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1 G.R. No. 160748 July 14, 2004SPOUSES ANTONIO and LUCY VERA CRUZ, petitioners, vs. LUCY CALDERON, respondent. YNARES-SANTIAGO, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals' Decision1 dated August 20, 2003 in CA-G.R. CV No. 57900 which affirmed with modifications the Decision of the Regional Trial Court of Laguna, Branch 31. Likewise, challenged is the Resolution dated November 10, 2003 of the Court of Appeals denying petitioners' motion for reconsideration.2 The antecedent facts are as follows: Lucy Calderon and Avelino Belisario, Jr. were married on January 31, 1967.3 On October 23, 1970,4 they bought a parcel of land with an area of 248 square meters, located on Mabini Street, Poblacion, Biñan, Laguna, from Avelino's aunt, Margarita Arguelles. Accordingly, Transfer Certificate of Title No. 10744 was issued in the name of "Avelino Belizario, Jr., married to Lucy Calderon." The spouses separated in 1981 and Lucy resided with her children in Garcia Subdivision, San Antonio, Biñan, Laguna. On June 3, 1986, Avelino sold the subject property to petitioner spouses Antonio and Lucy Vera Cruz.5 The Vera Cruz spouses registered the sale on July 30, 1986 and TCT No. T-143101 was issued in their name.6 When Avelino died on November 20, 1993, his wife, respondent Lucy Calderon, discovered that their conjugal property had been sold by her husband without her knowledge and consent and that her signature on the Deed of Sale had been forged. Hence, she filed a complaint against the Vera Cruz spouses for annulment of Deed of Absolute Sale and TCT No. T-143101 with the Regional Trial Court of San Pedro, Laguna, Branch 31, which case was docketed as Civil Case No. B-4488. In their answer, petitioner spouses assert that they purchased the property in good faith and for value. In 1984, Avelino offered to lease the land to Antonio's brother, Joselito Vera Cruz.7 The latter, as manager of the store and vice-president of VeraCruz, Inc., entered into a verbal lease agreement with Avelino for a period of two (2) years. In May 1986, at about the time the lease expired, Avelino and

Joselito visited petitioners in Marikina. Avelino offered to sell the land to them.9 He showed them the owner's duplicate title of the property as well as the Deed of Sale executed by Margarita Arguelles, which were both in his name. Thus, petitioners were convinced that the lot was Avelino's exclusive property.10 This notwithstanding, they asked Avelino to bring his wife during the execution of the deed of sale.11 On June 3, 1986, Joselito and petitioner spouses, along with Avelino and a woman, whom he introduced as his wife, Lucy Calderon, met and executed the deed of sale before Notary Public Atty. Democlito J. Angeles.12 Thereafter, petitioners filed the Deed of Sale with the Registry of Deeds of Laguna. After trial, the trial court rendered a Decision in favor of respondent Lucy Calderon,13 the dispositive portion of which states: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendants:

Petitioners appealed to the Court of Appeals, which affirmed the decision of the trial court with modification, and ruled: WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED with modification. We find the appellants purchasers in good faith and We delete the award of attorney's fees and costs: 1. Declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as null and void insofar as the share of plaintiff on the lot in litigation is concerned; and, 2. Ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. 14101 (Exhibits B and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a new one in lieu thereof in the names of the said defendant spouses over the ½ undivided share and in the name of the plaintiff over the other half of the subject lot. No costs. SO ORDERED.

1. declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as null and void (sic) insofar as the share of plaintiff on the lot in litigation is concerned; 2. ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. T-14101 (Exhibits B and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a new one in lieu thereof in the names of the said defendant spouses over the ½ undivided share and in the name of plaintiff over the other half of the subject lot; and 3. ordering the defendant spouses to pay plaintiff P20,000 for and as attorney's fees. Costs against the defendants. SO ORDERED. In so ruling, the trial court declared that the subject parcel of land was presumed conjugal under Article 160 of the Civil Code,14 and that petitioners were negligent in failing to inquire into the ownership of the property purchased.

Hence this petition anchored on the sole ground that: THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN HOLDING THAT ALTHOUGH PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE OF THE LAND IN QUESTION, THEY ARE ONLY ENTITLED TO OWN ONE HALF PORTION THEREOF AND THAT RESPONDENT LUCY CALDERON IS ENTITLED TO THE OTHER HALF PORTION. As a general rule, only questions of law may be raised in a petition for review on certiorari to the Supreme Court. Although it has long been settled that findings of fact are conclusive upon this Court, there are exceptional circumstances which would require us to review findings of fact of the Court of Appeals,15 to wit: It is well settled that the findings of facts of the Court of Appeals are conclusive on the parties and on this Court, unless (1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion;

2 (4) the judgment is based on misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the decision as well as in the petitioner's main and reply briefs are not disputed by the respondents; (10) the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by evidence on record. (Emphasis supplied) The case at bar falls under one of the exceptions, it appearing that there was a disparity between the findings of the trial court and those of the Court of Appeals on the issue of whether petitioners were purchasers in good faith. ISSUE: Whether petitioners are purchasers in good faith? – YES!!! Reviewing the contradicting factual findings of the courts below, we agree with the following findings of the Court of Appeals that petitioners are purchasers in good faith: Under the circumstances of the case, they are entitled to claim the status of innocent purchasers for value. They exercised the necessary diligence in ascertaining the credentials of the seller, the registered owner himself, Avelino Belisario, Jr. We cannot charge said appellants with negligence since, at the time of the sale to them, the land was registered in the name of the vendor and the tax declaration was also issued in the latter's name. It was also clearly indicated at the back of the transfer certificate of title that Avelino acquired ownership over the said land by virtue of the Deed of Sale. Even appellee confirmed that they bought the property. There is no annotation, defect or flaw in the title that would have aroused any suspicion as to its authenticity. Such being the case, appellants had the right to rely on what appeared on the face of the certificate of title.

Based on the records, it was the registered owner who sold the land to them. Avelino validly possessed the title since he was the administrator thereof. Avelino presented his title as well as the deed of sale in his favor to show how he acquired said property. It was Avelino himself who brought and introduced another woman as "Lucy Calderon". Joselito testified that Avelino and this woman were living together as husband and wife. Even plaintiff-appellee Lucy Calderon admitted that she knew her husband was living with another woman.16 Indeed, petitioners were dealing with the registered owner of the property and they had no reason to suspect that the woman whom he introduced to them as his wife, Lucy Calderon, was an impostor.

Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. In the recent case of Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares,19 we reiterated the rule that the husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife, otherwise, the contract is voidable. To wit:

We have long settled the rule that an innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in such property and pays the full price for the same, at the time of such purchase or before he has notice of the claims or interest of some other person in the property.17 A person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.18

Indeed, in several cases the Court has ruled that such alienation or encumbrance by the husband is void. The better view, however, is to consider the transaction as merely voidable and not void. This is consistent with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and within 10 years from the questioned transaction, seek its annulment.

Anent the issue that the respondents are entitled to only one half (½) of the portion of the conjugal property corresponding to the share of Avelino, the pertinent provisions involved are Articles 165, 166 and 173 of the Civil Code, the law at the time the sale was contracted in 1986.

There is no ambiguity in the wording of the law. A sale of real property of the conjugal partnership made by the husband without the consent of his wife is voidable. The action for annulment must be brought during the marriage and within ten years from the questioned transaction by the wife. Where the law speaks in clear and categorical language, there is no room for interpretation – there is room only for application.

Art. 165. The husband is the administrator of the conjugal partnership. Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same. x x x.

Likewise, in the case of heirs of Christina Ayuste v. Court of Appeals,20 we declared that:

In the present case, the deed of sale was executed on February 27, 1987. Rafael Ayuste died on October 13, 1989. However, it was only on March 2, 1990 that Christina Ayuste filed her complaint with the lower court asking for the annulment of the sale. Although the action was filed within ten years from the questioned transaction, it was not brought during the existence of the marriage which was dissolved upon the death of Rafael Ayuste in 1989. Clearly,

3 the action for annulment filed by Christina Ayuste was barred for having been filed out of time. The fact that Christina Ayuste only learned of the sale after the death of her husband is not material. We affirm public respondent's ruling that registration of the sale with the Register of Deeds constitutes a notice to the whole world. Precisely, the purpose of the legislature in providing a system of registration is to afford a means of publicity so that persons dealing with real property may search the records and thereby acquire security against instruments the execution of which have not been revealed to them. Since the deed of sale was registered on March 5, 1987, Christina Ayuste is presumed to have constructive notice of the sale from such date. This case is on all fours with the above-quoted Ayuste case. Under Article 173 of the Civil Code, an action for the annulment of any contract entered into by the husband without the wife's consent must be filed (1) during the marriage; and (2) within ten years from the transaction questioned. Where any one of these two conditions is lacking, the action will be considered as having been filed out of time. In the case at bar, while respondent filed her complaint for annulment of the deed of sale on July 8, 1994, i.e., within the ten-year period counted from the execution of the deed of sale of the property on June 3, 1986, the marriage between her and Avelino had already been dissolved by the death of the latter on November 20, 1993. In other words, her marriage to Avelino was no longer subsisting at the time she filed her complaint. Therefore, the civil case had already been barred by prescription. Actions prescribe by the mere lapse of time fixed by law.21 The registration of the deed of sale executed by Avelino in favor of petitioners served as constructive notice thereof. As such, respondent is chargeable with knowledge of the sale as to let the prescriptive period run against her. Her complaint must, therefore, be ordered dismissed. WHEREFORE, the instant petition is GRANTED. Civil Case No. B-4488 is ordered DISMISSED on the ground of prescription. No pronouncement as to costs. SO ORDERED.

