G.R. No.

129416 November 25, 2004

ZENAIDA B. TIGNO, IMELDA B. TIGNO and ARMI B. TIGNO, petitioners,

vs.
SPOUSES ESTAFINO AQUINO and FLORENTINA AQUINO and the HONORABLE COURT OF
APPEALS, respondents.

DECISION

TINGA, J.:

The controversy in the present petition hinges on the admissibility of a single document, a deed of sale
involving interest over real property, notarized by a person of questionable capacity. The assailed ruling
of the Court of Appeals, which overturned the findings of fact of the Regional Trial Court, relied primarily
on the presumption of regularity attaching to notarized documents with respect to its due execution.
We conclude instead that the document has not been duly notarized and accordingly reverse the Court
of Appeals.

The facts are as follow:

On 11 January 1980, respondent spouses Estafino and Florentina Aquino (the Aquinos) filed a complaint
for enforcement of contract and damages against Isidro Bustria (Bustria).1 The complaint sought to
enforce an alleged sale by Bustria to the Aquinos of a one hundred twenty thousand (120,000) square
meter fishpond located in Dasci, Pangasinan. The property was not registered either under the Land
Registration Act or under the Spanish Mortgage Law, though registrable under Act No. 3344.2 The
conveyance was covered by a Deed of Sale dated 2 September 1978.

Eventually, Bustria and the Aquinos entered into a compromise agreement, whereby Bustria agreed to
recognize the validity of the sale, and the Aquinos in turn agreed to grant to Bustria the right to
repurchase the same property after the lapse of seven (7) years.

Upon submission, the Court of First Instance of Pangasinan, Branch VII, approved and incorporated the
compromise agreement in a Decision which it rendered on 7 September 1981.

Bustria died in October of 1986.3 On 1 December 1989, petitioner Zenaida B. Tigno (Tigno), in
substitution of her deceased father Isidro Bustria,4 attempted to repurchase the property by filing a
Motion for Consignation. She deposited the amount of Two Hundred Thirty Thousand Pesos
(P200,000.00) with the trial court, now Regional Trial Court (RTC), Branch 55 at Alaminos, Pangasinan.
On 18 December 1989, the Aquinos filed an opposition, arguing that the right to repurchase was not yet
demandable and that Tigno had failed to make a tender of payment. In an Order dated 10 October 1999,
the RTC denied the Motion for Consignation.5

In June of 1991, Tigno filed a Motion for a Writ of Execution, which was likewise opposed by the
Aquinos, and denied by the RTC. Then, on 6 September 1991, Tigno filed an action for Revival of
Judgment,6 seeking the revival of the decision in Civil Case No. A-1257, so that it could be executed
accordingly.7 The Aquinos filed an answer, wherein they alleged that Bustria had sold his right to
repurchase the property to them in a deed of sale dated 17 October 1985.8

Among the witnesses presented by the Aquinos during trial were Jesus De Francia (De Francia), the
instrumental witness to the deed of sale, and former Judge Franklin Cariño (Judge Cariño), who
notarized the same. These two witnesses testified as to the occasion of the execution and signing of the
deed of sale by Bustria. Thereafter, in their Formal Offer of Documentary Evidence, the Aquinos offered
for admission as their Exhibit No. "8," the deed of sale (Deed of Sale)9 purportedly executed by Bustria.
The admission of the Deed of Sale was objected to by Tigno on the ground that it was a false and
fraudulent document which had not been acknowledged by Bustria as his own; and that its existence
was suspicious, considering that it had been previously unknown, and not even presented by the
Aquinos when they opposed Tigno's previous Motion for Consignation.10

In an Order dated 6 April 1994, the RTC refused to admit the Deed of Sale in evidence.11 A Motion for
Reconsideration praying for the admission of said exhibit was denied in an Order dated 27 April 1994.12

Then, on 18 August 1994, a Decision was rendered by the RTC in favor of Tigno. The RTC therein
expressed doubts as to the authenticity of the Deed of Sale, characterizing the testimonies of De Francia
and Cariño as conflicting.13 The RTC likewise observed that nowhere in the alleged deed of sale was
there any statement that it was acknowledged by Bustria;14 that it was suspicious that Bustria was not
assisted or represented by his counsel in connection with the preparation and execution of the deed of
sale15 or that Aquino had raised the matter of the deed of sale in his previous Opposition to the Motion
for Consignation.16 The RTC then stressed that the previous Motion for Execution lodged by Tigno had to
be denied since more than five (5) years had elapsed from the date the judgment in Civil Case No. A-
1257 had become final and executory; but the judgment could be revived by action such as the instant
complaint. Accordingly, the RTC ordered the revival of the judgment dated 7 September 1981 in Civil
Case No. A-1257.17

The Aquinos interposed an appeal to the Court of Appeals.18 In the meantime, the RTC allowed the
execution pending appeal of its Decision.19 On 23 December 1996, the Court of Appeals Tenth Division
promulgated a Decision20 reversing and setting aside the RTC Decision. The appellate court ratiocinated
that there were no material or substantial inconsistencies between the testimonies of Cariño and De
Francia that would taint the document with doubtful authenticity; that the absence of the
acknowledgment and substitution instead of a jurat did not render the instrument invalid; and that the
non-assistance or representation of Bustria by counsel did not render the document null and
ineffective.21 It was noted that a notarized document carried in its favor the presumption of regularity
with respect to its due execution, and that there must be clear, convincing and more than merely
preponderant evidence to contradict the same. Accordingly, the Court of Appeals held that the RTC
erred in refusing to admit the Deed of Sale, and that the document extinguished the right of Bustria's
heirs to repurchase the property.

After the Court of Appeals denied Tigno's Motion for Reconsideration,22 the present petition was filed
before this Court. Tigno imputes grave abuse of discretion and misappreciation of facts to the Court of
Appeals when it admitted the Deed of Sale. He also argues that the appellate court should have declared
the Deed of Sale as a false, fraudulent and unreliable document not supported by any consideration at
all.

The general thrusts of the arguments posed by Tigno are factually based. As such, they could normally
lead to the dismissal of this Petition for Review. However, while this Court is not ordinarily a trier of
facts,23 factual review may be warranted in instances when the findings of the trial court and the
intermediate appellate court are contrary to each other.24 Moreover, petitioner raises a substantial
argument regarding the capacity of the notary public, Judge Cariño, to notarize the document. The Court
of Appeals was unfortunately silent on that matter, but this Court will take it up with definitiveness.

The notarial certification of the Deed of Sale reads as follows:

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

PROVINCE OF PANGASINAN ) S.S.
MUNICIPALITY OF ALAMINOS )

SUBSCRIBED AND SWORN TO before me this 17th day of October 1985 at Alaminos, Pangasinan both
parties known to me to be the same parties who executed the foregoing instrument.

FRANKLIN CARIÑO
Ex-Officio Notary Public
 Judge, M.T.C.
Alaminos, Pangasinan

There are palpable errors in this certification. Most glaringly, the document is certified by way of a jurat
instead of an acknowledgment. A jurat is a distinct creature from an acknowledgment. An
acknowledgment is the act of one who has executed a deed in going before some competent officer or
court and declaring it to be his act or deed; while a jurat is that part of an affidavit where the officer
certifies that the same was sworn before him.25 Under Section 127 of the Land Registration Act,26 which
has been replicated in Section 112 of Presidential Decree No. 1529,27 the Deed of Sale should have been
acknowledged before a notary public.28

But there is an even more substantial defect in the notarization, one which is determinative of this
petition. This pertains to the authority of Judge Franklin Cariño to notarize the Deed of Sale.

It is undisputed that Franklin Cariño at the time of the notarization of the Deed of Sale, was a sitting
judge of the Metropolitan Trial Court of Alaminos.29 Petitioners point out, citing Tabao v. Asis,30 that
municipal judges may not undertake the preparation and acknowledgment of private documents,
contracts, and other acts of conveyance which bear no relation to the performance of their functions as
judges.31 In response, respondents claim that the prohibition imposed on municipal court judges from
notarizing documents took effect only in December of 1989, or four years after the Deed of Sale was
notarized by Cariño.32

Respondent's contention is erroneous. Municipal Trial Court (MTC) and Municipal Circuit Trial Court
(MCTC) judges are empowered to perform the functions of notaries public ex officio under Section 76 of
Republic Act No. 296, as amended (otherwise known as the Judiciary Act of 1948) and Section 242 of the
Revised Administrative Code.33 However, as far back as 1980 in Borre v. Moya,34 the Court explicitly
declared that municipal court judges such as Cariño may notarize only documents connected with the
exercise of their official duties.35 The Deed of Sale was not connected with any official duties of Judge
Cariño, and there was no reason for him to notarize it. Our observations as to the errant judge in Borre
are pertinent in this case, considering that Judge Cariño identified himself in the Deed of Sale as "Ex-
Officio Notary Public, Judge, MTC:"

[A notary ex officio] should not compete with private law practitioners or regular notaries in transacting
legal conveyancing business.

In the instant case, it was not proper that a city judge should notarize documents involving private
transactions and sign the document in this wise: "GUMERSINDO ARCILLA, Notary Public Ex-Officio, City
Judge" (p. 16, Rollo, Annex D of Complaint). In doing so, he obliterated the distinction between a regular
notary and a notary ex officio.36

There are possible grounds for leniency in connection with this matter, as Supreme Court Circular No. I-
90 permits notaries public ex officio to perform any act within the competency of a regular notary public
provided that certification be made in the notarized documents attesting to the lack of any lawyer or
notary public in such municipality or circuit. Indeed, it is only when there are no lawyers or notaries
public that the exception applies.37 The facts of this case do not warrant a relaxed attitude towards
Judge Cariño's improper notarial activity. There was no such certification in the Deed of Sale. Even if one
was produced, we would be hard put to accept the veracity of its contents, considering that Alaminos,
Pangasinan, now a city,38 was even then not an isolated backwater town and had its fair share of
practicing lawyers.

There may be sufficient ground to call to task Judge Cariño, who ceased being a judge in 1986, for his
improper notarial activity. Perhaps though, formal sanction may no longer be appropriate considering
Judge Cariño's advanced age, assuming he is still alive.39 However, this Decision should again serve as an
affirmation of the rule prohibiting municipal judges from notarizing documents not connected with the
exercise of their official duties, subject to the exceptions laid down in Circular No. 1-90.

Most crucially for this case, we should deem the Deed of Sale as not having been notarized at all. The
validity of a notarial certification necessarily derives from the authority of the notarial officer. If the
notary public does not have the capacity to notarize a document, but does so anyway, then the
document should be treated as unnotarized. The rule may strike as rather harsh, and perhaps may prove
to be prejudicial to parties in good faith relying on the proferred authority of the notary public or the
person pretending to be one. Still, to admit otherwise would render merely officious the elaborate
process devised by this Court in order that a lawyer may receive a notarial commission. Without such a
rule, the notarization of a document by a duly appointed notary public will have the same legal effect as
one accomplished by a non-lawyer engaged in pretense.

The notarization of a document carries considerable legal effect. Notarization of a private document
converts such document into a public one, and renders it admissible in court without further proof of its
authenticity.40 Thus, notarization is not an empty routine; to the contrary, it engages public interest in a
substantial degree and the protection of that interest requires preventing those who are not qualified or
authorized to act as notaries public from imposing upon the public and the courts and administrative
offices generally.41

On the other hand, what then is the effect on the Deed of Sale if it was not notarized? True enough,
from a civil law perspective, the absence of notarization of the Deed of Sale would not necessarily
invalidate the transaction evidenced therein. Article 1358 of the Civil Code requires that the form of a
contract that transmits or extinguishes real rights over immovable property should be in a public
document, yet it is also an accepted rule that the failure to observe the proper form does not render the
transaction invalid. Thus, it has been uniformly held that the form required in Article 1358 is not
essential to the validity or enforceability of the transaction, but required merely for convenience.42 We
have even affirmed that a sale of real property though not consigned in a public instrument or formal
writing, is nevertheless valid and binding among the parties, for the time-honored rule is that even a
verbal contract of sale or real estate produces legal effects between the parties.43

Still, the Court has to reckon with the implications of the lack of valid notarization of the Deed of Sale
from the perspective of the law on evidence. After all, the case rests on the admissibility of the Deed of
Sale.

Clearly, the presumption of regularity relied upon by the Court of Appeals no longer holds true since the
Deed of Sale is not a notarized document. Its proper probative value is governed by the Rules of Court.
Section 19, Rule 132 states:

Section 19. Classes of documents.—For the purpose of their presentation in evidence, documents are
either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or of a foreign country;

(b) Documents acknowledged before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.

All other writings are private. (Emphasis supplied.)

The Deed of Sale, invalidly notarized as it was, does not fall under the enumeration of public documents;
hence, it must be considered a private document. The nullity of the alleged or attempted notarization
performed by Judge Cariño is sufficient to exclude the document in question from the class of public
documents. Even assuming that the Deed of Sale was validly notarized, it would still be classified as a
private document, since it was not properly acknowledged, but merely subscribed and sworn to by way
of jurat.

Being a private document, the Deed of Sale is now subject to the requirement of proof under Section 20,
Rule 132, which states:

Section 20. Proof of private document.—Before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which is claimed to be.

The Deed of Sale was offered in evidence as authentic by the Aquinos, who likewise insist that its
enforceability militates against Tigno's claim. Correspondingly, the burden falls upon the Aquinos to
prove its authenticity and due execution. The Court of Appeals clearly erred in not appreciating the
Deed of Sale as a private document and in applying the presumption of regularity that attaches only to
duly notarized documents, as distinguished from private documents.

Did the RTC err then in refusing to admit the Deed of Sale? We hold that it did not. Section 20, Rule 132
provides ample discretion on the trier of fact before it may choose to receive the private document in
evidence. The RTC wisely refused to admit the Deed of Sale, taking great lengths as it did to explain its
doubts as to its veracity. The RTC was not convinced of the proffered proof by the Aquinos, and the
exercise of its sound discretion as the primary trier of fact warrants due respect.

The most telling observation of the RTC relates to the fact that for the very first time respondents
alleged the existence of the Deed of Sale when they filed their answer to petitioner's current action to
revive judgment.44 Prior to the initiation of the present action, Tigno had tried to operationalize and
implement the Compromise Agreement through two judicial means: consignation and execution of
judgment. The Aquinos duly opposed these prior attempts of the petitioner to exercise the right to
repurchase, but they did not raise then the claim that such right to repurchase was already extinguished
by the Deed of Sale. Tigno attempted to exercise the right to repurchase only a few years after the
execution of the Deed of Sale to which respondents themselves were signatories. Thus, it is incredulous
that the Aquinos did not invoke the Deed of Sale when they opposed in court petitioner's successive
attempts at consignation and execution of judgment. The Deed of Sale, if in existence and valid, would
have already precluded Tigno's causes of action for either consignation or execution of judgment. The
only believable conclusion, as drawn by the RTC, was that the Deed of Sale had yet to be created when
petitioner moved in 1990 for consignation and execution of judgment—an existential anomaly if we
were to agree with the respondents that such document had been signed and notarized back in 1985.

The dubiousness in origin of the Deed of Sale is not alleviated by the other observations of the RTC. It
also pointed to certain incredible aspects in the Aquinos' tale of events. It noted that no receipts were
ever presented by the respondents to evidence actual payment of consideration by them to Bustria,
despite the allegation of the respondents that the amount was covered by seven (7) receipts.45 The
Aquinos claimed that Bustria kept all the receipts, an assertion which the RTC found as unbelievable,
citing ordinary human nature to ask for receipts for significant amounts given and to keep the same.46 In
itself, the absence of receipts, or any proof of consideration, would not be conclusive since
consideration is always presumed. However, given the totality of the circumstances surrounding this
case, the absence of such proof further militates against the claims of the Aquinos.

We can appreciate in a similar vein the observation of the Court of Appeals that Bustria did not bother
to seek his lawyer's assistance as regards the execution of the Deed of Sale, considering that the subject
property had previously been fiercely litigated. Although the Court of Appeals was correct in ruling that
the document would not be rendered null or ineffective due to the lack of assistance of counsel, the
implausibility of the scenario strikes as odd and therefore reinforces the version found by the RTC as
credible.

The Court likewise has its own observations on the record that affirm the doubts raised by the Court of
Appeals. Isidro Bustria, who would die in 1986, was already ninety-three (93) years old when he
allegedly signed the Deed of Sale in 1985. Still, the Aquinos asserted before the RTC that Bustria traveled
unaccompanied from his home in Dasol, Pangasinan, passing through two towns to Alaminos, to execute
the Deed of Sale. Without discrediting the accomplishments of nonagenarians capable of great physical
feats, it should be acknowledged as a matter of general assumption that persons of Bustria's age are
typically sedentary and rarely so foolhardy as to insist on traveling significant distances alone.
Also of note is the fact that there are glaring differences as to the alleged signature of Bustria on the
Deed of Sale and as it otherwise appears on the judicial record. Bustria's signature in the 1981
Compromise Agreement is noticeably shaky which is not surprising, considering that it was subscribed
when Bustria was eighty-nine (89) years old. However, Bustria's signature on the Deed of Sale, which if
genuine was affixed when he was already ninety-three (93) years old, is remarkably steady in its strokes.
There are also other evident differences between Bustria's signature on the Deed of Sale and on other
documents on the record.

Admittedly, these doubts cast above arise in chief from an appreciation of circumstantial evidence.
These have to be weighed against the findings of the Court of Appeals that the fact that Bustria signed
the Deed of Sale was established by the respective testimonies of witnesses De Francia and Judge
Cariño. In its own appreciation of these testimonies, the RTC alluded to notable inconsistencies in their
testimonies. As a final measure of analysis, the Court shall now examine whether the appellate court
was in error in reversing the conclusion of the RTC on these testimonies.

The inconsistencies cited by the RTC were that De Francia testified that Judge Cariño himself prepared
and typed the Deed of Sale in his office, where the document was signed,47 while Judge Cariño testified
that he did not type the Deed of Sale since it was already prepared when the parties arrived at his office
for the signing.48 On this point, the Court of Appeals stated with utter nonchalance that a perusal of the
record revealed no material or substantial inconsistencies between the testimonies of Judge Cariño and
De Francia.

Strangely, the appellate court made no comment as to the inconsistency pointed out by the RTC as to
who prepared the Deed of Sale. If the only point of consideration was the due execution of the Deed of
Sale, then the Court of Appeals should have properly come out with its finding. Other variances aside,
there are no contradictions in the testimonies of Judge Cariño and De Francia on the question of
whether or not Bustria signed the Deed of Sale.

However, as earlier established, the Deed of Sale is a private document. Thus, not only the due
execution of the document must be proven but also its authenticity. This factor was not duly considered
by the Court of Appeals. The testimonies of Judge Cariño and De Francia now become material not only
to establish due execution, but also the authenticity of the Deed of Sale. And on this point, the
inconsistencies pointed out by the RTC become crucial.

The matter of authenticity of the Deed of Sale being disputed, the identity of the progenitor of this all-
important document is a material evidentiary point. It is disconcerting that the very two witnesses of the
respondent offered to prove the Deed of Sale, flatly contradict each other on the basis of their own
personal and sensory knowledge. Worse, the purported author of the Deed of Sale disavowed having
drafted the document, notwithstanding the contrary testimony grounded on personal knowledge by the
documentary witness.

Establishing the identity of the person who wrote the Deed of Sale would not ordinarily be necessary to
establish the validity of the transaction it covers. However, since it is the authenticity of the document
itself that is disputed, then the opposing testimonies on that point by the material witnesses properly
raises questions about the due execution of the document itself. The inconsistencies in the testimonies
of Judge Cariño and De Francia are irreconcilable. It is not possible to affirm the testimony of either
without denigrating the competence and credibility of the other as a witness. If Judge Cariño was
truthful in testifying that he did not write the Deed of Sale, then doubt can be cast as to the reliability of
the notarial witness De Francia. It takes a leap of imagination, a high level of gumption, and perverse
deliberation for one to erroneously assert, under oath and with particularities, that a person drafted a
particular document in his presence.

However, if we were to instead believe De Francia, then the integrity of the notary public, Judge Cariño,
would be obviously compromised. Assuming that Judge Cariño had indeed authored the Deed of Sale, it
would indeed be odd that he would not remember having written the document himself yet sufficiently
recall notarizing the same. If his testimony as to authorship of the document is deemed as dubious, then
there is all the reason to make a similar assumption as to his testimony on the notarization of the Deed
of Sale.

These inconsistencies are not of consequence because there is need to indubitably establish the author
of the Deed of Sale. They are important because they cast doubt on the credibility of those witnesses of
the Aquinos, presented as they were to attest to the due execution and authenticity of the Deed of Sale.
The Court of Appeals was clearly in error in peremptorily disregarding this observation of the RTC.

As a result, we are less willing than the Court of Appeals to impute conclusive value to the testimonies of
de Francia and Judge Cariño. The totality of the picture leads us to agree with the trial court that the
Deed of Sale is ineluctably dubious in origin and in execution. The Court deems as correct the refusal of
the RTC to admit the Deed of Sale, since its due execution and authenticity have not been proven. The
evidence pointing to the non-existence of such a transaction is so clear and convincing that it is
sufficient even to rebut the typical presumption of regularity arising from the due execution of notarial
documents. However, for the reasons stated earlier, the Deed of Sale is ineluctably an unnotarized
document. And the lower court had more than sufficient basis to conclude that it is a spurious
document.

Since the validity of the Deed of Sale has been successfully assailed, Tigno's right to repurchase was not
extinguished at the time of the filing of the Petition for revival of judgment, as correctly concluded by
the RTC. The Court of Appeals being in error when it concluded otherwise, the reinstatement of the RTC
Decision is warranted.

WHEREFORE, the Petition is GRANTED. The assailed Decision dated 23 December 1996 and Resolution
dated 9 June 1997 of the Court of Appeals in CA-G.R. CV No. 49879 is REVERSED, and the Decision dated
18 August 1994 of the Regional Trial Court of Alaminos, Pangasinan, Branch 55, in Civil Case No. A-1918
is REINSTATED. Costs against respondents.

SO ORDERED.

G.R. No. 133545 July 15, 2005

RENATO S. SANCHEZ, Petitioners,

vs.
RODOLFO M. QUINIO and ISMAEL M. QUINIO, Respondents.

DECISION

GARCIA, J.:

Under consideration is this appeal by way of a petition for review on certiorari under Rule 45 of the
Rules of Court to nullify and set aside the following issuances of the Court of Appeals in CA-G.R. CV No.
51764, to wit:

1. Decision dated 27 January 1998,1 reversing and setting aside an earlier decision of the Regional Trial
Court at Makati City dismissing respondents’ complaint per quieting of title, etc., thereat commenced by
them against, among others, the herein petitioner Renato S. Sanchez; and

2. Resolution dated 28 April 1998,2 denying petitioner’s motion for reconsideration.

The material facts, as found by the trial court and as adopted by the Court of Appeals, may briefly be
stated, as follows:

At the core of this case is a parcel of land with an area of 300 square meters, more or less, located at San
Antonio Valley I, Parañaque City and originally owned by and registered in the name of one Celia P.
Santiago (Santiago, hereinafter) under Transfer Certificate of Title (TCT) No. 391688 of the Registry of
Deeds of Rizal. On 12 July 1979, Santiago sold the disputed parcel to herein respondents Rodolfo M.
Quinio and Ismael M. Quinio (collectively the "Quinios"). Following the registration of the conveying
deed of absolute sale, the Registry of Deeds of Metro Manila, District IV (Makati) issued on 13 July 1979
TCT No. S-89991 in herein respondents’ name.
A little over thirteen (13) years later, one Renato Sanding, by virtue of a deed of absolute sale covering
the same parcel of land purportedly executed in his favor on 22 February 1993 by Santiago, was issued
TCT No. 70372 of the Registry of Paranaque. Renato Sanding subsequently sold the property to Romeo
Abel, married to Ma. Nora S. Abel, resulting in the issuance in the latter’s name of TCT No. 72406.

In turn, Romeo Abel sold the subject parcel of land to herein petitioner Renato Sanchez on 16 November
1993, executing for this purpose a deed of absolute sale in the latter’s favor. This sale was registered
with the Registry of Deeds of Paranaque, and, on 17 May 1994, TCT No. 81125 was issued in the name of
petitioner.

It appears that, before proceeding with the purchase, petitioner, who happened to own the lot adjacent
to the parcel sought to be acquired, repaired to the Registry of Deeds of Paranaque to look into the
authenticity of TCT No. 72406 which was then in the hands of Romeo S. Abel. Only upon being assured
of the authenticity of Romeo S. Abel’s TCT No. 72406 did petitioner conclude the purchase.

Disturbed, as may be expected, when later apprised that their property was the subject of several
transactions and that a building was being constructed thereon pursuant to a building permit issued to
Renato S. Sanchez, the Quinios instituted on 12 May 1994 before the Regional Trial Court at Makati City
a complaint for quieting of title and cancellation of titles against Sanchez and the spouses Romeo Abel
and Ma. Nora Abel, which complaint, docketed as Civil Case No. 94-1736, was raffled to Branch 147 of
the court.

After due proceedings, the trial court, in a decision dated 6 July 1995,3 rendered judgment dismissing
the complaint, it being its holding that Sanchez was an innocent purchaser for value of the disputed
property and, therefore, has a better right over it than the Quinios.

Following the denial of their motion for reconsideration, the Quinios went on appeal to the Court of
Appeals whereat their recourse was docketed as CA-G.R. CV NO. 51764. As stated at the outset hereof,
the Court of Appeals, in a decision dated 27 January 1998,4 reversed and set aside the appealed decision
of the trial court, thus:

WHEREFORE, the decision appealed from is hereby REVERSED. Transfer Certificate of Title No. S-89991
issued on July 13, 1979 in favor of Rodolfo M. Quinio and Ismael M. Quinio is forever quieted; Transfer
Certificate of Title No. 72406 issued on May 19, 1993 in favor of Spouses Romeo S. Abel and Ma. Nora S.
Abel is hereby ordered CANCELLED including any and all titles, deeds or proceedings derived or that may
emanate therefrom; Defendant-appellee Renato S. Sanchez and any and all persons acting in his behalf is
ordered to DEMOLISH and REMOVE any and all buildings, structures, tenements and works constructed,
built and made on the property covered by Transfer Certificate of Title No. S-89991; Defendants-
appellees to jointly and solidarily pay plaintiffs-appellants attorney’s fees in the amount of TEN
THOUSAND (P10,000.00) PESOS. Costs against defendants-appellees.

