
that serves as the operative act to convey the land registered under the Torrens System
(Davao Grains, Inc. vs. Intermediate Appellate Court, 171 SCRA 612), the petitioners
cannot invoke said dictum because their action to recover Lot 4362 is barred by the
equitable doctrine of laches.

The act of registering the conveyance to Rosendo was constructive notice to the whole
world of the fact of such conveyance (Heirs of Maria Marasigan vs. Intermediate
Appellate Court, 152 SCRA 253).

24
But the petitioners' complaint to recover the title and possession of Lot 4362 was filed only on
July 21, 1981, twelve (12) years after the registration of the sale to Rosendo. The petitioners
failed and neglected for an unreasonably long time to assert their right, if any, to the property in
Rosendo's possession.

Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon Levin Bass and Director of Lands vs.
Reyes 26 to the effect that entry of the notice of lis pendens in the day book (primary entry book) is sufficient to constitute
registration and such entry is notice to all persons of such adverse claim. Certainly, it is most iniquitous for the Capays
who, after sleeping on their rights for fifteen years to assert ownership over the property that has undergone several
transfers made in good faith and for value and already subdivided into several lots with improvements introduced thereon
by their owners.

In the same vein, the cases cited by the Capays in their first two (2) assignment of errors, do not help them any, as the
transferees in said cases were not innocent purchasers for value and in good faith. In Tuazon vs. Reyes and
Siochi, 27 where the land involved therein was sold by Petronilo David to Vicente Tuazon, it was with a deed containing
the recital that the land was in dispute between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to the
rights of the vendor was aware of the dispute and, furthermore, David did not warrant the title to the same. In Rivera vs.
Moran, 28 Rivera acquired interest in the land before the final decree was entered in the cadastral proceedings. Rivera, the
transferee, was aware of the pending litigation and, consequently, could not have been considered a purchaser in good
faith. Similarly, in Atun, et al. vs. Nuez, et al. 29 and Laroza vs. Guia, 30 the buyers of the property at the time of their
acquisition knew of the existence of the notice of lis pendens. In contrast to the cited cases, the non-bank respondents in
the case at bar acquired their respective portions of the land with clean title from their predecessors-in-interest.

II

We come now to TRB's liability towards the Capays.

The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to shift the blame on the
Capays, thus:

xxx xxx xxx

23. The petitioner Bank, during all the time that it was holding the title for over fourteen (14)
years that there was no legal impediment for it to sell said property, Central Bank regulations
require that real properties of banks should not he held for more than five (5) years:

24. The fault of the Register of Deeds in not carrying over the Notice of Lis Pendens to the new
title of the petitioner Bank should not be absorbed by the latter considering that in all good faith,
it was not aware of the existence of said annotation during all the time that said title was in its
possession for almost fourteen (14) years before the property was sold to Emelita G.
Santiago. . . . 31

TRB concludes that "(t)he inaction and negligence of private respondents allowing ownership to pass for almost 15 years
constitute prescription of action and/or laches." 32

Sec. 25 of the General Banking Act, 33 provides that no bank "shall hold the possession of any real estate under mortgage
or trust, deed, or the title and possession of any real estate purchased to secure any debt due to it, for a longer period than
five years." TRB, however, admits hoding on to the foreclosed property for twelve (12) years after consolidating title in its
name. The bank is, therefore, estopped from involving banking laws and regulations to justify its belated disposition of the
property. It cannot be allowed to hide behind the law which it itself violated.

25
TRB cannot feign ignorance of the existence of the lis pendens because when the property was foreclosed by it, the notice
of lis pendens was annotated on the title. But when TCT No. T-6595 in the name of the Capay spouses was cancelled after
the foreclosure, TCT No. T-16272 which was issued in place thereof in the name of TRB did not carry over the notice
of lis pendens.

We do not find the Capays guilty of "inaction and negligence" as against TRB. It may be recalled that upon the
commencement of foreclosure proceedings by TRB, the Capays filed an action for prohibition on September 22, 1966
against the TRB before the CFI to stop the foreclosure sale. Failing in that attempt, the Capays filed a supplemental
complaint for the recovery of the property. The case reached this Court. Prescription or laches could not have worked
against the Capays because they had persistently pursued their suit against TRB to recover their property.

On the other hand, it is difficult to believe TRB's assertion that after holding on to the property for more than ten (10)
years, it suddenly realized that it was acting in violation of the General Bank Act. What is apparent is that TRB took
advantage of the absence of the notice of lis pendens at the back of their certificate of title and sold the property to an
unwary purchaser. This notwithstanding the adverse decision of the trial court and the pendency of its appeal. TRB, whose
timing indeed smacks of bad faith, thus transferred caused the property without the lis pendens annotated on its title to put
it beyond the Capays' reach. Clearly, the bank acted in a manner contrary to morals, good customs and public policy and
should be held liable for damages. 34

Considering however, that the mortgage in favor of TRB had been declared null and void for want of consideration and,
consequently, the foreclosure proceedings did not have a valid effect, the Capays would ordinarily be entitled to the
recovery of their property. Nevertheless, this remedy is not now available to the Capays inasmuch as title to said property
has passed into the hands of third parties who acquired the same in good faith and for value. Such being the case, TRB is
duty bound to pay the Capays the fair market value of the property at the time it was sold to Emelita Santiago, the
transferee of TRB.

WHEREFORE, the Decision of the Court of Appeals dated Frebruary 24, 1994 in CA-G.R. CV No. 33920, as modified by
its Resolution dated August 10, 1994 is hereby AFFIRMED. In addition, Traders Royal Bank is ordered to pay the Capays
the fair market value of the property at the time it was sold to Emelita Santiago.

This Decision is without prejudice to whatever criminal, civil or administrative action against the Register of Deeds and or
his assistants that may be taken by the party or parties prejudiced by the failure of the former to carry over the notice of lis
pendens to the certificate of title in the name of TRB.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 183448 June 30, 2014

SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners,


vs.
HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON, Respondents.

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

26
G.R. No. 183464

HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON, Petitioners,


vs.
MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL, SPOUSES DOMINDOR PERALTA AND
OFELIA PERALTA, and HEIRS of RESTITUTO RELLAMA, represented by his children ALEX,
IMMANUEL, JULIUS and SYLVIA, all surnamed RELLAMA.

DECISION

SERENO, CJ:

Before us are the consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court assailing
the 30 May 2007 Decision1 of the Court of Appeals (CA) Seventeenth Division in CA-G.R. CV No. 85542. The
CA had reversed the 14 April 2005 Decision 2 of the Regional Trial Court (RTC), Fifth Judicial Region of
Legaspi City, Branch 5, in Civil Case No. 9243.

The civil case before the RTC of Legaspi City involved a parcel of land registered under the name of
Bernardina Abalon and fraudulently transferred to Restituto Rellama and who, in turn, subdivided the subject
property and sold it separately to the other parties to this case Spouses Dominador and Ofelia Peralta; and
Marissa, Leonil and Arnel, all surnamed Andal. Thereafter, Spouses Peralta and the Andals individually
registered the respective portions of the land they had bought under their names. The heirs of Bernardina were
claiming back the land, alleging that since it was sold under fraudulent circumstances, no valid title passed to
the buyers. On the other hand, the buyers, who were now title holders of the subject parcel of land, averred that
they were buyers in good faith and sought the protection accorded to them under the law.

THE FACTS

The RTC and the CA have the same findings of fact, but differ in their legal conclusions. There being no factual
issues raised in the Petitions, we adopt the findings of fact of the CA in CA-G.R. No. 85542, as follows:

The subject parcel of land, described as Lot 1679 of the Cadastral Survey of Legaspi, consisting of 8,571 square
meters, was originally covered by Original Certificate of Title (OCT) No. (O) 16 and registered in the name of
Bernardina Abalon (Abalon). It appears that a Deed of Absolute Sale was executed over the subject property in
favor of Restituto M. Rellama (Rellama) on June 10, 1975. By virtue of such conveyance OCT No. (O) 16 was
cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 42108 was issued in the name of Rellama.
The subject property was then subdivided into three (3) portions: Lot 1679-A, Lot 1679-B, Lot 1679-C. Lot
1679-A was sold to Spouses Dominador P. Peralta, Jr. and Ofelia M. Peralta (Spouses Peralta) for which reason
TCT No. 42254 was issued in their names. Lot 1679-B, on the other hand, was first sold to Eduardo Lotivio
(Lotivio) who thereafter transferred his ownership thereto to Marissa Andal, Arnel Andal, and Leonil Andal (the
Andals) through a Deed of Absolute Sale dated October 9, 1995. On even date, TCT No. 42482 was issued in
the name of the Andals. The Andals likewise acquired Lot 1679-C as evidenced by the issuance of TCT No.
42821 in their favor on December 27, 1995.

Claiming that the Deed of Absolute Sale executed by Abalon in favor of Rellama was a forged document, and
claiming further that they acquired the subject property by succession, they being the nephew and niece of
Abalon who died without issue, plaintiff-appellees Mansueta Abalon and Amelia Abalon filed the case below
against Rellama, Spouses Peralta, and the Andals, the herein defendants-appellants and the Bank of the
Philippines [sic] Islands which was later dropped as a party defendant.

27
It was alleged in their Complaint and subsequent Amended Complaint, under five separate causes of action, that
Rellama was able to cause the cancellation of OCT No. (O) 16, and in lieu thereof the issuance of TCT No.
42108 in his own name from which the defendants-appellants derived their own titles, upon presentation of a
xerox copy of the alleged forged deed of absolute sale and the order granting the issuance of a second owners
duplicate copy of OCT No. (O) 16 in his favor in Miscellaneous Cadastral Case No. 10648, which he had filed
on the pretext that Lot 1679 covered by OCT No. (O) 16 was sold to him and that the owners duplicate copy of
the said title got lost in 1976 after the same was delivered to him. They averred that the owners duplicate copy
of Oct NO. (O) 16 had always been with Abalon and that upon her death, it was delivered to them. Likewise,
they alleged that Abalon had always been in possession of the subject property through her tenant Pedro Bellen
who was thereafter succeeded by his wife, Ruperta Bellen, and then his son, Godofredo Bellen. On the other
hand, they said that Rellama had never set foot on the land he was claiming. They further alleged that after the
ownership over the subject property was transferred to them upon the death of Abalon, they took possession
thereof and retained Godofredo as their own tenant. However, they averred that in 1995 the defendants-
appellants were able to wrest possession of the subject property from Godofredo Bellen. They alleged that the
defendants-appellants are not buyers in good faith as they were aware that the subject land was in the possession
of the plaintiffs-appellees at the time they made the purchase. They thus claim that the titles issued to the
defendants-appellants are null and void.

In his answer, Rellama alleged that the deed of absolute sale executed by Abalon is genuine and that the
duplicate copy of OCT No. (O) 16 had been delivered to him upon the execution of the said deed of transfer.

As for Spouses Peralta and the Andals, who filed their separate answers to the complaint, they mainly alleged
that they are buyers in good faith and for value.

During the trial, Rellama passed away. He was substituted by his heirs.

After the plaintiffs-appellees rested their case, instead of presenting their own evidence, the defendants-
appellants and the Heirs of Restituto Rellama, on different occasions, filed a demurrer to evidence.

On April 14, 2005, the court a quo rendered judgment in favor of the plaintiffs-appellees and ordered the
restoration of OCT No. (O) 16 in the name of Abalon and the cancellation of the titles issued to the defendants-
appellants. The fact that only a xerox copy of the purported deed of sale between Rellama and Abalon was
presented before the Register of Deeds for registration and the absence of such xerox copy on the official files
of the said Office made the court a quo conclude that the said document was a mere forgery. On the other hand,
the court a quo noted that the duplicate copy of OCT No. (O) 16 in the hands of the plaintiffs-appellees bears
[sic] the perforated serial number B 221377, which it held is a convincing proof of its authenticity and
genuineness. It thus stated that "Miscellaneous Cadastral Case No. 10648 is a (mere) strategem [sic]
fraudulently concocted ... for the issuance of a fabricated (second) owners duplicate certificate of Oct No. (O)
16" since the owners duplicate copy of OCT No. (O) 16 has not been lost at all. It said that any subsequent
registration procured by the presentation of such forged instrument is null and void. The dispositive portion of
the court a quos decision reads: WHEREFORE, [p]remises [c]onsidered, judgment is rendered as follows, to
wit:

1. Ordering the restoration of Original Certificate of Title No. (O) 16 embracing Lot 1679 in the name of
Bernardina Abalon into the official files of the Registry of Deeds of Legaspi City a copy of the
owners duplicate certificate embodying the technical description of Lot 1679 forming official part of
the record as Exhibit "D" as well as ordering the cancellation of any and all transfer certificates of title
succeeding Original Certificate of title No. (O) 16 including Transfer Certificates (sic) of Title Nos.
42108, 42254, 42255, 42256, 42821 [,] and 42482;

28
2. Ordering the defendants Marissa Andal, Leonil Andal, Arnel Andal[,] and the spouses Dominador and
Ofelia Peralta to vacate Lot 1679 and to peacefully surrender such lot to the plaintiffs;

3. Ordering the defendants to pay the plaintiffs the amount of 50,000.00 as litigation expenses; and

4. Ordering the defendants to pay the costs of suit.

The counterclaims by [sic] the defendants are all dismissed.

SO ORDERED.

Spouses Peralta and the Andals filed their separate Notices of Appeal and thereafter, upon approval, filed their
respective Defendants-Appellants Briefs. The Heirs of Rellama, on the other hand, opted not to challenge the
ruling of the lower court.3

The Andals and Spouses Peralta appellants in CA-G.R. CV No. 85542 raised several issues, which the CA
summarized as follows:

1. Whether the Deed of Absolute Sale executed by Abalon in favor of Rellama was spurious

2. Whether the Andals and Spouses Peralta were buyers in good faith and for value

3. Who among the parties were entitled to their claims for damages.4

THE RULING OF THE COURT OF APPEALS

On 30 May 2007, the Seventeenth Division of the Court of Appeals promulgated its assailed judgment setting
aside the RTC Decision. The CA ruled that the circumstances surrounding the sale of the subject property
showed badges of fraud or forgery against Rellama. It found that Abalon had not parted with her ownership over
the subject property despite the claim of Rellama that they both executed a Deed of Absolute Sale. As proof, the
CA pointed out the existence of a notarized contract of leasehold executed by Abalon with Ruperta Bellen on 11
June 1976. The genuineness and due execution of the said leasehold agreement was uncontroverted by the
parties. On this basis, the appellate court concluded that Abalon could not have leased the subject parcel of land
to Bellen if the former had parted with her ownership thereof.5

The CA also found no evidence to show that Rellama exercised dominion over the subject property, because he
had not introduced improvements on the property, despite claiming to have acquired it in 1975. 6 Further, the CA
noted that he did not cause the annotation of the Deed of Sale, which he had executed with Abalon, on OCT No.
(O) 16. It observed that when the original copy of OCT No. (O) 16 was allegedly lost in 1976, while Rellama
was on his way to Legaspi City to register the title to his name, it took him almost 20 years to take steps to
judicially reconstitute a copy thereof. To the appellate court, these circumstances cast doubt on the veracity of
Rellamas claim of ownership over such a significant property, which was almost a hectare.7

The CA also ruled that the heirs of Bernardina Abalon had the legal standing to question the sale transaction
between Rellama and their predecessor-in-interest. It concluded that the heirs of Abalon had acquired the
subject property by ordinary acquisitive prescription and thus had every right to attack every document that
intended to divest them of ownership thereof,8 which in this case was the Deed of Sale that Bernardina executed
in favor of Rellama. Lastly, the appellate court considered the Spouses Peralta as buyers in bad faith for relying
on a mere photocopy of TCT No. 42108 when they bought the property from Rellama. 9 On the other hand, it
accorded the Andals the presumption of good faith, finding no evidence that would rebut this presumption.10
29
The dispositive portion of the assailed CA Decision in CA-G.R. CV No. 85542 is as follows:

WHEREFORE, the assailed decision is SET ASIDE and a new judgment is rendered as follows:

1. Transfer Certificate of Title No. 42482 and Transfer Certificate of Title No. 42821, both in the names
of Andals, are held legal and valid.

2. Transfer Certificate of Title No. 42254 registered in the names of Spouses Peralta is cancelled for
being null and void. Hence, they are ordered to vacate the land covered thereby and to surrender
possession thereof in favor of the plaintiffs-appellees.

SO ORDERED.11

The heirs of Abalon filed a Motion for Reconsideration of the 30 May 2007 Decision, insofar as the CA
declared the Andals to be buyers in good faith of the subject property and, thus, that the land title issued in their
favor was valid. Spouses Peralta, for their part, filed a Motion for Partial Reconsideration of the said CA
Decision pertaining to the portion that declared them as buyers in bad faith which accordingly nullified the title
issued to them.

On 10 June 2008, the CA denied the Motions for Partial Reconsideration of the movants for lack of merit.12

On 11 August 2008, Spouses Peralta filed with this Court a Petition for Review under Rule 45 of the Rules of
Court assailing the 30 May 2007 Decision in CA-G.R. CV No. 85542. 13 On the same day, the heirs of
Bernardina Abalon, represented by Mansueto Abalon, filed a similar Petition questioning the portion of the
mentioned CA Decision declaring the validity of the title issued to the Andals, who were adjudged by the
appellate court as buyers in good faith.14 THE ISSUES

The Petition filed by Spouses Peralta, docketed as G.R. No. 183448, lists the following issues:

a) The case for annulment should have been dismissed because the purported Deed of Sale executed by
Abalon and Rellama was not introduced in evidence and thus, forgery was not proven.

b) The heirs of Abalon are notforced heirs of Bernardina Abalon; hence, they do not have the legal
personality to file the action to annul the subject Deed of Sale.

c) The heirs of Abalon failed to prove that they had inherited the subject property.

d) Spouses Peralta are buyers in good faith and, thus title to their portion of the subject property must be
upheld15

As for the heirs of Abalon, their Petition, docketed as G.R. No. 183464, raises the following issues:

a) The Andals cannot be considered as buyers in good faith by simply applying the ordinary presumption
in the absence of evidence showing the contrary.

b) The CA erred in applying in favor of the Andals, the doctrine that a forged instrument may become
the root of a valid title in the hands of an innocent purchaser for value, because Abalon never parted with
her possession of the valid and uncancelled title over the subject property

30
c) The CA erred in declaring the validity of the title issued in the names of the Andals, because Rellama
was bereft of any transmissible right over the portion of the property he had sold to them.16

THE COURTS RULING

We deny the Petitions and affirm the ruling of the CA.

The main issue to be resolved in this case is whether a forged instrument may become the root of a valid
title in the hands of an innocent purchaser for value, even if the true owner thereof has been in possession
of the genuine title, which is valid and has not been cancelled.

It is well-settled that "a certificate of title serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein. The real purpose of the Torrens system of land
registration is to quiet title to land and put a stop forever to any question as to the legality of the title."17

In Tenio-Obsequio v. Court of Appeals,18 we explained the purpose of the Torrens system and its legal
implications to third persons dealing with registered land, as follows:

The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate
transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title
and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of
facts and circumstances that should impel a reasonably cautious man to make such further inquiry. Where
innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the
property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of
such an outright cancellation would be to impair public confidence in the certificate of title, for everyone
dealing with property registered under the Torrens system would have to inquire in every instance as to whether
the title has been regularly or irregularly issued by the court. Every person dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to
go beyond the certificate to determine the condition of the property.

The Torrens system was adopted in this country because it was believed to be the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is
valid, he should not run the risk of being told later that his acquisition was ineffectual after all. This would not
only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be
eroded and land transactions would have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be that land conflicts could be even more
numerous and complex than they are now and possibly also more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens system, should be the first to accept the validity of
titles issued thereunder once the conditions laid down by the law are satisfied.

The Torrens system was intended to guarantee the integrity and conclusiveness of the certificate of registration,
but the system cannot be used for the perpetration of fraud against the real owner of the registered land. The
system merely confirms ownership and does not create it. It cannot be used to divest lawful owners of their title
for the purpose of transferring it to another one who has not acquired it by any of the modes allowed or
recognized by law. Thus, the Torrens system cannot be used to protect a usurper from the true owner or to shield
the commission of fraud or to enrich oneself at the expense of another.19

31
It is well-established in our laws and jurisprudence that a person who is dealing with a registered parcel of land
need not go beyond the face of the title. A person is only charged with notice of the burdens and claims that are
annotated on the title.20 This rule, however, admits of exceptions, which we explained in Clemente v. Razo:21

Any buyer or mortgagee of realty covered by a Torrens certificate of title, in the absence of any suspicion, is not
obligated to look beyond the certificate to investigate the titles of the seller appearing on the face of the
certificate. And, he is charged with notice only of such burdens and claims as are annotated on the title.

We do acknowledge that the rule thus enunciated is not cast in stone. For, indeed, there are exceptions thereto.
Thus, in Sandoval vs. CA, we made clear the following:

The aforesaid principle admits of an unchallenged exception: that a person dealing with registered land has a
right to rely on the Torrens certificate of title and to dispense with the need of inquiring further except when the
party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge ofa defect or the lack of title in his vendor or of sufficient
facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. The
presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the
certificate and investigate the title of the vendor appearing on the face of said certificate. One who falls within
the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and
hence does not merit the protection of the law.22

Thus, the determination whether one is a buyer in good faith or can be considered an innocent purchaser for
value becomes imperative. Section 55 of the Land Registration Act provides protection to an innocent purchaser
for value23 by allowing him to retain the parcel of land bought and his title is considered valid. Otherwise, the
title would be cancelled and the original owner of the parcel of land is allowed to repossess it.

Jurisprudence has defined an innocent purchaser for value as one who buys the property of another without
notice that some other person has a right to or interest therein and who then pays a full and fair price for it at the
time of the purchase or before receiving a notice of the claim or interest of some other persons in the property.
Buyers in good faith buy a property with the belief that the person from whom they receive the thing is the
owner who can convey title to the property. Such buyers do not close their eyes to facts that should put a
reasonable person on guard and still claim that they are acting in good faith.24

The assailed Decision of the CA held that the Andals were buyers in good faith, while Spouses Peralta were not.
Despite its determination that fraud marred the sale between Bernardina Abalon and Rellama, a fraudulent or
forged document of sale may still give rise to a valid title. The appellate court reasoned that if the certificate of
title had already been transferred from the name of the true owner to that which was indicated by the forger and
remained as such, the land is considered to have been subsequently sold to an innocent purchaser, whose title is
thus considered valid.25 The CA concluded that this was the case for the Andals.

The appellate court cited Fule v. Legare26 as basis for its ruling. In the said case, the Court made an exception to
the general rule that a forged or fraudulent deed is a nullity and conveys no title. A fraudulent document may
then become the root of a valid title, as it held in Fule:

Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was able to secure
a registered title to the house and lot. It was this title which he subsequently conveyed to the herein petitioners.
We have indeed ruled that a forged or fraudulent deed is a nullity and conveys no title (Director of Lands vs.
Addison, 49 Phil., 19). However, we have also laid down the doctrine that there are instances when such a
fraudulent document may become the root of a valid title. 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
32
subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the
certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960).

We have been constrained to adopt the conclusion here set forth because under the Torrens system, "registration
is the operative act that gives validity to the transfer or creates a lien upon the land (Secs. 50 and 51, Land
Registration Act). Consequently, where there was 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. (Reynes vs.
Barrera, 68 Phil., 656; De Lara and De Guzman vs. Ayroso, 50 O.G. No 10, 4838). The public shall then be
denied of its foremost motivation for respecting and observing the Land Registration Act. In the end, the
business community stands to be inconvenienced and prejudiced immeasurably.

Furthermore, when the Register of Deeds issued a certificate of title in the name of John W. Legare, and
thereafter registered the same, John W. Legare, insofar as third parties were concerned, acquired valid title to
the house and lot here disputed. When, therefore, he transferred this title to the herein petitioners, third persons,
the entire transaction fell within the purview of Article 1434 of the Civil Code. The registration in John W.
Legare's name effectively operated to convey the properties to him.

After executing the Deed of Sale with Bernardina Abalon under fraudulent circumstances, Rellama succeeded
in obtaining a title in his name and selling a portion of the property to the Andals, who had no knowledge of the
fraudulent circumstances involving the transfer from Abalon to Rellama. In fact, the Decisions of the RTC and
the CA show no factual findings or proof that would rebut the presumption in favor of the Andals as buyers in
good faith. Thus, the CA correctly considered them as buyers in good faith and upheld their title.