[G.R. No. 132294. August 26, 1999] DELFIN R. VOLUNTAD and HEIRS OF LUZ VOLUNTAD, namely, RAMIL, JESUS, MELCHOR, JOSEPH and ERWIN, all SURNAMED VOLUNTAD, petitioners, vs. SPOUSES MAGTANGGOL AND CORAZON DIZON, and SPOUSES EUGENIO AND VICENTA REYES as successors-in-interest and transferees pendente lite of SPOUSES DIZON, respondents. BELLOSILLO, J.: This is a petition for review on certiorari of the Decision of the Court of Appeals which affirmed the denial by the trial court of a motion for a second alias writ of execution against respondent-spouses Eugenio Reyes and Vicenta Reyes. On 15 February 1993 petitioners filed a petition for mandamus with the Regional Trial Court of Malolos, Bulacan, docketed as Civil Case No. 142-M-93, to direct respondentspouses Magtanggol Dizon and Corazon Dizon to render a true and correct accounting of the financial obligation of petitioners. It appears that on 12 July 1980 petitioners obtained a loan from the Rural Bank of Pandi secured by a mortgage over one-half of a parcel of land formerly owned by petitioners and covered by TCT No. 25073 (T-7456-M) of the Registry of Deeds of Bulacan. For failure of petitioners to pay the loan, the Rural Bank of Pandi foreclosed the mortgage and the property was sold at public auction with the Bank becoming the highest bidder. More than three (3) months after the certificates of sheriff's sale were registered, the mortgagee-vendee Bank, without the knowledge of petitioners, assigned its rights over the property to respondent-spouses Magtanggol and Corazon Dizon. In their petition with the trial court, petitioners prayed to be allowed to exercise their right of redemption over the subject property for the amount of P124,762.04 with legal rate of interest from 17 December 1982 up to its legal redemption. On 16 February 1993 petitioners caused the annotation of a notice of lis pendens on the subject property then under the name of Carmen Voluntad and Maria Voluntad, predecessors-in-interest of petitioners. Upon partition into two (2) of the property covered by TCT No. 25073 (T-7456-M) the notice of lis pendens was carried over to TCT No. T166332-M in the name of respondent-spouses Dizon. The Dizons then filed an omnibus motion to dismiss the petition and to strike out the notice of lis pendens.

On 20 May 1993 the trial court issued an order dismissing the case on the ground of res judicata and granting the motion to strike out the notice of lis pendens "there is no longer need for such annotation on the title of the subject property with the dismissal of the case." Pursuant to this order, the Registry of Deeds of Meycauayan on 24 May 1993 cancelled the notice of lis pendens. Upon denial of the motion for reconsideration, petitioners went to the Court of Appeals questioning the order of the trial court cancelling the lis pendens and dismissing the petition. On 31 August 1994 the appellate court in CA-G.R. No. SP-33454 rendered a decision setting aside the order of the trial court which dismissed the complaint and remanded the case to the court a quo for further proceedings. On 8 December 1995 the trial court rendered a decision in favor of petitioners directing respondent-spouses Dizon (a) to render a true and correct accounting of the financial obligation of petitioners to the Rural Bank of Pandi, Inc., in Bulacan as assigned to respondent Dizons; (b) to allow petitioners to exercise their right of redemption over the one-half undivided portion of the parcel of land covered by TCT No. 25073 (T-7456-M) for the amount of P124,762.04 with legal rate of interest from 17 December 1982 up to the date of legal redemption; and, (c) to pay petitioners attorneys fees of P30,000.00. After the judgment had become final and executory, the trial court issued an order directing the issuance of a writ of execution. On 21 February 1995 a writ of execution was issued which was however returned unsatisfied for the reason that the property was already sold to respondentspouses Eugenio and Vicenta Reyes. Hence, petitioners filed another motion for the issuance of an alias writ of execution. The motion was granted by the trial court. Unfortunately, the sheriff's return dated 4 November 1996 showed that the alias writ was unsatisfied because the subject property was already transferred and sold by respondent-spouses Dizons to another person, referring to respondent-spouses Eugenio and Vicenta Reyes.[1] As a result of the transfer, TCT No. 166332-M in the name of Magtanggol and Corazon Dizon was cancelled and TCT No. T-178105-M was issued in the name of the spouses Eugenio and Vicenta Reyes.[2]

4 Petitioners filed a Motion for Second Alias Writ of Execution claiming, inter alia, that a notice of lis pendens had been annotated in the title with the filing of Civil Case No. 142-M93 and the order directing the cancellation of the notice of lis pendens had been set aside by the Court of Appeals in its decision in CA-G.R. SP No. 33454, and respondents Vicenta and Eugenio Reyes were transferees pendente lite when respondent-spouses Dizon sold and transferred to them the property subject of a pending litigation. On 26 November 1996 the trial court issued an order denying petitioners motion for second alias writ of execution. On 7 February 1997 petitioner's motion for reconsideration was also denied. Consequently, petitioners filed with the Court of Appeals a special civil action of certiorari and mandamus alleging grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of the trial court and praying that it be directed to issue an alias writ of execution against the transferees of the property, herein respondent-spouses Reyes. However on 22 October 1997 the Court of Appeals dismissed the petition. Hence, petitioners came to this Court alleging that the Court of Appeals erred: (a) in not ordering the Regional Trial Court to issue an alias writ of execution against respondents Eugenio and Vicenta Reyes as successors-in-interest and transferees pendente lite of respondents Magtanggol and Corazon Dizon; and, (b) in concluding that respondentspouses Reyes are buyers in good faith despite existence of circumstances that should have alerted them to investigate beyond the face of the certificate of title but did not. On 1 March 1999 we gave due course to the petition but only insofar as respondent-spouses Reyes were concerned, but denied the petition as against respondent-spouses Dizon for failure of petitioners to give the correct and present address of said respondents. We find the petition meritorious. Based on the records and the pleadings of the parties with this Court, the following facts are undisputed: that during the pendency of Civil Case No. 142-M-93 with the trial court, petitioners caused the annotation of a notice of lis pendens on TCT No. T-166332-M

covering the subject property; that pursuant to the order of the trial court of 20 May 1993, the Register of Deeds cancelled the previous annotation of lis pendens. The following inscriptions appear in TCT No. T-166332-M: Entry No. 74364(M): Lis Pendens in favor of Delfin R. Voluntad - An action has been commenced and is now pending in RTC of Bulacan Branch, Malolos in Sp. Civil Case No. 142-M-93 (For: Mandamus with Damages) entitled Delfin R. Voluntad and heirs of Luz Voluntad Ramil, Jesus, Melchor, Joseph and Erwin all surnamed Voluntad, Plaintiffs vs. Spouses Magtanggol Dizon and Corazon Dizon affecting the one-half (1/2) undivided portion of the land described herein; Date of Instrument: Feb. 16, 1993; Date of Inscription: Feb. 16, 1993 at 2:00 p.m. xxxx Entry No. 85179 (M): ORDER issued by RTC Br. 16, Malolos, Bulacan; By virtue of an order, Lis Pendens annotated under Entry No. 74364(M) is hereby dismissed and cancelled; Date of the Instrument May 20, 1993; Date of Inscription May 24, 1993 at 10:50 a.m.;[3] that petitioners timely appealed to the Court of Appeals which reversed the dismissal by the trial court and remanded the case for further proceedings; that, meanwhile, on 30 August 1993 respondent-spouses Dizon sold the property to respondent- spouses Reyes; and, that the trial court later rendered judgment declaring that petitioners had the right to repurchase the property from the Dizons, which became final and executory. From the attendant circumstances, it is crystal clear that an examination of the certificate of title and the annotations therein would disclose that a civil action was filed with the trial court involving the property described in the title. The annotation in the title that the property was involved in a suit should have prompted the prudent purchaser to inquire and verify if the suit was finally terminated and the property freed from any legal infirmity or judicial inquiry. Although the notice of lis pendens was cancelled pursuant to the order of the trial court dismissing the civil action, the cancellation effected after barely four (4) days was premature because the court order was not yet final, as petitioners still had the

remaining period of eleven (11) days to appeal the order. In fact, a mere inquiry with the trial court which issued the order of dismissal and the cancellation of the lis pendens would reveal that petitioners timely appealed the dismissal to the Court of Appeals. The general rule is that a person dealing with registered land has a right to rely on the Torrens Certificate of Title without the need of inquiring further. But this rule cannot 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 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.[4] Hence, when there is something in the certificate of title to indicate any cloud or vice in the ownership of the property or any encumbrance thereon, the purchaser is required to explore further than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right which may subsequently defeat his right thereto. As a purchaser, respondent-spouses Reyes should have examined the certificate of title and all factual circumstances necessary for them to determine whether or not flaws existed which might invalidate their title. It is a settled rule that a purchaser of real estate with knowledge of any defect or lack of title of the vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or interest therein. The same rule applies to one with knowledge of facts which should have put him on inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.[5] If circumstances exist that require a prudent man to investigate and he does not, he is deemed to have acted in mala fide. A partys mere refusal to believe that a defect exists or his willful closing of his eyes to the possibility of the existence of a defect in his vendors title will not make him an innocent purchaser for value if it afterwards develops that the title was in fact defective. Similarly, a buyer of registered land who fails to act with the diligence of a prudent man cannot be a purchaser in good faith.[6] Therefore, given the facts of this case which are clearly set forth in the records and established by the evidence, there is no need for petitioners

5 to file a separate action to enforce their right to repurchase the property as against the new registered owners.

presently registered in the name of respondent-spouses Eugenio and Vicenta Reyes.