SO ORDERED.

In a subsequent resolution5 dated 28 April 1998, the appellate court denied herein petitioner’s motion
for reconsideration.

Hence, this recourse by petitioner Renato S. Sanchez.

As we see it, the singular issue to be resolved is who between petitioner, on one hand, and respondents,
on the other, is entitled to the subject land.

Petitioner latches his case on his being an innocent purchaser for value of the land in question, and
asserts the rights and guarantees accorded by law on such purchaser.

We find no merit in the petition.

It cannot be over-emphasized that Santiago sold the subject land in July 1979 to respondents, who lost
no time in registering the conveying deed of sale and securing title in their names. From that time on,
ownership and other rights flowing therefrom over the land in question pertained to respondents. In
other words, Santiago was no longer possessed of transmissible rights over such property when she
executed on 22 February 1993 a deed of sale in favor of Renato Sanding. The aforesaid deed, in fine,
could not have conveyed valid title over the land.

Lest it be overlooked, Santiago, testifying below, denied having executed the deed of sale adverted to in
favor of Renato Sanding. But assuming, ex gratia argumenti, the authenticity of such deed and the bona
fides of the corresponding transaction, the consequent issuance in Renato Sanding’s name of TCT No.
70372 – and Romeo S. Abel’s TCT No. 72406 and petitioner’s TCT No. 81125 descending therefrom -
would not defeat respondents’ superior right to the property in question. For, in cases where two (2)
certificates of title covering the same parcel of land are issued to two (2) different persons, he who
holds in good faith that certificate which is earlier in date has superior right over the land covered
thereby. Thus, we said in Margolles vs. Court of Appeals:6

Lastly, it is a settled rule that when two certificates of title are issued to different persons covering the
same land in whole or in part, the earlier in date must prevail, and, in case of successive registrations
where more than one certificate is issued over the land, the person holding a prior certificate is entitled
to the land as against a person who relies on a subsequent certificate. The titles of the petitioners,
having emanated from an older title, should thus be upheld.

Even if petitioner and Romeo S. Abel, the former’s immediate predecessor-in-interest, are to be
accorded the status of innocent purchasers for value, as the term is juridically understood, the superior
right of respondents will still have to be posited and recognized. Baltazar vs. Court of Appeals7 explains
why:

We might assume for the moment and for purposes of argument only that Baltazar’s vendees had
successfully proven they were purchasers in good faith and for value. Even so, as between two persons
both of whom are in good faith and both innocent of any negligence, the law must protect and prefer
the lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights.
Under the foregoing principle derived from the above case law, Baltazar’s vendees have no rights as
against Good Earth. Their recourse is against Baltazar himself.

In Torres vs. Court of Appeals,8 we also said:

Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the
appellate court that a forged instrument may become the root of a valid title, cannot be applied where
the owner still holds a valid and existing certificate of title covering the same interest in a realty. The
doctrine would apply rather when, as in the cases for example of De la Cruz v. 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 owner's duplicate certificate of title, converts
it in his name, and subsequently sells or otherwise encumbers it to an innocent holder for value, for in
such a case the new certificate is binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But
if the owner holds a valid and existing certificate of title, his would be indefeasible as against the whole
world, and not that of the innocent holder's. ‘Prior tempore potior jure’ as We have said in Register of
Deeds v. Philippine National Bank, No. L-17641, January 30, 1965, 13 SCRA 46, citing Legarda v. Saleeby,
31 Phil. 590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791
(Emphasis supplied).

It may be that one dealing with property brought under the Torrens system of land registration may
rely, as petitioner did with respect to the land in question, on what appears on the face of the covering
certificate without inquiring further as to the title of the seller or mortgagor.9 But the guarantee
generally accorded a Torrens title holder to be secured in his ownership as long as he has not voluntarily
disposed of any right over the covered property admits of a couple of exceptions. C.N. Hodges vs. Dy
Buncio & Co., Inc.,10 deals with one of them, thus:

The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct
if previous valid title to the same parcel of land did not exist. The respondent had a valid title x x x It
never parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer
certificate of title; it could not be charged with negligence in the keeping of its duplicate certificate of
title or with any act which could have brought about the issuance of another certificate upon which a
purchaser in good faith and for value could rely. If the petitioner's contention as to indefeasibility of his
title should be upheld, then registered owners without the least fault on their part could be divested of
their title and deprived of their property. Such disastrous results which would shake and destroy the
stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles
issued under the Torrens system (Emphasis supplied).

At bottom then, the present petition basically features an instance where two (2) different persons
acquired by purchase at different times from the same owner (Santiago), the same piece of registered
land. And although the records do not provide clear answer on how the second vendee, Renato Sanding,
in this case, was able to secure a certificate of title despite the existence of an outstanding valid
certificate of title in the hands and name of the first vendee, herein respondents, who appear to have
never relinquished the document, the stubborn reality is that such a second title was issued and whence
two (2) other titles eventually descended.

Following the lessons imparted by Margolles, Baltazar, Torres and C.N. Hodges, supra, however,
whatever right Renato Sanding may have acquired over the disputed property cannot prevail over, but
must yield to, the superior right thereon of respondents, as the appellate court rightfully held. And,
inasmuch as his title is traceable to that of Romeo S. Abel, who in turn derived his right and title from
Renato Sanding, petitioner cannot plausibly have better rights than either Romeo S. Abel or Renato
Sanding, since no one can acquire a right greater than what the transferor himself has.11 As the saying
goes, the spring cannot rise higher than its source.

In all, this Court finds and so holds that the assailed decision and resolution of the appellate court
decreeing the cancellation of TCT No. 72406 in the name of Romeo S. Abel and the derivative TCT No.
81125 in the name of petitioner Renato S. Sanchez, are in accordance with law and applicable
jurisprudence.

FOR ALL THE FOREGOING, the instant petition is hereby DENIED and the assailed decision and
resolution of the Court of Appeals AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 172196 October 19, 2011

ADELAIDA MENESES (deceased), substituted by her heir MARILYN M. CARBONEL-GARCIA, Petitioner,

vs.
ROSARIO G. VENTUROZO, Respondent.

DECISION

PERALTA, J.:

This is a petition for review on certiorari1 of the Court of Appeals’ Decision dated October 27, 2005 in
CA-G.R. CV No. 78217 and its Resolution dated April 5, 2006, denying petitioner’s motion for
reconsideration.

The Court of Appeals’ Decision reversed and set aside the Decision of the Regional Trial Court (RTC) of
Dagupan City, Branch 40 in Civil Case No. D-9040, as the appellate court declared respondent Rosario G.
Venturozo the owner of the land in dispute, and ordered petitioner Adelaida Meneses to vacate and
surrender her possession thereof to respondent.

The facts are as follows:

On June 8, 1988, plaintiff Rosario G. Venturozo, respondent herein, filed a Complaint2 for "ownership,
possession x x x and damages" in the Regional Trial Court (RTC) of Dagupan City against defendant
Adelaida Meneses, petitioner herein, alleging that she (plaintiff) is the absolute owner of an untitled
coconut land, containing an area of 2,109 square meters, situated at Embarcadero, Mangaldan,
Pangasinan, and declared under Tax Declaration No. 239. Plaintiff alleged that she purchased the
property from the spouses Basilio de Guzman and Crescencia Abad on January 31, 1973 as evidenced by
a Deed of Absolute Sale,3 and that the vendors, in turn, purchased the property from defendant as
evidenced by a Deed of Absolute Sale4 dated June 20, 1966. Plaintiff alleged that she has been in
possession of the land until May 1983 when defendant with some armed men grabbed possession of
the land and refused to vacate despite repeated demands prompting her to engage the services of
counsel. Plaintiff prayed that after preliminary hearing, a writ of preliminary mandatory injunction be
issued; and that after hearing, a decision be rendered declaring her as the owner of the property in
dispute, ordering defendant to vacate the property in question and to pay her ₱5,000.00 as attorney’s
fees; ₱1,000.00 as litigation expenses; ₱10,000.00 as damages and to pay the costs of suit.

In her Answer,5 defendant Adelaida Meneses stated that plaintiff is the daughter of Basilio de Guzman,
the vendee in the Deed of Absolute Sale dated June 20, 1966 that was purportedly executed by her
(defendant) covering the subject property. Defendant alleged that she never signed any Deed of
Absolute Sale dated June 20, 1966, and that the said deed is a forgery. Defendant also alleged that she
never appeared before any notary public, and she did not obtain a residence certificate; hence, her
alleged sale of the subject property to Basilio de Guzman is null and void ab initio. Consequently, the
Deed of Absolute Sale dated January 31, 1973, executed by Basilio de Guzman in favor of plaintiff,
covering the subject property, is likewise null and void. Defendant stated that she acquired the subject
property from her deceased father and she has been in possession of the land for more than 30 years in
the concept of owner. Plaintiff’s allegation that she (defendant) forcibly took possession of the land is a
falsehood. Defendant stated that this is the fourth case the plaintiff filed against her concerning the land
in question.

In her Counterclaim, defendant stated that in view of the nullity of the falsified Deed of Absolute Sale of
the subject property, and the fact that plaintiff and her father Basilio de Guzman had never been in
actual possession of the property, plaintiff is under legal obligation to execute a deed of reconveyance
over the said property in her favor.

The issue before the trial court was whether the sale made by defendant Adelaida Meneses in favor of
plaintiff’s father, Basilio de Guzman, was valid.6

On July 18, 1991, the RTC of Dagupan City, Branch 40 (trial court) rendered a Decision in favor of
defendant Adelaida Meneses. The dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered:

1) Declaring the Deed of Absolute and Definite Sale dated June 20, 1966 (Exhibit "B") and the Deed of
Absolute and Definite Sale dated January 31, 1973 (Exhibit "A") null and void ab initio;

2) Declaring the defendant Adelaida Meneses as the owner of the property in question;

3) Ordering the plaintiff Rosario G. Venturozo to execute a Deed of Reconveyance in favor of the
defendant Adelaida Meneses over the property in question described in paragraph 2 of the complaint;

4) Ordering the plaintiff to pay to the defendant ₱10,000.00 as damages; and ₱1,000.00, as litigation
expenses.

SO ORDERED.7

The trial court found that defendant Adelaida Meneses inherited the land in dispute from her father,
Domingo Meneses; that she did not sell her property to Basilio de Guzman in 1966; and that the
signature of Adelaida Meneses on the Deed of Absolute Sale dated June 20, 1966 is a forgery. The trial
court stated that the signature of Adelaida Meneses, as appearing on the Deed of Absolute Sale dated
June 20, 1966, is very much different from her specimen signatures and those appearing in the records
of Civil Case No. 1096 in the Municipal Trial Court of Mangaldan. It held that since there was no valid
transfer of the property by Adelaida Meneses to Basilio de Guzman, the conveyance of the same
property in 1973 by Basilio de Guzman to his daughter, plaintiff Rosario G. Venturozo, was also invalid.
The trial court stated that the claim of plaintiff Rosario G. Venturozo, that her parents, Spouses Basilio
and Crescencia de Guzman, purchased from defendant Adelaida Meneses the subject property in 1966,
is negated by defendant’s continued possession of the land and she gathered the products therefrom.

Plaintiff appealed the decision of the trial court to the Court of Appeals.

On October 27, 2005, the Court of Appeals rendered a Decision reversing the decision of the trial court.
The dispositive portion of the appellate court’s decision reads:

WHEREFORE, the appealed decision of the Regional Trial Court of Dagupan City (Branch 40) is REVERSED
and SET ASIDE and a new one rendered declaring plaintiff-appellant the owner of the subject land and
ordering defendant-appellee to vacate and surrender possession thereof to the former.8

The Court of Appeals stated that appellee Adelaida Meneses failed to prove by clear and convincing
evidence that her signature on the Deed of Absolute Sale dated June 20, 1966 was a forgery. Instead,
she admitted on direct examination that her signature on the Deed of Absolute Sale was genuine, thus:

Q. I am showing to you Exhibit "6" and Exhibit "A" for the plaintiff a Deed of Absolute Sale o[f] Real
Property of one (1) Adelaida Meneses in favor of Basilio de Guzman. Will you examine this if you know
this Deed of Absolute Sale?

A. I do not know this document, sir.

Q. There is a signature over the name of the vendor Adelaida Meneses which was previously marked as
Exhibit "6-a" and Exhibit "A-1" for the plaintiff, will you examine this signature, if do you (sic) know this
signature?

A. This is my signature, sir.9

According to the Court of Appeals, such admission is binding on her, there being no showing that it was
made through palpable mistake or that no such admission was made.10

The Court of Appeals also stated that mere variance of signatures cannot be considered as conclusive
proof that the same were forged, as forgery cannot be presumed.11 Appellee Adelaida Meneses should
have produced specimen signatures appearing on documents executed in or about the year 1966 for a
better comparison and analysis.12

The Court of Appeals held that a notarized document, like the questioned Deed of Absolute Sale dated
June 20, 1966, has in its favor the presumption of regularity, and to overcome the same, there must be
evidence that is clear, convincing and more than merely preponderant; otherwise, the document should
be upheld.13 Moreover, Atty. Abelardo G. Biala − the notary public before whom the questioned Deed of
Sale was acknowledged − testified and confirmed its genuineness and due execution, particularly the
signature in question. The appellate court stated that as against appellee Adelaida Meneses’ version,
Atty. Biala’s testimony, that appellee appeared before him and acknowledged that the questioned deed
was her free and voluntary act, is more credible. The testimony of a notary public enjoys greater
credence than that of an ordinary witness.14

The Court of Appeals held that appellee Adelaida Meneses failed to present clear and convincing
evidence to overcome the evidentiary force of the questioned Deed of Absolute Sale dated June 1966,
which appears on its face to have been executed with all the formalities required by law.

Adelaida Meneses’ motion for reconsideration was denied for lack of merit by the Court of Appeals in a
Resolution15 dated April 5, 2006.

Hence, Adelaida Meneses, substituted by her heir, filed this petition raising this lone issue:

I
WHETHER THE DECISION OF THE COURT OF APPEALS, WHICH REVERSED THE DECISION OF THE
REGIONAL TRIAL COURT, IS IN KEEPING WITH BOTH LAW AND JURISPRUDENCE.16
Petitioner contends that her statement, made during the course of her testimony in the trial court, was
taken out of context by respondent to be used merely as an argumentative point. The examining lawyer
used the words, "Do you know this signature?" viz.:

Q. I am showing to you Exhibit "6" and Exhibit "A" for the plaintiff a Deed of Absolute Sale o[f] Real
Property of one (1) Adelaida Meneses in favor of Basilio de Guzman. Will you examine this if you know
this Deed of Absolute Sale?

A. I do not know this document, sir.

Q. There is a signature over the name of the vendor Adelaida Meneses which was previously marked as
Exhibit "6-a" and Exhibit "A-1" for the plaintiff, will you examine this signature, if do you (sic) know this
signature?

A. This is my signature, sir.17

Petitioner contends that in the above-quoted transcript of stenographic notes, she was merely asked if
she was cognizant of such a signature as hers or whether the signature appearing on the questioned
document was similar to that of her signature, and not if she was the one who indeed affixed such
signature on the said deed of sale.1avvphil

She avers that the general rule that a judicial admission is conclusive upon the party invoking it and does
not require proof admits of two exceptions: (1) when it is shown that the admission was made through
palpable mistake; and (2) when it is shown that no such admission was in fact made. The latter
exception allows one to contradict an admission by denying that he made such an admission. For
instance, if a party invokes an "admission" by an adverse party, but cites the admission "out of context,"
then the one making the admission may show that he made no such admission, or that his admission
was taken out of context.18 This may be interpreted as to mean not in the sense in which the admission
is made to appear.19

Petitioner also contends that a comparison of the signature on the Deed of Absolute Sale dated June 20,
1966 and her specimen signatures, as well as her genuine signature on pleadings, were made by the trial
court, and it ruled that her signature on the Deed of Absolute Sale dated June 20, 1966 was a forgery.
She submits that the trial court’s evaluation of the credibility of witnesses and their testimonies is
entitled to great respect,20 and the appellate court should have given weight to the trial court’s findings
that her signature on the said Deed of Absolute Sale was a forgery.

The petition is meritorious.

The rule is that the jurisdiction of the Court over appealed cases from the Court of Appeals is limited to
the review and revision of errors of law allegedly committed by the appellate court, as its findings of fact
are deemed conclusive.21 Thus, this Court is not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings below.22 However, this rule admits exceptions,23 such as
when the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial
court24 like in this case.

The necessity of a public document for contracts which transmit or extinguish real rights over
immovable property, as mandated by Article 1358 of the Civil Code,25 is only for convenience; it is not
essential for validity or enforceability.26 As notarized documents, Deeds of Absolute Sale carry
evidentiary weight conferred upon them with respect to their due execution27 and enjoy the
presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to
exclude all controversy as to falsity.28 The presumptions that attach to notarized documents can be
affirmed only so long as it is beyond dispute that the notarization was regular.29 A defective notarization
will strip the document of its public character and reduce it to a private instrument.30 Consequently,
when there is a defect in the notarization of a document, the clear and convincing evidentiary standard
normally attached to a duly-notarized document is dispensed with, and the measure to test the validity
of such document is preponderance of evidence.311avvphi1
In this case, it should be pointed out that contrary to the finding of the Court of Appeals, the Deed of
Sale dated June 20, 1966 did not comply with the formalities required by law, specifically Act No.
496,32 otherwise known as The Land Registration Act, which took effect on January 1, 1903, as Section
127 of the Act provides:

FORMS

Section 127. Deeds, conveyances, mortgages, leases, releases, and discharges affecting lands, whether
registered under this Act or unregistered, shall be sufficient in law when made substantially in
accordance with the following forms, and shall be as effective to convey, encumber, lease, release,
discharge, or bind the lands as though made in accordance with the more prolix form heretofore in
use: Provided, That every such instrument shall be signed by the person or persons executing the same,
in the presence of two witnesses, who shall sign the instrument as witnesses to the execution thereof,
and shall be acknowledged to be his or their free act and deed by the person or persons executing the
same, before the judge of a court of record or clerk of a court of record, or a notary public, or a justice of
the peace, who shall certify to such acknowledgment x x x.33

In the Deed of Absolute Sale dated June 20, 1966, the Notary Public signed his name as one of the two
witnesses to the execution of the said deed; hence, there was actually only one witness thereto.
Moreover, the residence certificate of petitioner was issued to petitioner and then it was given to the
Notary Public the day after the execution of the deed of sale and notarization; hence, the number of
petitioner’s residence certificate and the date of issuance (June 21, 1966) thereof was written on the
Deed of Absolute Sale by the Notary Public on June 21, 1966, after the execution and notarization of the
said deed on June 20, 1966.34 Considering the defect in the notarization, the Deed of Absolute Sale
dated June 20, 1966 cannot be considered a public document, but only a private document,35 and the
evidentiary standard of its validity shall be based on preponderance of evidence.

Section 20, Rule 132 of the Rules of Court provides that before any private document offered as
authentic is received in evidence, its due execution and authenticity must be proved either: (a) by
anyone who saw the document executed or written; or (b) by evidence of the genuineness of the
signature or handwriting of the maker.

In regard to the genuineness of petitioner’s signature appearing on the Deed of Absolute Sale dated
June 20, 1966,36 the Court agrees with the trial court that her signature therein is very much different
from her specimen signatures37 and those appearing in the pleadings38 of other cases filed against her,
even considering the difference of 17 years when the specimen signatures were made. Hence, the Court
rules that petitioner’s signature on the Deed of Absolute Sale dated June 20, 1966 is a forgery.

The Court agrees with petitioner that her admission was taken out of context, considering that in her
Answer39 to the Complaint, she stated that the alleged Deed of Sale purportedly executed by her in
favor of Basilio de Guzman is a forgery; that she never signed the said Deed of Sale; that she did not
appear personally before the Notary Public; and that she did not secure the residence certificate
mentioned in the said Deed of Sale. She also testified that she never sold her land to Basilio de
Guzman;40 that she never met the Notary Public, Attorney Abelardo Biala,41 and that she did not meet
Basilio de Guzman on June 20, 1966.42 The trial court found petitioner and her testimony to be credible,
and declared the Deed of Sale dated June 20, 1966 null and void ab initio. These circumstances negate
the said admission.

The Court finds the Notary Public’s testimony self-serving and unreliable, because although he testified
that petitioner was the one who submitted her residence certificate to him on June 21, 1966,43 the next
day after the Deed of Absolute Sale was executed on June 20, 1966, Crescencia de Guzman,
respondent’s mother, testified that she and her husband got the residence certificate from petitioner
and gave it to the Notary Public on June 21, 1966.44 Thus, it is doubtful whether the Notary Public really
knew the identity of the vendor who signed the Deed of Absolute Sale45 dated June 20, 1966.

The Court notes that the trial court found petitioner and her testimony to be credible. It is a well-settled
doctrine that findings of trial courts on the credibility of witnesses deserve a high degree of
respect.46 Having observed the deportment of witnesses during the trial, the trial judge is in a better
position to determine the issue of credibility.47

In fine, the preponderance of evidence is with petitioner.

WHEREFORE, the petition is GRANTED. The Court of Appeals’ Decision dated October 27, 2005 and its
Resolution dated April 5, 2006 in CA-G.R. CV No. 78217 are REVERSED and SET ASIDE, and the Decision
of the Regional Trial Court of Dagupan City, Branch 40 in Civil Case No. D-9040 is hereby REINSTATED.

No costs.

SO ORDERED.

G.R. No. 163271 January 15, 2010

SPOUSES PATRICIO and MYRNA BERNALES, Petitioners,

vs.
HEIRS OF JULIAN SAMBAAN, namely: EMMA S. FELICILDA, ANITA S. SAMBAAN, VIOLETA S.
DADSANAN, ABSALON S. SAMBAAN, AGUSTINE S. SAMBAAN, EDITHA S. MANGUIRAN, GRACE S.
NITCHA, CLODUALDO S. SAMBAAN, GINA S. SAMBAAN and FE S. YAP, Respondents.

DECISION

DEL CASTILLO, J.:

A legal tussle among children is a nightmare for their parents. Sometimes, this happens when pecuniary
interests takes precedence over family relationship. In the instant case, we are at the forefront of a
family squabble over a disputed land situated in Cagayan de Oro City which was purportedly conveyed
to the eldest child through a Deed of Absolute Sale.1

Branch 18 of the Regional Trial Court (RTC) of Misamis Oriental2 rendered judgment in favor of the
herein respondents, which was affirmed in toto by the Court of Appeals3 (CA). Alleging that the CA
Decision4 is not in accordance with law and jurisprudence, as well as the evidence on record, petitioners
now come to us via the instant Petition for Review on Certiorari.5

Factual Antecedents

Julian Sambaan (Julian), married to Guillerma Saarenas-Sambaan (Guillerma), was the registered owner
of a property located at Bulua, Cagayan de Oro City. The lot was covered by Transfer Certificate of Title
(TCT) No. T-142026 issued on March 8, 1972, and more particularly described as follows:

A parcel of land (Lot No. 5947-A of the Subdivision Plan (LRC) Psd-138019, being a portion of Lot No.
5947, Cagayan Cadastre, LRC Cad. Rec. No. 1572) situated in the Barrio of Bulua, City of Cagayan de Oro,
Island of Mindanao x x x containing an area of THREE THOUSAND SIX HUNDRED FORTY THREE (3,643)
SQUARE METERS, more or less.

The respondents herein and the petitioner Myrna Bernales (Myrna) are the children of Julian and
Guillerma. Myrna, who is the eldest of the siblings, is the present owner and possessor of the property
in question.

Sometime in 1975, Julian was ambushed at Merayon, Talakad, Bukidnon, and was hospitalized due to a
gunshot wound. On April 11, 1975, Julian allegedly requested his children to gather so that he could
make his last two wishes. Julian’s first wish was for the children to redeem the subject property which
was mortgaged to Myrna and her husband Patricio Bernales (Patricio), while his second wish was for his
remains not to be brought to the house of Myrna at Nazareth, Cagayan de Oro City. Thus, in 1982,
respondent Absalon Sambaan (Absalon), one of Julian’s children, offered to redeem the property but
the petitioners refused because they were allegedly using the property as tethering place for their
cattle.

In January 1991, respondents received information that the property covered by TCT No. T-14202 was
already transferred to petitioners’ name. Whereupon, they secured a copy of the Deed of Absolute Sale
dated December 7, 1970 which bore the signatures of their parents and had it examined by the National
Bureau of Investigation (NBI). The result of the examination revealed that the signatures of their
parents, Julian and Guillerma, were forged.

Proceedings before the Regional Trial Court

Thus, on April 13, 1993, the respondents, together with their mother Guillerma, filed a Complaint for
Annulment of Deed of Absolute Sale and Cancellation of Transfer Certificate of Title No. T-14204 with
Damages and Writ of Preliminary Injunction7 against herein petitioners. They alleged that in spite of the
forged signature of their parents, the petitioners were able to register the Deed of Absolute Sale with
the Registry of Deeds of Cagayan de Oro City and secure TCT No. T-142048 on March 8, 1972. They
prayed for an injunctive relief in order to prevent the petitioners from selling, disposing, or mortgaging
said property. They further prayed that (i) the Deed of Absolute Sale and TCT No. T-14204 be annulled;
(ii) they be declared the absolute owners of the property; (iii) all documents executed, made and
entered into relative to the said title be declared void; and, (iv) the petitioners be ordered to pay them
₱300,000.00 as moral and exemplary damages, and ₱50,000.00 as attorney’s fees plus ₱1,000.00 as
appearance fee.