The Abalons counter this ruling and allege that the CA erred in relying on Fuleto justify its assailed Decision.
They argue that Torres v. Court of Appeals 27 is the applicable ruling, because the facts therein are on all fours
with the instant case.28

In Torres, the subject property was covered by TCT No. 53628 registered in the name of Mariano Torres. His
brother-in-law Francisco Fernandez, misrepresenting that the copy of the title had been lost, succeeded in
obtaining a court Order for the issuance of another copy of TCT No. 53628. He then forged a simulated deed of
sale purportedly showing that Torres had sold the property to him and caused the cancellation of TCT No.
53628, as well as the issuance of TCT No. 86018 in his name. Soon, Fernandez mortgaged the property to
Mota. Upon learning of the fraud committed by Fernandez, Torres caused the annotation of an adverse claim on
the formers copy and succeeded in having Fernandezs title declared null and void. Meanwhile, Mota was able
to foreclose on Fernandezs real estate mortgage, as well as to cause the cancellation of TCT No. 86018 and the
issuance of a new one TCT No. 105953 in her name. The issue to be resolved in Torres was whether Mota
can be considered an innocent mortgagee for value, and whether her title can be deemed valid. Ruling in the
negative, the Court explained:

There is nothing on the records which shows that Torres performed any act or omission which could have
jeopardized his peaceful dominion over his realties. The decision under review, however, in considering Mota
an innocent mortgagee protected under Section 65 of the Land Registration Law, held that Torres was bound by
the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the highest bidder, also bound
Torres and concluded that the certificate of title issued in the name of Mota prevails over that of Torres'. As
correctly pointed out by Torres, however, his properties were sold on execution, and not on foreclosure sale, and
hence, the purchaser thereof was bound by his notice of adverse claim and lis pendens annotated at the back of
Fernandez' TCT. Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon
33
by the appellate court that a forged instrument may become the root of a valid title, cannot be applied where the
owner still holds a valid and existing certificate of title covering the same interest in a realty. The doctrine
would apply rather when, as in the cases for example of De la Cruz v. Fabie, 35 Phil. 144 [1916], Fule v. De
Legare, No. L-17951, February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989,
the forger thru insidious means obtains the owners duplicate certificate of title, converts it in his name, and
subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a case the new
certificate is binding upon the owner (Sec.55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid
and existing certificate of title, his would be indefeasible as against the whole world, and not that of the
innocent holder's. "Prior tempore potior jure" as We have said in Register of Deeds v. Philippine National Bank,
No. L-17641, January 30, 1965, 13 SCRA 46, citing Legarda v. Saleeby, 31 Phil.590, Roman Catholic Bishop v.
Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791.29(Emphasis and underscoring supplied)

We do not agree with the contention of the Abalons that the ruling in Torresis controlling in this case. They
quoted a portion in the said case that is clearly an obiter. In Torres, it was shown that Mariano had annotated an
adverse claim on the title procured by Fernandez prior to the execution sale, in which Mota was the highest
bidder. This Court declared her as a mortgagee in bad faith because, at the back of Fernandezs title, Torres
made an annotation of the adverse claim and the notice of lis pendens. The annotation of the adverse claim was
made while the forged document was still in the name of the forger, who in this case is Fernandez. That
situation does not obtain in the instant case.

The records of the RTC and the CA have a finding that when Rellama sold the properties to the Andals, it was
still in his name; and there was no annotation that would blight his clean title. To the Andals, there was no doubt
that Rellama was the owner of the property being sold to them, and that he had transmissible rights of
ownership over the said property. Thus, they had every right to rely on the face of his title alone.

The established rule is that a forged deed is generally null and cannot convey title, the exception thereto,
pursuant to Section 55 of the Land Registration Act, denotes the registration of titles from the forger to the
innocent purchaser for value. Thus, the qualifying point here is that there must be a complete chain of registered
titles.30 This means that all the transfers starting from the original rightful owner to the innocent holder for value
and that includes the transfer to the forger must be duly registered, and the title must be properly issued to
the transferee. Contrary to what the Abalons would like to impress on us, Fuleand Torresdo not present clashing
views. In Fule, the original owner relinquished physical possession of her title and thus enabled the perpetrator
to commit the fraud, which resulted in the cancellation of her title and the issuance of a new one. The forged
instrument eventually became the root of a valid title in the hands of an innocent purchaser for value. The new
title under the name of the forger was registered and relied upon by the innocent purchaser for value. Hence, it
was clear that there was a complete chain of registered titles.

On the other hand in Torres, the original owner retained possession of the title, but through fraud, his brother-in-
law secured a court order for the issuance of a copy thereof. While the title was in the name of the forger, the
original owner annotated the adverse claim on the forged instrument. Thus, before the new title in the name of
the forger could be transferred to a third person, a lien had already been annotated on its back. The chain of
registered titles was broken and sullied by the original owners annotation of the adverse claim. By this act, the
mortgagee was shown to be in bad faith.

In the instant case, there is no evidence that the chain of registered titles was broken in the case of the Andals.
Neither were they proven to have knowledge of anything that would make them suspicious of the nature of
Rellamas ownership over the subject parcel of land. Hence, we sustain the CAs ruling that the Andals were
buyers in good faith. Consequently, the validity of their title to the parcel of the land bought from Rellama must
be upheld.

34
As for Spouses Peralta, we sustain the ruling of the CA that they are indeed buyers in bad faith. The appellate
court made a factual finding that in purchasing the subject property, they merely relied on the photocopy of the
title provided by Rellama. The CA concluded that a mere photocopy of the title should have made Spouses
Peralta suspicious that there was some flaw in the title of Rellama, because he was not in possession of the
original copy. This factual finding was supported by evidence.

The CA pointed out Spouses Peraltas Answer to the Complaint of the Abalons in Case No. 9243 in the RTC of
Legaspi City, Branch 5. In their Answer, they specifically alleged as follows:

2- These defendants [Spouses Peralta] acquired lot No. 1679-A by purchase in good faith and for value
from Restituto Rellama under Doc. No. 11212, page No. 26, Book No. 60, Series of 1996 of Notary
Public Atty. Otilio Bongon, Legaspi City on March 2, 1995 copy of which is attached as and made part
of this answer as Exhibit "1;"

3- That these defendants were handed over by Rellama xerox [sic] copy of the Transfer Certificate of
Title No. 42103 issued by the Register of Deed of Legaspi City on the 2nd day of August 1995 copy
attached and made integral part as Exhibit "1-A" and also Original Certificate of Title No. (O) 16 as
Exhibit "1-B"31

We have no reason to disturb this factual finding of the CA because it is supported by the evidence on record.
Spouses Peralta filed a Petition for Review on Certiorari under Rule 45, which allows only questions of law to
be raised. It is a settled rule that questions of fact are not reviewable in this kind of appeal. Under Rule 45,
Section 1, "petitions for review on certiorari shall raise only questions of law which must be distinctly set
forth."32 A question of fact arises when there is "as to the truth or falsehood of facts or when there is a need to
calibrate the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of
specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability
of the situation."33 It is further pointed out that "the determination of whether one is a buyer in good faith is a
factual issue, which generally is outside the province of this Court to determine in a petition for review."34

Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a factual issue. Although this rule
admits of exceptions,35 none of these applies to their case. There is no conflict between the factual findings and
legal conclusions of the RTC and those of the CA, both of which found them to be buyers in bad faith. The fact
that they did not participate in the proceedings before the lower court does not help their case either.

On the issue of the legal standing of the Abalons to file this case, we find that the CA correctly upheld their
standing as heirs of the deceased Bernardina Abalon. The appellate court ruled that during her lifetime,
Bernardina Abalon had promised her heirs - siblings Mansueto and Amelia - that she would give them the
subject property. A duplicate copy of OCT No. (0) 16 was delivered to them upon her death. Thus, the CA
concluded that the two siblings acquired the subject property by ordinary prescription. Further, it deduced that
the mode of transmission of the property from Bernardina to her nephew and niece was a form of donation
mortis causa, though without the benefit of a will.36 Despite this omission, it still held that Mansueto and Amelia
acquired the subject property through ordinary acquisitive prescription because, since the death of their aunt
Bernardina, they had been in possession of the property for more than 10 years that ripened into full
ownership.37

Under Article 97538 of the Civil Code, siblings Mansueto and Amelia Abalon are the legal heirs of Bernardina,
the latter having had no issue during her marriage. As such, they succeeded to her estate when she passed away.
While we agree with the CA that the donation mortis causa was invalid in the absence of a will, it erred in
concluding that the heirs acquired the subject property through ordinary acquisitive prescription. The subject
parcel of land is a titled property; thus, acquisitive prescription is not applicable. 39 Upon the death of
35
Bernardina, Mansueto and Amelia, being her legal heirs, acquired the subject property by virtue of succession,
and not by ordinary acquisitive prescription.

WHEREFORE, the petitions in G.R. Nos. 183448 and 183464 are DENIED for lack of merit. The Decision in
CA-G.R. CV No. 85542 is hereby AFFIRMED.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 202414 June 4, 2014

JOSEPHINE WEE, Petitioner,


vs.
FELICIDAD MARDO, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 assailing the June 26, 2012 Decision of the Court of
Appeals (CA), which reversed and set aside the September 4, 2009 Decision of the Regional Trial Court,
Branch XVIII, Tagaytay City, Cavite (RTC), granting petitioner's "Application for Registration of Title."

Factual and Procedural Antecedents:

Respondent Felicidad Gonzales, married to Leopoldo Mardo, was granted a registered Free Patent No. (IV-2)
15284, dated April 26, 1979, covering Lot No. 8348, situated in Puting Kahoy, Silang, Cavite.

On February 1, 1993, respondent allegedly conveyed to petitioner, Josephine Wee, through a Deed of Absolute
Sale,1 a portion of Lot No. 8348 known as Lot No. 8348-B, for a consideration of 250,000.00 which was fully
paid. Respondent, however, refused to vacate and turn over the subject property claiming that the alleged sale
was falsified.

On December 22, 1994, petitioner filed an Application for Original Registration of a parcel of land located at
Barangay Putting Kahoy, Silang, Cavite, known as Lot No. 8349. Said application was amended on September
19, 1996, this time covering a parcel of land known as Lot 8348-B situated in Barangay Puting Kahoy, Silang,
Cavite. Petitioner claimed that she is the owner of the said unregistered land by virtue of a deed of absolute sale.

On September 19, 1997, respondent filed her Opposition to the Amended Application alleging 1] that she is the
true and lawful owner of the parcel of land which is the subject of the amended application; and 2] that
petitioners deed of absolute sale is surreptitious.

On October 28, 2000, respondent filed a Motion to Dismiss the Application alleging that the land described in
the application was different from the land being claimed for titling. The motion was, however, denied. A
motion for reconsideration and second urgent motion for reconsideration were subsequently filed by respondent,
but both were denied by the RTC.

36
Thereafter, petitioner completed her presentation of evidence and filed a formal offer which was admitted by the
RTC.

On June 10, 2003, during the pendency of the case, respondent managed to register the land in her name under
Original Certificate of Title (OCT) No. OP-1840. Petitioner filed a Notice of Lis Pendens with the Registry of
Deeds of Cavite on May 10, 2005 which was annotated on the title. A "Motion for Leave to File Supplemental
Pleading and to Admit Attached Supplemental Complaint for Reconveyance" was filed by petitioner which was
denied by the RTC on the ground that a motion for reconveyance was different from an application for
registration of title.

Consequently, respondent presented her own evidence, through the testimony of her counsel, who testified that
the parcel of land subject of the application for registration was the property she bought ten (10) years ago.
Respondent, however, did not state from whom she bought it. As proof of her alleged ownership, she presented
copies of tax declarations in the absence of any deed of sale in her favor.

On September 4, 2009, the RTC rendered a Decision 2 granting the application of petitioner. The dispositive
portion of said decision reads:

WHEREFORE, judgment is hereby rendered granting the applicant, Josephine Wee, as qualified to register the
subject land in her name, and the Administrator of LRA is hereby directed to issue the corresponding decree in
her name based on the plan and technical description of said land as submitted by the applicant and the Register
of Deeds of the Province of Cavite to issue title in her name.

SO ORDERED.

A motion for reconsideration was filed by respondent which was denied by the RTC. Hence, respondent
appealed the decision before the CA, which case was docketed as CA-G.R. CV No. 96934.

On June 26, 2012, the CA handed down a Judgment 3 reversing and setting aside the RTC decision. The decretal
portion of the CA decision reads:

WHEREFORE, the appeal is GRANTED. The Decision, dated September 4, 2009, of the Regional Trial Court
(Branch XVIII) of Tagaytay City, Cavite, in LRC No. TG-647 is SET ASIDE.

Accordingly, applicant-appellees Application for Original Registration of a parcel of land located at Barangay
Putting Kahoy, Silang Cavite, known as Lot No. 8349, Cad. Lot 042118-011719-D of Silang Cadastre, is hereby
DENIED.

SO ORDERED.

The CA held, among others, that petitioner was not able to comply with the requirement of possession and
occupation under Sec. 14 (1) of P.D. No. 1529. Her admission that the subject lot was not physically turned over
to her due to some objections and oppositions to her title suggested that she was not exercising any acts of
dominion over the subject property, an essential element in the requirement of possession and occupation
contemplated under Sec. 14 (1) of P.D. No. 1529.

A copy of the decision was received by petitioner on July 2, 2012. On August 15, 2012, petitioner filed this
subject petition for review challenging the CA decision.

Hence, this petition.


37
In advocacy of her petition, petitioner assigns the following

ERRORS:

I.

The Court of Appeals gravely erred and ruled contrary to law in not finding that petitioner is entitled to register
the subject land under her name. Under the peculiar circumstances of this case, wherein petitioners
predecessor-in-interest unexpectedly and unjustifiably continued to be in physical possession of the subject
property after the sale thereof to petitioner, the latter must be deemed to be in possession and occupation thereof
through her predecessor-in-interest. Under the Public Land Act and Presidential Decree No. 1529, the period of
possession of an applicants predecessor-in-interest benefits and is credited in favor of the applicant.

II.

Moreover, petitioner was denied actual possession of the subject land by circumstances amounting to a
fortuitous event. By express provision of Sec. 48(b) of the Public Land Act, such fortuitous event does not affect
her vested right to register the property under her name.

III.

The Court of Appeals likewise seriously erred and ruled contrary to the law and to the evidence in not finding
that petitioners predecessor-in-interest, respondent Felicidad Mardo, had possession and occupation of the
subject parcel of land under a bona fide claim of ownership since June 12, 1945, or earlier.

IV.

In view of the fact that the validity of the sale of the subject parcel of land to petitioner in 1993 was duly
established before the trial court and affirmed by the Court of Appeals and considering further that the
registration of the said land under respondents name was fraudulently secured, in order to avoid multiplicity of
suits and to put an end to the long pending dispute between the parties, the Court of Appeals should have
ordered the reconveyance of the subject parcel of land to the petitioner as its rightful owner.

Petitioner presents the theory that she must be deemed to have been in possession and occupation of the subject
property through respondent, her predecessor-in-interest, who after the sale in 1993 and despite demands from
her, unexpectedly and unjustifiably continued to occupy the property and refused to turn over physical
possession to her. Petitioner argues that it is not necessary that the person in possession should himself be the
occupant as the occupancy can be held by another in his name.

Moreover, petitioner also seeks reconveyance of the subject property arguing that by virtue of its fraudulent
registration, respondent became a trustee of an implied trust for her benefit, as its real owner, having validly
acquired the same from respondent through an absolute deed of sale.

The Courts Ruling

The petition deserves no merit.

P.D. 1529, otherwise known as Property Registration Decree, governs the original registration proceedings of
unregistered land. The subject application for original registration was filed pursuant to Sec. 14(1) of PD 1529,
which provides the condition necessary for registration. Thus:
38
SEC 14. Who may apply.The following persons may file in the proper Court of First Instance an application
for registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive
and notorious possession and occupation of alienable and disposable lands of the public domain under a bona
fide claim of ownership since June 12, 1945, or earlier.(Emphasis supplied)

Based on these legal parameters, applicants for registration of title under Section 14(1) must sufficiently
establish: (1) that the subject land forms part of the disposable and alienable lands of the public domain; (2) that
the applicant and his predecessors-in-interest have been in open, continuous, exclusive and notorious possession
and occupation of the same; and (3) that it is under a bona fide claim of ownership since June 12, 1945 or
earlier.4

The CA denied the application on the issue of open, continuous, exclusive, and notorious possession and
occupation of the subject land. It was of the view that she could not have complied with the requirement of
possession and occupation under Sec. 14 (1) of P.D. No. 1529 considering that she had admitted that it was not
physically turned over to her. As she was not in actual and physical possession, she could not have exercised
any acts of dominion over the subject property which was essential to the requirement of possession and
occupation contemplated under Sec. 14 (1) of P.D. No. 1529.

A more important consideration, however, is that the subject land is already registered under OCT No. OP-1840
(Patent No. 042118-03-6111) of the Registry of Deeds of Cavite, under the name of respondent Felicidad
Gonzales.

In the case of Republic vs. Umali,5 this Court ruled that once a patent is registered and the corresponding
certificate of title is issued, the land ceases to be part of public domain and becomes private property over which
the Director of Lands has neither control nor jurisdiction. A public land patent, when registered in the
corresponding Register of Deeds, is a veritable Torrens title, and becomes as indefeasible upon the expiration of
one (1) year from the date of issuance thereof. Said title, like one issued pursuant to a judicial decree, is subject
to review within one (1) year from the date of the issuance of the patent. This rule is embodied in Section 103 of
PD 1529, which provides that:

Section 103. Certificates of title pursuant to patents. Whenever public land is by the Government alienated,
granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree. x x x
After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to
all intents and purposes under this Decree. (Emphasis supplied)

Accordingly, respondents registered patent in the corresponding Registry of Deeds is a veritable Torrens title
and becomes as indefeasible as a Torrens title upon the expiration of one (1) year from the date of its issuance.6

For said reason, the order of the RTC directing the Administrator of LRA to issue a corresponding decree in
petitioners name is null and void. A land registration court has no jurisdiction to order the registration of land
already decreed in the name of another in an earlier land registration case. A second decree for the same land
would be null and void, since the principle behind the original registration is to register a parcel of land only
once.7

Verily, once a title is registered, as a consequence either of judicial or administrative proceedings, the owner
may rest secure, without the necessity of waiting in the portals of the court sitting in the mirador de su casa to
avoid the possibility of losing his land.8 The certificate of title cannot be defeated by adverse, open and
notorious possession. Neither can it be defeated by prescription. As provided under Sec. 47 of PD 1529, no title
39
to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse
possession.

A Certificate of Title Not


Subject to Collateral Attack

Petitioner argued that the rule on indefeasibility of title does not attach to titles secured by fraud and
misrepresentation. In this case, she alleged that the respondent fraudulently registered the subject property under
her name after she (respondent) had already sold a portion thereof to her (petitioner). By virtue of the deed of
sale, petitioner insists that she is considered to be the real owner of the subject parcel of land.

The Court finds no merit in petitioners argument. It is settled in this jurisdiction that the issue of the validity of
title can only be assailed in an action expressly instituted for such purpose. 9 A certificate of title cannot be
attacked collaterally. This rule is provided under Section 48 of PD 1529 which states that:

SEC. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral
attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.
(Emphasis supplied)

In Lagrosa v. Court of Appeals,10 it was stated that it is a well-known doctrine that the issue as to whether title
was procured by falsification or fraud as advanced by petitioner can only be raised in an action expressly
instituted for the purpose. A Torrens title can be attacked only for fraud, within one year after the date of the
issuance of the decree of registration. Such attack must be direct, and not by a collateral proceeding. The title
represented by the certificate cannot be changed, altered, modified, enlarged, or diminished in a collateral
proceeding.

In this case, the petitioner is contesting the indefeasibility of title on the ground of fraud and misrepresentation.
Applying the abovementioned doctrine, even assuming that the petitioners allegations are true, the same are
considered as collateral attacks, and such must be raised in an action expressly instituted for such purpose and
in a proper proceeding.

Thus, in Carvajal v. Court of Appeals, 11 it was ruled that an application for registration of an already titled land
constitutes a collateral attack on the existing title. The title may be challenged only in a proceeding for that
purpose, not in an application for registration of a land already registered in the name of another person. After
one year from its registration, the title is incontrovertible and is no longer open to review.

Remedy of the petitioner is to file a separate proceeding such as an action for specific performance or for
reconveyance

Petitioner further argues that considering the registration of the said land under respondents name was
fraudulently secured, in order to avoid multiplicity of suits and to put an end to the long pending dispute
between the parties, the courts below should have ordered the reconveyance of the subject land to her as its
rightful owner.

Petitioner advances the theory that by virtue of the fraudulent registration of a subject property, respondent is a
trustee of an implied trust for her benefit, being the real owner of the subject property, as she had validly
acquired the same from respondent through an absolute deed of sale.

Petitioners argument fails to persuade. The issue of fraudulent alienation raised in the second application for
registration of the subject property is collateral attack which should be directly raised in a separate proceeding
40
filed for such purpose. It cannot be entertained in this proceeding. In several cases, the Court has ruled that an
attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment or
proceeding is nevertheless made as an incident thereof.12

The RTC was, thus, correct in denying petitioners "Motion for Leave to File Supplemental Pleading and to
Admit Attached Supplemental Complaint For Reconveyance." Allowing it would not have been permissible
because the application for original registration of title over a parcel of land already registered is a collateral
attack itself. It is settled that an application for registration of a parcel of land already covered by a Torrens title
is actually a collateral attack, not permitted under the principle of indefeasibility of a Torrens title.13

Registration, however, does not deprive an aggrieved party of a remedy in law. What cannot be collaterally
attacked is the certificate of title and not the title or ownership which is represented by such certificate.
Ownership is different from a certificate of title. The fact that a person was able to secure a title in his name did
not operate to vest ownership upon him of the subject land. Registration of a piece of land under the Torrens
System does not create or vest title, because it is not a mode of acquiring ownership.

A certificate of title is merely an evidence of ownership or title over the particular property described
therein.1wphi1 It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the
commission of fraud: neither does it permit one to enrich himself at the expense of others. Its issuance in favor
of a particular person does not foreclose the possibility that the real prope1iy may be co-owned with persons not
named in the certificate, or that it may be held in trust for another person by the registered owner.14

The remedy of the petitioner is to file a separate proceeding or action to protect her alleged interest. As she
claimed that she bought the subject property for value from the respondent as evidenced by a deed of sale, she
can file an action for specific performance to compel the respondent to comply with her obligation in the
alleged deed of sale and/or an action for reconveyance of the property. She can also file an action for rescission.
Needless to state, petitioner must prove her entitlement because the respondent claims that the sale was
falsified.

Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which states that in all
cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the
parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate
of title.15 It is an action in personam available to a person whose property has been wrongfully registered under
the Torrens system in another's name.16 It does not seek to set aside the decree but, respecting it as
incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner
to the rightful owner.17 Reconveyance is always available as long as the property has not passed to an innocent
third person for value.18

WHEREFORE, the petition is hereby DENIED, without prejudice to any remedial action by the petitioner to
protect her claimed interest.

SO ORDERED.

41
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 164687 February 12, 2009

SM PRIME HOLDINGS, INC., Petitioner,


vs.
ANGELA V. MADAYAG, Respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Decision 1 of the Court of Appeals (CA) dated March 19, 2004
and Resolution dated July 15, 2004, which set aside the lower courts order to suspend the proceedings on
respondents application for land registration.

On July 12, 2001, respondent Angela V. Madayag filed with the Regional Trial Court (RTC) of Urdaneta,
Pangasinan an application for registration of a parcel of land with an area of 1,492 square meters located in
Barangay Anonas, Urdaneta City, Pangasinan.2 Attached to the application was a tracing cloth of Survey Plan
Psu-01-008438, approved by the Land Management Services (LMS) of the Department of Environment and
Natural Resources (DENR), Region 1, San Fernando City.

On August 20, 2001, petitioner SM Prime Holdings, Inc., through counsel, wrote the Chief, Regional Survey
Division, DENR, Region I, demanding the cancellation of the respondents survey plan because the lot
encroached on the properties it recently purchased from several lot owners and that, despite being the new
owner of the adjoining lots, it was not notified of the survey conducted on June 8, 2001.3

Petitioner then manifested its opposition to the respondents application for registration. The Republic of the
Philippines, through the Office of the Solicitor General, and the heirs of Romulo Visperas also filed their
respective oppositions.