In Lising v. Plan,[7] this Court ruled that a writ of execution may be issued against a person not a party to the case where the latters remedy which he did not avail of was to intervene in the case involving rights over the same parcel of land of which he claims to be the vendee. The cancellation of the lis pendens on the title of respondent-spouses Dizon prior to the purchase by the respondent-spouses Reyes need not alter our conclusion as the cancellation was prematurely done while the appeal in the case between petitioners and respondent-spouses Dizon was still pending with the appellate court. Having purchased registered land with full notice of the fact that it is in litigation between the vendor and a third party, respondent-spouses Reyes stand in the place of their vendor and their title is subject to the incidents and results of the pending litigation. Ought to have been aware of the pendency of the case, respondent-spouses Reyes should have intervened in the suit for the protection of their alleged rights. Having failed to do so, they are bound by the results. A transferee pendente lite stands exactly in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor.[8] Petitioners can legally enforce the final judgment of the trial court against respondent-spouses Eugenio and Vicenta Reyes with respect to the petitioners' right to repurchase the property from the Reyeses as transferees pendente lite of respondent-spouses Magtanggol and Corazon Dizon.

SO ORDERED.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals affirming the order of the trial court which denied petitioners' motion for a second alias writ of execution against respondent-spouses Eugenio and Vicenta Reyes is REVERSED and SET ASIDE. Accordingly, the case is remanded to the trial court for the immediate issuance of a second alias writ of execution against respondents Eugenio and Vicenta Reyes for the enforcement of the final judgment of the Regional Trial Court of Malolos, Bulacan, in Civil Case 142-M-93, allowing petitioners Delfin R. Voluntad and the heirs of Luz Voluntad, namely, Ramil, Jesus, Melchor, Joseph and Erwin, all surnamed Voluntad, to exercise their right to repurchase the property covered by TCT No. T-178105

G.R. No. 183448, June 30, 2014 SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners, v. HEIRS OF BERNARDINA ABALON, REPRESENTED BY MANSUETO ABALON, Respondents. G. R. No. 183464 HEIRS OF BERNARDINA ABALON, REPRESENTED BY MANSUETO ABALON, Petitioners, v. MARISSA ANDAL, LEONIL ANDAL, ARNEL ANDAL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, AND HEIRS OF RESTITUTO RELLAMA, REPRESENTED BY HIS CHILDREN ALEX, IMMANUEL, JULIUS AND SYLVIA, ALL SURNAMED RELLAMA, Respondents. SERENO, C.J.: Before us are the consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court assailing the 30 May 2007 Decision1 of the Court of Appeals (CA) Seventeenth Division in CA-G.R. CV No. 85542. The CA had reversed the 14 April 2005 Decision2 of the Regional Trial Court (RTC), Fifth Judicial Region of Legaspi City, Branch 5, in Civil Case No. 9243. The civil case before the RTC of Legaspi City involved a parcel of land registered under the name of Bernardina Abalon and fraudulently transferred to Restituto Rellama and who, in turn, subdivided the subject property and sold it separately to the other parties to this case � Spouses Dominador and Ofelia Peralta; and Marissa, Leonil and Arnel, all surnamed Andal. Thereafter, Spouses Peralta and the Andals individually registered the respective portions of the land they had bought under their names. The heirs of Bernardina were claiming back the land, alleging that since it was sold under fraudulent circumstances, no valid title passed to the buyers. On the other hand, the buyers, who were now title holders of the subject parcel of land, averred that they were buyers in good faith and sought the protection accorded to them under the law.

THE FACTS The RTC and the CA have the same findings of fact, but differ in their legal conclusions. There being no factual issues raised in the Petitions, we adopt the findings of fact of the CA in CAG.R. No. 85542, as follows:chanRoblesvirtualLawlibrary The subject parcel of land, described as Lot 1679 of the Cadastral Survey of Legaspi, consisting of 8,571 square meters, was originally covered by Original Certificate of Title (OCT) No. (O) 16 and registered in the name of Bernardina Abalon (Abalon). It appears that a Deed of Absolute Sale was executed over the subject property in favor of Restituto M. Rellama (Rellama) on June 10, 1975. By virtue of such conveyance OCT No. (O) 16 was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 42108 was issued in the name of Rellama. The subject property was then subdivided into three (3) portions: Lot 1679-A, Lot 1679-B, Lot 1679-C. Lot 1679-A was sold to Spouses Dominador P. Peralta, Jr. and Ofelia M. Peralta (Spouses Peralta) for which reason TCT No. 42254 was issued in their names. Lot 1679-B, on the other hand, was first sold to Eduardo Lotivio (Lotivio) who thereafter transferred his ownership thereto to Marissa Andal, Arnel Andal, and Leonil Andal (the Andals) through a Deed of Absolute Sale dated October 9, 1995. On even date, TCT No. 42482 was issued in the name of the Andals. The Andals likewise acquired Lot 1679-C as evidenced by the issuance of TCT No. 42821 in their favor on December 27, 1995. Claiming that the Deed of Absolute Sale executed by Abalon in favor of Rellama was a forged document, and claiming further that they acquired the subject property by succession, they being the nephew and niece of Abalon who died without issue, plaintiff-appellees Mansueta Abalon and Amelia Abalon filed the case below against Rellama, Spouses Peralta, and the Andals, the herein defendants-appellants and the Bank of the Philippines [sic] Islands which was later dropped as a party defendant. It was alleged in their Complaint and subsequent Amended Complaint, under five separate causes of action, that Rellama was able to cause the cancellation of OCT No. (O) 16, and in lieu thereof the issuance of TCT No. 42108 in his own name from which the defendants-appellants derived their own

6 titles, upon presentation of a xerox copy of the alleged forged deed of absolute sale and the order granting the issuance of a second owner�s duplicate copy of OCT No. (O) 16 in his favor in Miscellaneous Cadastral Case No. 10648, which he had filed on the pretext that Lot 1679 covered by OCT No. (O) 16 was sold to him and that the owner�s duplicate copy of the said title got lost in 1976 after the same was delivered to him. They averred that the owner�s duplicate copy of Oct NO. (O) 16 had always been with Abalon and that upon her death, it was delivered to them. Likewise, they alleged that Abalon had always been in possession of the subject property through her tenant Pedro Bellen who was thereafter succeeded by his wife, Ruperta Bellen, and then his son, Godofredo Bellen. On the other hand, they said that Rellama had never set foot on the land he was claiming. They further alleged that after the ownership over the subject property was transferred to them upon the death of Abalon, they took possession thereof and retained Godofredo as their own tenant. However, they averred that in 1995 the defendants-appellants were able to wrest possession of the subject property from Godofredo Bellen. They alleged that the defendants-appellants are not buyers in good faith as they were aware that the subject land was in the possession of the plaintiffs-appellees at the time they made the purchase. They thus claim that the titles issued to the defendants-appellants are null and void. In his answer, Rellama alleged that the deed of absolute sale executed by Abalon is genuine and that the duplicate copy of OCT No. (O) 16 had been delivered to him upon the execution of the said deed of transfer. As for Spouses Peralta and the Andals, who filed their separate answers to the complaint, they mainly alleged that they are buyers in good faith and for value.