On May 6, 1992, petitioners filed their Answer,9 alleging that the subject property (Lot No. 5947-A) used
to be a portion of Lot No. 5947, which was originally owned by Clodualdo Sambaan (Clodualdo) and
Gliceria Dacer (Gliceria). Lot No. 5947 is more particularly described as follows:

A parcel of land (Lot No. 5947 of the Cadastral Survey of Cagayan) situated at Bulua, Cagayan de Oro
City. Bounded on the NE., by Lot No. 5984 and 5948; E., by Lot Nos. 5948 and 5946, SW., by Lot No.
5946; and on the NW., by Lot No. 5984, containing an area of 7,286 square meters, more or less, under
Tax Declaration No. 21421 and covered by Original Certificate of Title No. 7921 issued on September 23,
1940.

After the death of Clodualdo and Gliceria in 1949, their heirs, namely, Alicia Lago, wife of Pedro
Gacusan; Bernardo Lago (single); Gloria Lago, wife of Jimmy Angco; Dionesia Lago, married to Paulino
Unat; Prysbetero Sambaan, married to Rosario Zaragosa; Juanito Sambaan, married to Renerio Galos;
Leo Sambaan, married to Adeloisa Tambulian; Renato Sambaan, married to Adelina Ablon; Aida
Sambaan (single); Julian Sambaan, married to Guillerma Saarenas; Paz Sambaan, wife of Rufinito Lago;
and, Bernie Sambaan, married to Alicia Sabuero, executed an Extra Judicial Settlement and Sale10 dated
April 10, 1970 involving the abovementioned land covered by Original Certificate of Title (OCT) No. 7921.

It appears, however, that Juanito, Aida and Renato sold their share to a certain Domingo Ebarrat
(Ebarrat). Hence, a portion of the property belonged to Julian while another portion belonged to
Ebarrat. In view of the co-ownership between Ebarrat and Julian, the former and the latter executed a
Deed of Partition11 dated September 8, 1970 whereby Lot No. 5947 was divided. The eastern half with
an area of 3,643 square meters was assigned to Julian, while the western half with the same area went
to Ebarrat.

Petitioners claimed that Julian subsequently sold his share to them by virtue of a Deed of Absolute
Sale 12 dated December 7, 1970. The said property is

described as follows:

A Parcel of land (Lot No. 5947-A, being a portion of Lot No. 5947, Cadastral Survey of Cagayan) situated
at Bulua, Cagayan de Oro City. Bounded on the North by Lot Nos. 5947-B and 5948, Cad. 237; South by
Lot Nos. 5946, Cad-237; East by Lot Nos. 5948 and 5946, Cad. 237; and West by Lot No. 5947-B,
containing an area of 3643 square meters, more or less, covered by OCT No. 7921 (now TCT No. T-
14202) of the Registry of Deeds of Cagayan de Oro City.

Thereafter, on December 10, 1970, Ebarrat and Patricio executed an Agreement13 wherein Ebarrat
acknowledged that petitioners are the owners of the 18 coconut trees planted in Ebarrat’s property and
even made Julian as a witness to the said Agreement.
In addition, petitioners alleged that the imputation of falsification of the signatures of Julian and
Guillerma is a product of respondents’ inflamed imagination because the latter envy them for they have
been successful in managing their properties. Petitioners thus prayed that judgment be rendered
dismissing the complaint; affirming their title over the controverted property and ordering respondents
to pay them ₱500,000.00 as moral damages; ₱300,000.00 as exemplary damages; ₱50,000.00 as
attorney’s fees and costs of litigation.

On July 27, 1992, petitioners filed a Motion for Production and Inspection of Document14 to compel
respondents to produce and permit them to inspect and to copy or photograph the Deed of Absolute
Sale subject matter of said examination. Thereafter, the trial court issued an Order15 dated August 14,
1992 granting the motion and directing the Regional Office of the NBI to bring the document to court so
that the same may be properly examined.

On August 11, 1992, Guillerma died in Cagayan de Oro City and was accordingly dropped as co-plaintiff.

After trial on the merits, the trial court rendered its Decision16 dated August 2, 2001 ruling in favor of the
respondents, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the plaintiffs were able to establish a strong preponderance of
evidence in their favor. Accordingly, Transfer Certificate of Title No. T-14204 is hereby declared NULL
AND VOID, and is hereby CANCELLED. Let another title be issued in the name of the late Julian Sambaan.
The defendants are jointly and severally directed to pay the plaintiffs the sum of ₱20,000.00 as moral
damages, ₱20,000.00 as attorney’s fees and ₱1,671.00 representing actual expenses.17

Proceedings before the Court of Appeals

Petitioners, alleging among others that the trial court erred in finding that the signature of Julian on the
assailed document was a forgery, went to the CA by way of ordinary appeal. On August 20, 2003, the CA
rendered a Decision affirming the findings of the trial court, the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed Decision dated August 2, 2001 of the Regional Trial
Court of Cagayan de Oro City, Branch 18, in Civil Case no. 92-179 is hereby AFFIRMED in toto. Costs
against appellants.18

Petitioners filed a Motion for Reconsideration19 which was denied by the CA in its Resolution20 dated
March 17, 2004.

Issues

In this Petition for Review on Certiorari, petitioners assail the Decision of the CA on the following
grounds:

A. THE COURT OF APPEALS ERRED WHEN IT RULED THAT PRESCRIPTION DID NOT BAR RESPONDENTS’
ACTION TO RECOVER OWNERSHIP OF THE SUBJECT PROPERTY.

B. THE COURT OF APPEALS ERRED WHEN IT DISREGARDED SETTLED PRINCIPLES ON THE ADMISSIBILITY
AND APPRECIATION OF OPINIONS OF EXPERT WITNESSES IN ITS BLANKET ACCEPTANCE OF THE
INADEQUATE TESTIMONY OF THE DOCUMENT EXAMINER WHO WAS COMMISSIONED BY RESPONDENTS
PRIOR TO THE COMMENCEMENT OF CIVIL CASE NO. 92-179.

C. THE COURT OF APPEALS ERRED WHEN IT DISREGARDED THE RULES OF EVIDENCE IN ARRIVING AT THE
CONCLUSION THAT THE DEED OF ABSOLUTE SALE WAS A FORGED DOCUMENT ON THE BASIS OF
SPECIMEN SIGNATURES THE GENUINENESS OF WHICH WERE NEVER ESTABLISHED.

D. THE COURT OF APPEALS ERRED WHEN IT DISREGARDED LEGAL PRINCIPLES ON HANDWRITING

COMPARISON IN USING SPECIMEN SIGNATURES OF GUILLERMA SAMBAAN THAT WERE MADE AT THE
TIME AND FOR THE SPECIFIC PURPOSE OF THE HANDWRITING ANALYSIS OF THE DEED OF ABSOLUTE
SALE.

E. THE COURT OF APPEALS ERRED WHEN IT DISREGARDED JURISPRUDENCE ON THE PROOF REQUIRED
TO ESTABLISH FORGERY IN ARRIVING AT THE CONCLUSION THAT THE SIGNATURE OF JULIAN SAMBAAN
ON THE DEED OF ABSOLUTE SALE WAS FORGED BECAUSE IT BELIEVED THAT GUILLERMA SAMBAAN’S
SIGNATURE WAS ALSO FORGED.

F. THE COURT OF APPEALS CONTRAVENED THE LEGAL RULES GOVERNING THE APPRECIATION OF
DOCUMENTS IN RULING AGAINST THE VALIDITY OF JULIAN SAMBAAN’S SALE OF THE SUBJECT
PROPERTY TO PETITIONERS DESPITE THE EXISTENCE OF THE AGREEMENT DATED 10 DECEMBER 1970
CONFIRMING THE SALE.

G. THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S AWARD OF DAMAGES IN FAVOR
OF RESPONDENTS AND IN DISMISSING PETITIONERS’ COUNTERCLAIMS FOR DAMAGES.

Our Ruling

The core issue to be resolved in the present controversy is the authenticity of the Deed of Absolute Sale
which is a question of fact rather than of law. In Manila Bay Club Corporation v. Court of Appeals,21 we
held that for a question to be one of law, it must involve no examination of the probative value of the
evidence presented by the litigants or any of them. There is a question of law when the doubt or
difference arises as to what the law is pertaining to a certain state of facts. On the other hand, there is a
question of fact when the doubt arises as to the truth or the falsity of alleged facts.22

In the case at bench, the issues raised by the petitioners are essentially factual matters, the
determination of which are best left to the courts below. Well-settled is the rule that the Supreme Court
is not a trier of facts. Factual findings of the lower courts are entitled to great weight and respect on
appeal, and in fact accorded finality when supported by substantial evidence on the record.23 Substantial
evidence is more than a mere scintilla of evidence. It is that amount of relevant evidence that a
reasonable mind might accept as adequate to support a conclusion,24 even if other minds, equally
reasonable, might conceivably opine otherwise.25 But to erase any doubt on the correctness of the
assailed ruling, we have carefully perused the records and, nonetheless, arrived at the same conclusion.
We find that there is substantial evidence on record to support the Court of Appeals and trial court’s
conclusion that the signatures of Julian and Guillerma in the Deed of Absolute Sale were forged.

The examination conducted by the NBI disclosed that Julian and Guillerma’s signatures were forged.

We find that both the trial court and the Court of Appeals correctly gave probative value to the
testimony of the NBI Senior Document Examiner Caroline Moldez Pitoy, who categorically testified that
the signatures of Julian and Guillerma in the Deed of Absolute Sale were forged, viz:26

Atty. Dalisay: As Senior Document Examiner of the National Bureau of Investigation, do [sic] you have
[the] occasion of examining [sic] the signatures of Julian Sambaan and Guillerma Saarenas by virtue of
the case of the Regional Director, Regional Office of the National Bureau of Investigation, Cagayan de
Oro City?

A: Yes sir.

xxxx

Q: What was the result of the findings on the signatures of Julian Sambaan and Guillerma Saarenas
Sambaan appearing on the Deed of Sale dated December 12, 1990.

A: After [conducting] comparative examinations x x x on the standard specimen signatures of Julian

Sambaan [and Guillerma Sambaan] as well as the x x x questioned x x x signatures x x x we found out
that [they were] not written by one and the same person.27

xxxx

Q: What was the procedure which you have taken x x x in examining the authenticity of the signatures of
Guillerma Saarenas Sambaan?

A: Per Standard Operating Procedures, the first thing we did upon receipt of the documents submitted
to us is to check x x x the documents attached to the basic letter-request and then the questioned and
standard documents were classified as to the sufficiency and appropriateness of the standards, and then
these were evaluated, after which, they were marked accordingly, then we go to examining all the
standard/specimens first, to determine whether the handwriting is done by one and the same person
before comparing with the questioned and standard signatures. x x x After they were found to be
written by one and the same person, before comparing with the questioned documents, the
handwriting characteristics were properly observed in these two (2) sheets of photographs, then, the
final evaluation is made, after which, a written report is made as a result of the examination, then the
same is forwarded to the Document Examiner for re-examination and this Examiner affixes his signature
and submits the same to the Chief of the Division for approval and the said report passes to the office of
the Regional Director for final approval.

Petitioners failed to present any evidence to rebut the findings of the NBI handwriting expert.

Moreover, the findings of the NBI document examiner were corroborated by the trial court’s own
observation, as affirmed by the CA, that "even a cursory examination of Guillerma’s questioned
signature from her specimen signatures in the enlarged photographs (Exhibits ‘F’ and ‘F-1’) would show
that it needs no expert witness to notice the wide difference in stroke, as well as the writing style in
capital ‘G’."28 What is more, Emma S. Felicilda, the daughter of then deceased Guillerma, likewise
testified that "in fact my mother was the one who filed the complaint in this instant case because
according to her, she did not sign the said document".29

The fact that the examination was commissioned by the respondents did not make said examination null
and void.

It is of no moment that the examination of the Deed of Absolute Sale was commissioned by the
respondents. In the end, it is the court which has the discretion and authority on whether to give
probative value to the results of the examination. As held in Sali v. Abubakar,30 the fact that the NBI
conducted the examination of certain contested documents upon the request of a private litigant does
not necessarily nullify the examination thus made:

x x x Its purpose is, presumably, to assist the court having jurisdiction over said litigations, in the
performance of its duty to settle correctly the issue relative to said documents. Even a non-expert
private individual may examine the same, if there are facts within his knowledge which may help the
courts in the determination of said issue. Such examination, which may properly be undertaken by a
non-expert private individual, does not, certainly, become null and void when the examiner is an expert
and/or an officer of the NBI.

Indeed, any person, expert or not, either in his private or in his official capacity, may testify in court on
matters, within his personal knowledge, which are relevant to a suit, subject to the judicial authority to
determine the credibility of said testimony and the weight thereof. [On] the other hand, the question
whether a public official may or shall be ordered or permitted by his superior to examine documents
and testify thereon in a given case, is one mainly administrative in character, which is within the
competence of said superior officer, or the Bureau Director or Head of the Office, or the corresponding
department head to decide, and is independent of the validity of the examination thus made or of the
credence and weight to be given by the Court to the conclusions reached, in consequence of said
examination, by the official who made it.

The procedures taken by the NBI document examiner did not violate Section 22, Rule 132 of the Rules of
Court.

We are not swayed by petitioners’ allegation that the comparisons made by the document examiner,
the CA and the trial court, of Guillerma’s signature in the Deed of Absolute Sale and her specimen
signatures, violated Section 22, Rule 13231 of the Rules of Court on the authentication of private
documents. It should be borne in mind that in this case respondents were not presenting evidence to
authenticate a private document. On the contrary, they are challenging the signatures appearing in the
Deed of Absolute Sale.

The confluence of the following circumstances prove by preponderance of evidence that the Deed of
Absolute Sale was forged.
Records show that Julian was unaware of any absolute conveyance of his rights over the subject
property in favor of petitioners. As found by the trial court and affirmed by the CA, Julian even
requested his children to redeem subject property from the petitioners. In furtherance of his father’s
request, Absalon offered to redeem the subject property from the petitioners in 1982, however, the
latter refused because they were allegedly using the same as tethering place for their cattle.32

The caretaker of the subject property, Eufronio Abrea, also testified on cross-examination that there
were times when the brothers and sisters of Myrna went to the land and asked for
coconuts.33 Petitioners take this to imply that the respondents "never owned the subject property
because they had to ask for coconuts from petitioners, who were the real owners of the property."34 We
disagree with this interpretation. Harvesting of coconuts requires specialized skills; an ordinary person
who does not know how to climb necessarily has to ask the caretaker to get the coconuts for him or her.

In addition, Myrna admitted that she was not present when her parents signed the assailed Deed of
Absolute Sale.35 Neither was she cognizant of who the witnesses were to the said deed.36 Interestingly,
Guillerma, one of the alleged signatories, would have been privy to the transaction that involved her
husband. Yet, she joined herein respondents in filing an action for the Annulment of the Deed of
Absolute Sale on the ground of forgery.

Lastly, the trial court and the CA were one in proclaiming that considering that the subject property
belongs to Julian’s capital, the execution of the assailed Deed of Absolute Sale could be validly made by
Julian even without his wife’s signature.37 As a matter of fact, the wife’s name was not typed in the
assailed deed and her purported signature merely appears next to the supposed signature of Julian. This
only confirms that the person who prepared the deed knew that her signature was unnecessary for the
assailed document.

The trial court and the CA further concluded:

x x x If such was the case, we are in a query why the signature of GUILLERMA must have to be forged
when her consent, as spouse of JULIAN, is not necessary to the execution of the Deed of Absolute Sale?
The answer to this is simple: JULIAN never executed the assailed Deed of Absolute Sale in favor of
MYRNA and such deed conveys no ownership in favor of the appellants.38

Conclusions and findings of fact by the trial court are entitled to great weight on appeal and should not
be disturbed unless for strong and cogent reasons because the trial court is in a better position to
examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the
case.39 The fact that the CA adopted the findings of fact of the trial court makes the same binding upon
this court.40 In Philippine Airlines, Inc. v. Court of Appeals, 41 we held that factual findings of the CA
which are supported by substantial evidence are binding, final and conclusive upon the Supreme Court.
A departure from this rule may be warranted where the findings of fact of the CA are contrary to the
findings and conclusions of the trial court,42 or when the same is unsupported by the evidence on
record.43 There is no ground to apply the exception in the instant case, however, because the findings
and conclusions of the CA are in full accord with those of the trial court.

The forged Deed of Absolute Sale is null and conveys no title.

Having affirmed the findings of fact of both the CA and the trial court that the signatures of Julian and
Guillerma are forgeries, we now come to the question of the validity of the transfer of title to the
petitioners.

In Sps. Solivel v. Judge Francisco,44 we held that:

x x x in order that the holder of a certificate for value issued by virtue of the registration of a voluntary
instrument may be considered a holder in good faith for value, the instrument registered should not be
forged. When the instrument presented is forged, even if accompanied by the owner’s duplicate
certificate of title, the registered owner does not thereby lose his title, and neither does the assignee in
the forged deed acquire any right or title to the property.
x x x The innocent purchaser for value protected by law is one who purchases a titled land by virtue of a
deed executed by the registered owner himself, not by a forged deed, as the law expressly states. x x x

In Instrade, Inc. v. Court of Appeals,45 we reiterated the said ruling maintaining that "[A]s early as
Joaquin v. Madrid, x x x, we said that in order that the holder of a certificate for value issued by virtue of
the registration of a voluntary instrument may be considered a holder in good faith and for value, the
instrument registered should not be forged". Indubitably, therefore, the questioned Deed of Absolute
Sale did not convey any title to herein petitioners. Consequently, they cannot take refuge in the
protection accorded by the Torrens system on titled lands.

Thus, we hold that with the presentation of the forged deed, even if accompanied by the owner’s
duplicate certificate of title, the registered owner did not thereby lose his title, and neither does the
assignee in the forged deed acquire any right or title to the said property. The CA has aptly arrived at the
same conclusion in its August 20, 2003 Decision affirming in toto the August 2, 2001 Decision of the RTC
of Cagayan de Oro City ratiocinating that:

It is significant to stress that the main thrust in the case at bench is the regularity and validity of the
assailed Deed of Absolute Sale dated December 7, 1970 (Record p. 374, Exhibit "3") allegedly executed
by JULIAN in favor of the appellants. As such, we must not confuse the issue at hand by averring that
other documents should be considered in determining the validity of the deed of absolute sale. The
reason is simple: the valid execution of the Deed of Absolute Sale will convey and transfer ownership in
favor of appellants title based on the rule that by the contract of sale one of the contracting parties
obligates himself to transfer ownership of and to deliver a determinate thing, and the other to pay
therefor a sum certain in money or its equivalent (Coronel vs. Court of Appeals, 263 SCRA 15). The fact
that the assailed Deed was not signed by JULIAN and the signatures of JULIAN and GUILLERMA were
forged per findings of the NBI Senior Document Examiner, it can therefore be inferred that the
subsequent issuance of Transfer Certificate of Title No. T-14204 has no basis at all since ownership was
not conveyed to appellants by reason of the forged Deed.1avvphi1

In addition, as to the issue that the Agreement dated December 10, 1970 (Record p. 375, Exhibit "4")
executed between DOMINGO and PATRICIO were excluded, we believe there is no need to delve on the
said Agreement since the same will not in any way give justification to the forgery committed in the
Deed of Absolute Sale. As explained by the court a quo, to which we concur, appellees should not be
faulted because they are not lawyers, and as such they may not be able to appreciate the legal logic
between Exhibits "3" and "4".46

Prescription did not bar respondents’ action to recover ownership of the subject property.

Citing Article 145447 of the Civil Code, petitioners assert that since the respondents admit that there was
a mortgage transaction between Julian and herein petitioners involving the subject property there is no
dispute that an implied trust was created by operation of law. In which case, respondents’ right to
reconveyance had already prescribed when they filed the annulment case on April 3, 1992, or more than
10 years after petitioners’ repudiated such implied trust.

On the other hand, respondents assert that the element of consent is totally wanting in the assailed
Deed of Absolute Sale because the signatures of Julian and Guillerma, which is equivalent to their
consent, were forged by the petitioners.48 They maintain that the absence of consent made the said
document null and void.49 Hence, this case falls under the purview of Article 1410 of the Civil Code
which provides that an action to declare the inexistence of void contracts does not prescribe.50

We agree with the respondents. The supposed vendor's signature having been proved to be a forgery,
the instrument is totally void or inexistent as "absolutely simulated or fictitious" under Article 1409 of
the Civil Code.51 According to Article 1410, "the action or defense for the declaration of the inexistence
of a contract does not prescribe". The inexistence of a contract is permanent and incurable which
cannot be cured either by ratification or by prescription.52

The award of moral damages and attorney’s fees is proper.

On this aspect, we must consider the blood relations among the parties. One of the respondents, Emma
S. Felicilda, testified on cross examination that they had high regard for Myrna, their eldest sister.53 The
same was echoed by respondent Anita Sambaan on cross examination.54 They could not believe that
Myrna would keep and appropriate the land for herself and transfer the title exclusively to her
name.55 On direct examination, respondent Emma S. Felicilda likewise testified that the forgery caused
them anger and bad emotions.56

Moreover, it was Julian’s dying wish for the property to be redeemed from the petitioners.57 Hence, it is
not unexpected that the sentimental significance of the property and the anger and emotions caused by
the unlawful transfer of the same have moved the respondents to recover the same through the instant
action. We therefore hold that the award of ₱20,000.00 as moral damages is proper.

In addition, in view of the complexity of the instant case and the multiple levels of appeal that this case
had gone through, we also affirm the award of attorney’s fees of ₱20,000.00 as well as the actual
damages of ₱1,671.00 incurred by the prevailing party which was substantiated during trial.

On a final note, it bears stressing that the arguments raised by the petitioners are essentially the same
issues they put forward before the CA which have been duly passed upon and considered by the
appellate court in affirming the RTC Decision in toto.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. no. 169970 January 20, 2009

PROTACIO VICENTE AND DOMINGA VICENTE, represented by Rondolf Vicente, Petitioners,

vs.
DELIA SOLEDAD AVERA and RONBERTO VALINO, Sheriff IV, Regional Trial Court, Branch 70, Pasig
City, Respondents.

DECISION

PUNO, C.J.:

This Petition for Review on Certiorari seeks to set aside the Decision1 and Resolution2 of the Court of
Appeals (CA), dated June 16, 2005 and October 4, 2005 respectively, in CA-G.R. CV No. 79327, which
reversed the Decision3 of the Regional Trial Court (RTC), Branch 208, Mandaluyong City, dated March 30,
2003.

Jovencio Rebuquiao was the registered owner of the property in dispute, then covered by Transfer
Certificate of Title (TCT) No. 34351.4 On October 1, 1987, Rebuquiao executed a Deed of Absolute Sale in
favor of petitioners, spouses Protacio Vicente and Dominga Vicente, over the property in
dispute.5 Respondent Delia Soledad Avera alleges that on October 9, 1987, Jose Rebuquiao, pursuant to
a Special Power of Attorney granted to him by Jovencio Rebuquiao, executed a Deed of Absolute Sale
with Assumption of Mortgage in favor of Roberto Domingo, Avera’s spouse at the time, and herself.6

On May 29, 1991, Avera filed a Petition for Declaration of Nullity of Marriage before the RTC, Branch 70,
Pasig City, entitled "Delia Soledad Domingo, etc. v. Roberto Domingo" and docketed as JDRC Case No.
1989-J (JDRC case).7 In this case, Avera asserted exclusive ownership over the property in dispute.8 On
January 23, 1992, a notice of lis pendens was inscribed on TCT No. 34351, pertaining to the JDRC case
pending at the time.9

Since 1997, petitioners possessed the property in dispute.10 On July 22, 1998, TCT No. 34351 was
cancelled, and in lieu thereof, the Registry of Deeds issued petitioners TCT No. 14216 for the property in
dispute, on the basis of the deed of sale executed on October 1, 1987.11 The notice of lis pendens was
carried over to TCT No. 14216.12

On November 28, 1994, the RTC, Branch 70, Pasig City, rendered a Decision in the JDRC case, declaring
the marriage of Avera and Domingo void and ordering the property acquired during their cohabitation
to be put in the custody of Avera, including the property in dispute.13 After the decision in the JDRC case
became final and executory, the RTC, Branch 70, Pasig City, issued a Writ of Execution.14 On June 13,
2001, the same trial court issued an Alias Writ of Execution, which reads:

Movant declared in her motion that the said property is now registered in the name of another person,
namely, Protacio Vicente, under TCT No. 14216 of the Register of Deeds of Mandaluyong City. It
appearing, however, that the transfer was made notwithstanding the annotation thereon of the notice
of lis pendens that the same property is the subject of the instant case, it can still be the subject of a writ
of execution to satisfy the judgment in favor of herein petitioner.

WHEREFORE, let an alias writ of execution be issued over Transfer Certificate of Title No. 34351, now
covered by TCT No. 14216 of the Register of Deeds of Mandaluyong City.1avvphil.zw+

SO ORDERED.15

Pursuant to the Alias Writ of Execution, respondent Ronberto Valino, in his capacity as Sheriff IV of the
RTC, Branch 70, Pasig City, served a Notice to Vacate dated August 15, 2001, on petitioners.16 On August
17, 2001, petitioners filed an Affidavit of Third Party Claim before the RTC, Branch 70, Pasig City.17

On August 22, 2001, petitioners filed a Complaint for Injunction with Prayer for a Temporary Restraining
Order (TRO) before the RTC, Branch 208, Mandaluyong City, to enjoin Sheriff Valino from implementing
the alias writ of execution.18 On September 4, 2001, the trial court issued a TRO19 and, on May 29, 2002,
a Writ of Preliminary Injunction, enjoining respondents from enforcing the notice to vacate.20 On March
30, 2003, it rendered a decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered making the writ of preliminary injunction PERMANENT.