On February 6, 2002, petitioner filed its formal opposition. Petitioner alleged that it had recently bought seven
parcels of land in Barangay Anonas, Urdaneta, delineated as Lots B, C, D, E, G, H and I in Consolidation-
Subdivision Plan No. (LRC) Pcs-21329, approved by the Land Registration Commission on August 26, 1976,
and previously covered by Survey Plan No. Psu-236090 approved by the Bureau of Lands on December 29,
1970. These parcels of land are covered by separate certificates of title, some of which are already in the name
of the petitioner while the others are still in the name of the previous owners.

On February 20, 2002, the RTC declared a general default, except as to the petitioner, the Republic, and the
heirs of Romulo Visperas. Thereafter, respondent commenced the presentation of evidence.

Meanwhile, acting on petitioners request for the cancellation of the respondents survey plan, DENR Assistant
Regional Executive Director for Legal Services and Public Affairs, Allan V. Barcena, advised the petitioner to
file a petition for cancellation in due form so that the DENR could properly act on the same. 4 Accordingly,
petitioner formally filed with the DENR a petition 5 for cancellation of the survey plan sometime in March 2002,
alleging the following grounds:
42
I.

THERE IS NO SUCH THING AS ALIENABLE OR DISPOSABLE PROPERTY WHICH IS THE SUBJECT


LOT IN THIS CASE

II.

NO NOTICE WAS MADE UPON PETITIONER (AS ADJOINING LANDOWNER AND WHO BEARS
INTEREST OVER THE SUBJECT LOT) MUCH LESS THE OWNERS OF ADJOINING LANDS.

III.

THE CIRCUMSTANCES EVIDENTLY SHOW THAT BAD FAITH AND/OR MALICE ATTENDED THE
APPROVAL OF (PLAN WITH PSU NO. 01-008438).6

On July 17, 2002, petitioner filed an Urgent Motion to Suspend Proceedings 7 in the land registration case,
alleging that the court should await the DENR resolution of the petition for the cancellation of the survey plan
"as the administrative case is prejudicial to the determination" of the land registration case.

On October 8, 2002, the RTC issued an Order granting the motion, thus:

WHEREFORE, PREMISES CONSIDERED, the Court hereby GRANTS the instant motion and suspends the
proceedings herein. In the meantime, and until receipt by this Court of a copy of the resolution of the petition
for cancellation by the DENR, the instant case is hereby ARCHIVED.

SO ORDERED.8

Emphasizing that a survey plan is one of the mandatory requirements in land registration proceedings, the RTC
agreed with the petitioner that the cancellation of the survey plan would be prejudicial to the petition for land
registration.9

On February 13, 2003, the RTC denied the respondents motion for reconsideration of its order. 10 Respondent
thereafter filed a petition for certiorari with the CA assailing the order suspending the proceedings.

On March 19, 2004, finding that the RTC committed grave abuse of discretion in suspending the proceedings,
the CA granted the petition for certiorari, thus:

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The challenged Orders dated
October 8, 2002 and February 13, 2003 of the respondent Court are declared NULL and VOID.

The Court a quo is directed to continue the proceedings until its final determination. No pronouncement as to
costs.

SO ORDERED.11

The CA ratiocinated that the survey plan which was duly approved by the DENR should be accorded the
presumption of regularity, and that the RTC has the power to hear and determine all questions arising from an
application for registration.12

43
On July 15, 2004, the CA issued a Resolution13 denying the petitioners motion for reconsideration. Petitioner
was, thus, compelled to file this petition for review, ascribing the following errors to the CA:

I. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT FINDING THAT THE
SUSPENSION OF THE PROCEEDINGS IN THE LAND REGISTRATION CASE IS LEGAL AND PROPER
PENDING THE DETERMINATION AND RESOLUTION OF THE ADMINISTRATIVE CASE BEFORE
THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES-REGION 1.

II. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO FIND THAT THE
ASSAILED ORDERS OF THE LOWER COURT HAVE PROPER AND SUFFICIENT BASES IN FACT
AND IN LAW.

III. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN HOLDING THAT THE LOWER
COURT HAS ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSPENDING THE PROCEEDINGS
AND ARCHIVING THE CASE.

IV. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO FIND THAT THE
FILING OF THE PETITION FOR CERTIORARI, UNDER RULE 65 OF THE REVISED RULES OF CIVIL
PROCEDURE, IS NOT THE ONLY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY
COURSE OF LAW ON THE PART OF HEREIN RESPONDENT. 14

The petition has no merit.

Petitioner contends that, since the respondents cause of action in the land registration case depends heavily on
the survey plan, it was only prudent for the RTC to suspend the proceedings therein pending the resolution of
the petition for cancellation of the survey plan by the DENR. 15 It, therefore, insists that recourse to a petition for
certiorari was not proper considering that respondent was not arbitrarily deprived of her right to prosecute her
application for registration.16

Undeniably, the power to stay proceedings is an incident to the power inherent in every court to control the
disposition of the cases in its dockets, with economy of time and effort for the court, counsel and litigants. But
courts should be mindful of the right of every party to a speedy disposition of his case and, thus, should not be
too eager to suspend proceedings of the cases before them. Hence, every order suspending proceedings must be
guided by the following precepts: it shall be done in order to avoid multiplicity of suits and prevent vexatious
litigations, conflicting judgments, confusion between litigants and courts, 17 or when the rights of parties to the
second action cannot be properly determined until the questions raised in the first action are
settled.18 Otherwise, the suspension will be regarded as an arbitrary exercise of the courts discretion and can be
corrected only by a petition for certiorari.

None of the circumstances that would justify the stay of proceedings is present. In fact, to await the resolution
of the petition for cancellation would only delay the resolution of the land registration case and undermine the
purpose of land registration.

The fundamental purpose of the Land Registration Law (Presidential Decree No. 1529) is to finally settle title to
real property in order to preempt any question on the legality of the title except claims that were noted on the
certificate itself at the time of registration or those that arose subsequent thereto.1avvphi1 Consequently, once
the title is registered under the said law, owners can rest secure on their ownership and possession.19

Glaringly, the petition for cancellation raises practically the very same issues that the herein petitioner raised in
its opposition to the respondents application for registration. Principally, it alleges that the survey plan should
44
be cancelled because it includes portions of the seven properties that it purchased from several landowners,
which properties are already covered by existing certificates of title.

Petitioner posits that it is the DENR that has the sole authority to decide the validity of the survey plan that was
approved by the LMS.20 It cites Section 4(15), Chapter 1, Title XIV, Administrative Code of 1987 which
provides that the DENR shall

(15) Exercise (of) exclusive jurisdiction on the management and disposition of all lands of the public domain
and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in
consultation with appropriate agencies.

However, respondent argues that the land registration court is clothed with adequate authority to resolve the
conflicting claims of the parties, and that even if the DENR cancels her survey plan, the land registration court
is not by duty bound to dismiss the application for registration based solely on the cancellation of the survey
plan.21lawphil.net

Without delving into the jurisdiction of the DENR to resolve the petition for cancellation, we hold that, as an
incident to its authority to settle all questions over the title of the subject property, the land registration court
may resolve the underlying issue of whether the subject property overlaps the petitioners properties without
necessarily having to declare the survey plan as void.

It is well to note at this point that, in its bid to avoid multiplicity of suits and to promote the expeditious
resolution of cases, Presidential Decree (P.D.) No. 1529 eliminated the distinction between the general
jurisdiction vested in the RTC and the latters limited jurisdiction when acting merely as a land registration
court. Land registration courts, as such, can now hear and decide even controversial and contentious cases, as
well as those involving substantial issues.22 When the law confers jurisdiction upon a court, the latter is deemed
to have all the necessary powers to exercise such jurisdiction to make it effective. 23 It may, therefore, hear and
determine all questions that arise from a petition for registration.

In view of the nature of a Torrens title, a land registration court has the duty to determine whether the issuance
of a new certificate of title will alter a valid and existing certificate of title. 24 An application for registration of
an already titled land constitutes a collateral attack on the existing title, 25 which is not allowed by law. 26 But the
RTC need not wait for the decision of the DENR in the petition to cancel the survey plan in order to determine
whether the subject property is already titled or forms part of already titled property. The court may now verify
this allegation based on the respondents survey plan vis--vis the certificates of title of the petitioner and its
predecessors-in-interest. After all, a survey plan precisely serves to establish the true identity of the land to
ensure that it does not overlap a parcel of land or a portion thereof already covered by a previous land
registration, and to forestall the possibility that it will be overlapped by a subsequent registration of any
adjoining land.27

Should the court find it difficult to do so, the court may require the filing of additional papers to aid in its
determination of the propriety of the application, based on Section 21 of P.D. No. 1529:

SEC. 21. Requirement of additional facts and papers; ocular inspection. The court may require facts to be
stated in the application in addition to those prescribed by this Decree not inconsistent therewith and may
require the filing of any additional papers.

The court may also directly require the DENR and the Land Registration Authority to submit a report on
whether the subject property has already been registered and covered by certificates of title, like what the court
did in Carvajal v. Court of Appeals.28 In that case, we commended such move by
45
the land registration court for being "in accordance with the purposes of the Land Registration Law."29

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated March 19,
2004 and Resolution dated July 15, 2004 are AFFIRMED. The Regional Trial Court of Urdaneta, Pangasinan is
DIRECTED to continue with the proceedings in L.R.C. Case No. U-1134 and to resolve the same with dispatch.

SECOND DIVISION

[G.R. No. 157447. April 29, 2005]

NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B. BUENA, EUSEBIA V. TABLADA,


CANUTO G. TISBE, DAVID R. CARULLO, SOFONIAS E. COLEGADO, FELIX B. BUENA,
TORIBIO C. EVANGELISTA, LEBRADA A. NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS
REYES, SALVADOR I. DE LA TORRE, MOISES CRUZ, RUFINO INFANTE, ALICIA
ASTROLOGO, TRINIDAD LUMIQUED, LUZMINIDA QUINIQUINI, & TEODORA C.
TEMERAS, petitioners, vs. CARMELINO M. SANTIAGO, respondent.

DECISION
CHICO-NAZARIO, J.:

In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray for the reversal of the
Decision of the Court of Appeals in CA-G.R. CV No. 64957, [1] affirming the Order of the Regional Trial Court
(RTC) of San Mateo, Rizal, Branch 77, in Civil Case No. 1220, [2] dismissing petitioners Complaint for
declaration of nullity of Original Certificate of Title (OCT) No. 670 and all other titles emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels of land, located in Sitio
Panayawan, Barangay San Rafael, Montalban (now Rodriquez), Province of Rizal (Subject Property), by virtue
of several Deeds of Assignment, dated 15 April 1994 and 02 June 1994, executed by a certain Ismael Favila y
Rodriguez.[3]
According to the Deeds of Assignment, the Subject Property was part of a vast tract of land called Hacienda
Quibiga, which extended to Paraaque, Las Pias, Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig,
Mandaluyong, Quezon City, Caloocan, Bulacan, and Rizal; awarded to Don Hermogenes Rodriguez by the
Queen of Spain and evidenced by a Spanish title. Ismael Favila claimed to be one of the heirs and successors-in-
interest of Don Hermogenes Rodriguez. Acting as Attorney-in-Fact pursuant to a Special Power of Attorney
executed by his mga kapatid on 25 February 1965, Ismael Favila signed the aforementioned Deeds of
Assignment, assigning portions of the Subject Property to the petitioners, each portion measuring around 500 to
1,000 square meters, in exchange for the labor and work done on the Subject Property by the petitioners and
their predecessors.[4]
Petitioners came by information that respondent was planning to evict them from the Subject Property. Two
of the petitioners had actually received notices to vacate. Their investigations revealed that the Subject Property
was included in Transfer Certificates of Titles (TCTs) No. 53028, No. 281660, No. N-39258 and No. 205270,
all originating from OCT No. 670, and now in the name of respondent.[5]
OCT No. 670 was issued in the name of respondents mother, Isabel Manahan y Francisco, and three other
individuals, pursuant to Decree No. 10248, dated 13 February 1913, in Case No. 8502 of the Court of Land
Registration of the Philippine Islands. The whole property covered by OCT No. 670 was subsequently
46
adjudicated in favor of Isabel Manahan Santiago (formerly Isabel Manahan y Francisco). Consequently, OCT
No. 670 was cancelled and TCT No. T-53028 was issued exclusively in the name of Isabel Manahan Santiago.
On 28 December 1968, Isabel Manahan Santiago executed a Deed of Donation transferring the property to her
son, respondent herein, who subsequently secured TCTs No. 281660, No. N-39258 and No. 205270 in his own
name.[6]
Petitioners filed with the trial court, on 29 April 1996, an action for declaration of nullity of respondents
certificates of title on the basis that OCT No. 670 was fake and spurious. Among the defects of OCT No. 670
pointed out by petitioners were that: (1) OCT No. 670 was not signed by a duly authorized officer; (2) Material
data therein were merely handwritten and in different penmanships; (3) OCT No. 670 was not printed on the
Official Form used in 1913, the year it was issued; (4) It failed to indicate the Survey Plan which was the basis
of the Technical Description of the property covered by the title; (5) Decree No. 10248 referred to in OCT No.
670 was issued only on 11 April 1913, while OCT No. 670 was issued earlier, on 13 February 1913; and (6)
Decree No. 10248 was issued over a property other than the one described in OCT No. 670, although also
located in the Province of Rizal.[7]
Respondent filed his Answer with Prayer for Preliminary Hearing on the Affirmative Defenses on 03 July
1996. According to respondent, [t]he allegations in the Complaint would readily and patently show that the
same are flimsy, fabricated, malicious, without basis in law and in fact[8]
As an affirmative defense, respondent claimed that the petitioners had no legal capacity to file the
Complaint, and thus, the Complaint stated no cause of action. Since OCT No. 670 was genuine and authentic on
its face, then OCT No. 670 and all of respondents land titles derived therefrom, are incontrovertible,
indefeasible and conclusive against the petitioners and the whole world.[9]
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M. Muoz, et al. and
Pinagcamaligan Indo-Agro Development Corporation v. Hon. Macario Peralta, Jr., et al., [10] respondent argued
that the Spanish title, on which petitioners based their claim, was neither indefeasible nor imprescriptible.
Moreover, Presidential Decree (P.D.) No. 892, which took effect on 16 February 1976, required all holders of
Spanish titles or grants to apply for registration of their lands under Republic Act No. 496, otherwise known as
the Land Registration Act,[11] within six months from effectivity of the decree. After the given period, Spanish
titles could no longer be used as evidence of land ownership in any registration proceedings under the Torrens
System. [12]
Respondent also raised the affirmative defense of prescription. He pointed out that any action against his
certificates of title already prescribed, especially with regard to OCT No. 670, which was issued in 1913 or
more than 83 years prior to the filing of the Complaint by the petitioners. At the very least, respondent
contended, it must be presumed that the questioned land titles were issued by the public officials concerned in
the performance of their regular duties and functions pursuant to the law.[13]
Even assuming arguendo that the petitioners entered and occupied the Subject Property, they did so as mere
intruders, squatters and illegal occupants, bereft of any right or interest, since the Subject Property was already
covered by Torrens certificates of title in the name of respondent and his predecessors-in-interest.[14]
Lastly, respondent denied knowing the petitioners, much less, threatening to evict them. In fact, petitioners
were not included as defendants in Civil Case No. 783 entitled, Carmelino M. Santiago v. Remigio San Pascual,
et al., which respondent instituted before the same trial court against squatters occupying the Subject Property.
In its decision, dated 01 July 1992, the trial court held that there is no doubt that the plaintiff (respondent herein)
is the owner of the land involved in this case on which the defendants have built their houses and shanties
Although the decision in Civil Case No. 783 was appealed to the Court of Appeals, it had become final and
executory for failure of the defendants-appellants therein to file their appellants brief.[15]
In the instant case, the trial court held a preliminary hearing on the affirmative defenses as prayed for by the
respondent. During said hearing, petitioners presented their lone witness, Engineer Placido Naval, a supposed
47
expert on land registration laws. In response to questions from Honorable Judge Francisco C. Rodriguez of the
trial court, Engineer Naval answered that a parcel of land titled illegally would revert to the State if the Torrens
title was cancelled, and that it was the State, through the Office of the Solicitor General, that should file for the
annulment or cancellation of the title. Respondent, on the other hand, did not present any evidence but relied on
all the pleadings and documents he had so far submitted to the trial court.[16]
After the preliminary hearing, the trial court issued the questioned Order, dated 05 February 1999,
dismissing petitioners Complaint. Pertinent portions of the Order of the trial court read:

After considering the testimonial and documentary evidence presented, this Court is inclined not to grant
plaintiffs (sic) prayer. Finding credence and giving weight to plaintiffs (sic) lone but expert witness, it is crystal
clear that, to quote:

1. a parcel of land titled illegally will revert to the State

2. it is the State who must file the corresponding case of annulment of title through the Office of
the Solicitor General, and

3. a land illegally titled in the name of private individual, the State through the Office of the
Solicitor General should file the corresponding case for cancellation of title. (TSN August 26,
1997).

The above quoted testimony is straight from horse (sic) mouth so to speak as this was the testimony of the
plaintiffs (sic) expert witness. And judging from the said testimony alone aforecited, plaintiffs (sic) cause [of
action] is bound to fail. Plaintiffs (sic) own testimony wrote finis to their case. From the record, this case was
initiated and filed by private individuals, Nemencio Evangelista, et. al., contradicting their witness (sic)
testimony. To reiterate, this Court finds credence to the testimony of the plaintiffs (sic) witness, i.e., is (sic) the
State through the Office of the Solicitor General who must initiate and file a case of this nature when title to a
land is being claimed to be obtained through fraud and allegedly spurious.

The opinion of this Court anent the testimony of the witness is not without basis. Explicit is the pronouncement
of the Supreme Court in the recent case of Heirs of Marciano Nagano v. Court of Appeals, to wit:

An action for reversion has to be instituted by the Solicitor General pursuant to Section 101, Commonwealth
Act No. 141. (282 SCRA 43).

As to the documentary evidence, having gone through with the Deed of Assignment/s purportedly executed by
and between a certain Ismael Favila y Rodriguez and the plaintiffs, which is the principal if not the only basis of
plaintiffs claim ownership and possession of the subject parcel of land, the same does not hold water in a
manner of speaking, for being self-serving. Assignor Ismael Favila y Rodriguez claimed in said Deed that he is
the Attorney-in-Fact by virtue of an alleged Special Power of Attorney executed in his favor by his mga kapatid
on February 23, 1965, but said Special Power of Attorney was not presented before this Court, thus there arises
a doubt as to its existence and execution not to mention doubt on the existence of his mga kapatid who as
alleged executed said Special Power Attorney (sic) in his favor.

Even if this Court granting arguendo would admit the authenticity of said Deeds of Assignment/s, that will not
alter the outcome of the pending incident/s before this Court. Why? Because the said Deed of Assignment/s
which were based on Spanish title have lost their evidentiary value pursuant to the Presidential Decree No. 892
i.e. DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF REGISTRATION AND OF THE
USE OF SPANISH TITLES AS EVIDENCE IN LAND REGISTRATION PROCEEDINGS.
48
There is no need to elaborate on the above-cited provisions of PD 892 as they are self-explanatory. Suffice it to
say that there is no showing that plaintiffs complied with the said law i.e. to apply for registration of their lands
under Act No. 496, otherwise known as the Land Registration Act, within six (6) months from the effectivity of
this decree (February 16, 1976). Thereafter, Spanish titles cannot be used as evidence of land ownership in any
registration proceedings under the Torrens System.

This being the case and likewise being clear that plaintiffs were not the lawful owners of the land subject of this
case, for they did not comply with PD 892, the said plaintiffs do not have the legal standing to bring before this
Court the instant complaint

Moreover, the principal issue in this case is for the declaration of nullity of defendants title, which has nothing
to do with plaintiffs (sic) claim of ownership and possession even if we set aside, albeit momentarily, the truth
that plaintiffs (sic) claim were based on barred Spanish Title/s, and thus plaintiffs were never the owners of the
parcel of land subject of this case.

Further, defendants (sic) title especially so with the mother title OCT 670 was entered and issued in 1913 or
more than Eighty Three (83) years ago, the same not having been questioned by any party. Only now that it is
being questioned, but sad to say, plaintiffs who are on the offensive and relying on their lone expert witness,
instead of bolstering their case, unwittingly sealed their fate [17]

After the trial court denied petitioners Motion for Reconsideration in its Order, dated 20 July 1999,
[18]
petitioners appealed both Orders of the trial court to the Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002,[19] affirmed the Order of the trial court, dated 05
February 1999, dismissing petitioners Complaint. The Court of Appeals denied petitioners Motion for
Reconsideration in its Resolution, dated 14 February 2003.[20]
Thus, petitioners filed this Petition for Review [21] under Rule 45 of the Rules of Court, raising the
following issues and praying for the reversal of the aforementioned Decision of the Court of Appeals affirming
the Order of dismissal of the trial court:

I. Whether the lower courts dismissal of the petitioners complaint should be proscribed by the rules of
evidence it being based inter alia on Engr. Navals testimony, which was indisputably not based on
facts but conclusion of law.

II. Whether the lower courts dismissal of petitioners complaint should be proscribed by the rules of
evidence it being done sans ample evidence except bare allegations of respondent.

III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as evidence of land ownership in
any registration proceedings under the Torrens system, holds of an exception.

IV. Whether an action for quieting of title, specifically where petitioners are in possession of subject land,
can be subject of prescription.

In his Comment,[22] the respondent, for the most part, reiterated the findings of the trial court and the Court
of Appeals.
The Court believes that the trial court rightfully dismissed petitioners Complaint, but for reasons different
from those relied upon by the trial court and the Court of Appeals.
According to the respondent, petitioners had no legal capacity to file the Complaint, and thus, the
Complaint filed before the trial court stated no cause of action.
49
Before anything else, it should be clarified that the plaintiff has no legal capacity to sue [23] and the pleading
asserting the claim states no cause of action [24] are two different grounds for a motion to dismiss or are two
different affirmative defences. Failure to distinguish between the lacks of legal capacity to sue from the lack of
personality to sue is a fairly common mistake. The difference between the two is explained by this Court
in Columbia Pictures, Inc. v. Court of Appeals:[25]

Among the grounds for a motion to dismiss under the Rules of Court are lack of legal capacity to sue and that
the complaint states no cause of action. Lack of legal capacity to sue means that the plaintiff is not in the
exercise of his civil rights, or does not have the necessary qualification to appear in the case, or does not have
the character or representation he claims. On the other hand, a case is dismissible for lack of personality to sue
upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action.
The term "lack of capacity to sue" should not be confused with the term "lack of personality to sue." While the
former refers to a plaintiffs general disability to sue, such as on account of minority, insanity, incompetence,
lack of juridical personality or any other general disqualifications of a party, the latter refers to the fact that the
plaintiff is not the real party- in-interest. Correspondingly, the first can be a ground for a motion to dismiss
based on the ground of lack of legal capacity to sue; whereas the second can be used as a ground for a motion to
dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action.

In the present case, this Court may assume that the respondent is raising the affirmative defense that the
Complaint filed by the petitioners before the trial court stated no cause of action because the petitioners lacked
the personality to sue, not being the real party-in-interest. It is the respondents contention that only the State can
file an action for annulment of his certificates of title, since such an action will result in the reversion of the
ownership of the Subject Property to the State.
The affirmative defense that the Complaint stated no cause of action, similar to a motion to dismiss based
on the same ground, requires a hypothetical admission of the facts alleged in the Complaint. In the case
of Garcon v. Redemptorist Fathers,[26] this Court laid down the rules as far as this ground for dismissal of an
action or affirmative defense is concerned:

It is already well-settled by now that, in a motion to dismiss a complaint based on lack of cause of action, the
question submitted to the court for determination is the sufficiency of the allegations of fact made in the
complaint to constitute a cause of action, and not on whether these allegations of fact are true, for said motion
must hypothetically admit the truth of the facts alleged in the complaint; that the test of the sufficiency of the
facts alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid
judgment upon the same in accordance with the prayer of said complaint. Stated otherwise, the insufficiency of
the cause of action must appear in the face of the complaint in order to sustain a dismissal on this ground, for in
the determination of whether or not a complaint states a cause of action, only the facts alleged therein and no
other matter may be considered, and the court may not inquire into the truth of the allegations, and find them to
be false before a hearing is had on the merits of the case; and it is improper to inject in the allegations of the
complaint facts not alleged or proved, and use these as basis for said motion.