On April 14, 2005, the court a quo rendered judgment in favor of the plaintiffs-appellees and ordered the restoration of OCT No. (O) 16 in the name of Abalon and the cancellation of the titles issued to the defendants-appellants. The fact that only a xerox copy of the purported deed of sale between Rellama and Abalon was presented before the Register of Deeds for registration and the absence of such xerox copy on the official files of the said Office made the court a quo conclude that the said document was a mere forgery. On the other hand, the court a quo noted that the duplicate copy of OCT No. (O) 16 in the hands of the plaintiffs-appellees bears [sic] the perforated serial number B 221377, which it held is a convincing proof of its authenticity and genuineness. It thus stated that �Miscellaneous Cadastral Case No. 10648 is a (mere) strategem [sic] fraudulently concocted ... for the issuance of a fabricated (second) owner�s duplicate certificate of Oct No. (O) 16� since the owner�s duplicate copy of OCT No. (O) 16 has not been lost at all. It said that any subsequent registration procured by the presentation of such forged instrument is null and void. The dispositive portion of the court a quo�s decision reads: WHEREFORE, [p]remises [c]onsidered, judgment is rendered as follows, to wit:ChanRoblesVirtualawlibrary Ordering the restoration of Original Certificate of Title No. (O) 16 embracing Lot 1679 in the name of Bernardina Abalon into the official files of the Registry of Deeds of Legaspi City � a copy of the owner�s duplicate certificate embodying the technical description of Lot 1679 forming official part of the record as Exhibit �D� � as well as ordering the cancellation of any and all transfer certificates of title succeeding Original Certificate of title No. (O) 16 � including Transfer Certificates (sic) of Title Nos. 42108, 42254, 42255, 42256, 42821 [,] and 42482;

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

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

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

Ordering the defendants to pay the plaintiffs the amount of P50,000.00 as litigation expenses; and Ordering the defendants to pay the costs of suit. The counterclaims by [sic] the defendants are all dismissed.

SO ORDERED. Spouses Peralta and the Andals filed their separate Notices of Appeal and thereafter, upon approval, filed their respective Defendants-Appellants� Briefs. The Heirs of Rellama, on the other hand, opted not to challenge the ruling of the lower court.3cralawlawlibrary The Andals and Spouses Peralta � appellants in CA-G.R. CV No. 85542 � raised several issues, which the CA summarized as follows:chanRoblesvirtualLawlibrary Whether the Deed of Absolute Sale executed by Abalon in favor of Rellama was spurious Whether the Andals and Spouses Peralta were buyers in good faith and for value Who among the parties were entitled to their claims for damages.4 THE RULING OF THE COURT OF APPEALS On 30 May 2007, the Seventeenth Division of the Court of Appeals promulgated its assailed judgment setting aside the RTC Decision. The CA ruled that the circumstances surrounding the sale of the subject property showed badges of fraud or forgery against Rellama. It found that Abalon had not parted with her ownership over the subject property despite the claim of Rellama that they both executed a Deed of Absolute Sale. As proof, the CA pointed out the existence of a notarized contract of leasehold executed by Abalon with Ruperta Bellen on 11 June 1976. The genuineness and due execution of the said leasehold agreement was uncontroverted by the parties. On this basis, the appellate court concluded that Abalon could not have leased the subject parcel of land to Bellen if the former had parted with her ownership thereof.5cralawred The CA also found no evidence to show that Rellama exercised dominion over the subject property, because he had not introduced improvements on the property, despite claiming to have acquired it in 1975.6 Further, the CA noted that he did not cause the annotation of the Deed of Sale,

7 which he had executed with Abalon, on OCT No. (O) 16. It observed that when the original copy of OCT No. (O) 16 was allegedly lost in 1976, while Rellama was on his way to Legaspi City to register the title to his name, it took him almost 20 years to take steps to judicially reconstitute a copy thereof. To the appellate court, these circumstances cast doubt on the veracity of Rellama�s claim of ownership over such a significant property, which was almost a hectare.7cralawred

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

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

On 11 August 2008, Spouses Peralta filed with this Court a Petition for Review under Rule 45 of the Rules of Court assailing the 30 May 2007 Decision in CA-G.R. CV No. 85542.13 On the same day, the heirs of Bernardina Abalon, represented by Mansueto Abalon, filed a similar Petition questioning the portion of the mentioned CA Decision declaring the validity of the title issued to the Andals, who were adjudged by the appellate court as buyers in good faith.14cralawred

The dispositive portion of the assailed CA Decision in CA-G.R. CV No. 85542 is as follows:chanRoblesvirtualLawlibrary

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

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

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

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

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

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

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

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

SO ORDERED.11cralawlawlibrary

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

The heirs of Abalon filed a Motion for Reconsideration of the 30 May 2007 Decision, insofar as the CA declared the Andals

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

a) The Andals cannot be considered as buyers in good faith by simply applying the ordinary presumption in the absence of evidence showing the contrary. b) The CA erred in applying in favor of the Andals, the doctrine that a forged instrument may become the root of a valid title in the hands of an innocent purchaser for value, because Abalon never parted with her possession of the valid and uncancelled title over the subject property c) The CA erred in declaring the validity of the title issued in the names of the Andals, because Rellama was bereft of any transmissible right over the portion of the property he had sold to them.16cralawlawlibrary THE COURT�S RULING We deny the Petitions and affirm the ruling of the CA. The main issue to be resolved in this case is whether a forged instrument may become the root of a valid title in the hands of an innocent purchaser for value, even if the true owner thereof has been in possession of the genuine title, which is valid and has not been cancelled. It is well-settled that �a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. The real purpose of the Torrens system of land registration is to quiet title to land and put a stop forever to any question as to the legality of the title.�17cralawred In Tenio-Obsequio v. Court of Appeals, 18 we explained the purpose of the Torrens system and its legal implications to third persons dealing with registered land, as follows:chanRoblesvirtualLawlibrary The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that should impel a reasonably cautious man to make such further inquiry. Where innocent third persons, relying on the

8 correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. The Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all. This would not only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership. The further consequence would be that land conflicts could be even more numerous and complex than they are now and possibly also more abrasive, if not even violent. The Government, recognizing the worthy purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder once the conditions laid down by the law are satisfied. The Torrens system was intended to guarantee the integrity and conclusiveness of the certificate of registration, but the system cannot be used for the perpetration of fraud against the real owner of the registered land. The system merely confirms ownership and does not create it. It cannot be used to divest lawful owners of their title for the purpose of transferring it to another one who has not acquired it by any of the modes allowed or recognized by law. Thus, the Torrens system cannot be used to protect a usurper from the true owner or to shield the commission of fraud or to enrich oneself at the expense of another.19cralawred

It is well-established in our laws and jurisprudence that a person who is dealing with a registered parcel of land need not go beyond the face of the title. A person is only charged with notice of the burdens and claims that are annotated on the title.20 This rule, however, admits of exceptions, which we explained in Clemente v. Razo:21cralawred Any buyer or mortgagee of realty covered by a Torrens certificate of title, in the absence of any suspicion, is not obligated to look beyond the certificate to investigate the titles of the seller appearing on the face of the certificate. And, he is charged with notice only of such burdens and claims as are annotated on the title. We do acknowledge that the rule thus enunciated is not cast in stone. For, indeed, there are exceptions thereto. Thus, in Sandoval vs. CA, we made clear the following:ChanRoblesVirtualawlibrary The aforesaid principle admits of an unchallenged exception: that a person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense with the need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge 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. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and hence does not merit the protection of the law.22 Thus, the determination whether one is a buyer in good faith or can be considered an innocent purchaser for value becomes imperative. Section 55 of the Land Registration Act provides protection to an innocent purchaser for value23 by allowing him to retain the parcel of land bought and his title is considered valid. Otherwise, the title would be cancelled and the original owner of the parcel of land is allowed to repossess it.

Jurisprudence has defined an innocent purchaser for value as one who buys the property of another without notice that some other person has a right to or interest therein and who then pays a full and fair price for it at the time of the purchase or before receiving a notice of the claim or interest of some other persons in the property. Buyers in good faith buy a property with the belief that the person from whom they receive the thing is the owner who can convey title to the property. Such buyers do not close their eyes to facts that should put a reasonable person on guard and still claim that they are acting in good faith.24cralawred The assailed Decision of the CA held that the Andals were buyers in good faith, while Spouses Peralta were not. Despite its determination that fraud marred the sale between Bernardina Abalon and Rellama, a fraudulent or forged document of sale may still give rise to a valid title. The appellate court reasoned that if the certificate of title had already been transferred from the name of the true owner to that which was indicated by the forger and remained as such, the land is considered to have been subsequently sold to an innocent purchaser, whose title is thus considered valid.25 The CA concluded that this was the case for the Andals. The appellate court cited Fule v. Legare26 as basis for its ruling. In the said case, the Court made an exception to the general rule that a forged or fraudulent deed is a nullity and conveys no title. A fraudulent document may then become the root of a valid title, as it held in Fule:chanRoblesvirtualLawlibrary Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was able to secure a registered title to the house and lot. It was this title which he subsequently conveyed to the herein petitioners. We have indeed ruled that a forged or fraudulent deed is a nullity and conveys no title (Director of Lands vs. Addison, 49 Phil., 19). However, we have also laid down the doctrine that there are instances when such a fraudulent document may become the root of a valid title. One such instance is where the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the