Defendants’ counterclaims are hereby dismissed for lack of merit.

SO ORDERED.21

It held that petitioners were entitled to permanent injunction considering the following: (1) it is
undisputed that petitioners are the registered owners of the subject property, which certificate of title
confers upon them conclusive ownership of the property; and (2) the writ of execution issued in the
JDRC case could only be issued against a party to the action, and thus not to the petitioners.22

On appeal, the CA reversed and set aside the decision of the RTC, Branch 208, Mandaluyong City.23 The
CA held that petitioners are bound by the outcome of the JDRC case, because the annotation of the
notice of lis pendens (January 23, 1992) was ahead of petitioners’ registration of the deed of sale
executed on October 1, 1987 (July 22, 1998).24 Petitioners filed a Motion for Reconsideration, which the
CA denied.25

Petitioners raise the following issues before this Court:

The CA erred in ordering the dismissal of the complaint for injunction despite the fact that the
Petitioners are the registered owners of the property and as such cannot be evicted out therefrom
unless:

A. the sale from which they based their acquisition is declared void.

B. the title issued in their names based on the Deed of Sale is likewise declared void.

II

The CA erred in dismissing the complaint because in so doing, it made an implied recognition that a real
property titled under the torrens system may be attacked collaterally in contravention of law and
established jurisprudence[.]

III
The CA erred in concluding that the Petitioners are bound by the lis pendens it being clear that the
property was acquired long before the lis pendens was annotated. Petitioners’ (sic) became owners of
the property on October 1, 1987 and not on July 20, 1998 when their ownership was merely confirmed
by the title issued by the Office of the Register of Deeds.

Petitioners maintain that as the registered owners and actual possessors of the property in dispute, they
are entitled to a writ of injunction that will prevent the implementation of the writ of execution
corresponding to the JDRC case.

Respondents assert that petitioners are not entitled to the writ of injunction, because the petitioners
are subject to the outcome of the JDRC case and thus the implementation of the writ of execution due
to the notice of lis pendens annotated on their TCT. They further allege: (1) that there was no sale by
Rebuquiao in favor of petitioners on October 1, 1987; and (2) if there was a sale, the same happened in
1997, the year petitioners registered the deed of sale executed in their favor.26

The core issue in the case at bar is whether injunction lies in favor of the petitioners to prevent the
respondents from interfering in the exercise of their rights over the property in dispute.

We find merit in the petition.

Injunction, as a preservative remedy, aims to protect substantive rights and interests.27 To be entitled to
a writ of injunction, the complainant must establish the following requisites: (1) there must be a right
in esse or the existence of a right to be protected; and (2) the act against which injunction is to be
directed is a violation of such right.28 The grant of the writ is conditioned on the existence of the
complainant’s clear legal right, which means one clearly founded in or granted by law or is "enforceable
as a matter of law."29

As the registered owners and actual possessors of the property in question, petitioners have a clear legal
right to the property in dispute. Section 51 of Presidential Decree (P.D.) No. 1529 provides that
registration is the operative act that conveys or affects registered land as against third persons.30 Thus, a
TCT is the best proof of ownership of land.31 In the case at bar, it is undisputed that petitioners are the
registered owners and actual possessors of the subject property. Moreover, as the registered owners,
petitioners have the right to the possession of the property, which is one of the attributes of
ownership.32

It was erroneous for respondents to assail the deed of sale executed on October 1, 1987 in favor of
petitioners, because this constitutes a collateral attack on petitioners’ TCT. Section 48 of P.D. No. 1529
prohibits a collateral attack on a Torrens title.33 This Court has held that a petition which, in effect,
questioned the validity of a deed of sale for registered land constitutes a collateral attack on a certificate
of title.34 In the case at bar, respondents’ allegation, that the deed of sale executed on October 1, 1987
in favor of petitioners does not exist, clearly constitutes a collateral attack on a certificate of title. The
allegation of the inexistence of the deed of sale in effect attacks the validity of the TCT issued in the
petitioners’ names.

Petitioners’ title to the property in dispute is not subject to the outcome of the litigation covered by the
notice of lis pendens annotated on January 23, 1992. Section 24, Rule 14 of the 1964 Rules of Civil
Procedure provides that a purchaser of the property affected by the notice of lis pendens is deemed to
have constructive notice of the pendency of the action only from the time of filing such notice.35 Section
14, Rule 13 of the 1997

Rules of Civil Procedure reiterates this rule.36 Thus, a notice of lis pendens affects a transferee pendente
lite, who by virtue of the notice, is bound by any judgment, which may be rendered for or against the
transferor, and his title is subject to the results of the pending litigation.37

A notice of lis pendens neither affects the merits of a case nor creates a right or a lien.38 It serves to
protect the real rights of the registrant while the case involving such rights is pending resolution.39 While
the notice of lis pendens remains on a certificate of title, the registrant could rest secure that he would
not lose the property or any part of it during the litigation.40 Once a notice of lis pendens has been duly
registered, any subsequent transaction affecting the land involved would have to be subject to the
outcome of the litigation. For this reason, the Court has pronounced that a "purchaser who buys
registered land with full notice of the fact that it is in litigation between the vendor and a third party
stands in the shoes of his vendor and his title is subject to the incidents and result of the pending
litigation."41

In the case at bar, the notice of lis pendens does not affect petitioners’ title to the property in dispute. A
notice of lis pendens concerns litigation between a transferor and a third party, where the transferee
who acquires land with a notice of lis pendens annotated on the corresponding certificate of title stands
in the shoes of his predecessor and in which case the transferee’s title is subject to the results of the
pending litigation. The notice of lis pendens does not concern litigation involving Rebuquiao, who
transferred his title to the property in dispute to petitioners, and his title. The notice of lis
pendens pertains to the JDRC case, an action for nullity of the marriage between Avera and Domingo.
Since Rebuquiao’s title to the property in dispute is not subject to the results of the JDRC case,
petitioners’ title to the same property is also not subject to the results of the JDRC case.

To determine whether the second requisite for granting a writ of injunction exists, that the act against
which injunction is to be directed is a violation of the complainant’s right, we must examine the
implications regarding the implementation of the writ of execution over TCT No. 14216. Pursuant to this
writ of execution, Sheriff Valino served petitioners with a notice to vacate.

If allowed to be carried out, the act against which the injunction is directed, the implementation of the
writ of execution, would violate petitioners’ rights as the registered owners and actual possessors of the
property in dispute. The registered owner has the right to possess and enjoy his property, without any
limitations other than those imposed by law.42 The implementation of the writ of execution would
unduly deprive petitioners, as the registered owners, of their right to possess the subject property,
which is one of the attributes of ownership.43

We must stress that until petitioners’ title is annulled in a proper proceeding, Avera has no enforceable
right over the property in dispute. At this point, petitioners’ possession of the subject property must be
respected. Since Avera failed to prove her indubitable right over the subject property, we rule that
petitioners possess a clear and unmistakable right over the property in dispute that requires the
issuance of a writ of injunction to prevent any damage to their interests as registered owners.

IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 79327, dated June 16, 2005 and October 4, 2005 respectively, are REVERSED and SET ASIDE.

SO ORDERED.

G.R. No. 181844 September 29, 2010

SPS. FELIPE and JOSEFA PARINGIT, Petitioner,

vs.
MARCIANA PARINGIT BAJIT, ADOLIO PARINGIT and ROSARIO PARINGIT ORDOÑO, Respondents.

DECISION

ABAD, J.:

This case is about the existence of an implied trust in a transaction where a property was bought by one
sibling supposedly for the benefit of all. The other siblings now want to recover their share in the
property by reimbursing their brother for their share in the purchase price.

The Facts and the Case

During their lifetime, spouses Julian and Aurelia Paringit leased a lot on Norma Street, Sampaloc, Manila
(the lot) from Terocel Realty, Inc. (Terocel Realty).1 They built their home there and raised five children,
namely, Florencio, Felipe, Marciana, Adolio, and Rosario.2 Aurelia died on November 6, 1972.3

For having occupied the lot for years, Terocel Realty offered to sell it to Julian but he did not have
enough money at that time to meet the payment deadline. Julian sought the help of his children so he
can buy the property but only his son Felipe and wife Josefa had the financial resources he needed at
that time.4 To bring about the purchase, on January 16, 1984 Julian executed a deed of assignment of
leasehold right in favor of Felipe and his wife that would enable them to acquire the lot.5 On January 30,
1984 the latter bought the same from Terocel Realty for ₱55,500.00 to be paid in installments.6 On April
12, 1984 Felipe and his wife paid the last installment and the realty company executed a Deed of
Absolute Sale in their favor and turned over the title to them.7

On February 25, 1985, due to issues among Julian’s children regarding the ownership of the lot, Julian
executed an affidavit clarifying the nature of Felipe and his wife’s purchase of the lot. He claimed that it
was bought for the benefit of all his children.8 He said in his affidavit:

3. That recently, the Terocel Realty, Inc., owners of the subdivision lots in Sampaloc, gave a limited
period to actual occupants like us within which to purchase the lands occupied and as I had no funds at
that time, I asked all my children and their respective spouses to contribute money with which to
purchase the lot and thereafter to divide the lot among themselves but only my son Felipe Paringit and
his wife Josefa answered my plea and so, in order that they could purchase the land, I assigned to my
son and his wife my right to the whole property and with this assignment, the couple purchased the
parcel of land from the Terocel Realty, Inc. for the sum of Fifty Five Thousand Five Hundred Pesos
(₱55,500.00) Philippine currency on April 12, 1984 as shown in the Deed of Absolute sale executed by
the Terocel Realty, Inc. bearing Registry No. 273, Page 56, Book XV, Series of 1984, of Notary Public of
Manila, Atty. Albino B. Achas plus the sum of ₱4,500.00 expenses or a total of Sixty Thousand
(₱60,000.00);

xxxx

5. That to set the records straight, and to effect peace and understanding among my children and their
respective families, I, as father and head of the family, hereby declare:

xxxx

c) That my conjugal share in the above described property is one half or 75 sq. m. and the other half or
75 sq. m. belongs to my deceased wife;

d) That I waive my share in the estate of my deceased wife and as she has no will regarding the said
estate, the same must be divided equally among my five children at 15 sq. m. each; but each of them
should reimburse their brother Felipe and his wife, Josefa the proportional amount advanced by them as
I also will reimburse him the sum of ₱30,000.00 or one half of the amount that the couple advanced.

e) That if any of my children claims or needs a bigger area than 15 sq. m., he/she should amicably talk
with or negotiate with any other brother or sister for transfer or assignment of such area as they agree.9

Expressing their concurrence with what their father said in his affidavit, Felipe’s siblings, namely,
Marciana, Rosario, and Adolio (collectively, Marciana, et al) signed the same. Josefa, Felipe’s wife, also
signed the affidavit for Felipe who was in Saudi Arabia.10 Only Florencio, among the siblings, did not sign.

On January 23, 1987 Felipe and his wife registered their purchase of the lot,11 resulting in the issuance of
Transfer Certificate of Title 172313 in their names.12 Despite the title, however, the spouses moved to
another house on the same street in 1988.13 Marciana, et al, on the other hand, continued to occupy the
lot with their families without paying rent.14 This was the situation when their father Julian died on
December 21, 1994.

On December 18, 1995 Felipe and his wife sent a demand letter to Marciana, et al asking them to pay
rental arrearages for occupying the property from March 1990 to December 1995 at the rate of
₱2,400.00 a month, totaling ₱168,000.00.15 Marciana, et al refused to pay or reply to the letter,
believing that they had the right to occupy the house and lot, it being their inheritance from their
parents. On March 11, 1996 Felipe and his wife filed an ejectment suit against them.16 The suit
prospered, resulting in the ejectment of Marciana, et al and their families from the property.17 Shortly
after, Felipe and his wife moved into the same.18
To vindicate what they regarded as their right to the lot and the house, on July 24, 1996 Marciana, et al
filed the present action against Felipe and his wife for annulment of title and reconveyance of property
before the Regional Trial Court (RTC) of Manila, Branch 39.19

In his answer, Felipe denied knowledge of the agreement among the siblings that the property would
devolve to them all.20 Josefa, his wife, claimed that she signed the affidavit only because Marciana, et al
were going to get mad at her had she refused.21 She also claimed that she signed the document only to
prove having received it.22

For their part, Marciana, et al insisted that the agreement was that Felipe and his wife would acquire the
lot for the benefit of all the siblings. They even tried to reimburse the spouses for their shares in the lot’s
price.23 In fact, Adolio offered to pay ₱32,000.00 for his 30 square meter-portion of the lot but Felipe
and his wife did not accept it. The other siblings tried to pay for their shares of the purchase price, too,
but the spouses already avoided them.24 Marciana, et al denied pressuring Josefa into signing the
document in question. They claimed that it was in fact Josefa who caused the drafting of the affidavit.25

On July 21, 2004 the RTC rendered a decision, finding the evidence of Marciana, et al insufficient to
prove by preponderance of evidence that Felipe and his wife bought the subject lot for all of the siblings.
Not satisfied with that decision, Marciana, et al appealed to the Court of Appeals (CA).

On August 29, 2007 the CA rendered judgment26 reversing the decision of the RTC and ordering Felipe
and his wife to reconvey to Marciana, et al their proportionate share in the lot upon reimbursement of
what the spouses paid to acquire it plus legal interest. Felipe and his wife filed a motion for
reconsideration of the decision but the CA denied it on February 21, 2008,27 prompting them to come to
this Court on a petition for review.

The Issues Presented

This case presents the following issues:

1. Whether or not the CA erred in finding that Felipe and his wife purchased the subject lot under an
implied trust for the benefit of all the children of Julian; and

2. Whether or not the CA erred in failing to hold that Marciana, et al’s right of action was barred by
prescription or laches.

The Court’s Rulings

The CA found that Felipe and his wife’s purchase of the lot falls under the rubric of the implied trust
provided in Article 1450 of the Civil Code.28 Implied trust under Article 1450 presupposes a situation
where a person, using his own funds, buys property on behalf of another, who in the meantime may not
have the funds to purchase it. Title to the property is for the time being placed in the name of the
trustee, the person who pays for it, until he is reimbursed by the beneficiary, the person for whom the
trustee bought the land. It is only after the beneficiary reimburses the trustee of the purchase price that
the former can compel conveyance of the property from the latter.29

Felipe and his wife claim 1) that they did not lend money to Marciana, et al for the purchase of the lot;
2) that they did not buy it for the benefit of the siblings; and 3) that the conveyance of the lot was not to
secure the payment of any supposed loan. Felipe and his wife insist that they had no agreement with
Marciana, et al regarding the spouses’ purchase of the lot for the benefit of all of Julian’s children.

But the circumstances of this case are actually what implied trust is about. Although no express
agreement covered Felipe and his wife’s purchase of the lot for the siblings and their father, it came
about by operation of law and is protected by it. The nature of the transaction established the implied
trust and this in turn gave rise to the rights and obligations provided by law. Implied trust is a rule of
equity, independent of the particular intention of the parties.30

Here, the evidence shows that Felipe and his wife bought the lot for the benefit of Julian and his
children, rather than for themselves. Thus:
First. There is no question that the house originally belonged to Julian and Aurelia who built it. When
Aurelia died, Julian and his children inherited her conjugal share of the house. When Terocel Realty,
therefore, granted its long time tenants on Norma Street the right to acquire the lots on which their
house stood, that right technically belonged to Julian and all his children. If Julian really intended to sell
the entire house and assign the right to acquire the lot to Felipe and his wife, he would have arranged
for Felipe’s other siblings to give their conformity as co-owners to such sale. And if Felipe and his wife
intended to buy the lot for themselves, they would have, knowing that Felipe’s siblings co-owned the
same, taken steps to secure their conformity to the purchase. These did not happen.

Second. Julian said in his affidavit that Felipe and his wife bought the lot from Terocel Realty on his
behalf and on behalf of his other children. Felipe and his wife advanced the payment because Julian and
his other children did not then have the money needed to meet the realty company’s deadline for the
purchase. Julian added that his other children were to reimburse Felipe for the money he advanced for
them.

Notably, Felipe, acting through his wife, countersigned Julian’s affidavit the way his siblings did. The
document expressly acknowledged the parties’ intention to establish an implied trust between Felipe
and his wife, as trustees, and Julian and the other children as trustors. Josefa, Felipe’s wife, of course
claims that she signed the document only to show that she received a copy of it. But her signature did
not indicate that fact. She signed the document in the manner of the others.

Third. If Felipe and his wife really believed that the assignment of the house and the right to buy the lot
were what their transactions with Julian were and if the spouses also believed that they became
absolute owners of the same when they paid for the lot and had the title to it transferred in their name
in 1987, then their moving out of the house in 1988 and letting Marciana, et al continue to occupy the
house did not make sense. They would make sense only if, as Marciana, et al and their deceased father
claimed, Felipe and his wife actually acquired the lot only in trust for Julian and all the children.

Fourth. Felipe and his wife demanded rent from Marciana, et al only on December 18, 1995, a year
following Julian’s death on December 21, 1994. This shows that from 1984 when they bought the lot to
December 18, 1995, when they made their demand on the occupants to leave, or for over 10 years,
Felipe and his wife respected the right of the siblings to reside on the property. This is incompatible with
their claim that they bought the house and lot for themselves back in 1984. Until they filed the suit, they
did nothing to assert their supposed ownership of the house and lot.

Felipe and his wife also claim that Marciana, et al’s action to recover their portions of the house and lot
had already prescribed. True, an implied trust prescribes within 10 years from the time the right of
action accrues.31 But when did the right of action based on the implied trust accrue in this case? A right
of action implies the existence of a cause of action and a cause of action has three elements: a) the
existence of a right in plaintiff’s favor; b) defendant’s obligation to respect such right; and c) defendant’s
act or omission that violates the plaintiff’s right. Only when the last element occurs or takes place can it
be said in law that a cause of action has arisen.32

In an implied trust, the beneficiary’s cause of action arises when the trustee repudiates the trust, not
when the trust was created as Felipe and his wife would have it.33 The spouses of course registered the
lot in their names in January 1987 but they could not be said to have repudiated the implied trust by
that registration. Their purchase of the land and registration of its title in their names are not
incompatible with implied trust. It was understood that they did this for the benefit of Julian and all the
children.

At any rate, even assuming that Felipe and his wife’s registration of the lot in their names in January
1987 constituted a hostile act or a violation of the implied trust, Marciana, et al had 10 years or until
January of 1997 within which to bring their action. Here, they filed such action in July 1996 well within
the period allowed them.

Felipe and his wife also claim that Marciana, et al’s action was barred by laches. But there is no basis for
such claim. 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 or should have been done
earlier.341avvphil

Here, Marciana, et al had no reason to file an earlier suit against Felipe and his wife since the latter had
not bothered them despite their purchase of the lot in their names on January 30, 1984. Only about 12
years later or on December 18, 1995 when they wrote their demand letter did the spouses take an
adverse attitude against Marciana, et al. The latter filed their action to annul Felipe and his wife’s title
and have the same transferred to their names not too long later on July 24, 1996.

Finally, the CA ordered Marciana, et al to reimburse Felipe and his wife the individual siblings’
proportionate share in the ₱55,500.00 that the spouses paid the realty company. But, according to
Julian’s affidavit, concurred in by Felipe, his wife, and Marciana, et al, the total acquisition cost of the lot
was ₱60,000.00 (purchase price of ₱55,500.00 plus additional expenses of ₱4,500.00). Thus,
respondents should reimburse petitioners their proportionate contribution in the total acquisition cost
of ₱60,000.00.

WHEREFORE, the Court DENIES the petition, and AFFIRMS the decision of the Court of Appeals in CA-
G.R. CV 84792 with the MODIFICATION that respondents Marciana Paringit Bajit, Adolio Paringit, and
Rosario Paringit Ordoño reimburse petitioners Felipe and Josefa Paringit of their corresponding share in
the purchase price plus expenses advanced by petitioners amounting to ₱60,000.00 with legal interest
from April 12, 1984 until fully paid.

SO ORDERED.

G.R. No. 161925 November 25, 2009

SPOUSES EXEQUIEL LOPEZ and EUSEBIA LOPEZ, Petitioners,

vs.
SPOUSES EDUARDO LOPEZ and MARCELINA R. LOPEZ, Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Court of Appeals (CA) Decision1 dated January 26, 2004,
which ordered the cancellation of Transfer Certificate of Title (TCT) No. T-5066 in the name of
petitioners.

Respondents, spouses Eduardo and Marcelina Lopez, are the owners and occupants of an 80-square-
meter residential lot situated in San Pascual, Hagonoy, Bulacan. They acquired the property by donation
inter vivos from Maria Alvarado and Agatona Caparas, in whose names the lot was previously declared
for taxation purposes. Respondents have occupied the lot since 1977.2

In November 1992, respondents discovered that Victor Villadares was granted a free patent over an
885-sq-m land, which included respondents’ lot, and was subsequently issued Original Certificate of Title
(OCT) No. RP-253 (P-8511) on March 8, 1978. Thereafter, Villadares subdivided the entire parcel of land
into 3 lots, namely: Lot 9954-A, Lot 9954-B and Lot 9954-C. As shown in the Deed of Absolute Sale of
Portions of a Parcel of Land, Villadares sold Lot 9954-B with an area of 273 sq m to petitioners, spouses
Eusebia and Exequiel Lopez, and Lot 9954-C with an area of 337 square meters to Filomena Caparas.
Consequently, OCT No. RP-253 (P-8511) was cancelled and TCT Nos. T-5065, T-5066 and T-5067 were
issued to Villadares, to petitioners, and to Caparas, respectively.

Respondents filed an action for reconveyance, declaration of nullity of a deed of absolute sale,
cancellation of titles, and damages against Villadares and petitioners. The action was filed only against
the two parties because respondents’ property is situated between their properties, Lots 9954-A and
9954-B.

In their Answer, petitioners averred that respondents had no personality to institute the action, that the
free patent in favor of Villadares was issued pursuant to law, that they were innocent purchasers for
value, and that their certificate of title was already incontrovertible.3
During trial, Pedro Manansala, a witness for respondents, testified that petitioners’ lot consisted of 168
sq m only, which they bought from him for ₱20,000.00 sometime after Martial Law.4

Petitioner Eusebia Lopez refuted this by stating that she bought a 273-sq-m lot from Pedro
Manansala.5 She admitted that she filed a protest against Villadares’ application for registration but
claimed that Villadares later agreed to sell the property to her for ₱30,000.00.6 Villadares corroborated
her testimony, saying that when petitioners showed him proof that they owned a portion of the lot
registered in his name, he agreed to transfer the title of the said portion to their names.7

The Regional Trial Court ruled in favor of respondents. According to the trial court, the declaration of the
subject property for taxation purposes in the name of respondents, coupled with their actual possession
thereof, strongly indicated that they owned the same. It held that petitioners were not buyers in good
faith because it appeared that the execution of the deed of sale was only an afterthought. The
dispositive portion of the trial court’s decision reads:

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

1. that the deed of absolute sale, dated May 8, 1990 is hereby declared null and void;

2. that defendants reconvey to the plaintiffs the subject 80-square meter lot;

3. the Register of Deeds of Tabang, Guiguinto, Bulacan is hereby ordered to cancel TCT Nos. T-5065 in
the name of defendant Victor Villadares and T-5066 in the name of defendants/Spouses Exequiel and
Eusebia Lopez;

4. that defendants jointly and severally pay the plaintiffs the sum of: ₱10,000.00 for moral damages;
₱10,000.00 for exemplary damages and ₱10,000.00 for attorney’s fees and cost of suit.

SO ORDERED.8

Subsequently, the case was elevated to the CA on appeal, through petitioners’ and Villadares’ respective
notices of appeal.

Based on the doctrine that land registration proceedings cannot shield fraud or permit the enrichment
of a person at the expense of another, the CA affirmed the trial court’s decision. In so ruling, the
appellate court considered the following: (a) respondents’ ownership of the 80-sq-m lot was admitted
by petitioners during pre-trial; (b) petitioners were not innocent purchasers for value; (c) respondents
were in possession of the subject property and paid the real property taxes thereon; and (d) the
conveyance of the 273-sq-m lot from Villadares to petitioners was simulated.9

Only Villadares filed a motion for reconsideration with the CA; petitioners elevated the case immediately
to this Court. In a Resolution10 dated April 28, 2004, the CA resolved to hold in abeyance the resolution
of Villadares’ motion and to consider it abandoned if the present petition would be given due course by
this Court.

In this petition, petitioners ascribe the following errors to the CA:

I.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THE ACTUAL POSSESSION OF PETITIONERS
AND THEIR PREDECESSORS-IN-INTEREST ON (sic) THE PROPERTY NOW COVERED BY TCT NO. T-5066 OF
THE REGISTRY OF DEEDS FOR THE PROVINCE OF BULACAN FOR MORE THAN FIFTY (50) YEARS.

II.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT PETITIONERS EXEQUIEL LOPEZ AND
EUSEBIA LOPEZ HAVE BEEN PAYING REAL ESTATE TAXES ON THE SUBJECT PROPERTY AFTER THEY HAVE
BOUGHT IT FROM PEDRO MANANSALA AND MIGUELA AYUSON MANANSALA ON AUGUST 2, 1974.

III.
THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE POSSESSION OF RESPONDENTS ON
(sic) THE SUBJECT PROPERTY FOR LESS THAN THIRTY (30) YEARS.

IV.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT THE DEED OF ABSOLUTE SALE OF
PORTION OF PARCEL OF LAND EXECUTED BY DEFENDANT VICTOR VILLADARES IN FAVOR OF
PETITIONERS, EXEQUIEL LOPEZ AND EUSEBIA LOPEZ, WAS MERELY TO SETTLE THEIR CONFLICT OF
OWNERSHIP ON THE SUBJECT PROPERTY AND TO EXPEDITE THE TRANSFER THEREOF TO THE
PETITIONERS.