In resolving whether or not the Complaint in the present case stated a cause of action, the trial court should
have limited itself to examining the sufficiency of the allegations in the Complaint. It was proscribed from
inquiring into the truth of the allegations in the Complaint or the authenticity of any of the documents referred
or attached to the Complaint, since these are deemed hypothetically admitted by the respondent. The trial court
evidently erred in making findings as to the authenticity of the Deeds of Assignment executed by Ismael Favila
in favor of petitioners on 15 April 1994 and 02 June 1994; and questioning the existence and execution of the
Special Power of Attorney in favor of said Ismael Favila by his siblings on 25 February 1965. These matters
may only be resolved after a proper trial on the merits.

50
Petitioners alleged in their Complaint, and respondent hypothetically admitted that: (1) Petitioners
predecessors-in-interest, in the concept of owners, had been in actual, physical, open, continuous and adverse
possession of the Subject Property against the whole world since time immemorial; (2) The Subject Property
was part of the vast tract of land called Hacienda Quibiga awarded to Don Hermogenes Rodriguez by the Queen
of Spain by virtue of a Spanish title; (3) Ismael Favila, an heir and successor-in-interest of Don Hermogenes
Rodriguez, acting as Attorney-in-Fact pursuant to a Special Power of Attorney executed by his mga kapatid on
25 February 1965, executed Deeds of Assignment covering the Subject Property in favor of petitioners; (4)
Petitioners still occupied and possessed the Subject Property, on which their houses were erected, when they
discovered that the Subject Property was already covered by Torrens certificates of title in the name of
respondent; and (5) That petitioners filed the Complaint to prevent their eviction by the respondent. To
determine whether these allegations are sufficient to constitute a cause of action, it is important for this Court to
establish first the nature of petitioners action.
Indeed, petitioners Complaint filed before the trial court was captioned as an action for declaration of
nullity of respondents certificates of title. However, the caption of the pleading should not be the governing
factor, but rather the allegations therein should determine the nature of the action, because even without the
prayer for a specific remedy, the courts may nevertheless grant the proper relief as may be warranted by the
facts alleged in the Complaint and the evidence introduced.[27]
The trial court believed that petitioners action was ultimately one for reversion of the Subject Property to
the public domain. Based on the testimony of Engineer Naval and the case of Nagao v. Court of Appeals,[28] it
declared that the State, represented by the Office of the Solicitor General, is the party-in-interest in an action for
cancellation of a certificate of title illegally issued in the name of a private individual, because the eventual
effect of such cancellation is the reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far closer review of its decision
in Nagao v. Court of Appeals,[29] wherein the Court held that

It is then clear from the allegations in the complaint that private respondents claim ownership of the 2,250
square meter portion for having possessed it in the concept of an owner, openly, peacefully, publicly,
continuously and adversely since 1920. This claim is an assertion that the lot is private land, or that even
assuming it was part of the public domain, private respondents had already acquired imperfect title thereto
under Section 48(b) of C.A. No. 141, otherwise known as the Public Land Act, as amended by R.A. No. 1942

Under Section 48, a subject lot is, for all legal intents and purposes, segregated from the public domain, because
the beneficiary is conclusively presumed to have performed all the conditions essential to a Government grant
and shall be entitled to a certificate of title under the provisions of this chapter.

Consequently, merely on the basis of the allegations in the complaint, the lot in question is apparently beyond
the jurisdiction of the Director of the Bureau of Lands and could not be the subject of a Free Patent. Hence,
dismissal of private respondents complaint was premature and trial on the merits should have been conducted to
thresh out evidentiary matters.

It would have been entirely different if the action were clearly for reversion, in which case, it would have to be
instituted by the Solicitor General pursuant to Section 101 of C.A. No. 141, which provides:

Sec. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the
name of the [Republic] of the Philippines.

51
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,[30] the difference
between an action for declaration of nullity of land titles from an action for reversion was more thoroughly
discussed as follows:

An ordinary civil action for declaration of nullity of free patents and certificates of title is not the same as an
action for reversion. The difference between them lies in the allegations as to the character of ownership of the
realty whose title is sought to be nullified. In an action for reversion, the pertinent allegations in the complaint
would admit State ownership of the disputed land. Hence, in Gabila vs. Barriga[41 SCRA 131], where the
plaintiff in his complaint admits that he has no right to demand the cancellation or amendment of the defendants
title because even if the title were canceled or amended the ownership of the land embraced therein or of the
portion affected by the amendment would revert to the public domain, we ruled that the action was for reversion
and that the only person or entity entitled to relief would be the Director of Lands.

On the other hand, a cause of action for declaration of nullity of free patent and certificate of title would require
allegations of the plaintiffs ownership of the contested lot prior to the issuance of such free patent and certificate
of title as well as the defendants fraud or mistake, as the case may be, in successfully obtaining these documents
of title over the parcel of land claimed by plaintiff. In such a case, the nullity arises strictly not from the fraud or
deceit but from the fact that the land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever
patent or certificate of title obtained therefore is consequently void ab initio. The real party-in-interest is not the
State but the plaintiff who alleges a pre-existing right of ownership over the parcel of land in question even
before the grant of title to the defendant

In their Complaint, petitioners never alleged that the Subject Property was part of the public domain. On
the contrary, petitioners asserted title over the Subject Property by virtue of their actual, physical, open,
continuous and adverse possession thereof, in the concept of owners, by themselves and through their
predecessors-in-interest, since time immemorial. The Deeds of Assignment executed in their favor and attached
to their Complaint referred to a Spanish title granted by the Queen of Spain to their predecessor-in-interest, Don
Hermogenes Rodriguez. Clearly, petitioners are asserting private title over the Subject Property, and
consequently, their action could not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action for nullity of respondents
certificates of title, theirs was more appropriately an action to remove a cloud on or to quiet their title over the
Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title, provides that:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.

Respondents certificates of title over the Subject Property appeared valid or effective; but according to the
petitioners, they were fake, spurious and/or fraudulent, and a cloud on their title to the same property that
needed to be removed. A cloud on title has been defined as follows:

Cloud on Title. A cloud on title is an outstanding instrument, record, claim, encumbrance or proceeding which
is actually invalid or inoperative, but which may nevertheless impair or affect injuriously the title to property.
The matter complained of must have a prima facie appearance of validity or legal efficacy. The cloud on title is
52
a semblance of title which appears in some legal form but which is in fact unfounded. The invalidity or
inoperativeness of the instrument is not apparent on the face of such instrument, and it has to be proved by
extrinsic evidence[31]

Even as this Court agrees with the petitioners that their action was one for removal of a cloud on or
quieting of title, it does arrive at the same conclusion as the trial court and the Court of Appeals that petitioners
had no personality to file the said action, not being the parties-in-interest, and their Complaint should be
dismissed for not stating a cause of action.
According to Article 477 of the Civil Code, the plaintiff, in an action to remove a cloud on or to quiet title,
must have legal or equitable title to, or interest in, the real property which is the subject matter of the action.
[32]
Petitioners failed to establish in their Complaint that they had any legal or equitable title to, or legitimate
interest in, the Subject Property so as to justify their right to file an action to remove a cloud on or to quiet title.
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.[33]
In their Complaint, petitioners claimed title to the Subject Property by virtue of their actual and continuous
possession of the same since time immemorial, by themselves and through their predecessors-in-interest. Yet,
the Deeds of Assignment executed by Ismael Favila in their favor, attached to and an integral part of their
Complaint, revealed that petitioners predecessors-in-interest based their right to the Subject Property on the
Spanish title awarded to Don Hermogenes Rodriguez.
There existed a contradiction when petitioners based their claim of title to the Subject Property on their
possession thereof since time immemorial, and at the same time, on the Spanish title granted to Don
Hermogenes Rodriguez. Possession since time immemorial carried the presumption that the land had never
been part of the public domain or that it had been private property even before the Spanish conquest. [34] If the
Subject Property was already private property before the Spanish conquest, then it would have been beyond the
power of the Queen of Spain to award or grant to anyone.
The title to and possession of the Subject Property by petitioners predecessors-in-interest could be traced
only as far back as the Spanish title of Don Hermogenes Rodriguez. Petitioners, having acquired portions of the
Subject Property by assignment, could acquire no better title to the said portions than their predecessors-in-
interest, and hence, their title can only be based on the same Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the Spanish title as basis of
their ownership of the Subject Property. P.D. No. 892 strengthens the Torrens system by discontinuing the
system of registration under the Spanish Mortgage Law, and by categorically declaring all lands recorded under
the latter system, not yet covered by Torrens title, unregistered lands. It further provides that within six months
from its effectivity, all holders of Spanish titles or grants should apply for registration of their land under what is
now P.D. No. 1529, otherwise known as the Land Registration Decree. Thereafter, Spanish titles can no longer
be used as evidence of land ownership in any registration proceedings under the Torrens system. [35] Indubitably,
P.D. No. 892 divests the Spanish titles of any legal force and effect in establishing ownership over real property.
P.D. No. 892 became effective on 16 February 1976. The successors of Don Hermogenes Rodriguez had
only until 14 August 1976 to apply for a Torrens title in their name covering the Subject Property. In the absence
of an allegation in petitioners Complaint that petitioners predecessors-in-interest complied with P.D. No. 892,
then it could be assumed that they failed to do so. Since they failed to comply with P.D. No. 892, then the
successors of Don Hermogenes Rodriguez were already enjoined from presenting the Spanish title as proof of
their ownership of the Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or vest title, but only confirm and record
title already created and vested.[36] By virtue of P.D. No. 892, the courts, in registration proceedings under the
53
Torrens system, are precluded from accepting, confirming and recording a Spanish title. Reason therefore
dictates that courts, likewise, are prevented from accepting and indirectly confirming such Spanish title in some
other form of action brought before them (i.e., removal of cloud on or quieting of title), only short of ordering
its recording or registration. To rule otherwise would open the doors to the circumvention of P.D. No. 892, and
give rise to the existence of land titles, recognized and affirmed by the courts, but would never be recorded
under the Torrens system of registration. This would definitely undermine the Torrens system and cause
confusion and instability in property ownership that P.D. No. 892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of ownership on the basis of the
exception provided in the fourth whereas clause of P.D. No. 892, which reads:

WHEREAS, Spanish titles to lands which have not yet been brought under the operation of the Torrens
system, being subject to prescription, are now ineffective to prove ownership unless accompanied by
proof of actual possession; . . .

Since Petitioners alleged that they were in actual possession of the Subject Property, then they could still present
the Spanish title as evidence of their ownership of the Subject Property. [37]
This Court cannot sustain petitioners argument. Actual proof of possession only becomes necessary
because, as the same whereas clause points out, Spanish titles are subject to prescription. A holder of a Spanish
title may still lose his ownership of the real property to the occupant who actually possesses the same for the
required prescriptive period.[38] Because of this inherent weakness of a Spanish title, the applicant for
registration of his Spanish title under the Torrens system must also submit proof that he is in actual possession
of the real property, so as to discount the possibility that someone else has acquired a better title to the same
property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the statute as a whole, and not just
a particular provision alone. A word or phrase taken in the abstract may easily convey a meaning quite different
from the one actually intended and evident when the word or phrase is considered with those with which it is
associated. An apparently general provision may have a limited application if read together with other
provisions of the statute.[39]
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized with the other provisions
of the whole statute.[40] Note that the tenor of the whole presidential decree is to discontinue the use of Spanish
titles and to strip them of any probative value as evidence of ownership. It had clearly set a deadline for the
filing of applications for registration of allSpanish titles under the Torrens system (i.e., six months from its
effectivity or on 14 August 1976), after which, the Spanish titles may no longer be presented to prove
ownership.
All holders of Spanish titles should have filed applications for registration of their title on or before 14
August 1976. In a land registration proceeding, the applicant should present to the court his Spanish title plus
proof of actual possession of the real property. However, if such land registration proceeding was filed and
initiated after 14 August 1976, the applicant could no longer present his Spanish title to the court to evidence his
ownership of the real property, regardless of whether the real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject Property when they filed the
Complaint with the trial court on 29 April 1996 does not exclude them from the application of P.D. No. 892, and
their Spanish title remain inadmissible as evidence of their ownership of the Subject Property, whether in a land
registration proceeding or in an action to remove a cloud on or to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming ownership of the real
property on some other basis, such as those provided in either the Land Registration Decree [41] or the Public
Land Act.[42] Petitioners though failed to allege any other basis for their titles in their Complaint aside from
54
possession of the Subject Property from time immemorial, which this Court has already controverted; and the
Spanish title, which is already ineffective to prove ownership over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners lacked the personality to
file an action for removal of a cloud on, or quieting of, title and their Complaint was properly dismissed for
failing to state a cause of action. In view of the dismissal of the case on this ground, it is already unnecessary for
this Court to address the issue of prescription of the action.
Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of the Court of Appeals,
dated 29 July 2002, and the Order of the Regional Trial Court of San Mateo, Rizal, Branch 77, dated 05
February 1999, dismissing petitioners Complaint for failure to state a cause of action.
SO ORDERED.
EN BANC

[G.R. No. 103727. December 18, 1996]

INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO Y ESTEBAN, represented by its
HEIR-JUDICIAL ADMINISTRATOR, ENGRACIO F. SAN PEDRO, petitioner-appellant, vs.
COURT OF APPEALS (Second Division), AURELIO OCAMPO, DOMINADOR D. BUHAIN,
TERESA C. DELA CRUZ, respondents-appellees.

[G.R. No. 106496. December 18, 1996]

ENGRACIO SAN PEDRO, CANDIDO GENER, ROSA PANTALEON, VICENTE PANTALEON,


ELEUTERIO PANTALEON, TRINIDAD SAN PEDRO, RODRIGO SAN PEDRO, RICARDO
NICOLAS, FELISA NICOLAS, and LEONA SAN PEDRO, petitioners, vs. THE HONORABLE
COURT OF APPEALS, (Sixteenth Division) and REPUBLIC OF THE
PHILIPPINES, respondents.

DECISION
HERMOSISIMA, JR., J.:

The most fantastic land claim in the history of the Philippines is the subject of controversy in these two
consolidated cases. The heirs of the late Mariano San Pedro y Esteban laid claim and have been laying claim to
the ownership of, against third persons and the Government itself, a total land area of approximately 173,000
hectares or 214,047 quiniones,[1] on the basis of a Spanish title, entitled Titulo de Propriedad Numero 4136
dated April 25, 1894. The claim, according to the San Pedro heirs, appears to cover lands in the provinces of
Nueva Ecija, Bulacan, Rizal, Laguna and Quezon; and such Metro Manila cities as Quezon City, Caloocan City,
Pasay City, City of Pasig and City of Manila, thus affecting in general lands extending from Malolos, Bulacan
to the City Hall of Quezon City and the land area between Dingalan Bay in the north and Tayabas Bay in the
south.[2]

55
Considering the vastness of the land claim, innumerable disputes cropped up and land swindles and rackets
proliferated resulting in tedious litigation in various trial courts, in the appellate court and in the Supreme Court,
[3]
in connection therewith.
We have had the impression that our decisions in Director of Forestry, et al. v. Muoz, 23 SCRA 1183
[1968]; Antonio, et al. v. Barroga, et al., 23 SCRA 357 [1968]; Carabot, et al. v. Court of Appeals, et al., 145
SCRA 368 [1986]; Republic v. Intermediate Appellate Court, et al., 186 SCRA 88 [1990]; Widows and Orphans
Association, Inc. (WIDORA) v. Court of Appeals, et al., 212 SCRA 360 [1992]; NAPOCOR v. Court of Appeals,
et al., 144 SCRA 318 [1986]; Republic v. Court of Appeals, et al., 135 SCRA 156 [1985]; and Director of Lands
v. Tesalona, 236 SCRA 336 [1994][4] terminated the controversy as to ownership of lands covered by Spanish
Land Titles, for it is the rule that, once this Court, as the highest Tribunal of the land, has spoken, there the
matter must rest:
It is withal of the essence of the judicial function that at some point, litigation must end. Hence, after
the procedures and processes for lawsuits have been undergone, and the modes of review set by law
have been exhausted, or terminated, no further ventilation of the same subject matter is allowed. To be
sure, there may be, on the part of the losing parties, continuing disagreement with the verdict, and the
conclusions therein embodied. This is of no moment, indeed, is to be expected; but, it is not their will,
but the Courts, which must prevail; and, to repeat, public policy demands that at some definite time,
the issues must be laid to rest and the courts dispositions thereon accorded absolute finality. [5] [Cited
cases omitted]
It is, therefore, to the best interest of the people and the Government that we render judgment herein
writing finis to these controversies by laying to rest the issue of validity of the basis of the estates claim of
ownership over this vast expanse of real property.
The following facts are pertinent in the resolution of these long drawn-out cases:

G.R. NO. 103727

G.R No. 103727, an appeal by certiorari, arose out of a complaint[6] for recovery of possession and/or damages
with a prayer for a writ of preliminary injunction. This was dismissed by the Regional Trial Court, National
Capital Judicial Region, Branch 104, Quezon City in its decision[7] dated July 7, 1989, the dispositive
portion[8] of which reads:

WHEREFORE, judgment is hereby rendered, dismissing the complaint against the defendants Aurelio Ocampo,
Dominador Buhain and Teresa dela Cruz and ordering plaintiff to pay each of the herein defendants, the sum of
FIVE THOUSAND PESOS (P5,000.00) as and for attorneys fees, and to pay the costs of suit.

The said complaint for recovery of possession of real property and/or reconveyance with damages and with
a prayer for preliminary injunction was filed on August 15, 1988 by Engracio San Pedro as heir-judicial
administrator of the Intestate Estate of Don Mariano San Pedro y Esteban against Jose G. De Ocampo, Aurelio
Ocampo, MARECO, Inc., Rey Antonio Noguera, Teresa C. dela Cruz, Gaudencio R. Soliven, Diomedes Millan,
Carmen Rayasco, Dominador D. Buhain, Mario D. Buhain, Jose D. Buhain, Arestedes S. Cauntay, Manuel
Chung and Victoria Chung Tiu (El Mavic Investment & Development Corporation), Capitol Hills Realty
Corporation and Jose F. Castro. The complaint was docketed as Civil Case No. Q-88-447 in Branch 104,
Regional Trial Court of Quezon City.
In the complaint, it was alleged, among others: (1) that Engracio San Pedro discovered that the aforenamed
defendants were able to secure from the Registry of Deeds of Quezon City titles to portions of the subject estate,
particularly Transfer Certificates of Title Nos. 1386, 8982, 951975-951977, 313624, 279067, 1412, 353054,
372592, 149120, 86404, 17874-17875, all emanating from Original Certificate of Title No. 614 [9] and Transfer
56
Certificates of Title Nos. 255544 and 264124, both derivatives of Original Certificate of Title No. 333; (2) that
the aforesaid defendants were able to acquire exclusive ownership and possession of certain portions of the
subject estate in their names through deceit, fraud, bad faith and misrepresentation; (3) that Original Certificates
of Title Nos. 614 and 333 had been cancelled by and through a final and executory decision dated March 21,
1988 in relation to letter recommendations by the Bureau of Lands, Bureau of Forest Development and the
Office of the Solicitor General and also in relation to Central Bank Circulars dated April 7, 1971, April 23,
1971, September 12, 1972 and June 10, 1980; and (4) that the issue of the existence, validity and genuineness of
Titulo Propriedad No. 4136 dated April 25, 1894 which covers the subject estate had been resolved in favor of
the petitioner estate in a decision dated April 25, 1978 by the defunct Court of First Instance, Branch 1 of
Baliwag, Bulacan pertaining to a case docketed as Special Proceeding No. 312-B.[10]
Summons were served on only five of the aforementioned defendants, namely, Aurelio Ocampo,
MARECO, Inc., Teresita G. dela Cruz, Dominador Buhain and Manuel Chung and Victoria Chung Tiu.[11]
On February 7, 1989, the lower court ordered the dismissal of the complaint against Mareco, Inc. for
improper service of summons and against Manuel Chung and Victoria Chung Tiu for lack of cause of action
considering that the registered owner of the parcel of land covered by TCT No. 86404 is El Mavic Investment
and Development Co., Inc., not Manuel Chung and Victoria Chung Tiu.[12]
Trial on the merits proceeded against the private respondents Ocampo, Buhain and Dela Cruz.
On July 7, 1989, the lower court rendered judgment dismissing the complaint based on the following
grounds: (a) Ocampo, Buhain and Dela Cruz are already the registered owners of the parcels of land covered by
Torrens titles which cannot be defeated by the alleged Spanish title, Titulo Propriedad No. 4136, covering the
subject estate; and (b) the decision of the Court of First Instance of Bulacan entitled In the Matter of the
Intestate Estate of the late Don Mariano San Pedro y Esteban specifically stated in its dispositive portion that all
lands which have already been legally and validly titled under the Torrens system by private persons shall be
excluded from the coverage of Titulo Propriedad No. 4136.[13]
The motion for reconsideration thereof was denied,[14] and so, the petitioner estate interposed an appeal with
the Court of Appeals. On January 20, 1992, the appeal was dismissed[15]for being unmeritorious and the lower
courts decision was affirmed with costs against the petitioner estate. The appellate court ratiocinated:
(1) neither the Titulo Propriedad No. 4136 nor a genuine copy thereof was presented in the proceeding
below;
(2) the illegible copy of the Titulo presented in court was not registered under the Torrens System
hence, it cannot be used as evidence of land ownership;
(3) the CFI decision invoked by petitioner estate in its favor expressly excluded from the Titulo titled
lands of private individuals;
(4) the Titulo is inferior to that of the registered titles of Ocampo, Buhain and Dela Cruz as correctly
ruled by the lower court;
(5) there is no evidence showing that OCT No. 614 from which titles of Ocampo, Buhain and Dela
Cruz originated was already cancelled, hence, the lower court did not err in not declaring the same as
null and void.[16]
Not having obtained a favorable judgment on appeal, the petitioner estate, on March 16, 1992, filed the
present petition[17] docketed as G. R. No. 103727.

G.R. NO. 106496

57
G.R No. 106496, a petition for review on certiorari, began as a petition[18] for letters of administration over the
intestate estate of the late Mariano San Pedro y Esteban which eventually resulted to an Order [19] dated
November 17, 1978 declaring inter alia, Titulo de Propriedad No. 4136 as null and void and of no legal force
and effect.

The dispositive portion[20] of the said Order reads:

WHEREFORE, this Court so orders that:

1) The Decision dated April 25, 1978 is reconsidered and set aside.

2) Titulo de Propriedad No. 4136 is declared null and void and of no legal force and effect and that
therefore no rights could be derived therefrom.

3) All orders approving the sales, conveyances, donations or any other transactions involving the lands
covered by Titulo de Propriedad No. 4136 are declared invalidated, void and of no force and
effect.

4) All lands covered by Titulo de Propriedad No. 4136 are excluded from the inventory of the estate of
the late Mariano San Pedro y Esteban.

5) The heirs, agents, privies or anyone acting for and in behalf of the estate of the late Mariano San
Pedro y Esteban are enjoined from representing or exercising any acts of possession or
ownership or from disposing in any manner portions of all the lands covered by Titulo de
Propriedad No. 4136 and to immediately vacate the same.

6) Engracio San Pedro and Justino Benito as co-administrators submit in Court within twenty days
their final accounting and inventory of all real and personal properties of the estate which had
come into their possession or knowledge under oath.

7) This case is hereby re-opened, to allow movants-intervenors to continue with the presentation of
their evidence in order to rest their case.