9 certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960). We have been constrained to adopt the conclusion here set forth because under the Torrens system, "registration is the operative act that gives validity to the transfer or creates a lien upon the land (Secs. 50 and 51, Land Registration Act). Consequently, where there was nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens system seeks to insure would entirely be futile and nugatory. (Reynes vs. Barrera, 68 Phil., 656; De Lara and De Guzman vs. Ayroso, 50 O.G. No 10, 4838). The public shall then be denied of its foremost motivation for respecting and observing the Land Registration Act. In the end, the business community stands to be inconvenienced and prejudiced immeasurably. Furthermore, when the Register of Deeds issued a certificate of title in the name of John W. Legare, and thereafter registered the same, John W. Legare, insofar as third parties were concerned, acquired valid title to the house and lot here disputed. When, therefore, he transferred this title to the herein petitioners, third persons, the entire transaction fell within the purview of Article 1434 of the Civil Code. The registration in John W. Legare's name effectively operated to convey the properties to him. After executing the Deed of Sale with Bernardina Abalon under fraudulent circumstances, Rellama succeeded in obtaining a title in his name and selling a portion of the property to the Andals, who had no knowledge of the fraudulent circumstances involving the transfer from Abalon to Rellama. In fact, the Decisions of the RTC and the CA show no factual findings or proof that would rebut the presumption in favor of the Andals as buyers in good faith. Thus, the CA correctly considered them as buyers in good faith and upheld their title. The Abalons counter this ruling and allege that the CA erred in relying on Fule to justify its assailed Decision. They argue

that Torres v. Court of Appeals27 is the applicable ruling, because the facts therein are on all fours with the instant case.28cralawred In Torres, the subject property was covered by TCT No. 53628 registered in the name of Mariano Torres. His brotherin-law Francisco Fernandez, misrepresenting that the copy of the title had been lost, succeeded in obtaining a court Order for the issuance of another copy of TCT No. 53628. He then forged a simulated deed of sale purportedly showing that Torres had sold the property to him and caused the cancellation of TCT No. 53628, as well as the issuance of TCT No. 86018 in his name. Soon, Fernandez mortgaged the property to Mota. Upon learning of the fraud committed by Fernandez, Torres caused the annotation of an adverse claim on the former�s copy and succeeded in having Fernandez�s title declared null and void. Meanwhile, Mota was able to foreclose on Fernandez�s real estate mortgage, as well as to cause the cancellation of TCT No. 86018 and the issuance of a new one � TCT No. 105953 � in her name. The issue to be resolved in Torres was whether Mota can be considered an innocent mortgagee for value, and whether her title can be deemed valid. Ruling in the negative, the Court explained:chanRoblesvirtualLawlibrary There is nothing on the records which shows that Torres performed any act or omission which could have jeopardized his peaceful dominion over his realties. The decision under review, however, in considering Mota an innocent mortgagee protected under Section 65 of the Land Registration Law, held that Torres was bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the highest bidder, also bound Torres and concluded that the certificate of title issued in the name of Mota prevails over that of Torres'. As correctly pointed out by Torres, however, his properties were sold on execution, and not on foreclosure sale, and hence, the purchaser thereof was bound by his notice of adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon 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. 791.29 (Emphasis and underscoring supplied) We do not agree with the contention of the Abalons that the ruling in Torres is controlling in this case. They quoted a portion in the said case that is clearly an obiter. In Torres, it was shown that Mariano had annotated an adverse claim on the title procured by Fernandez prior to the execution sale, in which Mota was the highest bidder. This Court declared her as a mortgagee in bad faith because, at the back of Fernandez�s title, Torres made an annotation of the adverse claim and the notice of lis pendens. The annotation of the adverse claim was made while the forged document was still in the name of the forger, who in this case is Fernandez. That situation does not obtain in the instant case. The records of the RTC and the CA have a finding that when Rellama sold the properties to the Andals, it was still in his name; and there was no annotation that would blight his clean title. To the Andals, there was no doubt that Rellama was the owner of the property being sold to them, and that he had transmissible rights of ownership over the said property. Thus, they had every right to rely on the face of his title alone. The established rule is that a forged deed is generally null and cannot convey title, the exception thereto, pursuant to Section 55 of the Land Registration Act, denotes the registration of titles from the forger to the innocent purchaser for value. Thus, the qualifying point here is that

10 there must be a complete chain of registered titles. 30 This means that all the transfers starting from the original rightful owner to the innocent holder for value � and that includes the transfer to the forger � must be duly registered, and the title must be properly issued to the transferee. Contrary to what the Abalons would like to impress on us, Fule and Torres do not present clashing views. In Fule, the original owner relinquished physical possession of her title and thus enabled the perpetrator to commit the fraud, which resulted in the cancellation of her title and the issuance of a new one. The forged instrument eventually became the root of a valid title in the hands of an innocent purchaser for value. The new title under the name of the forger was registered and relied upon by the innocent purchaser for value. Hence, it was clear that there was a complete chain of registered titles. On the other hand in Torres, the original owner retained possession of the title, but through fraud, his brother-in-law secured a court order for the issuance of a copy thereof. While the title was in the name of the forger, the original owner annotated the adverse claim on the forged instrument. Thus, before the new title in the name of the forger could be transferred to a third person, a lien had already been annotated on its back. The chain of registered titles was broken and sullied by the original owner�s annotation of the adverse claim. By this act, the mortgagee was shown to be in bad faith. In the instant case, there is no evidence that the chain of registered titles was broken in the case of the Andals. Neither were they proven to have knowledge of anything that would make them suspicious of the nature of Rellama�s ownership over the subject parcel of land. Hence, we sustain the CA�s ruling that the Andals were buyers in good faith. Consequently, the validity of their title to the parcel of the land bought from Rellama must be upheld. As for Spouses Peralta, we sustain the ruling of the CA that they are indeed buyers in bad faith. The appellate court made a factual finding that in purchasing the subject property, they merely relied on the photocopy of the title provided by Rellama. The CA concluded that a mere photocopy of the title should have made Spouses Peralta

suspicious that there was some flaw in the title of Rellama, because he was not in possession of the original copy. This factual finding was supported by evidence. The CA pointed out Spouses Peralta�s Answer to the Complaint of the Abalons in Case No. 9243 in the RTC of Legaspi City, Branch 5. In their Answer, they specifically alleged as follows:chanRoblesvirtualLawlibrary 2- These defendants [Spouses Peralta] acquired lot No. 1679A by purchase in good faith and for value from Restituto Rellama under Doc. No. 11212, page No. 26, Book No. 60, Series of 1996 of Notary Public Atty. Otilio Bongon, Legaspi City on March 2, 1995 copy of which is attached as and made part of this answer as Exhibit �1;� 3- That these defendants were handed over by Rellama xerox [sic] copy of the Transfer Certificate of Title No. 42103 issued by the Register of Deed of Legaspi City on the 2nd day of August 1995 copy attached and made integral part as Exhibit �1-A� and also Original Certificate of Title No. (O) 16 as Exhibit �1-B�31 We have no reason to disturb this factual finding of the CA because it is supported by the evidence on record. Spouses Peralta filed a Petition for Review on Certiorari under Rule 45, which allows only questions of law to be raised. It is a settled rule that questions of fact are not reviewable in this kind of appeal. Under Rule 45, Section 1, �petitions for review on certiorari shall raise only questions of law which must be distinctly set forth.�32 A question of fact arises when there is �as to the truth or falsehood of facts or when there is a need to calibrate the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.�33 It is further pointed out that �the determination of whether one is a buyer in good faith is a factual issue, which generally is outside the province of this Court to determine in a petition for review.�34cralawred

Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a factual issue. Although this rule admits of exceptions,35 none of these applies to their case. There is no conflict between the factual findings and legal conclusions of the RTC and those of the CA, both of which found them to be buyers in bad faith. The fact that they did not participate in the proceedings before the lower court does not help their case either. On the issue of the legal standing of the Abalons to file this case, we find that the CA correctly upheld their standing as heirs of the deceased Bernardina Abalon. The appellate court ruled that during her lifetime, Bernardina Abalon had promised her heirs � siblings Mansueto and Amelia � that she would give them the subject property. A duplicate copy of OCT No. (O) 16 was delivered to them upon her death. Thus, the CA concluded that the two siblings acquired the subject property by ordinary prescription. Further, it deduced that the mode of transmission of the property from Bernardina to her nephew and niece was a form of donation mortis causa, though without the benefit of a will.36 Despite this omission, it still held that Mansueto and Amelia acquired the subject property through ordinary acquisitive prescription because, since the death of their aunt Bernardina, they had been in possession of the property for more than 10 years that ripened into full ownership.37cralawred Under Article 97538 of the Civil Code, siblings Mansueto and Amelia Abalon are the legal heirs of Bernardina, the latter having had no issue during her marriage. As such, they succeeded to her estate when she passed away. While we agree with the CA that the donation mortis causa was invalid in the absence of a will, it erred in concluding that the heirs acquired the subject property through ordinary acquisitive prescription. The subject parcel of land is a titled property; thus, acquisitive prescription is not applicable.39 Upon the death of Bernardina, Mansueto and Amelia, being her legal heirs, acquired the subject property by virtue of succession, and not by ordinary acquisitive prescription. WHEREFORE, the petitions in G.R. Nos. 183448 and 183464 are DENIED for lack of merit. The Decision in CA-G.R. CV No. 85542 is hereby AFFIRMED. SO ORDERED.