V.

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE LOWER COURT FOR THE
CANCELLATION OF TCT NO. T-5065 WITH AN AREA OF 275 SQUARE METERS IN THE NAME OF
DEFENDANT VICTOR VILLADARES AND THE CANCELLATION OF TCT NO. T-5066 WITH AN AREA OF 273
SQUARE METERS IN THE NAME OF PETITIONERS EXEQUIEL LOPE[Z] AND EUSEBIA LOPEZ, WHEN THE
CLAIM OF RESPONDENTS IS ONLY EIGHTY (80) SQUARE METERS.11

The petition is partly meritorious.

An action for reconveyance is a legal and equitable remedy granted to the rightful owner of a land which
has been wrongfully or erroneously registered in the name of another for the purpose of compelling the
latter to transfer or reconvey the land to him.12 The action does not seek to reopen the registration
proceedings and to set aside the decree of registration but only purports to show that the person who
secured the registration of the property in controversy is not the real owner thereof.13

Initially, we affirm the CA’s findings of fact that respondents are the rightful owners of the subject
property, an 80-sq-m portion of land, wrongfully included in either or in both of the certificates of title
of petitioners or Villadares, and that petitioners were not innocent purchasers for value. As neighbors of
respondents, petitioners certainly would have known that respondents actually occupied the subject
property. Thus, Villadares, not being the owner of the subject property, could not have transferred
ownership of the subject 80-sq-m portion of land to petitioners.

As a logical consequence, petitioners did not become the owners of the subject property even after a
TCT had been issued in their names. After all, registration does not vest title. Certificates of title merely
confirm or record title already existing and vested. They cannot be used to protect a usurper from the
true owner, nor can they be used as a shield for the commission of fraud, or to permit one to enrich
oneself at the expense of others.14 Hence, reconveyance of the subject property is warranted.

It is well to remember that in an action for reconveyance, the decree of registration is highly regarded as
incontrovertible. What is sought is the transfer of the property or its title, which has been wrongfully or
erroneously registered in another person’s name, to its rightful owner or to one who has a better
right.15 The present action for reconveyance only entails the segregation of the portion wrongfully
included in the certificate of title. The decree of registration is to be respected, but the certificate of title
will be cancelled for the purpose of amending it in order to exclude the portion wrongfully included
therein. A new certificate covering the portion reconveyed shall then be subsequently issued in the
name of the real owner.

However, the CA went beyond this and declared the entire deed of sale, covering 273 sq m, void for
being simulated. As such, the CA decision would result not only in the amendment of petitioners’
certificate of title, but in the absolute revocation of petitioners’ title itself. The property would then
revert to its previous owner, subject to the right of respondents over the portion of the lot which they
claim as their own.

Understandably, petitioners anxiously insist that their TCT should not be cancelled even if the deed of
sale is declared void. They maintain that they own the entire Lot 9954-B, not because they purchased
the same from Villadares, but because they previously acquired the same from Pedro Manansala, in
whose name the lot was previously declared for taxation purposes. Petitioners allegedly acquired the
property from Pedro Manansala long before they bought the property from Villadares, and they claim
that they and their predecessors-in-interest have been in possession thereof for more than 50 years.
Hence, even if the deed of sale executed by Villadares in their favor is nullified, they would remain
owners of the land and their title thereto should not be cancelled.16

However, petitioners are barred from raising this issue as it constitutes a collateral attack on the decree
of registration. The record shows that petitioners had participated in the land registration proceeding by
filing their opposition to Villadares’ application for registration. Petitioners’ alleged possession of the
property prior to Villadares’ filing of the application for registration was, in fact, the meat of their
opposition in the land registration proceeding. And in a proceeding for land registration, whether with
or without opposition, the final judgment of the court confirming the title of the applicant or oppositor,
as the case may be, and ordering its registration in his name constitutes res judicata against the whole
world.17

Thus, the Court is compelled to exercise its authority to review the validity of the Deed of Absolute Sale
of Portions of a Parcel of Land, though not specifically assigned as error in this petition, because its
resolution is necessary to arrive at a just decision and complete disposition of the case.18

In finding that the contract of sale was simulated, the CA held that petitioner’s opposition to Villadares’
application for registration, together with Pedro Manansala’s testimony that petitioners actually bought
the property from him, evinces the falsity of the claim that petitioners purchased the property from
Villadares.

We are not convinced. The primary consideration in determining the true nature of a contract is the
intention of the parties. Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts of the parties.191avvphi1

Simulation takes place when the parties do not really want the contract they have executed to produce
the legal effects expressed by its wordings.20 This Court’s pronouncement in Valerio v. Refresca21 is
instructive —

Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or
relative. In absolute simulation, there is a colorable contract but it has no substance as the parties have
no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent
contract is not really desired or intended to produce legal effect or in any way alter the juridical
situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties
may recover from each other what they may have given under the contract. However, if the parties
state a false cause in the contract to conceal their real agreement, the contract is relatively simulated
and the parties are still bound by their real agreement. Hence, where the essential requisites of a
contract are present and the simulation refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable between the parties and their successors in interest.22l
awphil

Based on the foregoing, the subject deed of sale can hardly be considered simulated. There is no
showing that the parties did not intend to be bound by the contract and to comply with its terms. In
fact, Villadares surrendered to petitioners any right he had over the property. He caused the titling of
the property and the transfer of the tax declaration in petitioners’ names, and thereafter, delivered the
certificate of title and the tax declaration to petitioners and accepted the purchase price from them. To
recall, Villadares admitted that he was swayed by petitioners’ claim that they had a right over the
property and thus, he agreed to sell it to them. Such motivation for entering into the contract would not
negate the efficacy of the contract. In the same way, petitioners’ opposition in the land registration case
does not necessarily mean that petitioners did not really intend to purchase the property. Petitioners
could have accepted or acquiesced to Villadares’ title and entered into the agreement to finally settle
their claim over the property. The following testimony of petitioner Eusebia Lopez is telling:

Q Then after filing the protest, what did you do?

A I talked with Victor Villadares and we agreed that he will sell the land in a much lower price, sir.
Q Did he comply with his promise?

A Yes, sir.

Q So how much was it sold [to] you[;] as you said it will be sold to you at a lower price. How much was
the selling price?

A ₱30,000.00, sir.

Q Did you pay the ₱30,000.00 to him?

A Yes, sir.

Q When did you pay it to defendant Victor Villadares?

A When the title was given to me by him as well as the tax declaration and the Bilihang Patuluyan, sir.23

We, therefore, uphold the validity of the deed of sale subject to the reconveyance of respondents’ 80-
sq-m portion of the land.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision
dated January 26, 2004 is AFFIRMED WITH MODIFICATIONS. The Deed of Absolute Sale of Portions of a
Parcel of Land dated May 8, 1990 is declared VALID but subject to our disposition hereunder. Petitioners
and Victor Villadares are directed to cause a SURVEY of Lots 9954-A and 9954-B in order to determine
the exact location of the 80-sq m portion pertaining to respondents. Thereafter, the Register of Deeds of
Tabang, Guiguinto, Bulacan is ordered to ISSUE the corresponding transfer certificates of title in the
names of petitioners, respondents and Victor Villadares, in accordance with said survey.

SO ORDERED.

G.R. No. 193517 January 15, 2014

THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI,* MELENCIA** S. MAXIMO, ALBERTO A.
SARILI, IMELDA S. HIDALGO, all herein represented by CELSO A. SARILI, Petitioners,
vs.
PEDRO F. LAGROSA, represented in this act by his Attorney-in-Fact LOURDES LABIOS
MOJICA, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on Certiorari1 are the Decision2 dated May 20, 2010 and
Resolution3 dated August 26, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 76258 which: (a) set
aside the Decision4 dated May 27, 2002 of the Regional Trial Court of Caloocan City, Branch 131 (RTC) in
Civil Case No. C-19152; (b) cancelled Transfer Certificate of Title (TCT) No. 2622185 in the name of
Victorino Sarili (Victorino) married to Isabel Amparo (Sps. Sarili); (c) reinstated TCT No. 559796 in the
name of respondent Pedro F. Lagrosa (respondent); and (d) awarded respondent moral damages,
attorney’s fees and litigation expenses.

The Facts

On February 17, 2000, respondent, represented by his attorney-in-fact Lourdes Labios Mojica (Lourdes)
via a special power of attorney dated November 25, 19997 (November 25, 1999 SPA), filed a
complaint8 against Sps. Sarili and the Register of Deeds of Caloocan City (RD) before the RTC, alleging,
among others, that he is the owner of a certain parcel of land situated in Caloocan City covered by TCT
No. 55979 (subject property) and has been religiously paying the real estate taxes therefor since its
acquisition on November 29, 1974. Respondent claimed that he is a resident of California, USA, and that
during his vacation in the Philippines, he discovered that a new certificate of title to the subject property
was issued by the RD in the name of Victorino married to Isabel Amparo (Isabel), i.e., TCT No. 262218, by
virtue of a falsified Deed of Absolute Sale9 dated February 16, 1978 (February 16, 1978 deed of sale)
purportedly executed by him and his wife, Amelia U. Lagrosa (Amelia). He averred that the falsification
of the said deed of sale was a result of the fraudulent, illegal, and malicious acts committed by Sps. Sarili
and the RD in order to acquire the subject property and, as such, prayed for the annulment of TCT No.
262218, and that Sps. Sarili deliver to him the possession of the subject property, or, in the alternative,
that Sps. Sarili and the RD jointly and severally pay him the amount of ₱1,000,000.00, including moral
damages as well as attorney’s fees.10

In their answer,11 Sps. Sarili maintained that they are innocent purchasers for value, having purchased
the subject property from Ramon B. Rodriguez (Ramon), who possessed and presented a Special Power
of Attorney12 (subject SPA) to sell/dispose of the same, and, in such capacity, executed a Deed of
Absolute Sale13 dated November 20, 1992 (November 20, 1992 deed of sale) conveying the said
property in their favor. In this relation, they denied any participation in the preparation of the February
16, 1978 deed of sale, which may have been merely devised by the "fixer" they hired to facilitate the
issuance of the title in their names.14 Further, they interposed a counterclaim for moral and exemplary
damages, as well as attorney’s fees, for the filing of the baseless suit.15

During the pendency of the proceedings, Victorino passed away16 and was substituted by his heirs,
herein petitioners.17

The RTC Ruling

On May 27, 2002, the RTC rendered a Decision18 finding respondent’s signature on the subject SPA as
"the same and exact replica"19 of his signature in the November 25, 1999 SPA in favor of Lourdes.20 Thus,
with Ramon’s authority having been established, it declared the November 20, 1992 deed of
sale21 executed by the latter as "valid, genuine, lawful and binding"22 and, as such, had validly conveyed
the subject property in favor of Sps. Sarili. It further found that respondent "acted with evident bad faith
and malice" and was, therefore, held liable for moral and exemplary damages.23 Aggrieved, respondent
appealed to the CA.

The CA Ruling

In a Decision24 dated May 20, 2010, the CA granted respondent’s appeal and held that the RTC erred in
its ruling since the November 20, 1992 deed of sale, which the RTC found "as valid and genuine," was
not the source document for the transfer of the subject property and the issuance of TCT No. 262218 in
the name of Sps. Sarili25 but rather the February 16, 1978 deed of sale, the fact of which may be gleaned
from the Affidavit of Late Registration26 executed by Isabel (affidavit of Isabel). Further, it found that
respondent w as "not only able to preponderate his claim over the subject property, but [has] likewise
proved that his and his wife’s signatures in the [February 16, 1978 deed of sale] x x x were forged."27 "[A]
comparison by the naked eye of the genuine signature of [respondent] found in his [November 25, 1999
SPA] in favor of [Lourdes], and those of his falsified signatures in [the February 16, 1978 deed of sale]
and [the subject SPA] shows that they are not similar."28 It also observed that "[t]he testimony of
[respondent] denying the authenticity of his purported signature with respect to the [February 16, 1978
deed of sale] was not rebutted x x x."29 In fine, the CA declared the deeds of sale dated February 16,
1978 and November 20, 1992, as well as the subject SPA as void, and consequently ordered the RD to
cancel TCT No. 262218 in the name of Victorino married to Isabel, and consequently reinstate TCT No.
55979 in respondent’s name. Respondent’s claims for moral damages and attorney’s fees/litigation
expenses were also granted by the CA.30

Dissatisfied, petitioners moved for reconsideration which was, however, denied in a Resolution31 dated
August 26, 2010, hence, the instant petition.

The Issues Before the Court

The main issue in this case is whether or not there was a valid conveyance of the subject property to
Sps. Sarili. The resolution of said issue would then determine, among others, whether or not: (a) TCT No.
262218 in the name of Victorino married to Isabel should be annulled; and (b) TCT No. 55979 in
respondent’s name should be reinstated.

The Court’s Ruling

The petition lacks merit.

Petitioners essentially argue that regardless of the fictitious February 16, 1978 deed of sale, there was
still a valid conveyance of the subject property to Sps. Sarili who relied on the authority of Ramos (as per
the subject SPA) to sell the same. They posit that the due execution of the subject SPA between
respondent and Ramon and, subsequently, the November 20, 1992 deed of sale between Victorino and
Ramon were duly established facts and that from the authenticity and genuineness of these documents,
a valid conveyance of the subject land from respondent to Victorino had leaned upon.32

The Court is not persuaded.

It is well-settled that even if the procurement of a certificate of title was tainted with fraud and
misrepresentation, such defective title may be the source of a completely legal and valid title in the
hands of an innocent purchaser for value. 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 whether the title has been
regularly or irregularly issued. This is contrary to the evident purpose of the law.33

The general rule is that every person dealing with registered land may safely rely on the correctness of
the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate
to determine the condition of the property. Where there is nothing in the certificate of title to indicate
any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the Torrens Title upon its face indicates in quest for any hidden
defects or inchoate right that may subsequently defeat his right thereto.34

However, a higher degree of prudence is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. In such a case, the buyer is
expected to examine not only the certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor.35 The buyer also has the duty to ascertain
the identity of the person with whom he is dealing with and the latter’s legal authority to convey the
property.36

The strength of the buyer’s inquiry on the seller’s capacity or legal authority to sell depends on the proof
of capacity of the seller. If the proof of capacity consists of a special power of attorney duly notarized,
mere inspection of the face of such public document already constitutes sufficient inquiry. If no such
special power of attorney is provided or there is one but there appears to be flaws in its notarial
acknowledgment, mere inspection of the document will not do; the buyer must show that his
investigation went beyond the document and into the circumstances of its execution.37

In the present case, it is undisputed that Sps. Sarili purchased the subject property from Ramos on the
strength of the latter’s ostensible authority to sell under the subject SPA. The said document, however,
readily indicates flaws in its notarial acknowledgment since the respondent’s community tax certificate
(CTC) number was not indicated thereon. Under the governing rule on notarial acknowledgments at that
time,38 i.e., Section 163(a) of Republic Act No. 7160, otherwise known as the "Local Government Code of
1991," when an individual subject to the community tax acknowledges any document before a notary
public, it shall be the duty of the administering officer to require such individual to exhibit the
community tax certificate.39 Despite this irregularity, however, Sps. Sarili failed to show that they
conducted an investigation beyond the subject SPA and into the circumstances of its execution as
required by prevailing jurisprudence. Hence, Sps. Sarili cannot be considered as innocent purchasers for
value.

The defective notarization of the subject SPA also means that the said document should be treated as a
private document and thus examined under the parameters of Section 20, Rule 132 of the Rules of Court
which provides that "before any private document offered as authentic is received in evidence, its due
execution and authenticity must be proved either: (a) by anyone who saw the document executed or
written; or (b) by evidence of the genuineness of the signature or handwriting of the maker x x x."
Settled is the rule that a defective notarization will strip the document of its public character and reduce
it to a private instrument, and the evidentiary standard of its validity shall be based on preponderance
of evidence.40

The due execution and authenticity of the subject SPA are of great significance in determining the
validity of the sale entered into by Victorino and Ramon since the latter only claims to be the agent of
the purported seller (i.e., respondent). Article 1874 of the Civil Code provides that "[w]hen a sale of a
piece of land or any interest therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void." In other words, if the subject SPA was not proven to be duly executed
and authentic, then it cannot be said that the foregoing requirement had been complied with; hence,
the sale would be void.

After a judicious review of the case, taking into consideration the divergent findings of the RTC and the
CA on the matter,41 the Court holds that the due execution and authenticity of the subject SPA were not
sufficiently established under Section 20, Rule 132 of the Rules of Court as above-cited.

While Ramon identified the signature of respondent on the subject SPA based on his alleged familiarity
with the latter’s signature,42 he, however, stated no basis for his identification of the signatures of
respondent’s wife Amelia and the witness, Evangeline F. Murral,43 and even failed to identify the other
witness,44 who were also signatories to the said document. In other words, no evidence was presented
to authenticate the signatures of the other signatories of the subject SPA outside from respondent.45

Besides, as the CA correctly observed, respondent’s signature appearing on the subject SPA is not
similar46 to his genuine signature appearing in the November 25, 1999 SPA in favor of
Lourdes,47 especially the signature appearing on the left margin of the first page.48

Unrebutted too is the testimony of respondent who, during trial, attested to the fact that he and his
wife, Amelia, had immigrated to the USA since 1968 and therefore could not have signed the subject
SPA due to their absence.49

Further, records show that the notary public, Atty. Ramon S. Untalan, failed to justify why he did not
require the presentation of respondent’s CTC or any other competent proof of the identity of the person
who appeared before him to acknowledge the subject SPA as respondent’s free and voluntary act and
deed despite the fact that he did not personally know the latter and that he met him for the first time
during the notarization.50 He merely relied on the representations of the person before him51 and the
bank officer who accompanied the latter to his office,52 and further explained that the reason for the
omission of the CTC was "because in [a] prior document, [respondent] has probably given us already his
residence certificate."53 This "prior document," was not, however, presented during the proceedings
below, nor the CTC number ever identified.

Thus, in light of the totality of evidence at hand, the Court agrees with the CA’s conclusion that
respondent was able to preponderate his claims of forgery against the subject SPA.54 In view of its
invalidity, the November 20, 1992 sale relied on by Sps. Sarili to prove their title to the subject property
is therefore void.1âwphi1

At this juncture, it is well to note that it was, in fact, the February 16, 1978 deed of sale which – as the
CA found – was actually the source of the issuance of TCT No. 262218. Nonetheless, this document was
admitted to be also a forgery.55 Since Sps. Sarili’s claim over the subject property is based on forged
documents, no valid title had been transferred to them (and, in turn, to petitioners). Verily, when the
instrument presented is forged, even if accompanied by the owner’s duplicate certificate of title, the
registered owner does not thereby lose his title, and neither does the assignee in the forged deed
acquire any right or title to the property.56 Accordingly, TCT No. 262218 in the name of Victorino
married to Isabel should be annulled, while TCT No. 55979 in the name of respondent should be
reinstated.

Anent the award of moral damages, suffice it to say that the dispute over the subject property had
caused respondent serious anxiety, mental anguish and sleepless nights, thereby justifying the aforesaid
award.57 Likewise, since respondent was constrained to engage the services of counsel to file this suit
and defend his interests, the awards of attorney’s fees and litigation expenses are also sustained.58

The Court, however, finds a need to remand the case to the court a quo in order to determine the rights
and obligations of the parties with respect to the house Sps. Sarili had built59 on the subject property in
bad faith in accordance with Article 449 in relation to Articles 450, 451, 452, and the first paragraph of
Article 546 of the Civil Code which respectively read as follows:

ART. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted
or sown without right to indemnity.

ART. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.

ART. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the
builder, planter or sower.

ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary
expenses of preservation of the land.

xxxx

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed therefor. (Emphases and underscoring supplied)

xxxx

To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he
builds, i.e. , that he be a possessor in concept of owner, and that he be unaware that there exists in his
title or mode of acquisition any flaw which invalidates it.60 Good faith is an intangible and abstract
quality with no technical meaning or statutory definition, and it encompasses, among other things, an
honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable
advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought
to put the holder upon inquiry.61 As for Sps. Sarili, they knew – or at the very least, should have known –
from the very beginning that they were dealing with a person who possibly had no authority to sell the
subject property considering the palpable irregularity in the subject SPA’s acknowledgment. Yet, relying
solely on said document and without any further investigation on Ramos’s capacity to sell Sps. Sarili still
chose to proceed with its purchase and even built a house thereon. Based on the foregoing it cannot be
seriously doubted that Sps. Sarili were actually aware of a flaw or defect in their title or mode of
acquisition and have consequently built the house on the subject property in bad faith under legal
contemplation. The case is therefore remanded to the court a quo for the proper application of the
above-cited Civil Code provisions.

WHEREFORE, the petition is DENIED. The Decision dated May 20, 2010 and Resolution dated August 26,
2010 of the Court of Appeals in CA-G.R. CV No. 76258 are AFFIRMED. However the case is REMANDED to
the court a quo for the proper application of Article 449 in relation to Articles 450 451 452 and the first
paragraph of Article 546 of the Civil Code with respect to the house Spouses Victorino Sarili and Isabel
Amparo had built on the subject property as herein discussed.

SO ORDERED.

G.R. No. 156973 June 4, 2004

SPOUSES TOMAS OCCEÑA and SILVINA OCCEÑA, petitioners,

vs.
LYDIA MORALES OBSIANA ESPONILLA, ELSA MORALES OBSIANA SALAZAR and DARFROSA OBSIANA
SALAZAR ESPONILLA, respondents.
DECISION

PUNO, J.:

The case at bar involves a portion of the 1,198-square meter residential lot (lot no. 265) situated in
Sibalom, Antique, originally owned by spouses Nicolas and Irene Tordesillas under OCT No. 1130. The
Tordesillas spouses had three (3) children, namely: Harod, Angela and Rosario, the latter having been
survived by her two (2) children, Arnold and Lilia de la Flor.

After the death of the Tordesillas spouses, the lot was inherited by their children Harod and Angela, and
grandchildren Arnold and Lilia. In 1951, the heirs executed a Deed of Pacto de Retro Sale1 in favor of
Alberta Morales covering the southwestern portion of the lot with an area of 748 square meters.

Three (3) years later, in 1954, Arnold and Lilia executed a Deed of Definite Sale of Shares, Rights,
Interests and Participations2 over the same 748 sq. m. lot in favor of Alberta Morales. The notarized
deed also attested that the lot sold by vendors Arnold and Lilia to Alberta were their share in the estate
of their deceased parents.

Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker to oversee
her property. Thereafter, in July 1956, vendor Arnold de la Flor borrowed the OCT from Alberta covering
the lot. He executed an Affidavit3 acknowledging receipt of the OCT in trust and undertook to return said
title free from changes, modifications or cancellations.

In 1966, Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses, without the
knowledge of Alberta, executed a Deed of Extrajudicial Settlement4 declaring the two of them as the
only co-owners of the undivided 1,198 sq. m. lot no. 265, without acknowledging their previous sale
of 748 sq. m. thereof to Alberta. A number of times, thereafter, Alberta and her nieces asked Arnold for
the OCT of the land but Arnold just kept on promising to return it.

In 1983, Arnold executed an Affidavit of Settlement of the Estate5 of Angela who died in 1978 without
issue, declaring himself as the sole heir of Angela and thus consolidating the title of the entire lot in his
name.

In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa and Dafrosa, succeeded in the
ownership of the lot. Months later, as the heirs were about to leave for the United States, they asked
Arnold to deliver to them the title to the land so they can register it in their name. Arnold repeatedly
promised to do so but failed to deliver the title to them.

On December 4, 1986, after Alberta’s heirs left for the States, Arnold used the OCT he borrowed from
the deceased vendee Alberta Morales, subdivided the entire lot no. 265 into three sublots, and
registered them all under his name, viz: lot no. 265-A (with TCT No. 16895), lot no. 265-B (with TCT No.
16896) and lot no. 265-C (with TCT No. 16897). He then paid the real estate taxes on the property.

On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas and Sylvina Occeña, which
included the 748 sq. m. portion previously sold to Alberta Morales. A Deed of Absolute Sale6 over said
lots was executed to the Occeña spouses and titles were transferred to their names.

In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta Morales learned about the
second sale of their lot to the Occeña spouses when they were notified by caretaker Abas that they
were being ejected from the land. In 1994, the heirs filed a case7 for annulment of sale and cancellation
of titles, with damages, against the second vendees Occeña spouses. In their complaint, they alleged
that the Occeñas purchased the land in bad faith as they were aware that the lots sold to them had
already been sold to Alberta Morales in 1954. They averred that before the sale, when Tomas Occeña
conducted an ocular inspection of the lots, Morito Abas, the caretaker appointed by Alberta Morales to
oversee her property, warned them not to push through with the sale as the land was no longer owned
by vendor Arnold as the latter had previously sold the lot to Alberta Morales who had a house
constructed thereon.

For their part, the Occeña spouses claimed that the OCT in the name of the original owners of the lots,
the Tordesillas spouses, was cancelled after it was subdivided between Angela and Arnold in 1969; that
new TCTs had been issued in the latter’s names; that they were unaware that the subject lots were
already previously sold to Morales as they denied that Tomas had a talk with caretaker Abas on the
matter; that as of December 4, 1987, the TCTs covering the lots were in the name of Arnold and his wife,
without any adverse claim annotated thereon; that vendor Arnold represented to them that the
occupants they saw on the land were squatters and that he merely tolerated their presence; that they
did not personally investigate the alleged squatters on the land and merely relied on the
representation of vendor Arnold; that sometime in 1966-1967, Arnold and his co-heir Angela caused
the survey of the original lot and subdivided it into 3 lots, without opposition from Morales or her heirs.
Thus, three (3) TCTs were issued in 1969 to Arnold and Angela and, two of the lots were then sold to the
Occeña spouses, again without objection from Alberta Morales.