The consideration and approval of the administrators final accounting and inventory of
the presentation of movants-intervenors evidence as well as the consideration of all other
incidents are hereby set on December 22, 1978 at 8:30 a. m.
The aforementioned petition for letters of administration over the intestate estate of the late Mariano San
Pedro y Esteban was filed on December 29, 1971 with the defunct Court of First Instance of Bulacan, Fifth
Judicial District, Branch IV, Baliuag, Bulacan. The petition docketed as Sp. Proc. No. 312-B was initiated by
Engracio San Pedro and Justino Z. Benito who sought to be appointed as administrator and co-administrator,
respectively.
On February 29, 1972, after the jurisdictional facts were established, evidence for the petitioners was
received by the lower court without any opposition.[21]
On March 2, 1972, then Presiding Judge Juan F. Echiverri issued an Order appointing Engracio San Pedro
as Administrator of the subject estate.[22]
On March 11, 1972, the Court issued letters of administration in favor of Engracio San Pedro upon posting
of a bond in the sum of Ten Thousand Pesos (P10,000.00).[23]

58
On February 7, 1974, Administrator Engracio San Pedro was ordered to furnish copies of the letters of
administration and other pertinent orders approving certain dispositions of the properties of the estate to the
following entities:
(a) The Commanding General
Philippine Constabulary
Camp Crame, Quezon City
(b) The Solicitor General
Manila
(c) The Government Corporate Counsel
A. Mabini St., Manila
(d) The City Mayors of Quezon City & Caloocan
(e) The Governors of Rizal, Quezon and Bulacan
(f) The City Treasurers of Quezon City and
Caloocan
(g) The Provincial Treasurers of Quezon, Bulacan
and Rizal
(h) The PHHC, Diliman, Quezon City
(i) The PAHRRA Quezon Boulevard, Quezon City
(j) The Municipal Treasurers of the various
municipalities in which properties of the estate are
located; and
(k) Office of Civil Relations, Camp Crame, Quezon
City and Camp Aguinaldo, Quezon City.[24]
The above Order was issued so as to protect the general public from any confusion brought about by
various persons who had been misrepresenting themselves as having been legally authorized to act for the
subject estate and to sell its properties by virtue thereof.
On August 30, 1976, a Motion for Intervention and an Opposition to the Petition was filed by the Republic
of the Philippines alleging, inter alia:
4. That under Presidential Decree No. 892, dated February 16, 1976, Spanish titles like the
TITULO is absolutely inadmissible and ineffective as proof of ownership in court proceedings,
except where the holder thereof applies for land registration under Act 496, which is not true in
the proceedings at bar;
5. That no less than the Supreme Court had declared TITULO DE PROPIEDAD NO. 4136 as
invalid;
6. That, moreover, the late Don Mariano San Pedro y Esteban and/or his supposed heirs have lost
whatever rights of ownership they might have had to the so-called Estate on the ground of
inaction, laches and/or prescription;
7. That, accordingly, there is no estate or property to be administered for purposes of inventory,
settlement or distribution in accordance with law, and all the inventories so far submitted, insofar
as they embraced lands within the TITULO, are deemed ineffective and cannot be legally
considered; and
59
8. That the Republic of the Philippines has a legal interest in the land subject matter of the petition
considering that, except such portions thereof had been (sic) already the subject of valid
adjudication or disposition in accordance with law, the same belong in State ownership.[25]
On February 15, 1977, the Republic filed a Motion to Suspend Proceedings.[26]
On February 16, 1977, the Republics Opposition to the Petition for Letters of Administration was dismissed
by means of the following Order issued by Judge Benigno Puno:
WHEREFORE, for lack of jurisdiction to determine the legal issues raised, the Court hereby
DISMISSES the Opposition dated August 30, 1976, filed by the Office of the Solicitor General;
likewise, for lack of merit, the Motion to Suspend Proceedings dated February 15, 1977, filed by the
Office of the Solicitor General is DENIED.
The administrator Engracio San Pedro and the co-administrator Justino Z. Benito are ordered to
furnish the office of the Solicitor General all copies of inventories already filed in Court within ten
(10) days from notice hereof.[27]
On March 9, 1977, a motion for reconsideration was filed by the Republic.[28]
On April 25, 1978, the lower court then presided over by Judge Agustin C. Bagasao, rendered a 52-page
decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

(a) Declaring the existence, genuineness and authenticity of Titulo de Propriedad No. 4136 of the
Registry of Deeds of Bulacan, issued on April 29, 1984, in the name of the deceased Don Mariano San
Pedro y Esteban, covering a total area of approximately 214,047 quiniones or 173,000 hectares,
situated in the Provinces of Bulacan, Rizal, Quezon, Quezon City and Caloocan City;

(b) Declaring Engracio San Pedro, Candido Gener, Santiago Gener, Rosa Pantaleon, Vicente
Pantaleon, Eleuterio Pantaleon, Trinidad San Pedro, Rodrigo San Pedro, Ricardo Nicolas, and Teresa
Nicolas, as the true and lawful heirs of the deceased Don Mariano San Pedro y Esteban and entitled to
inherit the intestate estate left by the said deceased, consisting of the above-mentioned tract of private
land covered and described by said above-mentioned Titulo de Propriedad No. 4136 of the Registry of
Deeds of Bulacan, excluding therefrom: (a) all lands which have already been legally and validly titled
under the Torrens System, by private persons, or the Republic of the Philippines, or any of its
instrumentalities or agencies; (b) all lands declared by the government as reservations for public use
and purposes; (c) all lands belonging to the public domain; and, (d) all portions thereof which had
been sold, quitclaimed and/or previously excluded by the Administrator and duly approved by a final
order of the Court, except those which may hereafter be set aside, after due consideration on a case to
case basis, of various motions to set aside the said Court order which approved the said sales,
quitclaims, and/or exclusions;

(c) The designation of Atty. Justino Z. Benito as co-administrator, is hereby revoked to take effect
immediately, to obviate any confusion in the administration of the Estate, and to fix the responsibilities
of administration to the co-heir Administrator, Engracio San Pedro, whose appointment as such is
hereby confirmed. The said co-administrator Justino Z. Benito is hereby ordered to render his final
accounting of his co-administration of the Estate, within thirty (30) days from receipt of copy hereof;

(d) The Co-Heir-Administrator, Engracio San Pedro is hereby ordered to amass, collate, consolidate
and take possession of all the net estate of the deceased Don Marino San Pedro y Esteban, as well as
all other sets and credits lawfully belonging to the estate and/or to take appropriate legal action to
60
recover the same in the proper Courts of Justice, government offices or any appropriate forum; and to
pay all taxes or charges due from the estate to the Government, and all indebtedness of the estate, and
thereafter, to submit a project of partition of the estate among the lawful heirs as herein recognized and
declared.

It is, however, strongly recommended to His Excellency, President Ferdinand E. Marcos that, to avoid
the concentration of too much land to a few persons and in line with the projected urban land reform
program of the government, corollary to the agricultural land reform program of the New Society, the
above intestate estate of the late Don Mariano San Pedro y Esteban should be expropriated or
purchased by negotiated sale by the government to be used in its human settlements and low cost
housing projects.

No Costs.

SO ORDERED.[29]

On May 17, 1978, the Republic moved for a reconsideration of the above decision:[30]
On June 5, 1978, administrator Engracio San Pedro filed a Manifestation and Petition for the Inhibition of
the then newly appointed Presiding Judge Oscar Fernandez. On July 12,1978, after the Republic filed its Reply
to the Petition for Inhibition, Judge Fernandez denied the said petition.[31]
After hearings were conducted on the Republics Motion for Reconsideration, Judge Fernandez issued the
aforestated Order[32] dated November 17, 1978 which, in essence, set aside Judge Bagasaos decision dated April
25, 1978 by declaring Titulo de Propriedad No. 4136 as null and void and of no legal force and effect, thus,
excluding all lands covered by Titulo de Propriedad No. 4136 from the inventory of the estate of the late
Mariano San Pedro y Esteban.
The petitioners-heirs of the late Mariano San Pedro y Esteban appealed to the Court of Appeals and alleged
that the lower court did not act with impartiality when it granted the Republics motion for reconsideration
which was merely pro forma, thereby overturning a prior declaration by the same court of the existence,
genuineness and authenticity of Titulo de Propriedad No. 4136 in the name of the deceased Mariano San Pedro.
[33]

On March 11, 1992, the Court of Appeals dismissed the appeal of the petitioners-heirs. [34] In affirming the
assailed Order dated November 17, 1978, the appellate court focused its discussion solely on the issue of
whether or not the lower court erred in declaring Titulo de Propriedad No. 4136 null and void. The appellate
court ruled that the petitioners-heirs failed to controvert the Republics claim that Titulo de Propriedad No. 4136
is invalid on the following bases; (a) non-production of the original of the subject title; (b) inadmissibility of the
photostat copies of the said title; and (c) non-registration of the subject Spanish title under Act No. 496 (Land
Registration Act) as required by Presidential Decree No. 892 (Discontinuance of the Spanish Mortgage System
of Registration and of the Use of Spanish Titles as Evidence in Land Registration Proceedings).
The petitioners-heirs moved for a reconsideration of the Court of Appeals decision by invoking certain
cases wherein the validity of Titulo de Propriedad No. 4136 had been allegedly recognized. The Court of
Appeals refused to be swayed and denied the motion for reconsideration for lack of merit.[35]
Hence, the herein petition,[36] docketed as G. R. No. 106496, was filed on September 18, 1992.
After the parties filed their respective pleadings in G.R. Nos. 103727 and 106496, this Court resolved to
consolidate both cases on September 15, 1994.[37]

61
While these cases were pending before us, several parties filed separate motions for intervention which we
denied on different occasions for lack of merit.
In G.R. No. 103727, the grounds relied upon for the grant of the petition are as follows:
I. That petitioner-appellant as plaintiff in Civil Case No. Q-88-447, RTC, Branch 104 was denied due
process of law due to gross negligence of lawyer, which respondent court grossly failed to take
cognizance of.
II. That the respondent court committed grave abuse of discretion tantamount to lack of jurisdiction in
not remanding the case for trial and in affirming the lower courts null and void judgment.[38]
In G.R. No. 106496, the petitioners-heirs present the following assignment of errors, to wit:
First. Respondent Court of Appeals affirmed the appealed order which resolved a question of title or
ownership over which the lower court as an intestate court has no jurisdiction and over the vigorous
and repeated objections of the petitioners.[39]
Second. Respondent Court of Appeals erred in upholding the order of Judge Fernandez setting aside
the order and decision of Judge Puno and Bagasao; Judge Fernandez thereby acted as an appellate
court reviewing, revising, amending or setting aside the order and decision of Judges of equal rank.[40]
Third. Respondent Court of Appeals has no jurisdiction to uphold the order of Judge Fernandez who
without jurisdiction, set aside the order of Judge Puno and the decision of Judge Bagasao, both of
which were already final.[41]
Fourth. Respondent Court of Appeals was unmindful of the fact that Judge Fernandez was appointed
by President Marcos to reverse Judge Bagasao, regardless of the evidence, thereby unmindful that
petitioners were denied the cold neutrality of an impartial tribunal.[42]
Fifth. Respondent Court of Appeals erred in not considering the evidence presented before Judges
Echiverri, Puno and Bagasao and merely adopted the order of Judge Fernandez who never received a
single piece of evidence, notwithstanding the 1906 Guido title over Hacienda Angono in Binangonan,
Rizal, the boundary owner stated therein being Don Mariano San Pedro y Esteban, and the November
1991 en banc decision of the Supreme Court upholding the Guido title.[43]
Of paramount importance over and above the central issue of the probative value of the petitioners Spanish
title in these cases is the propriety of the lower courts resolution of the question of ownership of the subject San
Pedro estate in the special proceedings case. Thus, before we address ourselves to the issue of whether or not
petitioners Titulo de Propriedad No. 4136 is null and void and of no legal force and effect, it is best that we first
determine whether or not the lower court, acting as a probate court, in the petition for letters of administration,
committed grave abuse of discretion amounting to lack of jurisdiction in settling the issue of ownership of the
San Pedro estate covered by Titulo Propriedad No. 4136.
Petitioners-heirs, in G.R. No. 106496, on the one hand, contend that the lower court, then CFI, Bulacan,
Branch IV, had no jurisdiction as an intestate court,[44] to resolve the question of title or ownership raised by the
public respondent Republic of the Philippines, through the Office of the Solicitor General in the intestate
proceedings of the estate of Mariano San Pedro y Esteban.[45]
The public respondent, on the other hand, invoking its sovereign capacity as parens patriae, argues that
petitioners contention is misplaced considering that when the Republic questioned the existence of the estate of
Mariano San Pedro y Esteban, the lower court became duty-bound to rule on the genuineness and validity of
Titulo de Propriedad 4136 which purportedly covers the said estate, otherwise, the lower court in the intestate
proceedings would be mistakenly dealing with properties that are proven to be part of the States patrimony or
improperly included as belonging to the estate of the deceased.[46]

62
A probate courts jurisdiction is not limited to the determination of who the heirs are and what shares are
due them as regards the estate of a deceased person. Neither is it confined to the issue of the validity of
wills. We held in the case of Maingat v. Castillo,[47] that the main function of a probate court is to settle and
liquidate the estates of deceased persons either summarily or through the process of administration. Thus, its
function necessarily includes the examination of the properties, rights and credits of the deceased so as to rule
on whether or not the inventory of the estate properly included them for purposes of distribution of the net
assets of the estate of the deceased to the lawful heirs.
In the case of Trinidad v. Court of Appeals,[48] we stated, thus:
x x x questions of title to any property apparently still belonging to estate of the deceased maybe
passed upon in the Probate Court, with the consent of all the parties, without prejudice to third persons
xxx
Parenthetically, questions of title pertaining to the determination prima facie of whether certain properties
ought to be included or excluded from the inventory and accounting of the estate subject of a petition for letters
of administration, as in the intestate proceedings of the estate of the late Mariano San Pedro y Esteban, maybe
resolved by the probate court. In this light, we echo our pronouncement in the case of Garcia v. Garcia[49]that:
x x x The court which acquired jurisdiction over the properties of a deceased person through the filing
of the corresponding proceedings, has supervision and control over the said properties, and under the
said power, it is its inherent duty to see that the inventory submitted by the administrator appointed by
it contains all the properties, rights and credits which the law requires the administrator to set out in his
inventory. In compliance with this duty, the court has also inherent power to determine what
properties, rights and credits of the deceased should be included in or excluded from the
inventory. Should an heir or person interested in the properties of a deceased person duly call the
courts attention to the fact that certain properties, rights or credits have been left out in the inventory, it
is likewise the courts duty to hear the observations, with power to determine if such observations
should be attended to or not and if the properties referred to therein belong prima facie to the
intestate, but no such determination is final and ultimate in nature as to the ownership of the said
properties.[50] [Underscoring Supplied]
In view of these disquisitions of this Court, we hold that the lower court did not commit any reversible
error when it issued the Order dated November 17, 1978 which set aside Judge Bagasaos decision dated April
25, 1978 and declared Titulo de Propriedad No. 4136 as null and void, consequently excluding all lands covered
by the said title from the inventory of the estate of the late Mariano San Pedro y Esteban.
A corollary issue sought to be ventilated by the petitioners-heirs as regards the assailed Order of November
17, 1978 is the impropriety of Judge Fernandez act of granting the motion for reconsideration filed by the public
respondent Republic since, Judge Fernandez did not personally hear the intestate case. Petitioners thus dubbed
him as a reviewing judge. By setting aside the Decision dated April 25, 1978 of his predecessors in CFI, Branch
IV, Baliuag, Bulacan, namely, Judge Benigno Puno and Judge Agustin C. Bagasao, respectively, Judge
Fernandez, acting as a reviewing judge, proceeded without authority and/or jurisdiction.[51]
There is no question that, barring any serious doubts as to whether the decision arrived at is fair and just, a
newly appointed judge who did not try the case can decide the same as long as the record and the evidence are
all available to him and that the same were taken into consideration and thoroughly studied. The reviewing
judge argument of the petitioners-heirs has no leg to stand on considering that the fact that the judge who
penned the decision did not hear a certain case in its entirety is not a compelling reason to jettison his findings
and conclusion inasmuch as the full record was available to him for his perusal. [52] In the case at bar, it is evident
that the 41-page Order dated November 17, 1978 of Judge Fernandez bespeaks of a knowledgeable and
analytical discussion of the rationale for reconsidering and setting aside Judge Bagasaos Decision dated April
25, 1978.
63
Considering the definiteness of our holding in regard to the correctness of Judge Fernandez disposition of
the case, i.e., the issuance by the lower court of the assailed Order of November 17, 1978, we now focus on the
core issue of whether or not the lower court in G.R. No. 106496 committed reversible error in excluding from
the inventory of the estate of the deceased Mariano San Pedro y Esteban all lands covered by Titulo de
Propriedad No. 4136 primarily on the ground that the said title is null and void and of no legal force and
effect.Juxtaposed with this is the issue of whether or not the appellate court, in both cases, G.R. Nos. 103727
and 106496, erred in not recognizing Titulo de Propriedad No. 4136 as evidence to prove ownership by the late
Mariano San Pedro of the lands covered thereby.
It is settled that by virtue of Presidential Decree No. 892 which took effect on February 16, 1976, the
system of registration under the Spanish Mortgage Law was abolished and all holders of Spanish titles or grants
should cause their lands covered thereby to be registered under the Land Registration Act [53] within six (6)
months from the date of effectivity of the said Decree or until August 16, 1976. [54] Otherwise, non-compliance
therewith will result in a re-classification of their lands. [55] Spanish titles can no longer be countenanced as
indubitable evidence of land ownership.[56]
Section 1 of the said Decree provides:
SECTION 1. The system of registration under the Spanish Mortgage Law is discontinued, and all
lands recorded under said system which are not yet covered by Torrens title shall be considered as
unregistered lands.
All holders of Spanish titles or grants should apply for registration of their lands under Act No. 496,
otherwise known as the Land Registration Act, within six (6) months from the effectivity of this
decree. Thereafter, Spanish titles cannot be used as evidence of land ownership in any registration
proceedings under the Torrens system.
Hereafter, all instruments affecting lands originally registered under the Spanish Mortgage Law may
be recorded under Section 194 of the Revised Administrative Code, as amended by Act. 3344.
The Whereas clauses of the aforesaid Decree specify the underlying policies for its passage, to wit:
WHEREAS, fraudulent sales, transfers, and other forms of conveyances of large tracts of public and
private lands to unsuspecting and unwary buyers appear to have been perpetrated by unscrupulous
persons claiming ownership under Spanish titles or grants of dubious origin;
WHEREAS, these fraudulent transactions have often resulted in conflicting claims and litigations
between legitimate title holders, bona fide occupants or applicants of public lands, on the one hand,
and the holders of, or person claiming rights under the said Spanish titles or grants, on the other, thus
creating confusion and instability in property ownership and threatening the peace and order
conditions in the areas affected;
WHEREAS, statistics in the Land Registration Commission show that recording in the system of
registration under the Spanish Mortgage Law is practically nil and that this system has become
obsolete;
WHEREAS, Spanish titles to lands which have not yet been brought under the operation of the
Torrens system, being subject to prescription, are now ineffective to prove ownership unless
accompanied by proof of actual possession;
WHEREAS, there is an imperative need to discontinue the system of registration under the Spanish
Mortgage Law and the use of Spanish titles as evidence in registration proceedings under the Torrens
system;

64
In the case of Director of Lands v. Heirs of Isabel Tesalona, et al., [57] we took cognizance of this Decree and
thus held that caution and care must be exercised in the acceptance and admission of Spanish titles taking into
account the numerous fake titles that have been discovered after their supposed reconstitution subsequent to
World War II.
In both cases, petitioners-heirs did not adduce evidence to show that Titulo de Propriedad 4136 was brought
under the operation of P.D. 892 despite their allegation that they did so on August 13, 1976. [58] Time and again
we have held that a mere allegation is not evidence and the party who alleges a fact has the burden of proving it.
[59]
Proof of compliance with P.D. 892 should be the Certificate of Title covering the land registered.
In the petition for letters of administration, it was a glaring error on the part of Judge Bagasao who
rendered the reconsidered Decision dated April 25, 1978 to have declared the existence, genuineness and
authenticity of Titulo de Propriedad No. 4136 in the name of the deceased Mariano San Pedro y Esteban despite
the effectivity of P.D. No. 892. Judge Fernandez, in setting aside Judge Bagasao's decision, emphasized that
Titulo de Propriedad No. 4136, under P.D. 892, is inadmissible and ineffective as evidence of private ownership
in the special proceedings case. He made the following observations as regards the Titulo, to wit:
"The Solicitor General, articulating on the dire consequences of recognizing the nebulous titulo as an
evidence of ownership underscored the fact that during the pendency of this case, smart speculators
and wise alecks had inveigled innocent parties into buying portions of the so-called estate with
considerations running into millions of pesos.
Some, under the guise of being benign heroes even feigned donations to charitable and religious
organizations, including veterans' organizations as smoke screen to the gargantuan fraud they have
committed and to hood wink further other gullible and unsuspecting victims.[60]
In the same light, it does not escape this Courts onomatopoeic observation that the then heir-judicial
administrator Engracio San Pedro who filed the complaint for recovery of possession and/or reconveyance with
damages in G.R. No. 103727 on August 15, 1988 invoked Judge Bagasaos Decision of April 25, 1978 in
support of the Titulos validity notwithstanding the fact that, by then, the said Decision had already been set
aside by Judge Fernandez Order of November 17, 1978. We are in accord with the appellate courts holding in
G.R. No. 103727 insofar as it concludes that since the Titulo was not registered under Act No. 496, otherwise
known as the Land Registration Act, said Titulo is inferior to the registered titles of the private respondents
Ocampo, Buhain and Dela Cruz.
This Court can only surmise that the reason for the non-registration of the Titulo under the Torrens system
is the lack of the necessary documents to be presented in order to comply with the provisions of P.D. 892. We
do not discount the possibility that the Spanish title in question is not genuine, especially since its genuineness
and due execution have not been proven.In both cases, the petitioners-heirs were not able to present the original
of Titulo de Propriedad No. 4136 nor a genuine copy thereof. In the special proceedings case, the petitioners-
heirs failed to produce the Titulo despite a subpoena duces tecum (Exh. Q-RP) to produce it as requested by the
Republic from the then administrators of the subject intestate estate, Engracio San Pedro and Justino Benito,
and the other interested parties. As an alternative to prove their claim of the subject intestate estate, the
petitioners referred to a document known as hypoteca (the Spanish term is `hipoteca) allegedly appended to the
Titulo. However, the said hypoteca was neither properly identified nor presented as evidence. Likewise, in the
action for recovery of possession and/or reconveyance with damages, the petitioners-heirs did not submit the
Titulo as part of their evidence. Instead, only an alleged illegible copy of the Titulo was presented. (Exhs. C-9 to
C-19).
The Best Evidence Rule as provided under Rule 130, section 2 of the Rules of Court is stated in
unequivocal terms. Subparagraphs (a) and (b) of the said Rule read:

65
SEC. 2. - Original writing must be produced; exceptions. - There can be no evidence of a writing the
contents of which is the subject of inquiry, other than the original writing itself, except in the following
cases:

(a) When the original has been lost, destroyed, or cannot be produced in court;

(b) When the original is in the possession of the party against whom the evidence is offered, and the latter
fails to produce it after reasonable notice;"

xxxxxxxxx
Sections 4 and 5 of the same Rule further read:
SEC. 4. Secondary evidence when original is lost or destroyed. --- When the original writing has been
lost or destroyed, or cannot be produced in court, upon proof of its execution and loss or destruction or
unavailability, its contents may be proved by a copy, or by a recital of its contents in some authentic
document, or by the recollection of witnesses.
SEC. 5. Secondary evidence when original is in adverse partys custody. --- If the writing be in the
custody of the adverse party, he must have reasonable notice to produce it. If after such notice and
after satisfactory proof of its existence, he fails to produce the writing, the contents thereof may be
proved as in the case of its loss. But the notice to produce it is not necessary where the writing is itself
a notice, or where it has been wrongfully obtained or withheld by the adverse party.
Thus, the court shall not receive any evidence that is merely substitutionary in its nature, such as photocopies,
as long as the original evidence can be had. In the absence of a clear showing that the original writing has been
lost or destroyed or cannot be produced in court, the photocopy submitted, in lieu thereof, must be disregarded,
being unworthy of any probative value and being an inadmissible piece of evidence.[61]
Hence, we conclude that petitioners-heirs failed to establish by competent proof the existence and due
execution of the Titulo. Their explanation as to why the original copy of the Titulo could not be produced was
not satisfactory. The alleged contents thereof which should have resolved the issue as to the exact extent of the
subject intestate estate of the late Mariano San Pedro were not distinctly proved. In the case of Ong Hing Po v.
Court of Appeals,[62] we pointed out that:
Secondary evidence is admissible when the original documents were actually lost or destroyed. But
prior to the introduction of such secondary evidence, the proponent must establish the former existence
of the document. The correct order of proof is as follows: existence; execution; loss; contents. This
order may be changed if necessary in the discretion of the court.[63]
In upholding the genuineness and authenticity of Titulo de Propriedad No. 4136, Judge Bagasao, in his
decision, relied on: (1) the testimony of the NBI expert, Mr. Segundo Tabayoyong, pertaining to a report dated
January 28, 1963 denominated as Questioned Documents Report No. 230-163; (2) a photostat copy of the
original of the Titulo duly certified by the then Clerk of Court of the defunct Court of First Instance of Manila;
and (3) the hipoteca registered in the Register of Deeds of Bulacan on December 4, 1894.
Judge Fernandez, in his November 1978 Order which set aside Judge Bagasaos April 1978 decision
correctly clarified that the NBI report aforementioned was limited to the genuineness of the two signatures of
Alejandro Garcia and Mariano Lopez Delgado appearing on the last page of the Titulo, not the Titulo
itself. When asked by the counsel of the petitioners-heirs to admit the existence and due execution of the Titulo,
the handling Solicitor testified:
xxxxxxxxx

66
ATTY. BRINGAS:
With the testimony of this witness, I would like to call the distinguished counsel for the government
whether he admits that there is actually a titulo propriedad 4136.
COURT:
Would you comment on that Solicitor Agcaoili?
ATTY. AGCAOILI:
We are precisely impugning the Titulo and I think the question of counsel is already answered by
witness. The parties have not yet established the due existence of the titulo.
ATTY. BRINGAS:
We are constrained to ask this matter in order to be candid about the question. The witness is a witness for
the government, so with the testimony of this witness for the government to the effect that there is
actually in existence Titulo Propiedad 4136; we are asking the question candidly to the government
counsel whether he is prepared to state that there is really in existence such Titulo Propiedad 4136.
ATTY. AGCAOILI:
We are now stating before this Court that there was such a document examined by the NBI insofar as the
signatures of Alejandro Garcia and Manuel Lopez Delgado are concerned and they are found to be
authentic.[64]
The following significant findings of Judge Fernandez further lend credence to our pronouncement that the
Titulo is of dubious validity:
x x x the NBI in its Questioned Document Report No. 448-977 dated September 2, 1977 (Exhibit `O-
RP) concluded that the document contained material alterations as follows:

a) On line 15 of p. 1, Title and on line 5 of p. 2, Title, the word Pinagcamaligan was written after Pulo;

b) On line 16, p. 1, Title, un was converted to mil;

c) On Line 18, p. 1, Title, mil was written at the end of tres in tres mil;

d) On line 19 of p. 1, Title, a semblance of mil was written after setentay tres;

e) On line 6, p. 2, Title, un was formed to a semblance of uni; and

f) On line 8, p. 2, Title, un was formed to mil.