11 [G.R. No. 117897. May 14, 1997] ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and SECURITIES & EXCHANGE COMMISSION, petitioners, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents. HERMOSISIMA, JR., J.: The subject of this petition for review is the Decision of the public respondent Court of Appeals,[1] dated October 28, 1994, setting aside the portion of the Decision of the Securities and Exchange Commission (SEC, for short) in SEC Case No. 4012 which declared null and void the sale of two (2) parcels of land in Quezon City covered by the Deed of Absolute Sale entered into by and between private respondent Iglesia Ni Cristo (INC, for short) and the Islamic Directorate of the Philippines, Inc., Carpizo Group, (IDP, for short). The following facts appear of record. Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal groups in the Philippines headed by Dean Cesar Adib Majul organized and incorporated the ISLAMIC DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of which is to establish an Islamic Center in Quezon City for the construction of a Mosque (prayer place), Madrasah (Arabic School), and other religious infrastructures so as to facilitate the effective practice of Islamic faith in the area.[2] Towards this end, that is, in the same year, the Libyan government donated money to the IDP to purchase land at Culiat, Tandang Sora, Quezon City, to be used as a Center for the Islamic populace. The land, with an area of 49,652 square meters, was covered by two titles: Transfer Certificate of Title Nos. RT-26520 (176616)[3] and RT-26521 (170567),[4] both registered in the name of IDP. It appears that in 1971, the Board of Trustees of the IDP was composed of the following per Article 6 of its Articles of Incorporation: Senator Mamintal Tamano[5] Congressman Ali Dimaporo

Congressman Salipada Pendatun Dean Cesar Adib Majul Sultan Harun Al-Rashid Lucman

adopt the by-laws and certify its adoption. To remedy this unfortunate situation that the association has found itself in, the members of the petitioning corporation are hereby authorized to prepare and adopt their by-laws for submission to the Commission. Once approved, an election of the members of the Board of Trustees shall immediately be called pursuant to the approved by-laws.

Delegate Ahmad Alonto SO ORDERED.[9] Commissioner Datu Mama Sinsuat Mayor Aminkadra Abubakar[6] According to the petitioner, in 1972, after the purchase of the land by the Libyan government in the name of IDP, Martial Law was declared by the late President Ferdinand Marcos. Most of the members of the 1971 Board of Trustees like Senators Mamintal Tamano, Salipada Pendatun, Ahmad Alonto, and Congressman Al-Rashid Lucman flew to the Middle East to escape political persecution. Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the legitimate IDP. Significantly, on October 3, 1986, the SEC, in a suit between these two contending groups, came out with a Decision in SEC Case No. 2687 declaring the election of both the Carpizo Group and the Abbas Group as IDP board members to be null and void. The dispositive portion of the SEC Decision reads:

WHEREFORE, judgment is hereby rendered declaring the elections of both the petitioners[7] and respondents[8] as null and void for being violative of the Articles of Incorporation of petitioner corporation. With the nullification of the election of the respondents, the approved by-laws which they certified to this Commission as members of the Board of Trustees must necessarily be likewise declared null and void. However, before any election of the members of the Board of Trustees could be conducted, there must be an approved by-laws to govern the internal government of the association including the conduct of election. And since the election of both petitioners and respondents have been declared null and void, a vacuum is created as to who should

Neither group, however, took the necessary steps prescribed by the SEC in its October 3, 1986 Decision, and, thus, no valid election of the members of the Board of Trustees of IDP was ever called. Although the Carpizo Group[10] attempted to submit a set of by-laws, the SEC found that, aside from Engineer Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws were not bona fide members of the IDP, thus rendering the adoption of the bylaws likewise null and void. On April 20, 1989, without having been properly elected as new members of the Board of Trustees of IDP, the Carpizo Group caused to be signed an alleged Board Resolution[11] of the IDP, authorizing the sale of the subject two parcels of land to the private respondent INC for a consideration of P22,343,400.00, which sale was evidenced by a Deed of Absolute Sale[12] dated April 20, 1989. On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed by former Senator Mamintal Tamano, or the Tamano Group, filed a petition before the SEC, docketed as SEC Case No. 4012, seeking to declare null and void the Deed of Absolute Sale signed by the Carpizo Group and the INC since the group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP. Meanwhile, private respondent INC, pursuant to the Deed of Absolute Sale executed in its favor, filed an action for Specific Performance with Damages against the vendor, Carpizo Group, before Branch 81 of the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-90-6937, to compel said group to clear the property of squatters and deliver complete and full physical possession thereof to INC. Likewise, INC filed a motion in the same case to compel one Mrs. Leticia P. Ligon to produce and surrender to the Register

12 of Deeds of Quezon City the owners duplicate copy of TCT Nos. RT-26521 and RT-26520 covering the aforementioned two parcels of land, so that the sale in INCs favor may be registered and new titles issued in the name of INC. Mrs. Ligon was alleged to be the mortgagee of the two parcels of land executed in her favor by certain Abdulrahman R.T. Linzag and Rowaida Busran-Sampaco claimed to be in behalf of the Carpizo Group. The IDP-Tamano Group, on June 11, 1991, sought to intervene in Civil Case No. Q-90-6937 averring, inter alia: xxx xxx xxx 2. That the Intervenor has filed a case before the Securities and Exchange Commission (SEC) against Mr. Farouk Carpizo, et, al., who, through false schemes and machinations, succeeded in executing the Deed of Sale between the IDP and the Iglesia Ni Kristo (plaintiff in the instant case) and which Deed of Sale is the subject of the case at bar; 3. That the said case before the SEC is docketed as Case No. 04012, the main issue of which is whether or not the aforesaid Deed of Sale between IDP and the Iglesia ni Kristo is null and void, hence, Intervenors legal interest in the instant case. A copy of the said case is hereto attached as Annex A; 4. That, furthermore, Intervenor herein is the duly constituted body which can lawfully and legally represent the Islamic Directorate of the Philippines; xxx xxx xxx.[13] Private respondent INC opposed the motion arguing, inter alia, that the issue sought to be litigated by way of intervention is an intra-corporate dispute which falls under the jurisdiction of the SEC.[14]

Apprised of the pendency of SEC Case No. 4012 involving the controverted status of the IDP-Carpizo Group but without waiting for the outcome of said case, Judge Reyes, on September 12, 1991, rendered Partial Judgment in Civil Case No. Q-90-6937 ordering the IDP-Carpizo Group to comply with its obligation under the Deed of Sale of clearing the subject lots of squatters and of delivering the actual possession thereof to INC.[16] Thereupon, Judge Reyes in another Order, dated March 2, 1992, pertaining also to Civil Case No. Q-90-6937, treated INC as the rightful owner of the real properties and disposed as follows:

2. Declaring the sale of the two (2) parcels of land in Quezon City covered by the Deed of Absolute Sale entered into by Iglesia ni Kristo and the Islamic Directorate of the Philippines, Inc.[22] null and void. 3. Declaring the election of the Board of Directors[23] of the corporation from 1986 to 1991 as null and void; 4. Declaring the acceptance of the respondents, except Farouk Carpizo and Musnib Buat, as members of the IDP null and void. No pronouncement as to cost. SO ORDERED.[24]

WHEREFORE, Leticia P. Ligon is hereby ordered to produce and/or surrender to plaintiff[17] the owners copy of RT26521 (170567) and RT-26520 (176616) in open court for the registration of the Deed of Absolute Sale in the latters name and the annotation of the mortgage executed in her favor by herein defendant Islamic Directorate of the Philippines on the new transfer certificate of title to be issued to plaintiff. SO ORDERED.[18] On April 6, 1992, the above Order was amended by Judge Reyes directing Ligon to deliver the owners duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of Quezon City for the purposes stated in the Order of March 2, 1992.[19] Mortgagee Ligon went to the Court of Appeals, thru a petition for certiorari, docketed as CA-G.R. No. SP-27973, assailing the foregoing Orders of Judge Reyes. The appellate court dismissed her petition on October 28, 1992.[20] Undaunted, Ligon filed a petition for review before the Supreme Court which was docketed as G.R. No. 107751.

Private respondent INC filed a Motion for Intervention, dated September 7, 1993, in SEC Case No. 4012, but the same was denied on account of the fact that the decision of the case had become final and executory, no appeal having been taken therefrom.[25] INC elevated SEC Case No. 4012 to the public respondent Court of Appeals by way of a special civil action for certiorari, docketed as CA-G.R. SP No. 33295. On October 28, 1994, the court a quo promulgated a Decision in CA-G.R. SP No. 33295 granting INCs petition. The portion of the SEC Decision in SEC Case No. 4012 which declared the sale of the two (2) lots in question to INC as void was ordered set aside by the Court of Appeals. Thus, the IDP-Tamano Group brought the instant petition for review, dated December 21, 1994, submitting that the Court of Appeals gravely erred in: 1) Not upholding the jurisdiction of the SEC to declare the nullity of the sale; 2) Encouraging multiplicity of suits; and

Judge Celia Lipana-Reyes of Branch 81, Regional Trial Court of Quezon City, denied petitioners motion to intervene on the ground of lack of juridical personality of the IDP-Tamano Group and that the issues being raised by way of intervention are intra-corporate in nature, jurisdiction thereto properly pertaining to the SEC.[15]

In the meantime, the SEC, on July 5, 1993, finally came out with a Decision in SEC Case No. 4012 in this wise: 1. Declaring the by-laws submitted by the respondents[21] as unauthorized, and hence, null and void.