The Occeña spouses alleged that they were buyers in good faith as the titles to the subject lots were
free from liens or encumbrances when they purchased them. They claimed that in 1989, Arnold offered
to sell the subject lots to them. On August 13, 1990, after they verified with the Antique Registry of
Deeds that Arnold’s TCTs were clean and unencumbered, Arnold signed the instrument of sale over the
subject lots in favor of the Occeñas for ₱100,000.00 and new titles were issued in their names.

The Occeñas likewise set up the defenses of laches and prescription. They argue that Alberta and
plaintiffs-heirs were barred from prosecuting their action as they failed to assert their right for forty (40)
years. Firstly, they point out that vendor Arnold and Angela subdivided the entire lot in 1966 and
declared themselves as the only co-owners thereof in the deed of extrajudicial settlement. Alberta
Morales failed to oppose the inclusion of her 748 sq. m. lot in the deed. Thus, the title to the entire lot
no. 256 was transferred to the names of Arnold and Angela. Secondly, preparatory to the division of the
lots, vendor Arnold had the land surveyed but Alberta again failed to oppose the same. Finally, Alberta
and her heirs who are claiming adverse rights over the land based on the 1951 Deed of Pacto de Retro
Sale and the 1954 Deed of Definite Sale of Shares failed for 40 years to annotate their adverse claims on
the new titles issued to Arnold and Angela, enabling the latter to possess a clean title and transfer them
to the Occeña spouses.

After trial, the lower court rendered a decision declaring the Occeña spouses as buyers in good faith and
ruled that the action of the heirs was time-barred.

On appeal by Alberta’s heirs, the Court of Appeals reversed the decision of the trial court. It found that
the Occeñas purchased the land in bad faith and that the action filed by Alberta’s heirs was not barred
by prescription or laches. The dispositive portion reads:

WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the assailed decision is
hereby REVERSED and SET ASIDE and a new one is rendered declaring the Deed of Absolute Sale dated
August 13, 1990 executed between Arnold de la Flor in favor of defendants-appellees null and void and
ordering the cancellation of Transfer Certificate of Title Nos. 16896, 16897, T-18241 and T-18242.

SO ORDERED.8

Hence this appeal where petitioner-spouses Occeña raise the following issues:

WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO PREVAIL OVER A CLEAN CERTIFICATE
OF TITLE OF A REGISTERED LAND WHICH IS FREE OF ANY LIEN OR ENCUMBRANCE ANNOTATED ON ITS
CERTIFICATE OF TITLE OR ANY ADVERSE CLAIM RECORDED WITH THE REGISTER OF DEEDS.

II

WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED TO MAKE INQUIRIES OF ANY

POSSIBLE DEFECT OR ADVERSE CLAIM AFFECTING ITS OWNERSHIP WHICH DOES NOT APPEAR ON THE
CERTIFICATE OF TITLE.

III
WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS WITHOUT POSITIVE ACTION TAKEN
BY RESPONDENTS, AS WELL AS BY ALBERTA MORALES, TO PROTECT THEIR INTEREST CAN BE
CONSIDERED LACHES AND THUS THEIR PRESENT ACTION HAS PRESCRIBED.

On the first two issues, petitioner-spouses claim that they were purchasers of the land in good faith as
the law does not obligate them to go beyond a clean certificate of title to determine the condition of the
property. They argue that a person dealing with registered land is only charged with notice of the
burden on the property annotated on the title. When there is nothing on the title to indicate any cloud
or vice in the ownership of the property or any encumbrance thereon, the purchaser is not required to
explore further than the title in quest of any hidden defect or inchoate right that may subsequently
defeat his right thereto. They claim they had every right to purchase the land despite the verbal warning
made by caretaker Abas as the information was mere hearsay and cannot prevail over the title of the
land which was free from any encumbrance.

Their arguments do not persuade.

The petition at bar presents a case of double sale of an immovable property. Article 1544 of the New
Civil Code provides that in case an immovable property is sold to different vendees, the ownership shall
belong: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2)
should there be no inscription, the ownership shall pertain to the person who in good faith was first in
possession; and, (3) in the absence thereof, to the person who presents the oldest title, provided there
is good faith.

In all cases, good faith is essential. It is the basic premise of the preferential rights granted to the one
claiming ownership over an immovable.9 What is material is whether the second buyer first registers the
second sale in good faith, i.e., without knowledge of any defect in the title of the property sold.10 The
defense of indefeasibility of a Torrens title does not extend to a transferee who takes the certificate of
title in bad faith, with notice of a flaw.11

The governing principle of prius tempore, potior jure (first in time, stronger in right) enunciated under
Art. 1544 has been clarified, thus:

x x x Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when
the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA
33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is
first to register, since such knowledge taints his registration with bad faith (see also Astorga vs. Court
of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabaña (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that
the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court
of Appeals, 69 SCRA 99 and Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).12

In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and
registration of the land. A purchaser in good faith and for value is one who buys property without
notice that some other person has a right to or interest in such property and pays its fair price before he
has notice of the adverse claims and interest of another person in the same property. So it is that the
"honesty of intention" which constitutes good faith implies a freedom from knowledge
of circumstances which ought to put a person on inquiry. At the trial, Tomas Occeña admitted that he
found houses built on the land during its ocular inspection prior to his purchase. He relied on the
representation of vendor Arnold that these houses were owned by squatters and that he was merely
tolerating their presence on the land. Tomas should have verified from the occupants of the land the
nature and authority of their possession instead of merely relying on the representation of the vendor
that they were squatters, having seen for himself that the land was occupied by persons other than the
vendor who was not in possession of the land at that time. The settled rule is that a buyer of real
property in the possession of persons other than the seller must be wary and should investigate the
rights of those in possession. Without such inquiry, the buyer can hardly be regarded as a buyer in
good faith and cannot have any right over the property.13 A purchaser cannot simply close his eyes to
facts which should put a reasonable man on his guard and then claim that he acted in good faith under
the belief that there was no defect in the title of his vendor.14 His mere refusal to believe that such
defect exists or his willful closing of his eyes to the possibility of the existence of a defect in his vendor’s
title will not make him an innocent purchaser for value if it later develops that the title was in fact
defective, and it appears that he would have notice of the defect had he acted with that measure of
precaution which may reasonably be required of a prudent man in a similar situation.

Indeed, the general rule is that one who deals with property registered under the Torrens system need
not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens
and claims as are annotated on the title. However, this principle does not apply 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 of a 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. One who falls within the exception can neither be denominated an innocent purchaser for
value nor a purchaser in good faith.15

The evidence of the private respondents show that when Tomas Occeña conducted an ocular inspection
of the land prior to the second sale, Abas, the caretaker of the house which Alberta Morales built on the
land, personally informed Tomas that the lot had been previously sold by the same vendor Arnold to
Alberta Morales. With this information, the Occeñas were obliged to look beyond the title of their
vendor and make further inquiries from the occupants of the land as to their authority and right to
possess it. However, despite this information about a prior sale, the Occeñas proceeded with the
purchase in haste. They did not inquire from Abas how they could get in touch with the heirs or
representatives of Alberta to verify the ownership of the land. Neither do the records reveal that they
exerted effort to examine the documents pertaining to the first sale. Having discovered that the land
they intended to buy was occupied by a person other than the vendor not in actual possession thereof,
it was incumbent upon the petitioners to verify the extent of the occupant’s possessory rights.16 The
Occeñas did nothing and chose to ignore and disbelieve Abas’ statement.

On the third issue, we hold that the action to annul title filed by respondents-heirs is not barred by
laches and prescription. Firstly, laches is a creation of equity and its application is controlled by
equitable considerations. Laches cannot be used to defeat justice or perpetuate fraud and injustice.
Neither should its application be used to prevent the rightful owners of a property from recovering what
has been fraudulently registered in the name of another.17 Secondly, prescription does not apply when
the person seeking annulment of title or reconveyance is in possession of the lot because the action
partakes of a suit to quiet title which is imprescriptible.18 In this case, Morales had actual possession of
the land when she had a house built thereon and had appointed a caretaker to oversee her property.
Her undisturbed possession of the land for a period of fifty (50) long years gave her and her heirs a
continuing right to seek the aid of a court of equity to determine the nature of the claim of ownership of
petitioner-spouses.19 As held by this Court in Faja vs. Court of Appeals:20

x x x There is settled jurisprudence that one who is in actual possession of a piece of land claiming to
be owner thereof may wait until his possession is disturbed or his title attacked before taking steps to
vindicate his right, the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine the nature of the
adverse claim and its effect on his own title, which right can be claimed only by one who is in
possession. x x x The right to quiet title to the property, seek its reconveyance and annul any certificate
of title covering it accrued only from the time the one in possession was made aware of a claim
adverse to his own, and it is only then that the statutory period of prescription commences to run
against such possessor.

In the case at bar, Morales’ caretaker became aware of the second sale to petitioner-spouses only in
1991 when he received from the latter a notice to vacate the land. Respondents-heirs did not sleep on
their rights for in 1994, they filed their action to annul petitioners’ title over the land. It likewise bears to
stress that when vendor Arnold reacquired title to the subject property by means of fraud and
concealment after he has sold it to Alberta Morales, a constructive trust was created in favor of Morales
and her heirs. As the defrauded parties who were in actual possession of the property, an action of the
respondents-heirs to enforce the trust and recover the property cannot prescribe. They may vindicate
their right over the property regardless of the lapse of time.21 Hence, the rule that registration of the
property has the effect of constructive notice to the whole world cannot be availed of by petitioners and
the defense of prescription cannot be successfully raised against respondents.

In sum, the general rule is that registration under the Torrens system is the operative act which gives
validity to the transfer of title on the land. However, it does not create or vest title especially where a
party has actual knowledge of the claimant’s actual, open and notorious possession of the property at
the time of his registration.22 A buyer in bad faith has no right over the land. As petitioner-spouses failed
to register the subject land in good faith, ownership of the land pertains to respondent-heirs who first
possessed it in good faith.

IN VIEW WHEREOF, the petition is DISMISSED. No costs.

SO ORDERED.

G.R. No. 150462 June 15, 2011

TOP MANAGEMENT PROGRAMS CORPORATION, Petitioner,

vs.
LUIS FAJARDO AND THE REGISTER OF DEEDS OF LAS PIÑAS CITY, Respondents.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 seeking the reversal of the Decision1 dated
May 30, 2001 and Resolution2 dated October 23, 2001 of the Court of Appeals (CA) in CA-G.R. CV No.
60712 which affirmed the Order3 of the Regional Trial Court (RTC) of Las Piñas City, Branch 275 in Civil
Case No. 94-564 dismissing petitioner’s complaint for quieting of title and damages against private
respondent.

The factual antecedents:

On December 31, 1964, Emilio Gregorio (Gregorio) filed an application for registration of title over Lots 1
to 4 of Plan Psu-204785 situated at Mag-asawang Mangga, Las Piñas, Rizal, before the then Court of First
Instance (CFI) of Rizal, Branch II (LRC Case No. N-5053, LRC Rec. No. N-27523). On January 4, 1966, said
court issued an order declaring as abandoned the reserved oppositions of Jose T. Velasquez and Pablo
Velasquez. Thereafter, the case proceeded to trial.

Meanwhile, on July 29, 1965, Jose T. Velasquez (Velasquez) filed an application for registration of title
over six lots denominated as Lots 7 and 9 of Psu-80886, Ap-5538, and Lots 1, 7, 9 and 11 of Psu-56007
Amd., Ap-11135, situated at Almanza, Las Piñas, Rizal, in LRC Case No. N-5416, LRC Rec. No. N-28735,
before the same court.

On January 31, 1966, the CFI rendered a decision4 in LRC Case No. N-5053 declaring Gregorio to be the
absolute owner of Lots 1, 2, 3 and 4 described in Plan Psu-204785. On March 9, 1966, an order was
issued by said court for the issuance of the decree of registration, stating that the January 31, 1966 had
become final.

On March 30, 1966, the same court promulgated a decision in LRC Case No. N-5416 adjudicating Lots 1,
7, 9 and 11 of Psu-56007-Amd, plan Ap-11135, and Lots 7 and 9 of Psu-80886 (Ap-5538) to Jose T.
Velasquez. On May 3, 1966, said court ordered the issuance of a decree of registration in view of the
finality of the March 30, 1966 decision.

In the meantime, on July 25, 1966, the LRA called the attention of the Director of Lands regarding the
overlapping of Lots 1, 7 and 11 of Psu-56007-Amd awarded to Velasquez, with Lots 1 to 4 of Psu-204785
adjudicated to Gregorio, and requested that portions of these lots that are not in conflict be segregated.
On September 16, 1966, the LRA informed the CFI that Lots 1 and 7 of Psu-56007-Amd (Ap-11135) had
been amended by the Bureau of Lands to exclude therefrom portions covered by Lot 2, Psu-64894, Psu-
96904, and Lots 1 to 4, Psu-204785 of Gregorio.5 On the basis of the LRA report, Velasquez petitioned
the CFI to set aside the award earlier made in favor of Gregorio in LRC Case No. N-5035 on the ground of
lack of jurisdiction and to give due course to his application over the said lots in LRC Case No. N-5416.
On November 23, 1966, the CFI issued an Order in LRC Case Nos. N-5053 and N-5416 declaring that the
application of Velasquez be given due course insofar as Lots 1 and 7 of Ap-11135 which are identical to
Lots 1 to 4, Plan Psu-204785, and the January 31, 1966 decision in LRC Case No. N-5053 in favor of
Gregorio respecting the same lots as null and void.6 On December 6, 1966, Decree Nos. N-111862 to N-
111865 and the corresponding certificates OCT Nos. 5677, 5678, 5679 and 5680 were issued in favor of
Velasquez.

On January 7, 1967, Gregorio appealed the November 23, 1966 decision of the CFI to the CA (CA-G.R.
No. 40739-40-R). On July 30, 1971, the CA rendered its Decision7 reversing the CFI, as follows:

WHEREFORE, the order appealed from is hereby reversed and, in lieu thereof, another is hereby
rendered declaring null and void the Decision of the Court of First Instance of Rizal, dated March 30,
1966, in Land Registration Case No. N-5416, LRC Rec. No. N-28735, insofar as it adjudicates in favor of
appellee Jose T. Velasquez Lots Nos. 1 and 7 of Plan Ap-11315; and directing that the Order of March 9,
1966 for the issuance of the decree in Land Registration Case No. N-5053, LRC Rec. No. N-27523, over
Lots 1, 2, 3 and 4 of Plan Psu-204785, in the name of appellant Emilio Gregorio, be given due course.

No costs.

IT IS SO ORDERED.8

Per entry of judgment issued by the CA, the above decision became final and executory on February 1,
1972.9 It appears, however, that a petition for review had been filed by Velasquez with this Court,
docketed as G.R. Nos. L-34239-40 ("Jose T. Velasquez v. Emilio Gregorio"), which was given due course
per Resolution dated March 7, 1972 of the Second Division. Eventually, this Court denied the petition
under Resolution10 dated February 8, 1984 stating that:

We have carefully scrutinized the arguments of the parties stated in their respective briefs as well as the
reasons adduced by the Court of Appeals to support its decision sought to be reviewed and We have
Resolved to RECONSIDER the resolution of March 7, 1972, and enter instead another resolution
DENYING the petition for lack of merit with COSTS against the petitioners.11

The above resolution became final and executory on March 2, 1984 as per entry of judgment12 issued by
this Court. Prior to this however, on October 31, 1972, Decree No. N-141990 over Lots 1, 3 and 4 of Plan
Psu-204785 were issued by the LRA and the corresponding OCT No. 9587 in the name of Gregorio, was
subsequently issued on November 21, 1972.13

Lots 1, 3 and 4, Plan Psu-204785 covered by OCT No. 9587 also became the subject of Civil Case No.
16977 of the CFI of Rizal. Gregorio sought the annulment of the deed of sale over the said lots in favor of
Luciana Parami. The CFI dismissed the complaint of Gregorio in a decision rendered on May 8, 1974.
Gregorio appealed to the CA (CA-G.R. No. 56015-R, entitled "Emilio Gregorio v. Spouses Luciana and
Corpus Parami and the Register of Deeds of Rizal") which reversed the CFI. In its decision dated February
7, 1978, the CA declared the aforesaid deed of sale null and void, and ordered the cancellation of
certificate of title (No. 38433) in the name of the Paramis and issuance of an OCT in favor of Gregorio
covering Lots 1, 3 and 4, Plan Pasu-204785. On November 20, 1979, the court in the same case issued an
order declaring the children (Ana, Paz, Carmen, Remedios and Rolando, all surnamed Gregorio) of the
deceased Emilio Gregorio "as his compulsory heirs to substitute the said plaintiff."14 Pursuant to the said
decision, OCT No. 9587 in the name of Emilio Gregorio was cancelled and a new certificate of title, TCT
No. S-91911 in favor of his heirs was issued.15

In a Report dated September 12, 1984, the LRA informed the CFI in LRC Case No. N-5416 that
compliance with the July 30, 1971 CA decision in CA-G.R. No. 40739-40-R adjudicating Lots 1, 3 and 4 of
Plan Psu-204785 in favor of Gregorio will result in duplication of titles over the said properties. The
report further stated:
21. That based on the records of this Commission, Lots 1, 3 and 4 of plan Psu-204785 were already
covered by TCT No. S-91911 in the name of the Heirs of Emilio Gregorio with several annotations of
encumbrances x x x;

22. That among those encumbrances are the deeds of sale executed by them in favor of Herminia
Galman covering an undivided portion of aforesaid Lot 1, and of Everlita Talusan of the whole Lots 3 and
4 denominated as Entry No. 21079/S-97421, and that the latter vendee E. Talusan had already
acquire[d] TCT No. S-97421 over said two lots in her name also with several annotation of
encumbrances x x x;

23. That as per our verification from the Registry of Deeds of Makati, corresponding titles were issued in
the name of J.T. Velasquez denominated as OCT Nos. 5678, 5677, 5679 and 5680 x x x;

24. And that these certificates of title were all cancelled and assigned in favor of J.V. Development
Corporation as per Entry Nos. 99377/T-195606, 195605, 195605 and 19505 all inscribed on July 27,
1967.

WHEREFORE, these facts are respectfully brought to the attention of this Honorable Court with the
recommendation:

That Decree Nos. N-111862 to N-111865 issued on December 6, 1966 over Lots 1 to 4, Psu-204785, in
favor of Jose T. Velasquez, as well as existing subsequent titles emanating from the same shall be
declared null and void and ordered cancelled.16

On April 9, 1984, the heirs of Emilio Gregorio filed an ex-parte motion for execution before the RTC of
Pasig, Metro Manila, Branch 152 in LRC Case Nos. N-5053 and N-5416. On March 21, 1986, the RTC of
Pasig issued the following Order17:

Considering that the Resolution issued on February 8, 1984 by the Supreme Court in G.R. No. L-34239-
40, entitled "Jose T. Velasquez vs. Emilio Gregorio", denying the petition for review on certiorari of the
judgment of the Court of Appeals in CA-G.R. No. 40739-40-R, had on March 2, 1984 become final and
executory in favor of Emilio Gregorio, and considering further the recommendation contained in the
Report dated September 12, 1984 of the Acting Commissioner of Land Registration thru Silverio G.
Perez, Chief, Division of Original Registration, relative to LRC Case No. N-5053, LRC Record No. N-27523,
wherein Emilio Gregorio is the applicant and in LRC Case No. N-5416, LRC Record No. N-28735, wherein
Jose T. Velasquez is the applicant, which report is hereby approved, the Court declares as null and void
Decree Nos. N-111862 to N-111865, inclusive, issued on December 6, 1966, covering Lots 1, 2, 3 and 4,
Psu-204785 in favor of Jose T. Velasquez in LRC Case No. No. 5416 as well as all existing subsequent
titles emanating therefrom, and any and all encumbrances constituted against said Lots 1, 2, 3 and 4,
Psu-204785 and other acts of disposition affecting the same.

WHEREFORE, the Register of Deeds of Pasay City is hereby directed to cancel Original Certificates of Title
Nos. 5677, 5678, 5679 and 5680 issued in the name of Jose T. Velasquez and all titles and transactions
emanating therefrom and which are annotated at the back of the said Certificates of Title, and to issue,
in lieu thereof, new Certificates of Title in the name of the Heirs of Emilio Gregorio, after paying the
prescribed fees therefor, pursuant to the Order for issuance of a decree dated March 9, 1966 in the LRC
Case No. N-5053, Record No. N-27523.

SO ORDERED.18

On April 29, 1986, TCT Nos. 107727, 107728 and 107729 (covering Lot 1)19 was issued by the Register of
Deeds of Pasay City in the name of the Heirs of Emilio Gregorio. Subsequently, by virtue of a Partition
Agreement with Herminia Galman, the property was subdivided into two lots between the heirs of
Gregorio (Lot 1-A consisting of 20,000 sq. ms.) and Galman (Lot 1-B consisting of 27,536 sq. ms.).
Consequently, TCT No. 107729 was cancelled and in lieu thereof TCT No. 4635 in the name of the heirs
of Gregorio and TCT No. 4636 in the name of Herminia Galman, were issued by the Register of Deeds of
Las Piñas.20
Undeniably, the duplication of titles over Lot 1, Psu-204785 with the issuance of TCT No. S-
91911 (transfer from OCT No. 9587) and TCT No. 107729 and its derivative title, TCT No. 4635, both in
the name of the same owners, gave rise to the present controversy.

The Claim of Luis Fajardo

(TCT No. 27380, now
TCT No. T-34923)

As earlier mentioned, Gregorio appealed the November 23, 1966 CFI decision in LRC Case Nos. N-5053
and N-5416 awarding Lots 1 to 4 of Psu-204785 in favor of Velasquez, docketed as CA-G.R. No. 40739-
40-R. Sometime after this, he entered into an agreement with Tomas Trinidad (Trinidad) and Luis
Fajardo (Fajardo) entitled "Kasunduan na may Pambihirang Kapangyarihan." By virtue of this agreement,
Fajardo would finance the cost of the litigation and in return he would be entitled to one-half of the
subject property after deducting twenty per cent (20%) of the total land area as attorney’s fees for
Trinidad if the appeal is successful.

After the CA rendered a favorable ruling on Gregorio’s appeal, Fajardo and Trinidad filed Civil Case No.
35305 before the RTC of Pasig, Branch 164 to enforce their agreement with Gregorio. On May 8, 1986,
said court rendered judgment in their favor, as follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering herein defendants:

(1) to convey to Atty. Tomas Trinidad as honorarium for his services an area of 14,684 sq.m. which is
twenty percent (20%) of 72,424 sq.m. the total area of Lots 1, 2, 3 and 4;

(2) to convey to Luis Fajardo an area of 29,369 sq.m. representing fifty percent (50%) of the remainder
of the property after deducting the honorarium of Atty. Trinidad.

(3) to pay the cost of suit and litigation expenses.

SO ORDERED.21

The heirs of Gregorio appealed the above decision but their appeal was declared abandoned and
dismissed by the CA. By virtue of an Entry of Judgment issued by the CA dated December 8, 1988,
Trinidad and Fajardo filed a motion for the issuance of a writ of execution. However, the writ issued
remained unsatisfied as per the Return filed by the Sheriff on April 10, 1989. On August 14, 1989, the
court appointed Deputy Sheriff Marcial Estrellado to execute the deed of conveyance in favor of the
plaintiffs.

Deputy Sheriff Estrellado executed the Officer’s Deed of Conveyance22 dated August 15, 1989 in favor of
Trinidad and Fajardo. While the plaintiffs moved for the approval of the subdivision plan needed for the
transfer and issuance of separate titles as per decision, the Register of Deeds of Las Piñas wrote a letter-
reply23 to the Deputy Sheriff indicating that the deed of conveyance and Order of the Court dated
August 14, 1989 entered as Entry No. 6503 and 6504 in their docket book could not be pursued because
the subject property was already sold to other parties.

In compliance with the order of the CFI, then Register of Deeds of Las Piñas Alejandro R. Villanueva
submitted an official report24 stating that TCT No. S-91911, still existing in their records, should have
been cancelled when TCT Nos. 107727, 107728 and 107729 were issued in compliance with the Order
dated March 21, 1986 of the RTC of Pasig, and that such caused an anomalous situation of having two
separate and distinct certificates of title covering the same parcels of land although in the name of the
same registered owners. Villanueva opined that the issuance of TCT Nos. 107727, 107728 and 107729
covering Lots 1, 3 and 4 of Psu-204785, "placed TCT No. S-91911, as deemed cancelled, inasmuch as the
latter certificate of title covers one and the same parcels of land" and hence TCT No. S-91911 should not
anymore be subject of any transactions.

The CFI initially withdrew its Order dated August 14, 1989 but eventually reinstated the same and
ordered the Register of Deeds to annotate the Deed of Conveyance at the back of TCT No. S-91911
within 24 hours upon receipt of the order. Said directive was reiterated by the CFI on June 7, 1991. On
June 26, 1991, the court authorized the subdivision of Lot 1, Psu-204785 and directed the Register of
Deeds to issue separate titles in favor of plaintiffs Trinidad and Fajardo. Consequently, TCT No. T-
2738025 covering 29,369 sq. ms. portion of Lot 1, Psu-204785 in the name of Luis Fajardo was issued on
December 12, 1991. On April 26, 1993, said TCT No. T-27380 was cancelled per Order26 of the court
dated March 13, 1992 and in lieu thereof, TCT No. T-3492327 was issued, still in the name of Luis Fajardo
and without any of the encumbrances carried over from TCT No. S-91911.

The Claim of Top Management

Programs Corporation
(TCT No. T-8129)

On September 24, 1991, herein petitioner Top Management Programs Corporation sought the
annulment of the CFI orders in Civil Case No. 35305 reinstating the August 14, 1989 order and directing
the issuance of new certificates of title in the name of Trinidad and Fajardo, on the ground of extrinsic
fraud. Petitioner claimed that by virtue of a Deed of Absolute Sale28 dated November 29, 1988 which
was notarized on January 9, 1989, the heirs of Gregorio sold to it a parcel of land with an area of 20,000
sq. ms., located at Las Piñas and identified as Lot 1-A Psd-293076, being a portion of Lot 1, Psu-204785
covered by TCT No. T-4635, and that on February 20, 1989, TCT No. T-812929 covering the said property
was issued in its name.