The plain and evident purpose was definitely to enlarge the area of the Titulo. According to Mr.
Tabayoyong of the NBI, there are still pieces of black ashes around the rings of the portions which are
indications of burnings. The burnings were made on the very portions where there were previous
erasures, alterations and intercalations. Understandably, the burnings were done to erase traces of the
criminal act.[65]
In the case of National Power Corporation v. Court of Appeals, et al. [66] Justice Ameurfina Melencio-
Herrera, in reinstating the trial courts judgment therein, sustained the finding that:

67
x x x The photostatic copy (in lieu of the lost original) of the Spanish title in the name of Mariano San
Pedro shows obvious alterations and intercalations in an attempt to vastly increase the area and change
the location of the land described in the original title x x x.
Anent the inadmissibility as evidence of the photostat copy of the Titulo, we sustain the lower courts
analysis, as affirmed by the appellate court, viz:
To begin with, the original of Titulo de Propiedad No. 4136 was never presented in Court. Upon
request of the Government, a subpoena duces tecum (Exhibit Q-RP) was issued to the two
administrators, Engracio San Pedro and Justino Benito as well as to other interested parties to produce
the original of Titulo de Propriedad No. 4136. But no one produced the Titulo. What the parties did
was to pass the buck to one another.
Without any plausible explanation at all on as to why the original could not be produced, the Court
cannot take cognizance of any secondary evidence.
It was explained that the Titulo after changing hands, finally fell into the hands of a certain Moon Park
of Korea but who later disappeared and that his present whereabouts could not be known.
Strangely enough, despite the significance of the titulo, no serious efforts on the part of the claimants-
heirs were exerted to retrieve this document of vital importance despite the Court order to produce it in
order to determine its authenticity.
It would not be enough to simply say that Moon Parks whereabouts are unknown or that there are not
enough funds to locate him. The only logical conclusion would be that the original would be adverse if
produced.[67]
As regards the hipoteca which allegedly defines the metes and bounds of the subject intestate estate, the
petitioners-heirs have not established the conditions required by law for their admissibility as secondary
evidence to prove that there exists a document designated as Titulo de Propriedad No. 4136. Hence, the same
acquires no probative value.[68]
At this juncture, our decision dated June 28, 1968 in Director of Forestry, et al. v. Hon. Emmanuel M.
Muoz, as Judge of the Court of First Instance of Bulacan, Branch I, et al.[69] is enlightening. In said case, private
respondent, Pinaycamaligan Indo-Agro Development Corporation, Inc. (PIADECO), claimed to be the owner of
some 72,000 hectares of land located in the municipalities of Angat, Norzagaray and San Jose del Monte,
province of Bulacan, and in Antipolo and Montalban, province of Rizal. To prove its ownership Piadeco relied
on Titulo de Propriedad No. 4136 dated April 28, 1894. Scholarly opining that the Titulo is of doubtful validity,
[70]
Justice Conrado V. Sanchez, speaking for the Court, stated that:
But an important moiety here is the deeply disturbing intertwine of two undisputed facts. First. The
Title embraces land `located in the Provinces of Bulacan, Rizal, Quezon, and Quezon City. Second.
The title was signed only by the provincial officials of Bulacan, and inscribed only in the Land
Registry of Bulacan. Why? The situation, indeed, cries desperately for a plausible answer.
To be underscored at this point is the well-embedded principle that private ownership of land must be
proved not only through the genuineness of title but also with a clear identity of the land
claimed. (Oligan v. Mejia, 17 Phil. 494, 496; Villa Abrille v. Banuelos, 20 Phil. 1,
8, citing Sison v. Ramos, 13 Phil. 54 and Belen v. Belen, 13 Phil. 202; Licad v. Bacani, 51 Phil 51, 54-
56; Lasam v.Director, 65 Phil. 367, 371. This Court ruled in a case involving a Spanish title acquired
by purchase that the land must be concretely measured per hectare or per quinon, not in mass (cuerpos
ciertos), (Valdez v. Director, 62 Phil. 362, 373, 375). The fact that the Royal Decree of August 31,
1888 used 30 hectares as a basis for classifying lands strongly suggests that the land applied for must
be measured per hectare.

68
Here, no definite area seems to have been mentioned in the title. In Piadecos Rejoinder to Opposition
dated April 28, 1964 filed in Civil Case 3035-M, it specified that area covered by its Titulo de
Propiedad as 74,000 hectares (Rollo in L-24796, p. 36). In its Opposition of May 13, 1964 in the same
case, it described the land as containing 72,000 hectares (Id., p. 48). Which is which? This but
accentuates the nebulous identity of Piadecos land. Piadecos ownership thereof then equally suffers
from vagueness, fatal at least in these proceedings.
Piadeco asserts that Don Mariano San Pedro y Esteban, the original owner appearing on the title,
acquired his rights over the property by prescription under Articles 4 and 5 of the Royal Decree of
June 25, 1880, (Rollo of L-24796, p. 184) the basic decree that authorized adjustment of lands. By this
decree, applications for adjustment -- showing the location, boundaries and area of land applied for --
were to be filed with the Direccion General de Administracion Civil, which then ordered
the classification and survey of the land with the assistance of the interested party or his legal
representative (Ponce, op. cit., p. 22).
The Royal Decree of June 5, 1880 also fixed the period for filing applications for adjustment at one
year from the date of publication of the decree in the Gaceta de Manila on September 10, 1880,
extended for another year by the Royal Order of July 15, 1881 (Ibid.). If Don Mariano sought
adjustment within the time prescribed, as he should have, then, seriously to be considered here are the
Royal Orders of November 25, 1880 and of October 26, 1881, which limited adjustment to 1,000
hectares of arid lands, 500 hectares of land with trees and 100 hectares of irrigable lands (See:
Government v. Avila, 46 Phil. 146, 154; Bayot v. Director of Lands, 98 Phil. 935, 941. Article 15 of the
Royal Decree of January 26, 1889 limited the area that may be acquired by purchase to 2,500 hectares,
with allowable error up to 5%. Ponce, op. cit., p. 19). And, at the risk of repetition, it should be stated
again that Piadecos Titulo is held out to embrace 72,000 or 74,000 hectares of land.
But if more were needed, we have the Maura Law (Royal Decree of February 13, 1894), published in
the Gaceta de Manila on April 17, 1894 (Ibid., p. 26; Ventura, op. cit., p. 28). That decree required a
second petition for adjustment within six months from publication, for those who had not yet secured
their titles at the time of the publication of the law (Ibid.). Said law also abolished the provincial
boards for the adjustment of lands established by Royal Decree of December 26, 1884, and confirmed
by Royal Decree of August 31, 1888, which boards were directed to deliver to their successors, the
provincial boards established by Decree on Municipal Organization issued on May 19, 1893, all
records and documents which they may hold in their possession (Ramirez v. Director of Land, supra,
at p. 124).
Doubt on Piadecos title here supervenes when we come to consider that title was either dated April 29
or April 25, 1894, twelve or eight days after the publication of the Maura Law.
Let us now take a look, as near as the record allows, at how Piadeco exactly acquired its rights under
the Titulo. The original owner appearing thereon was Don Mariano San Pedro y Esteban. From
Piadecos explanation -- not its evidence (Rollo of L-24796, pp. 179-188) we cull the following: On
December 3, 1894, Don Mariano mortgaged the land under pacto de retro, redeemable within 10
years, for P8,000.00 to one Don Ignacio Conrado. This transaction was said to have been registered or
inscribed on December 4, 1894. Don Mariano Ignacio died, his daughter, Maria Socorro Conrado, his
only heir, adjudicated the land to herself. At about the same time, Piadeco was organized. Its
certificate of registration was issued by the Securities and Exchange Commission on June 27,
1932. Later, Maria Socorro, heir of Don Ignacio, became a shareholder of Piadeco when she conveyed
the land to Piadecos treasurer and an incorporator, Trinidad B. Estrada, in consideration of a certain
amount of Piadeco shares. Thereafter, Trinidad B. Estrada assigned the land to Piadeco. Then came to
the scene a certain Fabian Castillo, appearing as sole heir of Don Mariano, the original owner of the
land. Castillo also executed an affidavit of adjudication to himself over the same land, and then sold
69
the same to Piadeco. Consideration therefor was paid partially by Piadeco, pendingthe registration of
the land under Act 496.
The question may well be asked: Why was full payment of the consideration to Fabian Castillo made
to depend on the registration of the land under the Torrens system, if Piadeco was sure of the validity
of Titulo de Propiedad 4136? This, and other factors herein pointed out, cast great clouds of doubt that
hang most conspicuously over Piadecos title.
Moreover, in the case of Widows & Orphans Association, Inc. v. Court of Appeals,[71] we categorically
enunciated that the alleged Spanish title, Titulo de Propriedad No. 4136, had become bereft of any probative
value as evidence of land ownership by virtue of P.D. 892 as contained in our Resolution dated February 6,
1985 in a related case entitled Benito and WIDORA v. Ortigas docketed as G.R. No. 69343. On March 29, 1985,
an entry of final judgment was made respecting G.R. No. 69343.
Under the doctrine of conclusiveness of judgment, the prior declarations by this Court relating to the issue
of the validity of Titulo de Propriedad No. 4136 preclude us from adjudicating otherwise. In the Muoz case, we
had cast doubt on the Titulos validity. In the WIDORA case, the Titulos nullification was definitive. In both
cases, the Republic and the estate of Mariano San Pedro y Esteban were on opposite ends before this bench. In
the case en banc of Calalang v. Register of Deeds of Quezon City,[72] the Court explained the concept of
conclusiveness of judgment, viz:
x x x conclusiveness of judgment - states that a fact or question which was in issue in a former suit and
was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively
settled by the judgment therein as far as the parties to that action and persons in privity with them are
concerned and cannot be again litigated in any future action between such parties or their privies, in
the same court or any other court of concurrent jurisdiction on either the same or different cause of
action, while the judgment remains unreversed by proper authority. It has been held that in order that a
judgment in one action can be conclusive as to a particular matter in another action between the same
parties or their privies, it is essential that the issue be identical. If a particular point or question is in
issue in the second action, and the judgment will depend on the determination of that particular point
or question, a former judgment between the same parties or their privies will be final and conclusive in
the second if that same point or question was in issue and adjudicated in the first suit (Nabus v. Court
of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not required by merely identity of
issues.
The issue, whether Titulo de Propriedad No. 4136 is valid or not, must now be laid to rest. The Titulo cannot be
relied upon by the petitioners-heirs or their privies as evidence of ownership.In the petition for letters of
administration the inventory submitted before the probate court consisted solely of lands covered by the
Titulo. Hence, there can be no net estate to speak of after the Titulos exclusion from the intestate proceedings of
the estate of the late Mariano San Pedro.
In G.R. No. 103727, the Titulo cannot be superior to the Torrens Titles of private respondents Buhain,
Ocampo and Dela Cruz, namely TCT No. 372592 (Exh. 2, Buhain), TCT No. 8982 (Exh. 2- De Ocampo) and
TCT No. 269707 (Exh. 2 - Dela Cruz).[73] Under the Torrens system of registration, the titles of private
respondents became indefeasible and incontrovertible one year from its final decree. [74] More importantly, TCT
Nos. 372592, 8982, 269707, having been issued under the Torrens system, enjoy the conclusive presumption of
validity.[75] As a last hurrah to champion their claim to the vast estate covered by the subject Spanish title, the
petitioners-heirs imputed fraud and bad faith which they failed to prove on the part of the private respondents as
regards their Torrens titles and accused their own counsel of gross negligence for having failed to call the proper
witnesses from the Bureau of Forestry to substantiate the petitioners-heirs claim that OCT No. 614 from which
private respondents were derived is null and void. It is an elementary legal principle that the negligence of
counsel binds the client.[76]The records show that the petitioners-heirs were not at all prejudiced by the non-

70
presentation of evidence to prove that OCT No. 614 is a nullity considering that their ownership itself of the
lands being claimed was not duly proved. In the case of Villa Rhecar Bus v. Dela Cruz, et al.,[77] we held:
It is unfortunate that the lawyer of the petitioner neglected his responsibilities to his client. This
negligence ultimately resulted in a judgment adverse to the client. Be that as it may, such mistake
binds the client, the herein petitioner. As a general rule, a client is bound by the mistakes of his
counsel. (Que v. Court of Appeals, 101 SCRA 13 [1980] Only when the application of the general rule
would result in serious injustice should an exception thereto be called for. Under the circumstances
obtaining in this case, no undue prejudice against the petitioner has been satisfactorily
demonstrated. At most, there is only an unsupported claim that the petitioner had been prejudiced by
the negligence of its counsel, without an explanation to that effect.
Sans preponderance of evidence in support of the contention that the petitioners-heirs were denied due process
on account of the negligence of their counsel, the writ of certiorari is unavailing.
It bears repeating that the heirs or successors-in-interest of Mariano San Pedro y Esteban are not without
recourse. Presidential Decree No. 892, quoted hereinabove, grants all holders of Spanish Titles the right to apply
for registration of their lands under Act No. 496, otherwise known as the Land Registration Act, within six (6)
months from the effectivity of the Decree.Thereafter, however, any Spanish Title, if utilized as evidence of
possession, cannot be used as evidence of ownership in any land registration proceedings under the Torrens
system.
All instruments affecting lands originally registered under the Spanish Mortgage Law may be recorded
under Section 194 of the Revised Administrative Code, as amended by Act 3344.
In view hereof, this is as good a time as any, to remind the Solicitor General to be more vigilant in handling
land registration cases and intestate proceedings involving portions of the subject estate. It is not too late in the
day for the Office of the Solicitor General to contest the Torrens titles of those who have acquired ownership of
such portions of land that rightfully belong to the State.
In fine, the release of the matured Land Bank Capital Bonds issued in favor of Mariano San Pedro y
Esteban on August 13, 1968 sought by one Catalino San Pedro, alleged heir, legal holder and owner of Titulo de
Propriedad No. 4136 is a matter not ripe for adjudication in these cases. Firstly, Catalino San Pedro is not a
party in any of the two cases before us for review, hence, this Court in a Resolution dated May 10, 1993,
[78]
denied Catalinos motion for leave to reopen and/or new trial. And, secondly, the aforementioned bonds were
not included in the inventory of the subject estate submitted by then administrators, Engracio San Pedro and
Justino Benito before the probate court.
WHEREFORE, in view of all the foregoing, the petitions in G.R. Nos. 103727 and 106496 are hereby
DISMISSED for lack of merit.
Consequently, in G.R. No. 103727, the decision of the Court of Appeals dated January 20, 1992 is hereby
AFFIRMED.
In G.R. No. 106496, judgment is hereby rendered as follows :
(1) Titulo de Propriedad No. 4136 is declared null and void and, therefore, no rights could be derived
therefrom;
(2) All lands covered by Titulo de Propriedad No. 4136 are excluded from the inventory of the estate
of the late Mariano San Pedro y Esteban;
(3) The petition for letters of administration, docketed as Special Proceedings No. 312-B, should be, as
it is, hereby closed and terminated.

71
(4) The heirs, agents, privies and/or anyone acting for and in behalf of the estate of the late Mariano
San Pedro y Esteban are hereby disallowed to exercise any act of possession or ownership or to
otherwise, dispose of in any manner the whole or any portion of the estate covered by Titulo de
Propriedad No. 4136; and they are hereby ordered to immediately vacate the same, if they or any of
them are in possession thereof.
This judgment is IMMEDIATELY EXECUTORY.
SO ORDERED.

EN BANC

CARMELITA FUDOT, G.R. No. 171008


Petitioner,
Present:
PUNO, C.J.,*
QUISUMBING,**
- versus - YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
CATTLEYLA LAND, INC., AZCUNA,
Respondent. TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
REYES,
LEONARDO DE CASTRO, and
BRION, JJ.

Promulgated:

October 24, 2008

72
x-----------------------------------------------------------------------------------x

R E S OLUTIO N
PER CURIAM:

For resolution is the charge of indirect contempt initiated motu proprio[1] by the Court against Atty. Victor De La
Serna.[2]

On 9 November 2007, the Court received from De La Serna a request for the inhibition of Associate
Justice Dante O. Tinga,[3] claiming that Justice Tinga received P10 Million from Mr. Johnny Chan (Mr. Chan) in
exchange for a favorable decision in the instant case.[4] He alleges:

After the usual exchange of civilities, JOHNNY CHAN curtly told the undersigned that all
negotiations for the purchase of petitioners rights between us were off.He further stated that he
had already given out TEN MILLION PESOS to JUSTICE DANTE O. TINGA in exchange
for a favorable Decision in this case. Hence, there is no more reason for him to talk to us. Justice
Dante O. Tinga is the ponente of the Decision subject to [sic] this Motion for Reconsideration.[5]

Atty. De La Serna relates that sometime in 2006, he was prevailed upon by former BIR Commissioner Tomas
Toledo to meet with Mr. Chan. In the meeting, Mr. Chan informed him that he had already bought the interest of
Cattleya Land, Inc. (Cattleya) over a property adjacent to the property subject of the case and that he was
interested in putting up a resort/hotel in the property. He wanted to purchase Carmelita Fudots interest in the
property as well to put an end to the litigation. They did not reach an agreement on the purchase price.[6]

Another meeting was set, this time, through the intercession of Atty. Dionisio De La Serna, former Secretary of
the Housing and Land Use Regulatory Board, and upon the request of Mr. Chans lawyer, Atty. Paulino Petralba
(Atty. Petralba). In this meeting, Atty. Petralba offered P4 Million. Again, no agreement was reached on the
purchase price, De La Serna narrates.[7]

Sometime in August 2007, Atty. Petralba sought out Atty. De La Sernas son, Atty. Victor De La Serna,
Jr., and informed him that the Supreme Courts decision in the instant case was forthcoming. [8] This advance
knowledge of the decision only confirms the bribery bragged about by Mr. Chan, De La Serna claims.[9]

In another meeting on 26 September 2007, Mr. Chan told Atty. De La Serna that there would
no more negotiations for the purchase of Fudots rights and he had already given P10 Million to Justice
Tinga. By way of consuelo de bobo, Mr. Chan offered De La Serna a legal retainer of P200,000.00 down and a
monthly fee of P15,000.00 to act as his lawyer in Bohol.[10] A day later, or on 27 September 2007, as De La
73
Serna notes, in a bid to tie the loose ends of his tale, the decision in this case was mailed at the Central Post
Office,[11] a copy of which was received by him on 10 October 2007.

Atty. De La Serna adds:

ALL WE NEED TO HAVE IS A LITTLE COMMON SENSE TO CONCLUDE THAT


INDEED, THE FAVORABLE DECISION OF THIS HONORABLE COURT WAS
OBTAINED THRU BRIBERY. This is what JOHNNY CHAN was bragging and this is what
happened.[12] (Emphasis supplied)

Atty. De La Serna insists that the decision was contrary to the principles enunciated by Justice Tinga in the case
of Lim v. Jorge.[13] He states:

III. THE DECISION OF JUSTICE TINGA IN THE CASE REEKS OF BRIBERY. HE


HAS REPUDIATED ALL THE DOCTRINES HE HAS SUMMARIZED AND
ENUNCIATED IN LIM v. JORGE, A DECISION HE PENNED ONLY IN 2005.

Only two years ago, in Lim v. Jorge, (G.R. No. 161861, March 11, 2005) Justice Dante
Tinga made a learned treatise when he summarized and further expounded on all the long-
established doctrines on the law and jurisprudence governing the Torrens System of land titles in
the Philippines. It was indeed a brilliant anthology worthy of publication into a book.

In this instant Decision however, Justice Tinga has swallowed all the noble doctrines he has
enunciated so brilliantly, and instead repudiated and contradicted everything he has said just to
accommodate JOHNNY CHAN and all his cohorts and his money.

xxx

If this is not a CLEAR CASE OF BRIBERY, then we dont know what is.

The Decision of Justice Tinga in this case is simply a ROGUE DECISION. It is illegal. It
is immoral. And like a mad dog, it should be slain at sight.[14](Emphasis supplied)

Atty. De La Serna also finds it surprising that the instant case was decided less than two (2) years after it was
submitted for resolution. He compares the instant case to a criminal case which has been pending for ten (10)
years before the Court.[15] He states:

Yet, in this instant case, TWO (2) YEARS is all it took for Justice Dante Tinga to come up with
a favorable Decision for JOHNNY CHAN.

Where is equity? Where is the justice? IF THIS IS NOT BRIBERY, THEN THE SUN RISES
EVERY MORNING FROM THE WEST.

This case must have been plucked out from underneath a stack of older cases which have been
prioritized for resolution. There could be no other explanation.

74
xxx

There is a difference of some 20,000 intervening cases between Oppus and Fudot. WHAT
COULD HAVE BEEN THE REASON WHY THIS INSTANT CASE WAS SELECTED
AND PLUCKED OUT FROM UNDERNEATH 20,000 OTHER CASES, AND DECIDED
IN LESS THAN TWO (2) YEARS?

Your Honors, the answer is in Your hands, but it seems quite obvious.[16] (Emphasis supplied)

On 6 February 2008, the Court issued a Resolution requiring Atty. De La Serna to explain in writing why he
should not be punished for indirect contempt of court. [17] On 27 March 2008, De La Serna submitted his
explanation, stating that he believes in utmost good faith that all the statements he made in recent pleadings he
submitted in this case do not constitute improper conduct and that his statements were not intended to impede,
obstruct or degrade the administration of justice, as they were made, on the contrary, TO PREVENT THE
COMMISSION OF A GRAVE INJUSTICE.[18]

In a resolution dated 14 April 2008, the Court set the hearing on the charge of indirect contempt on 18 June
2008.[19] In the hearing, Atty. De La Serna, together with his son Atty. Victor De La Serna, Jr., Mr. Chan, Atty.
Petralba and Atty. Alex Monteclar (Atty. Monteclar) of Cattleya appeared.