3) Not applying the principles of estoppel and laches.[26] While the above petition was pending, however, the Supreme Court rendered judgment in G.R. No. 107751 on the petition filed by Mrs. Leticia P. Ligon. The Decision, dated

13 June 1, 1995, denied the Ligon petition and affirmed the October 28, 1992 Decision of the Court of Appeals in CA-G.R. No. SP-27973 which sustained the Order of Judge Reyes compelling mortgagee Ligon to surrender the owners duplicate copies of TCT Nos. RT-26521 (170567) and RT26520 (176616) to the Register of Deeds of Quezon City so that the Deed of Absolute Sale in INCs favor may be properly registered. Before we rule upon the main issue posited in this petition, we would like to point out that our disposition in G.R. No. 107751 entitled, Ligon v. Court of Appeals, promulgated on June 1, 1995, in no wise constitutes res judicata such that the petition under consideration would be barred if it were the case. Quite the contrary, the requisites of res judicata do not obtain in the case at bench. Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res judicata in actions in personam, to wit: Effect of judgment. - The effect of a judgment or final order rendered by a court or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be as follows: xxx xxx xxx (b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. Section 49(b) enunciates the first concept of res judicata known as bar by prior judgment, whereas, Section 49(c) is referred to as conclusiveness of judgment.

There is bar by former judgment when, between the first case where the judgment was rendered, and the second case where such judgment is invoked, there is identity of parties, subject matter and cause of action. When the three identities are present, the judgment on the merits rendered in the first constitutes an absolute bar to the subsequent action. But where between the first case wherein judgment is rendered and the second case wherein such judgment is invoked, there is only identity of parties but there is no identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. This is what is termed conclusiveness of judgment.[27] Neither of these concepts of res judicata find relevant application in the case at bench. While there may be identity of subject matter (IDP property) in both cases, there is no identity of parties. The principal parties in G.R. No. 107751 were mortgagee Leticia P. Ligon, as petitioner, and the Iglesia Ni Cristo, as private respondent. The IDP, as represented by the 1971 Board of Trustees or the Tamano Group, was only made an ancillary party in G.R. No. 107751 as intervenor.[28] It was never originally a principal party thereto. It must be noted that intervention is not an independent action, but is merely collateral, accessory, or ancillary to the principal action. It is just an interlocutory proceeding dependent on or subsidiary to the case between the original parties.[29] Indeed, the IDP-Tamano Group cannot be considered a principal party in G.R. No. 107751 for purposes of applying the principle of res judicata since the contrary goes against the true import of the action of intervention as a mere subsidiary proceeding without an independent life apart from the principal action as well as the intrinsic character of the intervenor as a mere subordinate party in the main case whose right may be said to be only in aid of the right of the original party.[30] It is only in the present case, actually, where the IDP-Tamano Group became a principal party, as petitioner, with the Iglesia Ni Cristo, as private respondent. Clearly, there is no identity of parties in both cases. In this connection, although it is true that Civil Case No. Q-906937, which gave rise to G.R. No. 107751, was entitled, Iglesia Ni Kristo, Plaintiff v. Islamic Directorate of the Philippines, Defendant,[31] the IDP can not be considered

essentially a formal party thereto for the simple reason that it was not duly represented by a legitimate Board of Trustees in that case. As a necessary consequence, Civil Case No. Q90-6937, a case for Specific Performance with Damages, a mere action in personam, did not become final and executory insofar as the true IDP is concerned since petitioner corporation, for want of legitimate representation, was effectively deprived of its day in court in said case. Res inter alios judicatae nullum aliis praejudicium faciunt. Matters adjudged in a cause do not prejudice those who were not parties to it.[32] Elsewise put, no person (natural or juridical) shall be affected by a proceeding to which he is a stranger.[33] Granting arguendo, that IDP may be considered a principal party in Ligon, res judicata as a bar by former judgment will still not set in on the ground that the cause of action in the two cases are different. The cause of action in G.R. No. 107751 is the surrender of the owners duplicate copy of the transfer certificates of title to the rightful possessor thereof, whereas the cause of action in the present case is the validity of the Carpizo Group-INC Deed of Absolute Sale. Res Judicata in the form of conclusiveness of judgment cannot likewise apply for the reason that any mention at all in Ligon as to the validity of the disputed Carpizo Board-INC sale may only be deemed incidental to the resolution of the primary issue posed in said case which is: Who between Ligon and INC has the better right of possession over the owners duplicate copy of the TCTs covering the IDP property? G.R. No. 107751 cannot be considered determinative and conclusive on the matter of the validity of the sale for this particular issue was not the principal thrust of Ligon. To rule otherwise would be to cause grave and irreparable injustice to IDP which never gave its consent to the sale, thru a legitimate Board of Trustees. In any case, while it is true that the principle of res judicata is a fundamental component of our judicial system, it should be disregarded if its rigid application would involve the sacrifice of justice to technicality.[34] The main question though in this petition is: Did the Court of Appeals commit reversible error in setting aside that portion of the SECs Decision in SEC Case No. 4012 which declared the

14 sale of two (2) parcels of land in Quezon City between the IDP-Carpizo Group and private respondent INC null and void? We rule in the affirmative. There can be no question as to the authority of the SEC to pass upon the issue as to who among the different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5(c) of Presidential Decree No. 902-A:

It must be noted that SEC Case No. 4012 is not the first case wherein the SEC had the opportunity to pass upon the status of the Carpizo Group. As far back as October 3, 1986, the SEC, in Case No. 2687,[36] in a suit between the Carpizo Group and the Abbas Group, already declared the election of the Carpizo Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the Articles of Incorporation.[37] Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board.

Section 3. The Commission shall have absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are the grantees of primary franchises and/or a license or permit issued by the government to operate in the Philippines xxx xxx.

Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora property, allegedly in the name of the IDP, have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down the essential requisites of contracts:

xxxxxxxxx

There is no contract unless the following requisites concur:

Section 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

(1) Consent of the contracting parties;

xxxxxxxxx c) Controversies in the selection or appointment of directors, trustees, officers, or managers of such corporations, partnerships or associations. x x x. If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void.[35] By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property.

Sec. 40. Sale or other disposition of assets. - Subject to the provisions of existing laws on illegal combinations and monopolies, a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets, including its goodwill, upon terms and conditions and for such consideration, which may be money, stocks, bonds or other instruments for the payment of money or other property or consideration, as its board of directors or trustees may deem expedient, when authorized by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; or in case of non-stock corporation, by the vote of at least twothirds (2/3) of the members, in a stockholders or members meeting duly called for the purpose. Written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, That any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code.

(2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. All these elements must be present to constitute a valid contract. For, where even one is absent, the contract is void. As succinctly put by Tolentino, consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent.[38] In this case, the IDP, owner of the subject parcels of land, never gave its consent, thru a legitimate Board of Trustees, to the disputed Deed of Absolute Sale executed in favor of INC. This is, therefore, a case not only of vitiated consent, but one where consent on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever. The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Groups failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or substantially all assets of the corporation:

A sale or other disposition shall be deemed to cover substantially all the corporate property and assets if thereby the corporation would be rendered incapable of continuing the business or accomplishing the purpose for which it was incorporated. x x x x x x x x x. The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo Group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP

15 as they were made to appear to be. Apparently, there are only fifteen (15) official members of the petitioner corporation including the eight (8) members of the Board of Trustees.[39] All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent INC was intrinsically void ab initio. Private respondent INC nevertheless questions the authority of the SEC to nullify the sale for being made outside of its jurisdiction, the same not being an intra-corporate dispute. The resolution of the question as to whether or not the SEC had jurisdiction to declare the subject sale null and void is rendered moot and academic by the inherent nullity of the highly dubious sale due to lack of consent of the IDP, owner of the subject property. No end of substantial justice will be served if we reverse the SECs conclusion on the matter, and remand the case to the regular courts for further litigation over an issue which is already determinable based on what we have in the records. It is unfortunate that private respondent INC opposed the motion for intervention filed by the 1971 Board of Trustees in Civil Case No. Q-90-6937, a case for Specific Performance with Damages between INC and the Carpizo Group on the subject Deed of Absolute Sale. The legitimate IDP Board could have been granted ample opportunity before the regional trial court to shed light on the true status of the Carpizo Board and settled the matter as to the validity of the sale then and there. But INC, wanting to acquire the property at all costs and threatened by the participation of the legitimate IDP Board in the civil suit, argued for the denial of the motion averring, inter alia, that the issue sought to be litigated by the movant is intra-corporate in nature and outside the jurisdiction of the regional trial court.[40] As a result, the motion for intervention was denied. When the Decision in SEC Case No. 4012, came out nullifying the sale, INC came forward, this time, quibbling over the issue that it is the regional trial court, and not the SEC, which has jurisdiction to rule on the validity of the sale. INC is here trifling with the courts. We cannot put a premium on this clever legal maneuverings of private respondent which, if countenanced, would result in a failure of justice.