On November 28, 1991, the CA rendered its decision dismissing the petition for annulment (CA-G.R. SP
No. 26100). It held that there existed no extrinsic fraud which would justify the annulment of the
questioned orders. Petitioner sought the reversal of the CA ruling before this Court via a petition for
certiorari. By Decision30 dated May 28, 1993, this Court dismissed the petition and affirmed the CA
judgment. On the issue raised by petitioner as to whether the CA erred in holding that petitioner’s claim
of title to Lot 1-A should be served as third-party claim on the Deputy Sheriff who executed the Deed of
Conveyance and caused its registration, or to vindicate the claim to the property through a separate
independent action, the Court refrained from discussing the same since its resolution is inconsequential
and would not alter in any way the outcome of the petition.31

Civil Case No. 94-564

Thus, on February 10, 1994, petitioner filed before the RTC of Makati Civil Case No. 94-564 for Quieting
of Title With Damages. Petitioner alleged that the issuance of TCT No. T-27380 in the name of Fajardo --
who obtained the same from the court in a case without the knowledge of petitioner who was not a
party therein -- despite the existence of TCT No. T-8129 in its name constitutes a cloud upon the title of
petitioner. Petitioner claimed that it acquired the same property in good faith and for value from the
original owners thereof.

In his Answer, private respondent Fajardo asserted that it is the title of petitioner which originated from
a void title. OCT No. 5678 from which TCT No. 4635 was derived, was in effect declared null and void
under this Court’s Resolution dated February 8, 1984 in G.R. No. L-34239-40 which dismissed
petitioner’s appeal from the July 30, 1971 CA Decision in CA-G.R. No. 40739-40-R. The CA had nullified
the CFI decision dated March 30, 1966 in LRC Case No. N-5416 insofar as it adjudicates the subject lots
to Velasquez.

After petitioner’s formal offer of evidence, private respondent filed a demurrer to evidence, which the
trial court granted in its Order32 dated June 8, 1998, as follows:

WHEREFORE, premises considered, the case is hereby DISMISSED. No pronouncement as to costs. The
Register of Deeds of Las Piñas City is hereby ordered to cancel TCT No. T-8129 in the name of plaintiff
Top Management Programs Corporation.

SO ORDERED.33

Petitioner appealed to the CA and on May 30, 2001 said court rendered the assailed Decision34 affirming
the trial court’s dismissal of petitioner’s complaint. The CA held that petitioner cannot invoke the rule
that the title which bears the earlier date should prevail in view of the infirmity in TCT No. 107729 which
on its face shows that its origin was a title already voided by the appellate court. Petitioner’s motion for
reconsideration was likewise denied by the CA.
Hence, this petition alleging that the CA erred in (a) declaring TCT No. T-8129 as defective based on a
mere clerical error despite acknowledgment of its issuance resulting from a final determination by this
Court of the validity of Emilio Gregorio’s claim over the subject property, and (b) affirming the validity of
private respondent’s TCT No. T-27380 despite the clear nullity of its mother title (OCT No. 9587) which
was issued pending the appeal filed by Velasquez from the decision of the appellate court in CA-G.R. No.
40739-40-R to this Court.

Petitioner reiterates that an error was made on the entries in TCT No. 107729. Instead of providing that
said title, as well as TCT Nos. 107727 and 107728 issued in the name of the Heirs of Emilio Gregorio,
emanated from the application for registration of Emilio Gregorio in LRC Case No. N-5053, LRC Rec. No.
N-27523 pursuant to the Order of the RTC in LRC Case Nos. N-5416 and N-5053, the Register of Deeds of
Pasay City annotated on the face of said titles that these were derived from Jose T. Velasquez’s OCT No.
5678 under Decree No. N-111862. Petitioner laments that deplorable situation of the legitimate
successor of the winning litigant holding a title wrongly annotated to have been derived from the voided
title of the loser in the case. The winning party was then given a title registered as derived from the title
he fought so hard to set aside. Moreover, there is no logic in the appellate court’s conclusion that
petitioner’s title traces its origin to a mother title already voided, when in fact it is undisputed that TCT
No. 107729 was issued pursuant to the March 21, 1986 order of the RTC of Pasig in LRC Case Nos. N-
5416 and N-5053 implementing the final and executory February 8, 1984 decision of this Court in G.R.
Nos. L-34239-40 denying Velasquez’s appeal.

Petitioner further claims that it is a buyer in good faith who had no knowledge of any defect in the title
of his predecessor-in-interest. It paid the purchase price and acquired its title long before it discovered
the right to compensation of private respondent through the Officer’s Deed of Conveyance.

Finally, petitioner argues that the issuance of OCT No. 9587 during the pendency of Velasquez’s appeal
to this Court renders said title null and void ab initio, citing the ruling in Director of Lands v. Reyes35.
Since OCT No. 9587 is a nullity, it follows that its derivative title, private respondent’s TCT No. T-27380,
is likewise a nullity.

Private respondent counters that petitioner’s assertion of the existence of clerical errors in the
annotations of the entries in TCT No. 8129 is, at the very least, an admission that said title is indeed
defective. Obviously, petitioner may not file a petition to quiet its title and at the same time seek, in the
same proceeding, the corrections of the entries therein.

As to the issue of premature issuance of OCT No. 9587, private respondent points out that the decision
in LRC Case No. N-5053 dated January 31, 1966 as a consequence of which Decree of Registration No.
141990 was issued, has already attained finality even before Velasquez sought the annulment of the
award in favor of Emilio Gregorio utilizing the Report of the Commissioner of Land Registration dated
September 16, 1966, to the effect, among others, that a portion of the land awarded in his favor
overlapped with that adjudicated to Gregorio. Hence, the prohibition mentioned in the case of Director
of Lands v. Reyes (supra) has no application to the case at bar, and therefore could not serve as basis to
nullify OCT No. 9587, the mother title of TCT No. T-27380 in the name of private respondent.

We deny the petition.

Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting
title to real property. In an action for quieting of title, the plaintiffs must show not only that there is a
cloud or contrary interest over the subject real property, but that they have a valid title to it.36 The court
is tasked to determine the respective rights of the complainant and the other claimants, not only to
place things in their proper places, and to make the claimant, who has no rights to said immovable,
respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has the
right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly
introduce the improvements he may desire, as well as use, and even abuse the property as he deems
fit.37

Petitioner anchors its claim over the disputed lot on TCT No. T-8129 issued on February 20, 1989 which
is a transfer from TCT No. 107729 in the name of the Heirs of Emilio Gregorio, from whom it bought the
property in January 1989. On the other hand, private respondent acquired the same land by virtue of
the Officer’s Deed of Conveyance dated August 15, 1989 executed in their favor pursuant to the final
judgment in Civil Case No. 35305 of the RTC of Pasig, Branch 164 and was issued TCT No. T-27380 in his
name on December12, 1991.

In Degollacion v. Register of Deeds of Cavite38 we held that if two certificates of title purport to include
the same land, whether wholly or partly, the better approach is to trace the original certificates from
which the certificates of title were derived. Citing our earlier ruling in Mathay v. Court of Appeals39 we
declared:

x x x where two transfer certificates of title have been issued on different dates, to two different
persons, for the same parcel of land even if both are presumed to be title holders in good faith, it does
not necessarily follow that he who holds the earlier title should prevail. On the assumption that there
was regularity in the registration leading to the eventual issuance of subject transfer certificates of title,
the better approach is to trace the original certificates from which the certificates of title in dispute
were derived. Should there be only one common original certificate of title, x x x, the transfer certificate
issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the
process of registration.40

From the recitals in the transfer certificates of title respectively held by petitioner and private
respondent, as well as the records of the LRA, there appears not just one but two different original
certificates. TCT No. T-8129 on its face shows that the land covered was originally registered as OCT No.
5678 under Decree No. N-111862 (Velasquez), while TCT No. T-27380 indicates the original registration
as OCT No. 9587 under Decree No. N-141990 (Gregorio). Both the LRC and CA found TCT No. 107729
and its derivative titles TCT Nos. 4635 and T-8129 as void and inexistent since OCT No. 5678 in the name
of Velasquez had been nullified under the order for execution of the final judgment in LRC Case Nos. N-
5053 and N-5416 in which Gregorio prevailed. Consequently, the lower courts upheld the title of private
respondent which alone can be traced to the original certificate in the name of Emilio Gregorio (OCT No.
9578).

Petitioner, however, asserts that the entries in his TCT contain errors and insists that TCT Nos. 107729,
4635 and T-8129 actually emanated from the application for registration of Emilio Gregorio in LRC Case
No. N-5053, LRC Record No. N-27523 pursuant to the Order of the Regional Trial Court in LRC Case Nos.
N-5053 and N-5416, as in fact TCT No. 107729 were issued along with TCT Nos. 107727 and 107728
covering two other lots also in the name of the Heirs of Emilio Gregorio by way of implementing the
final judgment of said court in the case between Gregorio and Velasquez, as affirmed by the CA and this
Court.

We disagree.

TCT No. 107729 in the name of the heirs of Emilio Gregorio issued on April 29, 1986, on its face showed
badges of irregularity in its issuance. First, the technical description stated that it covers a portion of Lot
1, plan Psu-204785, LRC Case No. N-5416 instead of N-5053. Second, the decree number and date of
issuance, as well as OCT number clearly indicate that the original decree pertained to Velasquez and not
Gregorio. Third, the name of the registered owner in the original certificate is not Velasquez or Gregorio
but "Delta Motor Corp." And fourth, the certificate from which TCT No. 107729 was supposedly a
transfer should have been the OCT (of Gregorio) and not those unfamiliar TCT numbers indicated
therein. The annotations regarding the supposed original registration of TCT No. 107729 read as follows:

IT IS FURTHER CERTIFIED that said land was originally registered on the 12th day of December in the
year nineteen hundred and sixty-six in the Registration Book of the Office of the Register of Deeds
of Rizal Volume A-69 page 78 as Original Certificate of Title No. 5678 pursuant to Decree No. N-
111862 issued in L.R.C. _____________ Record No. N-28735 Case No. N-5416 in the name of Delta
Motor Corp. .

This certificate is a transfer from Transfer Certificate of Title No. 27737/A/T-145-A S-8722/T-41 which is
cancelled by virtue hereof in so far as the above-described land is concerned.41 (Emphasis supplied.)
The foregoing errors are not mere typographical as petitioner claims, but serious discrepancies in the
registration process. In fact, it is not far-fetched that the erroneous entries could have been intended to
create the impression that TCT No. 107729 was a separate and distinct title from the previously issued
TCT No. S-91911 even if they pertain to one and the same lot adjudicated to Emilio Gregorio. Such
conclusion is reinforced by the unexplained inaction or failure of the heirs of Gregorio to rectify the
alleged errors in their title before selling the property to petitioner. The heirs of Gregorio knew that
their TCT No. S-91911 bore encumbrances in favor of third parties, notably the notice of pending
litigation (Lis Pendens) involving the property covered by said title before the CFI of Pasig, Metro Manila
in Civil Case No. 35305, which Trinidad caused to be annotated thereon. The issuance of a new
certificate with exactly identical entries as that of TCT No. S-91911 (as to its original registration) would
mean that the aforesaid annotations had to be carried over to such new certificate. Strangely, it is TCT
No. 107729 which RD Alejandro R.Villanueva upheld in his February 5, 1989 Report notwithstanding its
later issuance and the glaring errors in the entries of its original registration. It must be stressed that
OCT No. 5677, 5678, 5679 and 5680 and its derivative titles were ordered cancelled precisely because
they were issued pursuant to Decree Nos. N-111862 to N-111865 issued in LRC Case No. N-5416 in the
name of Velasquez, who lost in the final judgment rendered in CA-G.R. No. 40739-40-R, and whose claim
to the lots covered thereby were declared null and void. Logically, therefore, any new certificate of title
to be issued to the heirs of Gregorio by virtue of the aforesaid final judgment adjudicating the land to
Emilio Gregorio, could not possibly be a transfer or replacement of the aforesaid void OCTs in the name
of Velasquez.

But even granting that the subject entries in TCT No. 107729 were mere clerical errors and assuming
arguendo that said certificate was issued to implement the final judgment in CA-G.R. No. 40739-40-R,
such execution is tainted with infirmity. The March 21, 1986 order issued by the RTC of Pasig did not
only cancel OCT No. 5678 (and other titles in the name of Velasquez covering the same lots adjudicated
to Gregorio), it also ordered the issuance of new certificates of title in the name of the heirs of Emilio
Gregorio despite having been informed by the LRA and the Register of Deeds that there was already
issued OCT No. 9587 over the same lot in the name of Emilio Gregorio, which was replaced with TCT No.
S-91911 in the name of the heirs of Emilio Gregorio following the decision rendered by the appellate
court (CA-G.R. No. 56015-R) in another case filed by Gregorio against spouses Parami (Civil Case No.
16977).

At this point, it serves well to emphasize that upon finality of judgment in land registration cases, the
winning party does not file a motion for execution as in ordinary civil actions. Instead, he files a petition
with the land registration court for the issuance of an order directing the Land Registration Authority to
issue a decree of registration, a copy of which is then sent to the Register of Deeds for inscription in the
registration book, and issuance of the original certificate of title.42 The LRC upon the finality of the
judgment adjudicating the land to an applicant shall, following the prescribed procedure, merely issues
an order for the issuance of a decree of registration and the corresponding certificate of title in the
name of such applicant.43

In this case, the RTC of Pasig, cognizant of a previous decree of registration instead ordered the Register
of Deeds to issue new certificates in favor of the heirs of Gregorio, erroneously declaring that such
certificates are in lieu of OCT Nos. 5677, 5678, 5679 and 5680. Said court exceeded its authority when it
ordered the issuance of transfer certificates in the name of the heirs of Gregorio despite the existence of
TCT No. S-91911 already issued to them covering the sae parcel of land. This caused the duplication of
titles held by the heirs of Gregorio over Lot 1. Thus, while there was only one decree and original
certificate issued to the common predecessor-in-interest of petitioner and private respondent, Emilio
Gregorio, the latter’s heirs were able to secure two transfer certificates covering the same land. Indeed
it could not order the issuance of another OCT as it would result to duplication of titles or "double
titling."44 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.45 Issuance of another decree covering the same
land is therefore null and void.46

In the light of the LRA Report dated September 12, 1984 stating that compliance with the July 30, 1971
final judgment rendered by the CA which reversed the LRC decision and adjudicated Lots 1, 3 and 4 in
favor of Emilio Gregorio, would result in duplication of titles, it was grave error for the RTC of Pasig to
grant the motion for execution filed by the heirs of Emilio Gregorio who sought, -- in the guise of
implementing the July 30, 1971 CA decision -- the issuance of new titles in their name notwithstanding
the existence of OCT No. 9587 and TCT No. S-91911. Given such vital information, there exists a
compelling need for the land registration court to ascertain the facts and "address the likelihood of
duplication of titles x x x, an eventuality that will undermine the Torrens system of land registration."47

Petitioner nonetheless assails OCT No. 9587 as null and void, having been issued when the adverse
decision of the appellate court in CA-G.R. No. 40739-40-R was elevated by it to this Court. Following the
doctrine in Director of Lands v. Reyes (supra), it is asserted that OCT No. 9587 should not have been
issued because the decision in CA-G.R. No. 40739-40-R was not yet final at the time, pending resolution
by this Court of the appeal by Velasquez (G.R. No. L-34239-40).

In Director of Lands v. Reyes (supra), this Court laid down the rule that execution pending appeal is not
applicable in a land registration proceeding and the certificate of title thereby issued is null and void. In
that case, the assignee of the original applicant applied for a motion for issuance of a decree of
registration before the lower court pending the approval of the Record on Appeal. The motion was
opposed by the Government which appealed the lower court’s decision adjudicating the land to the said
assignee. We thus ruled:

Under the circumstances of this case, the failure of the appellants to serve a copy of their Notice of
Appeal to the counsel for the adjudicatee Roman C. Tamayo is not fatal to the appeal because,
admittedly, he was served with a copy of the original, as well as the Amended Record on Appeal in both
of which the Notice of Appeal is embodied. Hence, such failure cannot impair the right of appeal.

What is more, the appeal taken by the Government was from the entire decision, which is not severable.
Thus, the appeal affects the whole decision.

In any event, We rule that execution pending appeal is not applicable in a land registration proceeding.
It is fraught with dangerous consequences. Innocent purchasers may be misled into purchasing real
properties upon reliance on a judgment which may be reversed on appeal.

A Torrens title issued on the basis of a judgment that is not final is a nullity, as it is violative of the
explicit provisions of the Land Registration Act which requires that a decree shall be issued only after the
decision adjudicating the title becomes final and executory, and it is on the basis of said decree that the
Register of Deeds concerned issues the corresponding certificate of title.

Consequently, the lower court acted without jurisdiction or exceeded its jurisdiction in ordering the
issuance of a decree of registration despite the appeal timely taken from the entire decision a
quo.481auuphi1

OCT No. 9587 on its face showed that its basis was Decree No. N-141990 issued on October 31, 1972
pursuant to the January 31, 1966 decision of the CFI in Land Reg. Case No. N-5053 and CA decision dated
July 30, 1971. Per records of this Court, however, Velasquez had filed a petition for review of the CA
decision. Be that as it may, the premature issuance of the decree in favor of Emilio Gregorio and the
corresponding original certificate of title in his name did not affect his acquisition of title over the
subject land considering that Velasquez’s petition was eventually dismissed. Neither can petitioner, by
reason alone of defective issuance of OCT No. 9587, claim a right over the subject land superior to that
acquired by the private respondent.

A reading of the annotations of encumbrances at the back of TCT No. T-27380 which were carried over
from TCT No. S-91911 in the name of the Heirs of Gregorio, would show that during the pendency of
Civil Case No. 35305 filed before the CFI of Rizal by private respondent and Trinidad, the latter caused
the annotation of a Notice of Lis Pendens involving the same properties of the defendants therein, the
heirs of Emilio Gregorio. The notice of lis pendens was registered as Entry No. 2139849 on TCT No. S-
91911.

Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court
acquires over property involved in a suit, pending the continuance of the action, and until final
judgment. Founded upon public policy and necessity, lis pendens is intended to keep the properties in
litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the
judgment or decree by subsequent alienation. Its notice is an announcement to the whole world that a
particular property is in litigation and serves as a warning that one who acquires an interest over said
property does so at his own risk or that he gambles on the result of the litigation over said property.50

The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject matter of the litigation
within the power of the court until the entry of the final judgment to prevent the defeat of the final
judgment by successive alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of
the litigation to the judgment or decree that the court will promulgate subsequently.51 Once a notice
of lis pendens has been duly registered, any subsequent transaction affecting the land involved would
have to be subject to the outcome of the litigation.52

Petitioner being a mere transferee at the time the decision of the RTC of Pasig in Civil Case No. 35305
had become final and executory on December 6, 1988, it is bound by the said judgment which ordered
the heirs of Emilio Gregorio to convey Lots 1, 2, 3 & 4, Psu-204875 in favor of private respondent and
Trinidad. As such buyer of one of the lots to be conveyed to private respondent pursuant to the court’s
decree with notice that said properties are in litigation, petitioner merely stepped into the shoes of its
vendors who lost in the case. Such vested right acquired by the private respondent under the final
judgment in his favor may not be defeated by the subsequent issuance of another certificate of title to
the heirs of Gregorio respecting the same parcel of land. For it is well-settled that being an involuntary
transaction, entry of the notice of lis pendens in the primary entry book of the Register of Deeds is
sufficient to constitute registration and such entry is notice to all persons of such claim.53

"It is to be noted that the notation of the lis pendens on the back of the owner’s duplicate is not
mentioned for the purpose of constituting a constructive notice because usually such owner’s duplicate
certificate is presented for the purpose of the annotation later, and sometimes not at all until [it is]
ordered by the court."54 Strictly speaking, the lis pendens annotation is not to be referred to "as a part
of the doctrine of notice; the purchaser pendente lite is affected, not by notice, but because the law
does not allow litigating parties to give to others, pending the litigation, rights to the property in dispute
so as to prejudice the opposite party. The doctrine rests upon public policy, not notice."55 Thus we have
held that one who buys land where there is a pending notice of lis pendens cannot invoke the right of a
purchaser in good faith; neither can he have acquired better rights than those of his predecessor in
interest.56

In view of the foregoing, we hold that the CA did not err in affirming the trial court’s order dismissing
petitioner’s complaint for quieting of title and ordering the cancellation of its TCT No. T-8129.

WHEREFORE, the petition is DENIED. The Decision dated May 30, 2001 and Resolution dated October
23, 2001 of the Court of Appeals in CA-G.R. CV No. 60712 are AFFIRMED.

With costs against the petitioner.

SO ORDERED.

G.R. No. 196118 July 30, 2014

LEONARDO C. CASTILLO, represented by LENNARD V. CASTILLO, Petitioner,

vs.
SECURITY BANK CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR., and
TERESITA FLORESCASTILLO, Respondents.

DECISION

PERALTA, J.:

This is a Petition for Review questioning the Decision1 of the Court of Appeals (CA) dated November 26,
2010, as well as its Resolution2 dated March 17, 2011 in CA-G.R. CV No. 88914. The CA reversed and set
aside the Decision3 of the Regional Trial Court (RTC) of San Pablo City, Laguna, Branch 32, dated October
16, 2006 in Civil Case No. SP-5882 (02), and consequently, upheld the validity of the real estate
mortgage entered into by respondents spouses Leon C. Castillo, Jr. and Teresita Flores-Castillo, and
Security Bank Corporation (SBC).

The facts, as culled from the records, are as follows:

Petitioner Leonardo C. Castillo and respondent Leon C. Castillo, Jr. are siblings. Leon and Teresita Flores-
Castillo (the Spouses Castillo) were doing business under the name of JRC Poultry Farms. Sometime in
1994, the Spouses Castillo obtained a loan from respondent SBC in the amount of ₱45,000,000.00. To
secure said loan, they executed a real estate mortgage on August 5, 1994 over eleven (11) parcels of
land belonging to different members of the Castillo family and which are all located in San Pablo
City.4 They also procured a second loan5 amounting to ₱2,500,000.00, which was covered by a mortgage
on a land in Pasay City. Subsequently, the Spouses Castillo failed to settle the loan, prompting SBC to
proceed with the foreclosure of the properties. SBC was then adjudged as the winning bidder in the
foreclosure sale held on July 29, 1999. Thereafter, they were able to redeem the foreclosed properties,
withthe exception of the lots covered by Torrens Certificate of Title(TCT) Nos. 28302 and 28297.

On January 30, 2002, Leonardo filed a complaint for the partial annulment of the real estate mortgage.
He alleged that he owns the property covered by TCT No. 28297 and that the Spouses Castillo used it as
one of the collaterals for a loan without his consent. He contested his supposed Special Power of
Attorney (SPA) in Leon’s favor, claiming that it is falsified. According to him, the date of issuance of his
Community Tax Certificate (CTC) as indicated on the notarization of said SPA is January 11, 1993, when
he only secured the same on May 17, 1993. He also assailed the foreclosure of the lots under TCT
Nos.20030 and 10073 which were still registered in the name of their deceased father. Lastly, Leonardo
attacked SBC’s imposition of penalty and interest on the loans as being arbitrary and unconscionable.

On the other hand, the Spouses Castillo insisted on the validity of Leonardo’s SPA. They alleged that they
incurred the loan not only for themselves, but also for the other members of the Castillo family who
needed money at that time. Upon receipt of the proceeds of the loan, they distributed the same to their
family members, as agreed upon. However, when the loan became due, their relatives failed to pay their
respective shares such that Leon was forced to use his own money until SBC had to finally foreclose the
mortgage over the lots.6

In a Decision dated October 16, 2006, the RTC of San Pablo City ruled in Leonardo’s favor, the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff Leonardo C. Castillo and against the
defendants SECURITY BANK CORPORATION, and JRC POULTRY FARMS or SPS. LEON C. CASTILLO, JR. and
TERESITA FLORES-CASTILLO declaring as null and void the Real Estate Mortgage dated August 5, 1994,
the Memorandum of Agreement dated October 28, 1997 and the Certificate of Sale dated August 27,
1999 insofar as plaintiff’s property with Transfer Certificate of Title No. T-28297 is concerned. The
Security Bank Corporation is likewise ordered to return the ownership of the Transfer Certificate of Title
No. T-28297 to plaintiff Leonardo Castillo. Likewise, defendants spouses Leon C. Castillo, Jr. and Teresita
Flores-Castillo are hereby ordered to pay plaintiff moral damages in the total amount of ₱500,000.00
and exemplary damages of ₱20,000.00. All other claims for damages and attorney’s fees are DENIED for
insufficiency of evidence.

SO ORDERED.7

Both parties elevated the case to the CA. On November 26, 2010, the CA denied Leonardo’s appeal and
granted that of the Spouses Castillo and SBC. It reversed and set aside the RTC Decision, essentially
ruling that the August 5, 1994 real estate mortgage isvalid. Leonardo filed a Motion for Reconsideration,
but the same was denied for lack of merit.

Hence, Leonardo brought the case to the Court and filed the instant Petition for Review.1âwphi1 The
main issue soughtto be resolved here is whether or not the real estate mortgage constituted over the
property under TCT No. T-28297 is valid and binding.

The Court finds the petition to be without merit.