Atty. De La Serna mainly reiterated his arguments during the hearing. His son, Atty. De La Serna, Jr.,
corroborated his statements. De La Serna, Jr. claimed that he heard Mr. Chan bragging that he spent so much for
the Supreme Court; afterwards, he heard Mr. Chan mention of Justice Tingas name and the amount of P10
Million,[20] only to clarify later that he did not hear Mr. Chan say for whom or which person the money was
spent on.[21]

Mr. Chan informed the Court that he represents Ryan, Patrick and John (RPJ) company which owns Bellevue
Hotel.[22] He testified that RPJ bought a property from Cattleya which was adjacent to the lot subject of the case.
[23]
He admitted that he approached De La Serna for the purpose of amicably settling their case with Cattleya,
and offered him to be their retainer in Bohol.[24] However, he denied having said to De La Serna that he had
already spent so much money for the Supreme Court.[25] He added that the hearing was the first time that he saw
all the justices.[26]

Mr. Chan related that during the 25 September 2007 meeting, he offered Atty. De La Serna P4 Million and an
additional incentiveas retainer of their company.[27] In his testimony:

xxx

Mr. Chan:
75
Well, as I said, I offered. I was trying to convince him to accept that amicable settlement and aside
from that, to be my friend, maybe you can be our company retainer in Bohol. Thats what
we discussed about, your honor.[28]

Justice Carpio Morales:

So, how did the conversation or that meeting end?

Mr. Chan:

Well, we end-up, he was kind of unhappy.

Justice Carpio Morales:

Why?

Mr. Chan:

I dont know; maybe angry.

Justice Carpio Morales:

Why? What is your basis in saying that?

Mr. Chan.

Because my offer to him for the amicable settlement still stands for Four Million.

Justice Carpio Morales:

Did he counter[-]offer?

Mr. Chan:

Well, he said Ten and I said thats too much.

Justice Carpio Morales:

And that was it?

Mr. Chan:

That was it.[29]

76
For his part, Atty. Petralba clarified that the third meeting he had with Atty. De La Serna was on 4 September
2007, and not in August as what De La Serna claimed, presenting his detailed diary for the purpose. [30] Thus:

Atty. Paulino Petralba:

The third meeting alluded to by Atty. de la Serna was not in August, Your Honors. It was
on September 4, 2007. It is recorded in my PDA and I do keep a diary where I list and
narrate what happens to my life everyday. In fact, Your Honor, I have my diary herethe
diary for June 2007 to December 2007, this is for last yearand I have marked September 4,
2007 and, with your indulgence, Your Honors, if I may be permitted to read even
extraneous matters because that will prove something also?

JUSTICE QUISUMBING:

Yes.

Justice Carpio Morales:

Yes.

Atty. Paulino Petralba:

September 4, 2007, Tuesday, Office, 11:00 a.m.: Tennis at Makati Sports Club with my son, score
8-5, I won; Meeting with Ryan Chan, Cecil, and Atty. Vic and Junior de la Serna; He said
his price is Ten Million, I offered Four Million; Home, 9:30 p.m.; I did not attend my
Tuesday club, Your Honor, the third meeting was on September 4, 2007; therefore, my
encounter with de la Serna, Jr. could not have happened prior to that because my
encounter with him was regarding the September 25, 2000 proposed meeting between
Johnny Chan and Atty. De la Serna. And may I relate, Your Honor, how that happened?[31]

Atty. Petralba claimed that his conversation with Atty. De La Serna, Jr. was a chance encounter in the tennis
court, and that he did not tell Atty. De La Serna, Jr. that a decision was forthcoming. Instead, he told him that
the client wants to have another meeting baka sakali there will be a favorable result.[32] He maintained that he
never intimated a bribery of a Supreme Court Justice.[33] In his testimony, Atty. Petralba stated:

Atty. Paulino Petralba:

I will proceed. After the third meeting in September 4, 2007 which is by the way, Your Honors, is
only nine days prior to the promulgation of the case on September 13. Ahhhmy birthday is
77
September 13, Your Honors, and I went to the tennis court on September 17, 2007 to give
a blow out to my tennis buddies and I also played one game of tennis on September 17. If
I may be permitted, Your Honors, may I read my entries in this diary?

JUSTICE QUISUMBING:

Go ahead.

Atty. Paulino Petralba:

September 27, 1007, Monday, lunch at office; Ordoez of tour organizers came to my office; went
to GBH for meeting; from GBH returned to office, conference with another client; then
went to BF tennis court, played one game and gave birthday blow out inom for my
group: Ernie, Glen, Roy, etc., etc; had short chat with Junior de la Serna, 5:00 p.m. This is
how it transpired, Your Honor.

JUSTICE QUISUMBING:

17 September .

Atty. Paulino Petralba:

After my game, I sat down, had beer, then Junior de la Serna was walking out of another tennis
court. He walked infront of our table and I said, O
Junior, gustodaw makipagmeeting uli ng kliyente

ko baka sakaling may favorable result, and he said Aba, okay, Ill tell my papa, my father. I
said, No, no kasi Im not going to arrange it anymore because Im on vacation and Im going
abroad. Thats all that happened in that meeting, your Honor. I did not seek him out, Your
Honor. It was a chance meeting.[34]

xxx

Pursuing a vital point, Justice Carpio inquired and Atty. Petralba answered, thus:

Justice Carpio:

Okay that was September 17, four days after the promulgation of the decision. September
13 was the date the decision was made.

Atty. Paulino Petralba:

Yes, Your Honor.

Justice Carpio:

78
So if Mr. Chan really paid Ten Million to anyone here, Mr. Chan would have known
immediately that the case was decided because he paid for it, correct?

Atty. Paulino Petralba:

Logically.

Justice Carpio:

So he would have told you to forget about paying anything we won already.

Atty. Paulino Petralba:

Logically, Your Honor.

Justice Carpio:

So your offer to meet againyour offer on September 17 to meet againwould be irrational


because you won already had that money been given really.

Atty. Paulino Petralba:

Exactly, Your Honor, and in fact the meeting on September 25 would have been an absurd
meeting.

Justice Carpio:

Absurd meeting because if

Atty. Paulino Petralba:

the case was already decided

Justice Carpio: Yaah

If your client really paid Ten Million, he would be the first to know right away.

Atty. Paulino Petralba:

Exactly, Your Honor.

Justice Carpio:

And on September 25, he would not have agreed to a meeting anymore.


79
Atty. Paulino Petralba:

Yes, Your Honor.[35]

Atty. Monteclar confirmed that Mr. Chan bought a land adjacent to the property subject of the petition, and that
Mr. Chan, interested in buying the property of Fudot, told them that he would try to expedite the matter and talk
to De La Serna.[36] He mentioned that he and his client, Cattleya, refused to negotiate with De La Serna because
they had a sad experience with him when he accused one of Cattleyas lawyers of making Cattleya a milking
cow. Said lawyer even filed an administrative case against De La Serna for making baseless accusations and
using intemperate language against opposing lawyers in his pleadings in this very case when it was still before
the trial court.[37] Atty. Monteclar admitted that he was the one who informed Atty. Petralba of the Supreme
Courts decision.[38] He denied any knowledge about the attempt to bribe any of the Justices of the Court.[39]

Mr. Chan and Atty. Petralba both admitted that they had never met Justice Tinga before and it was only during
the hearing on 18 June 2008 that they saw Justice Tinga in person.[40] On the other hand, Atty. Monteclar stated
that he had not known Justice Tinga personally, although he met Justice Tinga way back in 2003 in a hotel in
Makati when Justice Tinga was given an honor by the Council of Deans by the Philippine Association of Law
Schools.[41]
The parties were then required to submit their respective memoranda.[42]

Atty. De La Serna submitted a two-page Memorandum of Points. He pointed out that it was Mr. Chan who
sought him out using different intermediaries and who acted as if he had advance knowledge of the decision;
moreover, it was Mr. Chan who said that he had given P10 Million to Justice Tinga. Thus, if there was anyone
guilty of contemptible conduct, it was Mr. Chan, and not him. De La Serna added that anyone in his situation
would have acted similarly.[43]

Atty. Petralba and Mr. Chan jointly submitted their Comment[44] (Memorandum) while Cattleya filed its own
Memorandum.[45]

We find Atty. De La Serna guilty of indirect contempt.

Contempt is defined as a disobedience to the Court by setting up an opposition to its authority, justice and
dignity. It signifies not only a willful disregard or disobedience of the courts orders but such conduct that tends
to bring the authority of the court and the administration of law into disrepute or in some manner to impede the
due administration of justice.[46] Indirect contempt is one committed out of or not in the presence of the court
that tends to belittle, degrade, obstruct or embarrass the court and justice. [47] Any improper conduct tending,

80
directly or indirectly, to impede, obstruct, or degrade the administration of justice has also been considered to
constitute indirect contempt.[48]

An accusation of bribery is easy to concoct and difficult to disprove, the complainant must present
panoply of evidence in support of such an accusation.[49] It will take more than the uncorroborated and
independent statements of Atty. De La Serna to cast an aura of credibility to his accusations.

We reviewed the records of the case and find that the decision was made in accordance with law and
established jurisprudence. The principles enunciated in Lim v. Jorge,[50] now being invoked by Atty. De La
Serna, simply do not find application in this case. His insistence that Justice Tinga repudiated and contradicted
everything he enunciated in the Lim case just to accommodate Mr. Chan and all his cohorts and his money[51] is
not only groundless, it is also downright contemptuous.

In the first place, Mr. Chan, the person most involved [52] had categorically denied making the statement
to the effect that he gave P10 Million to Justice Tinga, or to any other justice in the division.[53]

Justice Quisumbing:

You denied. You said you did not make any statement to Atty. De la Serna concerning giving of
Ten Million to Mr. Justice Tinga?

Mr. Chan:

I did not.

Justice Quisumbing:

I ask you now that you have not given anything to the other justices in this panel?

Mr. Chan:

I did not, Your Honor.

Justice Quisumbing:

And also deny that you have told Atty. De La Serna, Sr. that you have spent Ten Million for the
Supreme Court?

Mr. Chan:

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I did not spend that on you, Your Honor.[54]

Atty. De La Serna claims that Mr. Chan and Atty. Petralba had advance knowledge of the Courts
decision, based on the fact that Atty. Petralba and Mr. Chan were already intimating a favorable decision even
before the decision was released. He points out that the decision was released only on 27 September 2007, when
it was

mailed at the Central Post Office, implying that if not for the fact that Mr. Chan paid for the decision, he would
not have known of the outcome of the case even before the decision was released on 27 September 2007.

The decision was promulgated on 13 September 2007. Decisions of the Court are posted in its website a few
days after their promulgation. In this case, the decision was published in the web on 19 September 2007, or
before the decision was posted in the Manila Central Post Office on 27 September 2007. However, Mr. Chan
stated that he learned of the decision only sometime in October of 2007, after Atty. Petralba had told him about
it.[55] On the other hand, Atty. Monteclar admitted that he was the one who called up Atty. Petralba to inform him
about the outcome of the case after he received a copy of the decision.[56]

Moreover, Atty. De La Sernas attribution of advance knowledge to Mr. Chan, apart from being incongruent with
the declarations of the other personalities, does not dovetail with logic and common sense. For one, Mr.
Chan was earnest in asking for, and pushing through with, the meeting on 25 September 2007 with De La
Serna. Had he known about the decision earlier, and more importantly, had he really paid P10 Million for a
favorable decision, he would not have reiterated his offer or suggest any further meeting with De La Serna for
the purchase of the subject property. The exercise would be downright irrational.[57]

From a related perspective, it would be plainly foolhardy for Mr. Chan to go through all the trouble and risk of
bribing a Supreme Court Justice in the amount of P10 Million when he could have directly acquired the
property by paying off De La Serna with the same amount which the latter had demanded in the first place. This
aspect was clearly demonstrated during the hearing, thus:

Justice Quisumbing:

From your point of view, is there any indication from your own circle of anything spent for the
Supreme Court by Mr. Chan?

Atty. Paulino Petralba:


No, Your Honor. May I add something to that, Your Honor?

82
Justice Quisumbing:
Yes.

Atty. Paulino Petralba:

My own observation, Your Honors. If he was willing to spend Ten Million, why go through the
difficult process of committing a crime of bribery and not just give it to the other party?

Justice Quisumbing:

I see.

Atty. Paulino Petralba:

It would be easier, Your Honor, because once a compromise agreement is signed, we submit it to
the Court. In fact, I can already advise my client, even if the Court has not resolved the
compromise agreement, go ahead construct because the compromise agreement will then
bind the other party. Its much easier, Your Honor. Its much more logical.

Justice Quisumbing:

I see. But in any case, you made an offer of Four Million?

Atty. Paulino Petralba:

Yes, Your Honor.

Justice Quisumbing:

But it was not accepted?

Atty. Paulino Petralba:

He said his price is Ten Million.

Justice Quisumbing:

And you did not agree to Ten Million?

Atty. Paulino Petralba:

Well, the client told me thats too much.[58]

83
Earlier, Justice Velasco pointed out the ludicrousness of Atty. De La Sernas claim in the following exchange
with Atty. De La Serna himself:

Justice Velasco:

That is correct.
In your offer, the price that your client want is Ten Million Pesos?

Atty. De La Serna:

Ten Million.

Justice Velasco:

So if thats the price for the lot of petitioner Fudot and he spent Ten Million, wouldnt it be a
lot easier for him to just have paid your client the price that she was asking for her lot
in Bohol?

Atty. De la Serna:

Im not thinking for Johnny Chan, Your Honor. Im just relaying what he told me.[59]

Atty. De La Sernas other basis for believing that the decision was prompted by bribery was the time it took for
this case to be decided, which he intimated was uncommonly short. He bewails that the case was pinpointed,
then plucked out from underneath 20,000 other cases, and thereafter resolved in less than two (2)
years. He also compared the case with Oppus v. Sandiganbayan,

G.R. No. 150186; a case which he previously handled, claiming that accused Oppus continues to languish in jail
because the Supreme Court had not resolved his appeal even after the lapse of more than ten (10) years. [60] De
La Sernas plaint is baseless and non sequitur.

Atty. De La Serna seems to be unaware that the Supreme Court is mandated by the Constitution to
decide cases within two (2) years from the date of submission. Art. VIII, Section 15(1) of the Constitution
reads:

84
Section 15 (1) All cases or matters filed after the effectivity of this Constitution must be
decided or resolved within twenty-four months from date of submission for the Supreme Court,
twelve months for all lower collegiate courts, and three months for all lower courts.

(2) A case or matter shall be deemed submitted for decision or resolution upon the filing of the
last pleading, brief, or memorandum required by the Rules of Court or by the court itself.

The instant petition was filed on 6 March 2006. Respondent was required to file its comment thereon,
which it submitted on 1 June 2006. The Court thereafter required petitioner to file her reply, and petitioner filed
one on 11 September 2006. Her reply was noted on 13 November 2006. Thus, as of 13 November 2006, the case
was deemed submitted, there being no other pleading required by the Court. From that point on, it is but logical
to assume that a decision would be forthcoming.

As for the Oppus case, it appears from the records that De La Serna used to be Oppuss lawyer, but he was
replaced upon Oppuss motion. Moreover, the case was already deemed closed and terminated as of 15 October
2007, when the Court granted Oppuss Motion to Withdraw Petition/Appeal filed on 19 September 2007.
Contrary to De La Sernas claim, the case is no longer pending as it was already been disposed of. Moreover,
the Oppus case was assigned to another ponente, not Justice Tinga. The period during which the Oppus case
was pending cannot serve as sound basis for comparison with this case.

In addition, Atty. De La Sernas assumption that the instant case was decided ahead of 20,000 other cases is
preposterous. Deducting the General Register Number ( G.R. No.) of the Oppus case from the instant case
would lead one to infer that 20,000 cases are still pending, which is not the case, since as pointed out by Justice
Carpio, there are no more than ten thousand cases pending in the Supreme Court at any one time. [61] Besides, in
between the G.R. No. of the Oppus case (G.R. No. 171008) and that of this case (G.R. No.150186), are
thousands of cases.
A lawyer is, first and foremost, an officer of the court. Corollary to his duty to observe and maintain the
respect due to the courts and judicial officers is to support the courts against "unjust

criticism and clamor."[62] His duty is to uphold the dignity and the authority of the courts to which he owes
fidelity, "not to promote distrust in the administration of justice, as it is his sworn and moral duty to help build

85
and not destroy unnecessarily that high esteem and regard towards the courts so essential to the proper
administration of justice."[63] As we held in one case:

It is [the] respondents duty as an officer of the court, to uphold the dignity and authority of
the courts and to promote confidence in the fair administration of justice and in the Supreme
Court as the last bulwark of justice and democracy. x x x[64]

As part of the machinery for the administration of justice, a lawyer is expected to bring to the fore
irregular and questionable practices of those sitting in court which tend to corrode the judicial machinery. Thus,
if he acquired reliable information that anomalies are perpetrated by judicial officers, it is incumbent upon him
to report the matter to the Court so that it may be properly acted upon. An omission or even a delay in reporting
may tend to erode the dignity of, and the publics trust in, the judicial system.

The Court is perplexed by the actuations of Atty. De La Serna. Claiming that he had been informed that a
member of the Court was involved in bribery, yet he chose to remain silent in the meantime
and to divulge the information long after he had come to know that he lost the case. He claims that as early
as 25 September 2007, Mr. Chan told him that he had already spent P10 Million for Justice Tinga; yet he failed
to inform the Court of this matter waited until 4 November 2007 before he divulged the alleged bribery in his
Request for Inhibition. According to him, he only became convinced that the bribe took place after he received
a copy of the decision. Yet there was no mention of the alleged bribery in his motion for
reconsideration dated 20 October 2007. For this, he offers the lame pretext that adverted bribery is a mere
extraneous matter (that) is not relevant as far as the legal issues are concerned in this case, and because
his request for inhibition dated 4 November 2007, where the matter was mentioned for the first time, at least
does not have a deadline.[65] While admitting that he did not even verify from other sources if Mr. Chans
statement had any factual basis, De La Serna offers another feeble explanation for his delayed reaction in that he
could not just go to the Supreme Court and request for investigation, as he could not even pass through the
guards.[66] A lawyer of De La Sernas caliber and experience would know that there is a proper way of lodging a
formal complaint for investigation, including sending it by registered mail.

That De La Serna did not report the matter immediately to the Court suffuses unshakeable dubiety to his
claim that Mr. Chan had uttered the statements attributed to him. That De La Serna brought

86
up the issue of bribery after an unfavorable decision was issued makes the allegation all the more a
contrived afterthought, a hastily concocted story brought to cast doubts on the integrity not only of Justice
Tinga, but also of the entire Supreme Court.

This is not to say, however, that as an officer of the court, Atty. De La Serna cannot criticize the court. [67] We
have long recognized and respected the right of a lawyer, or any person, for that matter, to be critical of courts
and magistrates as long as they are made in properly respectful terms and through legitimate channels. The
Court, in In re: Almacen,[68] held:

Moreover, every citizen has the right to comment upon and criticize the actuations of
public officers. This right is not diminished by the fact that the criticism is aimed at a judicial
authority, or that is it articulated by a lawyer. Such right is especially recognized where the
criticism concerns a concluded litigation, because then the courts actuation are thrown open to
public consumption. x x x

xxx

Courts and judges are not sacrosanct. They should and expect critical evaluation of their
performance. For like the executive and the legislative branches, the judiciary is rooted in the
soil of democratic society, nourished by the periodic appraisal of the citizen whom it is expected
to serve.

Well-recognized therefore is the right of a lawyer, both as an officer of the court and as a citizen,
to criticize in properly respectful terms and through legitimate channels the acts of courts and
judges. x x x

xxx

Hence, as a citizen and as officer of the court, a lawyer is expected not only to exercise the right,
but also to consider it his duty to avail of such right. No law may abridge this right. Nor is he
professionally answerable for a scrutiny into the official conduct of the judges, which would not
expose him to legal animadversion as a citizen.

xxx

But it is the cardinal condition of all such criticism that it shall be bona fide and shall not
spill over the walls of decency and propriety. A wide chasm exists between fair criticism, on
the one hand, and abuse and slander of courts and the judges thereof,
on the other. Intemperate and unfair criticism is a gross violation of the duty of respect to
courts. It is such a misconduct that subjects a lawyer to disciplinary action.[69]

87
Everything considered on the basis of the proofs on record, reason and normal discernment, Atty. De La
Sernas statements bear the badges of falsehood while the common version of the witnesses who disputed his
statements is imbued with the hallmarks of truth. There is more. De La Sernas declarations were
maliciously and irresponsiblymade. They exceeded the boundaries of decency
and propriety. The libelous attack on the integrity and credibility of Justice Tinga tend to degrade the dignity of
the Court and erode public confidence that should be accorded to it. As we stated in In re: Wenceslao Laureta,
[70]
thus:

To allow litigants to go beyond the Courts resolution and claim that the members acted
with deliberate bad faith and rendered an unjust resolution in disregard or violation of the duty of
their high office to act upon their own independent consideration and judgment of the matter at
hand would be to destroy the authenticity, integrity and conclusiveness of such collegiate acts
and resolutions and to disregard utterly the presumption of regular performance of official
duty.To allow such collateral attack would destroy the separation of powers and undermine the
role of the Supreme Court as the final arbiter of all justiciable disputes.[71]

Atty. De La Serna has transcended the permissible bounds of fair comment and criticism. His irresponsible and
baseless statements, his unrepentant stance and smuginsistence of his

malicious and unfounded accusation against Justice Tinga have sullied the dignity and authority of this
Court. Beyond question, therefore, De La Sernas culpability for indirect contempt warrants the penalty of a fine
not exceeding P30,000.00 or imprisonment not exceeding six (6) months or both under the Rules.[72]

The power to declare a person in contempt of court and in dealing with him accordingly is a means to
protect and preserve the dignity of the court, the solemnity of the proceedings therein and the administration of
justice from callous misbehavior and offensive personalities. [73] Respect for the courts guarantees the stability of
the judicial institution. Without such guarantee, the institution would be resting on a very shaky foundation.
[74]
The Court will not hesitate to wield this inherent power to preserve its honor and dignity and safeguard the
morals and ethics of the legal profession.[75]

WHEREFORE, premises considered, Atty. Victor De La Serna is found GUILTY of indirect contempt of
court. He is hereby FINED in the amount of P30,000.00 to be paid within ten (10) days from receipt of this
Resolution and WARNED that a repetition of a similar act will warrant a more severe penalty.
88
Let a copy of this Resolution be attached to Atty. De La Sernas personal record in the Office of the Bar
Confidant and copies thereof furnished the Integrated Bar of the Philippines (IBP).
The IBP is ordered to submit with DISPATCH its Report on the investigation in Gabriel T. Ingles v. Atty. Victor
De La Serna, docketed as A.C. No. 5763.

This Resolution is immediately executory.


SO ORDERED.
FIRST DIVISION

[G.R. No. 164356 : July 27, 2011]

HEIRS OF MARGARITO PABAUS, NAMELY, FELICIANA P. MASACOTE, MERLINDA P.


CAILING, MAGUINDA P. ARCLETA, ADELAIDA PABAUS, RAUL MORGADO AND LEOPOLDO
MORGADO, PETITIONERS, VS. HEIRS OF AMANDA YUTIAMCO, NAMELY, JOSEFINA TAN,
AND MOISES, VIRGINIA, ROGELIO, ERLINDA, ANA AND ERNESTO, ALL SURNAMED
YUTIAMCO, RESPONDENTS.

DECISION

VILLARAMA, JR., J.:

By way of petition[1] for review on certiorari, petitioners Heirs of Margarito Pabaus challenge the June 10, 2004
Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No. 65854. The CA affirmed the October 8, 1999
Judgment[3] of the Regional Trial Court (RTC) of Butuan City, Branch 1 in Civil Case No. 4489 declaring void
petitioners' title and ordering them and all those claiming any right under them to vacate the land covered by
said title and deliver possession thereof to the respondents.

Subject of this controversy are three adjoining parcels of land located in Barangay Cabayawa, Municipality of
Tubay, Agusan Del Norte. Lot 1, Plan Psu-213148 with an area of 58,292 square meters, and Lot 2, Plan Psu-
213148, consisting of 1,641 square meters, are registered in the name of Amanda L. Yutiamco under Original
Certificate of Title (OCT) No. O-104[4] and Transfer Certificate of Title (TCT) No. T-1428, [5] respectively. Lot
2994, Pls-736, with an area of 35,077 square meters, is owned by Margarito Pabaus and covered by OCT No. P-
8649.[6]

OCT No. O-104 was issued pursuant to Judicial Decree No. R-130700 dated July 9, 1970 which covered Lots 1
and 2. A separate title, TCT No. T-1428, was subsequently issued to Amanda Yutiamco for Lot 2, thus partially
canceling OCT No. O-104. Meanwhile, OCT No. P-8649 was issued to Margarito Pabaus on March 12, 1974
pursuant to Free Patent No. (X-2)102.