As a rule, the jurisdiction of the Court over appealed cases from the CA is limited to the review and
revision of errors of law it allegedly committed, as its findings of fact are deemed conclusive. Thus, the
Court is not duty-bound to evaluate and weigh the evidence all over again which were already
considered in the proceedings below, except when, as in this case, the findings of fact of the CAare
contrary to the findings and conclusions of the trial court.8

The following are the legal requisites for a mortgage to be valid:

(1) It must be constituted to secure the fulfillment of a principal obligation;

(2) The mortgagor must be the absolute owner of the thing mortgaged;

(3) The persons constituting the mortgage must have the free disposal of their property, and in the
absence thereof, they should be legally authorized for the purpose.9

Leonardo asserts that his signature inthe SPA authorizing his brother, Leon, to mortgage his property
covered by TCT No. T-28297 was falsified. He claims that he was in America at the time of its execution.
As proof of the forgery, he focuses on his alleged CTC used for the notarization10 of the SPA on May 5,
1993 and points out that it appears to have been issued on January 11, 1993 when, in fact, he only
obtained it on May 17, 1993. But it is a settled rule that allegations of forgery, like all other allegations,
must be proved by clear, positive, and convincing evidence by the party alleging it. It should not be
presumed, but must beestablished by comparing the alleged forged signature with the genuine
signatures.11 Here, Leonardo simply relied on his self-serving declarations and refused to present further
corroborative evidence, saying that the falsified document itself is the best evidence.12 He did not even
bother comparing the alleged forged signature on the SPA with samples of his real and actual signature.
What he consistently utilized as lone support for his allegation was the supposed discrepancy on the
date of issuance of his CTC as reflectedon the subject SPA’s notarial acknowledgment. On the contrary,
in view of the great ease with which CTCs are obtained these days,13 there is reasonable ground to
believe that, as the CA correctly observed, the CTC could have been issued with the space for the date
left blank and Leonardo merelyfilled it up to accommodate his assertions. Also, upon careful
examination, the handwriting appearing on the space for the date of issuance is different from that on
the computation of fees, which in turn was consistent with the rest of the writings on the
document.14 He did not likewise attempt to show any evidence that would back up his claim that at the
time of the execution of the SPA on May 5, 1993, he was actually in America and therefore could not
have possibly appeared and signed the document before the notary.

And even if the Court were to assume, simply for the sake of argument, that Leonardo indeed secured
his CTC only on May 17, 1993, this does not automatically render the SPA invalid. The appellate court
aptly held that defective notarization will simply strip the document of its public character and reduce it
to a private instrument, but nonetheless, binding, provided its validity is established by preponderance
of evidence.15 Article 1358 of the Civil Code requires that the form of a contract that transmits or
extinguishes real rights over immovable property should be in a public document, yet the failure to
observethe proper form does not render the transaction invalid.16 The necessity of a public document
for said contracts is only for convenience; it is not essential for validity or enforceability.17 Even a sale of
real property, though notcontained in a public instrument or formal writing, is nevertheless valid and
binding, for even a verbal contract of sale or real estate produceslegal effects between the
parties.18 Consequently, when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard originally attached to a dulynotarized document is dispensed with, and
the measure to test the validity of such document is preponderance of evidence.19

Here, the preponderance ofevidence indubitably tilts in favor of the respondents, still making the SPA
binding between the parties even with the aforementioned assumed irregularity.1âwphi1 There are
several telling circumstances that would clearly demonstrate that Leonardo was aware of the mortgage
and he indeed executed the SPA to entrust Leon with the mortgage of his property. Leon had inhis
possession all the titles covering the eleven (11) properties mortgaged, including that of
Leonardo.20 Leonardo and the rest of their relatives could not have just blindly ceded their respective
TCTs to Leon.21 It is likewise ridiculous how Leonardo seemed to have been totally oblivious to the status
of his property for eight (8) long years, and would only find outabout the mortgage and foreclosure from
a nephew who himself had consented to the mortgage of his own lot.22 Considering the lapse of time
from the alleged forgery on May 5, 1993 and the mortgage on August 5, 1994, to the foreclosure on July
29, 1999, and to the supposed discovery in 2001, it appears that the suit is a mere afterthought or a last-
ditch effort on Leonardo’s part to extend his hold over his property and to prevent SBC from
consolidating ownership over the same. More importantly, Leonardo himself admitted on cross-
examination that he granted Leon authority to mortgage, only that, according to him, he thought it was
going to be with China Bank, and not SBC.23 But as the CA noted, there is no mention of a certainbank in
the subject SPA with which Leon must specifically deal. Leon, therefore, was simply acting within the
bounds of the SPA’s authority when hemortgaged the lot to SBC.

True, banks and other financing institutions, in entering into mortgage contracts, are expected to
exercise due diligence.24 The ascertainment of the status or condition of a property offered to it as
security for a loan must be a standard and indispensable part of its operations.25 In this case, however,
no evidence was presented to show that SBC was remiss in the exercise of the standard care and
prudence required of it or that it was negligent in accepting the mortgage.26 SBC could not likewise
befaulted for relying on the presumption of regularity of the notarized SPA when it entered into the
subject mortgage agreement.

Finally, the Court finds that the interest and penalty charges imposed by SBC are just, and not excessive
or unconscionable.

Section 47 of The General Banking Law of 200027 thus provides:

Section 47. Foreclosure of Real Estate Mortgage.- In the event of foreclosure, whether judicially or extra-
judicially, of any mortgage on real estate which is security for any loan or other credit accommodation
granted, the mortgagor or debtor whose real property has been sold for the full or partial payment of
his obligation shall have the right within one year after the sale of the real estate, to redeem the
property by paying the amount due under the mortgage deed, with interest thereon at the rate
specified in the mortgage, and all the costs and expenses incurred by the bank or institutionfrom the
sale and custody of said property less the income derived therefrom. However,the purchaser at the
auction sale concerned whether in a judicial or extra-judicial foreclosure shall have the right to enter
upon and take possession of such property immediately after the date of the confirmation of the
auction sale and administer the same in accordance with law. Any petition in court to enjoin or restrain
the conduct of foreclosure proceedings instituted pursuant to this provision shall be given due course
only upon the filing by the petitioner of a bond in an amount fixed by the court conditioned that he will
pay all the damages which the bank may suffer by the enjoining or the restraint of the foreclosure
proceeding.

Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem the property in accordance with this provision until, but not
after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in
no case shall be more than three (3) months after foreclosure, whichever is earlier. Owners of property
that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption
rights until their expiration.28 Verily, the redemption price comprises not only the total amount due
under the mortgage deed, but also with interest at the rate specified in the mortgage, and all the
foreclosure expenses incurred by the mortgagee bank.

To sustain Leonardo's claim that their payment of ₱45,000,000.00 had already extinguished their entire
obligation with SBC would mean that no interest ever accrued from 1994, when the loan was availed, up
to the time the payment of ₱45,000,000.00 was made in 2000-2001.

SBC's 16% rate of interest is not computed per month, but rather per annum or only 1.33% per month.
In Spouses Bacolor v. Banco Filipino Savings and Mortgage Bank, Dagupan City Branch,29 the Court held
that the interest rate of 24% per annum on a loan of ₱244,000.00 is not considered as unconscionable
and excessive. As such, the Court ruled that the debtors cannot renege on their obligation to comply
with what is incumbent upon them under the contract of loan as they are bound by its stipulations. Also,
the 24o/o per annum rate or 2% per month for the penalty charges imposed on account of default,
cannot be considered as skyrocketing. The enforcement of penalty can be demanded by the creditor in
case of non-performance due to the debtor's fault or fraud. The nonperformance gives rise to the
presumption of fault and in order to avoid the penalty, the debtor has the burden of proving that the
failure of the performance was due to either force majeure or the creditor's own acts.30 In the instant
case, petitioner failed to discharge said burden and thus cannot avoid the payment of the penalty
charge agreed upon.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated
November 26, 2010, as well as its Resolution dated March 17, 2011 in CA-G.R. CV No. 88914, are hereby
AFFIRMED.

SO ORDERED.

G.R. No. 157553 September 8, 2004

AUTOCORP GROUP and AUTOGRAPHICS, INC., petitioners,

vs.
Hon. COURT OF APPEALS and KEPPEL MONTE BANK (formerly Monte de Piedad and Savings
Bank), respondents.

DECISION

PUNO, J.:

Petitioners are before us on a Petition for Review on Certiorari assailing the decision1 and resolution2 of
the Court of Appeals in CA-G.R. SP No. 59004, which set aside the order3 and resolution4 of the Regional
Trial Court (RTC) of Cebu City, Branch 5, granting a writ of preliminary injunction against the respondent
Keppel Monte Bank and the Register of Deeds of Cebu City.

The records show that respondent bank extended a loan of eighty-five million pesos (₱85,000,000.00) in
favor of petitioner Autocorp Group (Autocorp). The loan is embodied in an Agreement5 dated December
16, 1994 which was secured by pledge and real estate mortgage on several properties, among which,
were lots in Cebu City, co-owned by petitioner Autographics, Inc., and covered by Transfer Certificates
of Title (TCT) Nos. 72002, 72132, 85737, and 102042, and lots in Lapu-lapu City, registered under the
name of Eurasia Heavy Industries, Inc., and covered by TCT Nos. 19135 and 19136. The Agreement
provided that the "CREDITOR may, at its sole discretion, treat the whole obligation, its principal and
accrued interest and other charges, as immediately due, payable and defaulted, without necessity of
any demand, presentment or notice by the CREDITOR to the DEBTOR" in any event of default, such as,
when "[t]he DEBTOR fails to pay the principal loan, interests, and other fees and charges, or any part
thereof as they fall due."

Petitioner Autocorp failed to pay the loan. Despite its failure, it asked for an additional loan of
₱48,800,000.00 payable in one year at 20% interest per annum. Of this additional loan, ₱17,000,000.00
was applied partially against the original loan. Autocorp was again unable to pay both accounts totaling
₱116,800,000.00, despite repeated demands and various requests for extension.6

Hence, in a notarized letter7 dated September 8, 1997, addressed to the Office of the Provincial Sheriff
of Cebu City, respondent bank requested for the sale of the six (6) mortgaged lots at a public auction, for
the satisfaction of petitioner Autocorp’s obligations, which, as of July 15, 1997, allegedly amounted to
₱143,871,904.00, and a sum equivalent to 10% as attorney’s fees. The letter was filed with the Office of
the Clerk of Court Ex Oficio Provincial Sheriff of Cebu City on September 12, 1997, and raffled to Deputy
Sheriff Jessie Belarmino on September 15, 1997, for implementation.8

Before Deputy Sheriff Belarmino could prepare the requisite publication and notice, the petitioners filed
a complaint for "Annulment of Loan Agreement and Real Estate Mortgage/ Declaration of
Unenforceability of Loan Agreement and Real Estate Mortgage with ex parte Restraining Order,
Preliminary Injunction and Damages"9 against respondent bank, the Clerk of Court Ex Oficio Provincial
Sheriff of Cebu, and Deputy Sheriff Belarmino. Summons and notice of raffle were served on respondent
bank and its co-defendants on September 24, 1997. The case was raffled to Branch 23 of the RTC of
Cebu City. On October 1, 1997, the trial court issued a Temporary Restraining Order (TRO) effective for
seventy-two (72) hours. After a summary hearing on October 3, 1997, the TRO was extended for twenty
(20) days.10

On October 16, 1997, the trial court issued a writ of preliminary injunction,11 conditioned on petitioners’
filing of a bond of two million pesos (₱2,000,000.00). It also set the pre-trial hearing of the case. The
respondent bank sought a reconsideration of the order but in vain.

Respondent bank filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals, to annul the order and resolution of the trial court. It contended that the preliminary injunction
was issued without the requisite prior notice and hearing, provided under Section 5, Rule 58 of the 1997
Rules of Court. The Court of Appeals granted the petition on November 12, 1998, after finding that the
summary hearing conducted by the trial court was insufficient. The decision was held to be "without
prejudice to his (the trial court judge’s) conducting the required hearing to determine whether
preliminary injunction should be issued."12

The counsel for respondent bank immediately informed Deputy Sheriff Belarmino of the Court of
Appeals’ favorable decision. In a letter13 dated November 25, 1998, said counsel furnished Deputy
Sheriff Belarmino with a copy of the November 12, 1998 Decision of the Court of Appeals and requested
him to proceed with the foreclosure.

In response, Deputy Sheriff Belarmino prepared and served the Notice of Extrajudicial Sale.14 He
scheduled the extrajudicial sale on January 7, 1999 at 10:00 a.m. Before the notice could be published,
petitioners filed an "Urgent Motion to Hold in Abeyance the Extrajudicial Sale in Case No. EJF-2397-
CEB"15 dated December 7, 1997 with Branch 516 of the RTC of Cebu City. In addition, it filed a "Very
Urgent Motion for Issuance of an Order of Status Quo"17 with the Court of Appeals on December 17,
1998.

In its Resolution18 dated December 22, 1998, the Court of Appeals denied the motion of the petitioners.
It ruled that its November 12, 1998 Decision had become final and executory, hence, the motion of
petitioners should be resolved by the trial court. On January 6, 1999, the RTC of Cebu City, Branch 5, also
denied petitioners’ motion to hold the extrajudicial sale in abeyance on the ground that petitioners
violated the rule against forum-shopping.19 Petitioners filed a motion for the reconsideration of the trial
court’s decision but without any success.

The extrajudicial sale proceeded on January 7, 1999 at 10:00 a.m. and closed at 10:45 a.m. The six (6)
properties were awarded to respondent bank as the lone bidder. Deputy Sheriff Belarmino issued a
Certificate of Sale dated January 7, 1999 with the approval of Executive Judge Priscila Agana.20

On January 13, 1999, petitioners filed a motion to admit their Amended/Supplemental Complaint with a
prayer for the issuance of an ex parte Temporary Restraining Order and an Order for Preliminary
Injunction21 with the RTC of Cebu City, Branch 5. It aimed to stop the Register of Deeds of Cebu from
registering the Certificate of Sale in the name of respondent bank and the latter from taking possession
of the properties subject of the foreclosure. In addition, the amended complaint sought the annulment
of the extrajudicial foreclosure due to several alleged irregularities in the conduct of the sale.

On January 21, 1999 at 4:30 p.m., respondent bank presented the sheriff’s certificate of sale to the
Register of Deeds of Cebu City, involving the four (4) properties located in Cebu City covered by TCT Nos.
72002, 72132, 85737, and 102042. On the same date, the certificate was entered in the primary entry
book of the Register of Deeds of Cebu. However, the entry fee of ₱30.00 and the registration fee of
₱154,923.00 were paid only the following day or on January 22, 1999 as the cashier in charge of
receiving payment had already left. Respondent bank also presented the sheriff’s certificate of sale to
the Register of Deeds of Lapu-lapu City with respect to the two (2) subject lots, covered by TCT Nos.
19135 and 19136, located therein.22 The certificate of sale was duly annotated at the back of the
transfer certificates of title of the subject lots with a note that "this include[s] four (4) other lots situated
in Cebu City."23
On January 25, 1999, the RTC of Cebu City, Branch 5, admitted the amended/supplemental complaint of
petitioners and granted their prayer for the issuance of a TRO, directing the Office of the Register of
Deeds to refrain from registering the assailed sheriff’s certificate of sale and also respondent bank from
taking possession of the properties subject of the certificate of sale. It required the respondent bank to
file its answer to the amended/supplemental complaint, within ten (10) days from receipt of the order,
and set a hearing on the propriety of issuing a writ of preliminary injunction on February 15, 1999.24

Respondent bank’s counsel failed to appear on the scheduled February 15, 1999 hearing despite due
notice. Petitioners presented their evidence ex parte. As the TRO it issued was to expire on the same
day, the trial court issued the preliminary injunction on the basis of the evidence adduced by
petitioners. The dispositive portion of the order states:

WHEREFORE, in view of the foregoing, the court hereby grants the preliminary injunction and let a writ
issue after the plaintiffs shall have put up a bond of ONE HUNDRED THOUSAND (₱100,000.00) Pesos
conditioned that the applicant will pay the adverse party of all damages which it may sustain by reason
of the injunction if the court will finally decide that the applicant is not entitled thereto. Consequently,
the Office of the Register of Deeds, Cebu City is enjoined not to register the Certificate of Sale, dated
January 7, 1999, and likewise defendant Monte de Piedad is directed not to take possession or do any
act related thereto on the properties subject of said Certificate of [S]ale until further orders from this
court.25

Respondent bank’s motion for reconsideration was denied in an Order dated March 9, 1999.26

On May 29, 2000, respondent bank filed a petition for certiorari27 under Rule 65 of the Rules of Court
with the Court of Appeals, seeking to annul the orders of the trial court dated February 15, 1999 and
March 9, 1999. Respondent bank contended that the entry of the certificate of sale in the primary entry
book on January 21, 1999 was equivalent to registration. Hence, the TRO dated January 25, 1999 and
the preliminary injunction dated February 15, 1999, were issued with grave abuse of discretion, the
registration of the certificate of sale having already become fait accompli at the time. Respondent bank
also faulted the part of the order prohibiting petitioner from taking possession of the properties as it has
not even filed a petition for a writ of possession at the time as required by Section 7 of Act No. 3135.

On August 16, 2002, the Court of Appeals rendered its first assailed decision,28 annulling and setting
aside the trial court’s February 15, 1999 Order and April 28, 2000 Resolution. It held that the entry of
the certificate of sale in the primary entry book was equivalent to registration, citing Section 56 of
Presidential Decree (P.D.) No. 1529, also known as the "Property Registration Decree," and the case
of DBP vs. Acting Register of Deeds of Nueva Ecija.29 The Court of Appeals held that the failure of
respondent bank to pay the entry and registration fees, on the same day that the sheriff’s certificate of
sale was presented and entered in the primary entry book, was not respondent’s fault but due to the
absence of the cashier. In any case, it ruled that the payment by respondent bank the following day
cured the defect. The Court of Appeals also found as premature the injunction to stop respondent bank
from taking possession of the properties.

Petitioners’ motion for reconsideration was denied by the Court of Appeals in a Resolution dated March
17, 2003.30

Hence, this petition where petitioners raise the following issues:

ARE THE QUESTIONED DECISION OF THE COURT OF APPEALS AND ITS RESOLUTION DATED AUGUST 16,
2002 AND MARCH 17, 2003 IN CA-G.R. SP. NO. 59004 IN ACCORD WITH THE LAW AND JURISPRUDENCE
THEREON?

II

CAN THE COURT OF APPEALS IN A PETITION FOR CERTIORARI PASS UPON AND REVERSE THE FINDINGS
OF FACT AND LAW OF THE TRIAL COURT MADE IN THE EXERCISE OF ITS JURISDICTION?31
Petitioners contend that payment of the entry fee is a condition sine qua non before any valid entry can
be made in the primary entry book. Allegedly, the Court of Appeals resorted to judicial legislation when
it held that the subsequent payment of the entry fee was curative and a substantial compliance with the
law. Petitioners claim that the ruling in DBP vs. Acting Register of Deeds of Nueva Ecija does not apply
to this case. As there was no valid registration, petitioners conclude that the order of the trial court
issuing a writ of preliminary injunction was proper, considering the irregularities present in the conduct
of the extrajudicial foreclosure such as: (a) the petition for extrajudicial foreclosure was not filed with
the executive judge of the RTC of Cebu City but only with the Clerk of Court Ex Oficio Sheriff, Atty.
Jeffrey Joaquino; (b) the notice of extrajudicial foreclosure was made three (3) days ahead of the finality
of the November 12, 1998 Decision of the Court of Appeals in CA-G.R. SP No. 48305, which dissolved the
first writ of preliminary injunction issued by the court a quo; and (c) the extrajudicial foreclosure sale on
January 7, 1999 was not supervised by the Clerk of Court Ex Oficio Sheriff, as required under
Administrative Order No. 3-98 of this Court.32

We find the petition bereft of merit.

First. The objection as to the payment of the requisite fees is unavailing. There is no question that the
fees were paid, albeit belatedly. Respondent bank presented the certificate of sale to the Office of the
Register of Deeds of Cebu City for registration on January 21, 1999 at 4:30 p.m. As the cashier had
already left, the Office could not receive the payment for entry and registration fees, but still, the
certificate of sale was entered in the primary entry book. The following day, respondent bank paid the
requisite entry and registration fees. Given the peculiar facts of the case, we agree with the Court of
Appeals that the payment of respondent bank must be deemed to be substantial compliance with the
law; and, the entry of the instrument the day before, should not be invalidated. In any case, even if we
consider the entry to have been made on January 22, the important fact is that the entry in the primary
entry book was done prior to the issuance of the writ of injunction by the trial court.

Section 56 of P.D. No. 1529 provides:

SEC. 56. Primary Entry Book; fees; certified copies. – Each Register of Deeds shall keep a primary entry
book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all
instruments including copies of writs and processes filed with him relating to registered land. He shall, as
a preliminary process in registration, note in such book the date, hour and minute of reception of all
instruments, in the order in which they were received. They shall be regarded as registered from the
time so noted, and the memorandum of each instrument, when made on the certificate of title to which
it refers, shall bear the same date: Provided, that the national government as well as the provincial and
city governments shall be exempt from the payment of such fees in advance in order to be entitled to
entry and registration. (emphasis ours)

Second. Petitioners contend that the aforecited case of DBP is not apropos to the case at bar. Allegedly,
in DBP, the bank not only paid the registration fees but also presented the owner’s duplicate certificate
of title. We find no merit in petitioners’ posture. They fail to consider the voluntary or involuntary
nature of the instrument subject of registration. A voluntary instrument is a willful act of the registered
owner of the land to be affected by registration,33 while an involuntary instrument is one pertaining to a
transaction affecting lands in which the registered owner’s cooperation is not needed and which
transaction may even be done against his will.34 For the registration of a voluntary instrument, it is
necessary not only to register the deed, instrument or assignment, mortgage, or lease in the entry book
of the register of deeds, but a memorandum thereof must also be made on the owner’s duplicate and
on its original. The mere entry by the register of deeds in the entry or diary book, without the
presentation of the owner’s duplicate certificate of title for corresponding annotation of the
conveyance, does not have the effect of a conveyance of the property.35 On the other hand, for the
registration of an involuntary instrument, the law does not require the presentation of the owner’s
duplicate certificate of title and considers the annotation of such instrument upon the entry book, as
sufficient to affect the real estate to which it relates.36 The reason for the difference is obvious. In a
voluntary instrument, the registered owner of the land to be affected by registration is presumed to be
interested in registering the instrument and would willingly surrender, present or produce his duplicate
certificate of title to the register of deeds in order to accomplish such registration. On the other hand, as
the registration of an involuntary instrument is contrary to the interest of the registered owner or will
affect him adversely, it is but natural that he will not willingly present or produce his duplicate certificate
or at least delay the production as long as possible.37

Like in DBP vs. Acting Register of Deeds of Nueva Ecija,38 the instrument involved in the case at bar, is a
sheriff’s certificate of sale. We hold now, as we held therein, that the registrant is under no necessity to
present the owner’s duplicates of the certificates of title affected, for purposes of primary entry, as the
transaction sought to be recorded is an involuntary transaction.

Registration is merely a specie of notice.39 It is a ministerial act by which an instrument is sought to be

inscribed in the records of the Office of the Register of Deeds and annotated at the back of the
certificate of title covering the land subject of the instrument. It is not a declaration by the State that
such an instrument is a valid and subsisting interest in the land.40 The law on registration does not
require that only valid instruments shall be registered. The purpose of registration is merely to give
notice.41

It is a ministerial duty on the part of the Register of Deeds to annotate the instrument on the certificate
of sale after a valid entry in the primary entry book. P.D. No. 1524 provides:

SEC. 63. Foreclosure of Mortgage. – x x x

(b) If the mortgage was foreclosed extrajudicially, a certificate of sale executed by the officer who
conducted the sale shall be filed with the Register of Deeds who shall make a brief memorandum
thereof on the certificate of title. (emphases ours)

In fine, petitioner’s prayer for the issuance of a writ of injunction, to prevent the register of deeds from
registering the subject certificate of sale, had been rendered moot and academic by the valid entry of
the instrument in the primary entry book. Such entry is equivalent to registration. Injunction would not
lie anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished
act.

Third. As to the writ of injunction preventing respondent bank from possessing the subject lands, Act
No. 3135 provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of
First Instance of the province or place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of
the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale
was made without violating the mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of
any other real property encumbered with a mortgage duly registered in the office of any register of
deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of
such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act
Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-
six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to
the sheriff of the province in which the property is situated, who shall execute said order immediately.

A writ of possession is generally understood to be an order whereby a sheriff is commanded to place a

person in possession of a real or personal property, such as, when a property is extrajudicially
foreclosed. It has been consistently held that during the period of redemption after the registration of
the sale, a writ of possession issues as a matter of course upon the filing of the proper motion and the
approval of a bond. A writ of possession may also be issued after consolidation of ownership of the
property in the name of the purchaser. It is settled that the buyer in a foreclosure sale, who becomes
the absolute owner of the property if the same is not redeemed during the one-year redemption period
after the registration of the sale, is entitled to the possession of the property and can demand it at any
time, following the consolidation of ownership in his name and the issuance to him of a new transfer
certificate of title. To underscore the writ’s ministerial character, we have disallowed injunction to
prohibit its issuance, just as we have held that issuance of the same may not be stayed by a pending
action for annulment of the mortgage or the foreclosure itself.42

The preliminary injunction issued by the trial court to prevent respondent bank from taking possession
of the subject lots, was properly set aside by the Court of Appeals, as the trial court judge acted with
grave abuse of discretion when it issued the same. It was not alleged that respondent bank committed
acts of possession over the properties before it could file a petition for a writ of possession during the
redemption period. If the trial court cannot refuse to issue a writ of possession in the event that
respondent bank complies with the requisites for its issuance, with more reason that the trial court
cannot issue an injunction, preempting respondent bank from filing a petition or application for a writ of
possession, over the properties subject of the certificate of sale.

IN VIEW WHEREOF, the petition is dismissed. The assailed decision and resolution of the Court of
Appeals are affirmed.

Cost against petitioners.

SO ORDERED.