On December 26, 1996, respondents Josefina Tan, and Moises, Virginia, Rogelio, Erlinda, Ana and Ernesto, all
surnamed Yutiamco, representing themselves as the heirs of Amanda L. Yutiamco, filed a Complaint [7] for
Cancellation of OCT No. P-8649, Recovery of Possession and Damages against the heirs of Margarito Pabaus,
namely, petitioners Feliciana P. Masacote, Merlinda P. Cailing, Maguinda P. Arcleta, Adelaida Pabaus, Raul
Morgado and Leopoldo Morgado. The case was docketed as Civil Case No. 4489 in the RTC of Butuan City,
Branch 1.

89
Respondents alleged that petitioners illegally entered upon their lands, harvested coconuts therein and built a
house on the premises, thus encroaching a substantial portion of respondents' property. Despite repeated
demands and objection by Moises Yutiamco, petitioners continued to occupy the encroached portion and harvest
the coconuts; petitioners even filed a criminal complaint against the respondents before the Office of the
Provincial Prosecutor. Respondents averred that OCT No P-8649 issued to Margarito Pabaus is invalid as it
substantially includes a land already covered by Decree No. N-130700 and OCT No. O-104 issued on July 9,
1970 in the name of Amanda Yutiamco. When Moises Yutiamco caused a resurvey of the land, the relocation
plan confirmed that the free patent title of Margarito Pabaus overlapped substantially the lot covered by OCT
No. O-104.

In their Answer with Counterclaim,[8] petitioners admitted having gathered coconuts and cut trees on the
contested properties, but asserted that they did so in the exercise of their rights of dominion as holders of OCT
No. P-8649. They also contended that it was respondents who unlawfully entered their property and harvested
coconuts therein. Citing a sketch plan prepared by Engr. Rosalinda V. De Casa, petitioners claimed it was the
respondents who encroached Lot 1708, Cad-905 which is within and part of OCT No. P-8649. It was pointed
out that with the claim of respondents of an alleged encroachment, respondents' land area would have increased
by 5,517.50 square meters (or a total of 65,447.5) while that of petitioners would be decreased to only 29,546
square meters. Petitioners likewise averred that the complaint states no cause of action since the case was not
referred for barangay conciliation and respondents' cause of action was, in any event, already barred by
prescription, if not laches.

In the pre-trial conference held on March 12, 1997, the RTC issued an Order [9] which directed the conduct of a
relocation survey to determine if the land covered by petitioners' title overlaps those in defendants' titles. The
three commissioners who conducted the said survey were Engr. Romulo Estaca, a private surveyor and the
court-appointed commissioner, Antonio Libarios, Jr., the representative of respondents, and Engr. Regino
Lomarda, Jr., petitioners' representative.[10] It was agreed that the relocation survey shall be done by having the
commissioners examine the titles in question and then survey the land to determine if there was indeed an
overlapping of titles and who has better right to the contested lands. [11]

During the same pre-trial conference, petitioners manifested their intention to file an amended answer. The
RTC gave them five days within which to seek leave of court to file the amended answer but they failed to
comply. Thus, the court considered petitioners to have waived the filing of said pleading.

At the continuation of the pre-trial conference on June 23, 1997, the trial court informed the parties of the
following findings in the Relocation Survey Report[12] dated May 27, 1997:

x x x x

That, Lot 2, Psu-213148 covered by TCT#T-1428 issued in favor of Amanda L. [Yutiamco] is inside the lot
covered by OCT#[P]-8649, issued in favor of Margarito Pabaus;

That, Portion of Lot 1, Psu-213148 covered by OCT#O-104, issued in favor of Amanda L. [Yutiamco]
containing an area of 15,675 Sq. M. is inside the lot covered by OCT#P-8649, issued in favor of Margarito
Pabaus;

That, there is actually an overlapping in the issuance of title[s] on the above-mentioned two (2) parcels of land,
please refer to accompanying relocation plan and can be identified through color legend;

That, the Technical Description of Lot 1, Psu-213148 of OCT#O-104 has been properly verified and checked
against approved plan of Psu-213148, approved in the name of Amanda L. [Yutiamco];
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Finally, that during the relocation survey nobody objected and oppose[d] the findings conducted by the
undersigned.

x x x x[13]

The Report was accompanied by a Relocation Plan [14] which was certified by Engr. Estaca as accurately
indicating the boundaries of the subject properties. Engr. Libarios, Jr. and Engr. Lomarda, Jr. also signed the
Relocation Plan, expressing their conformity thereto.

In the pre-trial conference held on July 17, 1997, petitioners' counsel sought leave of court to file an amended
answer. In their Amended Answer with Counterclaim,[15] petitioners reiterated that in Engr. De Casa's sketch
plan which was plotted in accordance with the description in the cadastral survey, it was respondents who
encroached and claimed Lot 1708, Cad-905 within and part of OCT P-8649. They further alleged -

x x x x

10. That plaintiffs['] title to the property in [question], known as O.C.T. No. 104 and TCT No. 1428 both
registered in the name of Amanda Yutiamco were both secured thru fraud, if not the said properties are situated
away, for a distance as adjoining of defendants property, under the following circumstances:

10.a. The subject property was surveyed by a private surveyor Antonio A. Libarios, Jr. on November 3 and 5,
1960, nonetheless, his license as Geodetic Engineer was issued only on November 11, [1965];

10.b. Base[d] on this fact, the survey plan or relocation survey was approved by the Director of Land[s],
Nicanor G. Jorge on June 9, 1965;

10.c. Perspicacious examination of the technical description of plaintiffs['] title under OCT No. 104 and TCT
No. 1428, the BLLM is marked as No. 4, which the tie line of PSU No. 213148, as compared [to] defendants[']
title under OCT No. P-8649, the BLLM is marked as No. 1, which the tie line of PLS 736;

11. Actually, based on the foregoing observation, the properties of plaintiffs are away situated with the property
of defendants; should plaintiffs insisted (sic) based on the relocation survey conducted by the commissioner
appointed by this Honorable Court, which defendants believed that there was a maneuver to hoax and hoodwink
themselves, into believing that plaintiffs properties are situated in the heart of defendants property, then their
titles, covering their properties were secured thru fraud, which annulment of the same is proper and within the
bounds of the law.

x x x x[16]

At the trial, plaintiffs presented as witnesses Moises Yutiamco (adopted son of Amanda Yutiamco), Figuracion
Regala, Sr. (former barangay captain of Tubay), Antonio Payapaya (tenant of Moises Yutiamco) and court-
appointed commissioner Engr. Estaca, while the defendants presented Raul P. Morgado (one of the heirs of
Margarito Pabaus), Francisco Baylen (retired Land Management Officer/Deputy Land Inspector of the Bureau
of Lands, Butuan City), Engr. Rosalinda V. De Casa (Geodetic Engineer I, DENR) and Ambrocio P. Alba
(retired Land Management Officer-Chief of Lands Management Services, CENRO-Cabadbaran, Agusan del
Norte).

On October 8, 1999, the RTC rendered judgment in favor of the respondents and against the petitioners. Said
91
court gave credence to the finding in the Relocation Survey Report that petitioners' lot overlap respondents'
lands. It held that since the land in dispute was already under the private ownership of the respondents and no
longer part of the public domain, the same could not have been the subject of a free patent. As to the
presumption of regularity in the performance of official duty invoked by the petitioners as far as the issuance of
the free patent and title, the trial court pointed out that this cannot be appreciated in view of the testimony of
Engr. De Casa that in conducting the cadastral survey, she was not able to secure a copy of the title of the
landholdings of Amanda Yutiamco from the Register of Deeds, which is a vital document in the scheme of
operations. The trial court thus applied the rule that in case of two certificates of title issued to different persons
over the same land, the earlier in date must prevail. Hence, respondents' OCT No. O-104 is superior to
petitioners' OCT No. P-8649 which is a total nullity.

The fallo of the RTC decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the
defendants, as follows:

1. Declaring as null and void ab initio [Original] Certificate of Title No. [P]-8649 and ordering
defendants and all those claiming any right under them to vacate the land covered by said title
and deliver possession thereof to the plaintiffs and/or otherwise refrain and desist perpetually
from exercising any act of dispossession and encroachment over the subject premises;

2. Declaring the plaintiffs as the true and legal owner of the property subject of this case;

3. Ordering defendants to render an accounting to the plaintiffs with respect to the income of the
coconuts in the area in conflict starting from December 26, 1996 up to the time...reconveyance as
herein directed is made, and to deliver or pay to the plaintiffs the income with legal interest
thereon from the date of filing of the complaint in this case[,] which is December 26, 1996, until
the same is paid or delivered; and

4. Ordering defendants to pay the plaintiffs, jointly and severally, the amount of P13,175.00 by way
of actual damages, P50,000.00 by way of moral damages, the sum of P30,000.00 by way of
attorney's fees and the cost of litigation in the amount of P720.00.

SO ORDERED.[17]

On appeal, the CA affirmed the RTC ruling and emphasized that petitioners are bound by the findings contained
in the Relocation Survey Report and the Relocation Plan because not only did they agree to the appointment of
the three commissioners but the commissioner representing them also manifested his conformity to the
findings. It noted that neither party posed any objection while the survey was ongoing and that petitioners
disputed the findings only after it turned out adverse to them. Since the settled rule is that a free patent issued
over a private land is null and void and produces no legal effects whatsoever, and with the trial court's finding
that the properties of respondents and petitioners overlapped as to certain areas, the CA held that the trial court
correctly declared as void the title of the petitioners. Moreover, the CA cited previous rulings stating that "a
certificate of title over a land issued pursuant to the Public Land Law, when in conflict with one obtained on the
same date through judicial proceedings, must give way to the latter," and that "a certificate of title issued
pursuant to a decree of registration and a certificate of title issued in conformity therewith are on a higher level
than a certificate of title based upon a patent issued by the Director of Lands." [18]

92
Aggrieved, petitioners filed the instant petition arguing that --

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING THE LOWER COURT
DECISION THAT PETITIONERS' LOT NO. 2994, COVERED BY OCT NO. P-8649[,] REGISTERED IN
THE NAME OF MARGARITO PABAUS OVERLAPPED RESPONDENTS['] LOT 2 AND LOT 1,
[RESPECTIVELY] COVERED [BY] TCT NO. T-1428 AND OCT NO. O-104...BOTH REGISTERED IN THE
NAME OF AMANDA YUTIAMCO.

II

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RELYING [ON] THE FINDING OF
PRIVATE SURVEYOR OR GEODETIC [ENGR.] ROMULO S. ESTACA APPOINTED BY THE COURT
WHO DISTURBED THE CADASTRAL SURVEY CONDUCTED BY THE GOVERNMENT THRU THE
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES.[19]

Petitioners contend that the original technical description of Lot 2994, as per the 1961 public land survey [20],
clearly showed that respondents' property lies south of the land applied for by Margarito Pabaus. The matter of
encroachment was likewise refuted by Engr. De Casa who conducted the cadastral survey CAD 905 in Tubay
and plotted the subject lots on the cadastral map.[21] They likewise assailed the relocation survey undertaken
solely by the court-appointed commissioner, Engr. Estaca while the other two surveyors did not perform their
respective tasks or confirm the ground verification conducted by Engr. Estaca. With the admission by Engr.
Estaca that there were five missing corners, there was no precise and accurate ground verification made on the
alleged overlapping. Petitioners cite the testimony of Engr. De Casa which was based on the cadastral map she
herself prepared showing the respective locations of the subject lots. They assert that the three government
witnesses testified that the property of Margarito Pabaus was surveyed based on existing official records, and
that the presumption of regularity in the performance of official duty should be upheld.

Respondents, for their part, assert that petitioners' assignment of errors delve on factual matters which are not
proper subjects of an appeal before this Court. They echo the trial court's conclusion that petitioners' title is
void since it covers private land.

As a general rule, in petitions for review, the jurisdiction of this Court in cases brought before it from the CA is
limited to reviewing questions of law which involves no examination of the probative value of the evidence
presented by the litigants or any of them. The Supreme Court is not a trier of facts; it is not its function to
analyze or weigh evidence all over again. [22] Accordingly, findings of fact of the appellate court affirming those
of the trial court are generally conclusive on this Court.

Nonetheless, jurisprudence has recognized certain exceptions to the general rule that findings of the fact by the
Court of Appeals are not reviewable by the Supreme Court. One such exception is when such findings are not
sustained by the evidence.[23] Another is when the judgment of the CA is based on misapprehension of facts or
overlooked certain relevant facts not disputed by the parties which, if properly considered, would justify a
different conclusion.[24]

The case of overlapping of titles necessitates the assistance of experts in the field of geodetic engineering. The
very reason why commissioners were appointed by the trial court, upon agreement of the parties, was precisely
to make an evaluation and analysis of the titles in conflict with each other. Given their background, expertise
and experience, these commissioners are in a better position to determine which of the titles is valid. Thus, the
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trial court may rely on their findings and conclusions.[25]

However, in overlapping of titles disputes, it has always been the practice for the court to appoint a surveyor
from the government land agencies - the Land Registration Authority or the DENR - to act as commissioner. [26]
In this case, the trial court appointed a private surveyor in the person of Engr. Estaca who actually conducted
the relocation survey while the two other surveyors chosen by the parties expressed their conformity with the
finding of encroachment or overlapping indicated in the Relocation Plan [27] submitted to the court by Engr.
Estaca. Said plan showed that the area in conflict is on the northeastern portion wherein petitioners' OCT No. P-
8649 overlapped with respondents' title (OCT No. O-104) by 15,675 square meters.

Were the respondents able to prove their claim of overlapping?

We rule in the negative.

Survey is the process by which a parcel of land is measured and its boundaries and contents ascertained; also a
map, plat or statement of the result of such survey, with the courses and distances and the quantity of the land.
[28]
A case of overlapping of boundaries or encroachment depends on a reliable, if not accurate, verification
survey.[29] To settle the present dispute, the parties agreed to the conduct of a relocation survey. The Manual for
Land Surveys in the Philippines (MLSP)[30] provides for the following rules in conducting relocation surveys:

Section 593 - The relocation of corners or re-establishment of boundary lines shall be made using the bearings,
distances and areas approved by the Director of Lands or written in the lease or Torrens title.

Section 594 - The data used in monumenting or relocating corners of approved surveys shall be submitted to
the Bureau of Lands for verification and approval. New corner marks set on the ground shall be accurately
described in the field notes and indicated on the original plans on file in the Bureau of Lands. (Italics supplied.)

In his Report, Engr. Estaca stated that he was able to relocate some missing corners of the subject lots:

x x x x

By April 26, 1997, the whole survey team together with Mr. E. Concon and representatives from the Plaintiffs
and De[f]endants returned to the area in question to relocate missing corners of Lot 1, Psu-213148 of OCT#O-
104; Lot 2, Psu-213148 of TCT#T-1428; and OCT#P-8649. We were able to relocate the following corners of:
Cors. 2 & 4 of Lot 1, Psu-213148 of OCT#O-104; cors. 7 & 8 of Lot 1, Psu-213148 of OCT#[O]-104 which are
identical to cors. 15 & 16 of OCT#P-8649, respectively. We laid out missing cors. 3 & 2 of Lot 2, Psu-213148
of TCT#T-1428 and missing cors. 1 & 3 of Lot 1, Psu-213148 of OCT#O-104. All missing corners which were
relocated were not yet planted with cylindrical concrete monuments pending court decision of the case.

x x x x[31]

On cross-examination, Engr. Estaca testified as follows:

xxxx
Q In your report, you stated that there missing corners: 3 and 2 of Lot 2; and missing corners 1 and 3 of
Lot 1. Which of these three documents, Exhibit S which is OCT No. O-104 or Exhibit T which is
TCT No. T-1428 or OCT No. P-8649 in which there are missing corners?
A TCT No. T-1428 has 3 missing corners; and OCT No. O-104 has 2 missing corners.
Q When you say missing corners, what do you mean by that?
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A Well, based on the technical description, we were not able to locate the corners because it might have
been moved or lost.
Q And when you say corners, you are referring to cylindrical concrete monuments?
A Yes, sir.
Q Do you agree with me Mr. Witness that in order to locate the missing corners to proceed with the
relocation survey, you have to make a point of reference?
A Yes.
Q And that point of reference is found in the title itself?
A Yes, sir.
Q Do you agree with me that the point of reference is BLLM?
A No, that is a point of tie line. But the point of reference can be any of the corners within the property.
If you have say ten corners, you can base from the existing corners. In other words, localize your
location. Unless the whole property is lost, meaning all missing corners are not reliable then you
have to tie from known BLLM (Bureau of Lands Location Monument) That is established by a
geographic position.
Q Do you agree with me that in order to have an accurate relocation survey, to determine and to locate
the missing corners, you have to base the relocation survey on the tie line?
A It depends. There are tie lines which are located "40 kilometers" from that point. The big error is
there. So we will not adopt all monuments. Anyway, they interrelated to each other. You can
determine it by doing relocation survey. You can check it out by their positions. So the allowable for
that is only 30 centimeters.
xxxx
Q Finally, in your resurvey report which is Exhibit Q, you mentioned that there were missing corners
which were relocated and you said certain basis for the relocation if there are missing corners and
you said that the river is not a reliable point or basis. What did you base on your relocation survey
considering that there are missing corners?
A Based on other existing monuments, sir.
Q What for example?
A Based on my report, I stated from a known corners identified as cors. 10 and 9 of Lot 1, PSU 213148
of OCT #O-104 which are identical to corners 1 and 17 of OCT #P-8649.
Q Is this already covered in your report?
A Yes, and it is found on par. 2 of my report.
x x x x[32]

The MLSP laid down specific rules regarding tie lines, point of reference and overlapping of adjoining titled
lands. In this case, records failed to disclose that the basis for relocating the missing corners was submitted to
the Bureau of Lands (now Land Management Bureau) for verification and approval as required by Section 594.
This is crucial considering that the court-appointed commissioner is a private surveyor and not a government
surveyor from the LRA or LMB-DENR. It bears stressing that in every land dispute, the aim of the courts is to
protect the integrity of and maintain inviolate the Torrens system of land registration, as well as to uphold the
law; a resolution of the parties' dispute is merely a necessary consequence.[33]

On the part of petitioners, their only evidence to support their opposition to the claim of encroachment by the
respondents is the cadastral map which indicated the boundary of respondents' property at the south of
petitioners' lot. But as admitted by Engr. De Casa, during the cadastral survey they conducted from 1986 to
1996, they did not send a written notice to the landowner Amanda Yutiamco and that she plotted the boundaries
of her property based merely on a tax declaration because the cadastral survey team failed to obtain copies of
OCT No. O-104 and TCT No. T-1428 from the Registry of Deeds.[34] The MLSP specifically required that
relocation of boundary lines is to be made using the bearings, distances and areas approved by the Director of
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Lands or indicated in the Torrens titles. Hence, said cadastral map is not competent proof of the actual location
and boundaries of respondents' Lots 1 and 2, Psu-213148.

Indeed, we have ruled that if the land covered by free patent was a private land, the Director of Lands has no
jurisdiction over it. Such free patent and the subsequent certificate of title issued pursuant thereto are a nullity.
[35]
The aggrieved party may initiate an action for cancellation of such title. In the recent case of De Guzman v.
Agbagala,[36] the Court reiterated:

The settled rule is that a free patent issued over a private land is null and void, and produces no legal effects
whatsoever. Private ownership of land - as when there is a prima facie proof of ownership like a duly registered
possessory information or a clear showing of open, continuous, exclusive, and notorious possession, by present
or previous occupants - is not affected by the issuance of a free patent over the same land, because the Public
Land [L]aw applies only to lands of the public domain. The Director of Lands has no authority to grant free
patent to lands that have ceased to be public in character and have passed to private ownership. Consequently, a
certificate of title issued pursuant to a homestead patent partakes of the nature of a certificate issued in a judicial
proceeding only if the land covered by it is really a part of the disposable land of the public domain.[37]

Considering, however, that the claim of overlapping has not been clearly established, it is premature to declare
the free patent issued to Margarito Pabaus null and void. Instead, the Court deems it more appropriate to remand
the case to the trial court for the conduct of a verification/relocation survey under the direction and supervision
of the LMB-DENR. In the event that respondents' claim of encroachment of 15,675 square meters is found to be
correct, the corresponding adjustment in the metes and bounds of petitioners' property should be reflected in
OCT No. P-8649 which title will then have to be partially, not totally, voided and the corresponding amendment
as to the precise area and technical description of Lot 2994, PLS 736 be entered by the Registry of Deeds.

WHEREFORE, the Decision dated June 10, 2004 of the Court of Appeals in CA-G.R. CV No. 65854 and
Judgment dated October 8, 1999 of the Regional Trial Court of Butuan City, Branch 1 in Civil Case No. 4489
are SET ASIDE. The case is REMANDED to the said RTC which is hereby directed to order the Land
Management Bureau of the DENR to conduct verification/relocation survey to determine overlapping of titles
over Lots 1 and 2, Psu-213148 and Lot 2994, PLS 736 covered by OCT No. O-104, TCT No. T-1428 and OCT
No. P-8649, respectively, all of the Registry of Deeds for the Province of Agusan del Norte.

SO ORDERED.

96
CARMELITA FUDOT, Petitioner, G.R. No. 171008
vs. September 13, 2007
CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.

Facts:
Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent) asked someone to
check, on its behalf, the titles of nine (9) lots, the subject land included, which it intended to buy from
the spouses Troadio and Asuncion Tecson. Finding no defect on the titles, respondent purchased the
nine lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30 August 1993,
respondent and the Tecsons executed a Deed of Absolute Sale over the same properties. The Deed
of Conditional Sale and the Deed of Absolute Sale were registered with the Register of Deeds on 06
November 1992 and 04 October 1993, respectively. The Register of Deeds refused to actually
annotate the deed of sale on the titles because of the existing notice of attachment pending before
the Regional Trial Court of Bohol. The attachment was eventually cancelled by virtue of a
compromise agreement between the Tecsons and their attaching creditor which was brokered by
respondent. Titles to six (6) of the nine (9) lots were issued, but the Register of Deeds refused to
issue titles to the remaining three (3) lots , because the titles covering the same were still
unaccounted for.
Later, respondent learned that the Register of Deeds had already registered the deed of sale in favor
of petitioner and issued a new title herein.
The respondent filed its Complaintfor Quieting Of Title &/Or Recovery Of Ownership, Cancellation Of
Title With Damages before the Regional Trial Court of Tagbilaran City.

Issue:
Is the issuance of Deed of Sale valid?

Held:
On 31 October 2001, the trial court rendered its decision: (i) quieting the title or ownership of the subject land
in favor of respondent; (ii) declaring the deed of sale between petitioner and spouses Tecson invalid; (iii)
ordering the registration of the subject land in favor of respondent; (iv) dismissing respondents claim for
damages against the Register of Deeds for insufficiency of evidence; (v) dismissing Asuncions claim for
damages against petitioner for lack of factual basis; and (vi) dismissing petitioners counterclaim for lack of the
required preponderance of evidence.

97
CARMELITA FUDOT v. CATTLEYA LAND, GR No. 171008, 2007-09-13

Facts:

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent)


asked someone to check, on its behalf, the titles of nine (9) lots, the subject land
included, which it intended to buy from the spouses Troadio and Asuncion Tecson.
Finding no defect on the... titles, respondent purchased the nine lots through a Deed
of Conditional Sale on 6 November 1992.

On 23 January 1995, petitioner presented for registration before the Register of


Deeds the owner's copy of the title of the subject property, together with the deed of
sale purportedly executed by the Tecsons in favor of petitioner on 19 December 1986.

Issues:

BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT THE
FIRST BUYER WHO WAS GIVEN THE OWNER'S DUPLICATE TCT TOGETHER WITH A
DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A DEED OF
SALE.

Ruling:

In the first place, there is no double sale to speak of Art. 1544 of the Civil Code,[24]
which provides the rule on double sale, applies only to a situation where the same
property is validly sold to different vendees. In this case, there is only one... sale to
advert to, that between the spouses Tecson and respondent.

Even assuming that there was double sale in this case, petitioner would still not
prevail. The pertinent portion of Art. 1544 provides:

Art. 1544. 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.

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The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where the
land lies.

(Emphasis supplied)

Why it took petitioner nine (9) years to present the deed and the owner's copy, she
had no credible explanation; but it is clear that when she finally did, she already had
constructive notice of the deed of... sale in respondent's favor. Without a doubt,
respondent had acquired a better title to the property.

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 v. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil
744; Tajonera s. Court of Appeals, L-26677, 27 March 1981)

99