Furthermore, the Court observed that the INC bought the questioned property from the Carpizo Group without even seeing the owners duplicate copy of the titles covering the property. This is very strange considering that the subject lot is a large piece of real property in Quezon City worth millions, and that under the Torrens System of Registration, the minimum requirement for one to be a good faith buyer for value is that the vendee at least sees the owners duplicate copy of the title and relies upon the same.[41] The private respondent presumably knowledgeable on the aforesaid working of the Torrens System, did not take heed of this and nevertheless went through with the sale with undue haste. The unexplained eagerness of INC to buy this valuable piece of land in Quezon City without even being presented with the owners copy of the titles casts very serious doubt on the rightfulness of its position as vendee in the transaction. WHEREFORE, the petition is GRANTED. The Decision of the public respondent Court of Appeals dated October 28, 1994 in CA-G.R. SP No. 33295 is SET ASIDE. The Decision of the Securities and Exchange Commission dated July 5, 1993 in SEC Case No. 4012 is REINSTATED. The Register of Deeds of Quezon City is hereby ordered to cancel the registration of the Deed of Absolute Sale in the name of respondent Iglesia Ni Cristo, if one has already been made. If new titles have been issued in the name of Iglesia Ni Cristo, the register of Deeds is hereby ordered to cancel the same, and issue new ones in the name of petitioner Islamic Directorate of the Philippines. Petitioner corporation is ordered to return to private respondent whatever amount has been initially paid by INC as consideration for the property with legal interest, if the same was actually received by IDP. Otherwise, INC may run after Engineer Farouk Carpizo and his group for the amount of money paid.

CARPIO, J.: The Case This is a petition for review on certiorari of the Decision[1] dated 13 June 2000 and the Resolution dated 14 November 2002 of the Court of Appeals which affirmed the Decision[2] of the Regional Trial Court, Branch 14, Cebu City. The Court of Appeals agreed with the trial court that the sales by the late Teodoro Vao to respondents Alfredo Loy, Jr. and Teresita A. Loy of Lot Nos. 5 and 6, respectively, were valid. The Court of Appeals also agreed with the trial court that the unilateral extrajudicial rescission by the late Teodoro Vao of the contract to sell involving five lots, including Lot Nos. 5 and 6, between him and Benito Liu (predecessor-in-interest of Frank Liu) was valid. The Facts

SO ORDERED.

On 13 January 1950, Teodoro Vao, as attorney-in-fact of Jose Vao, sold seven lots of the Banilad Estate located in Cebu City to Benito Liu and Cirilo Pangalo.[3] Teodoro Vao dealt with Frank Liu, the brother of Benito Liu, in the sale of the lots to Benito Liu and Cirilo Pangalo. The lots sold to Benito Liu were Lot Nos. 5, 6, 13, 14, and 15 of Block 12 for a total price of P4,900. Benito Liu gave a down payment of P1,000, undertaking to pay the balance of P3,900 in monthly installments of P100 beginning at the end of January 1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 of Block 11 for a total price of P1,967.50. Cirilo Pangalo gave P400 as down payment, undertaking to pay the balance of P1,567.50 in monthly installments of P400 beginning at the end of January 1950. Meanwhile, Jose Vao passed away.

[G.R. No. 145982. July 3, 2003] FRANK N. LIU, deceased, substituted by his surviving spouse Diana Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu Rodriguez, petitioners, vs. ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAO, respondents.

Benito Liu subsequently paid installments totaling P2,900, leaving a balance of P1,000.[4] Apparently, Benito Liu stopped further payments because Teodoro Vao admitted his inability to transfer the lot titles to Benito Liu. Later, in a letter[5] dated 16 October 1954, Teodoro Vao informed Frank Liu[6] that the Supreme Court had already declared

16 valid the will of his father Jose Vao. Thus, Teodoro Vao could transfer the titles to the buyers names upon payment of the balance of the purchase price. When Frank Liu failed to reply, Teodoro Vao sent him another letter,[7] dated 1 January 1955, reminding him of his outstanding balance. It appears that it was only after nine years that Frank Liu responded through a letter,[8] dated 25 January 1964. In the letter, Frank Liu informed Teodoro Vao that he was ready to pay the balance of the purchase price of the seven lots. He requested for the execution of a deed of sale of the lots in his name and the delivery of the titles to him. On 22 April 1966, Benito Liu sold to Frank Liu the five lots (Lot Nos. 5, 6, 13, 14 and 15 of Block 12) which Benito Liu purchased from Teodoro Vao.[9] Frank Liu assumed the balance of P1,000 for the five lots. Cirilo Pangalo likewise sold to Frank Liu the two lots (Lot Nos. 14 and 15 of Block 11) that Pangalo purchased from Teodoro Vao. Frank Liu likewise assumed the balance of P417 for the two lots. On 21 March 1968, Frank Liu reiterated in a letter[10] his request for Teodoro Vao to execute the deed of sale covering the seven lots so he could secure the corresponding certificates of title in his name. He also requested for the construction of the subdivision roads pursuant to the original contract. In the letter, Frank Liu referred to another letter, dated 25 June 1966, which he allegedly sent to Teodoro Vao. According to Frank Liu, he enclosed PBC Check No. D-782290 dated 6 May 1966 for P1,417, which is the total balance of the accounts of Benito Liu and Cirilo Pangalo on the seven lots. However, Frank Liu did not offer in evidence the letter or the check. Frank Liu sent two other letters,[11] dated 7 June 1968 and 29 July 1968, to Teodoro Vao reiterating his request for the execution of the deed of sale in his favor but to no avail. On 19 August 1968, Teodoro Vao sold Lot No. 6 to respondent Teresita Loy for P3,930.[12] The Register of

Deeds of Cebu City entered this sale in the Daybook on 24 February 1969.[13]

Vao sold respectively to Alfredo Loy, Jr. on 16 December 1969 and to Teresita Loy on 19 August 1968.

On 2 December 1968, Frank Liu filed a complaint against Teodoro Vao for specific performance, execution of deed of absolute sale, issuance of certificates of title and construction of subdivision roads, before the Court of First Instance of Davao. The case was docketed as Civil Case No. 6300.[14]

On 19 March 1976, the probate court, upon an ex-parte motion filed by Teresita Loy, issued an Order[22] approving the 16 August 1968 sale by Teodoro Vao of Lot No. 6 in her favor. Likewise, upon an ex-parte motion filed by Alfredo Loy, Jr., the probate court issued on 23 March 1976 an Order[23] approving the 16 December 1969 sale of Lot No. 5 by Teodoro Vao in his favor.

On 19 December 1968, Frank Liu filed with the Register of Deeds of Cebu City a notice of lis pendens on the seven lots due to the pendency of Civil Case No. 6300.[15] However, the Register of Deeds denied the registration of the lis pendens on the ground that the property is under administration and said claim must be filed in court.[16] On 16 December 1969, Teodoro Vao sold Lot No. 5 to respondent Alfredo Loy for P3,910.[17] The Register of Deeds of Cebu City entered this sale in the Daybook on 16 January 1970.[18] On 3 October 1970, the Court of First Instance of Davao, on motion of Teodoro Vao, dismissed Civil Case No. 6300 on the ground that Frank Liu should have filed the claim with the probate court.[19] Thus, on 17 February 1972, Frank Liu filed before the probate court a claim against the Estate of Jose Vao for Specific Performance, Execution of Deed of Absolute Sale, Issuance of Certificate of Title, and Construction of Subdivision Roads.[20]

On 10 May 1976, the Register of Deeds of Cebu City cancelled TCT No. 44204 in the name of the Estate of Jose Vao covering Lot No. 5 and issued a new title, TCT No. 64522, in the name of Alfredo Loy, Jr. and Perfeccion V. Loy.[24] Likewise, on the same date, the Register of Deeds cancelled TCT No. 44205 in the name of the Estate of Jose Vao covering Lot No. 6, and issued TCT No. 64523 in the name of Teresita A. Loy.[25] On 3 June 1976, Milagros Vao, as administratrix of the estate, filed a motion for reconsideration of the Orders of the probate court dated 19 and 23 March 1976. She contended that she already complied with the probate courts Order dated 24 February 1976 to execute a deed of sale covering the seven lots, including Lot Nos. 5 and 6, in favor of Frank Liu. She also stated that no one notified her of the motion of the Loys, and if the Loys or the court notified her, she would have objected to the sale of the same lots to the Loys.

During the proceedings, Teodoro Vao died. His widow, Milagros Vao, succeeded as administratrix of the Estate of Jose Vao.

On 4 June 1976, Frank Liu filed a complaint for reconveyance or annulment of title of Lot Nos. 5 and 6. Frank Liu filed the case in the Regional Trial Court of Cebu City, Branch 14, which docketed it as Civil Case No. R-15342.

On 24 February 1976, the probate court approved the claim of Frank Liu. On 5 March 1976, Milagros Vao executed a deed of conveyance covering the seven lots in favor of Frank Liu, in compliance with the probate courts order.[21] The deed of conveyance included Lot Nos. 5 and 6, the same lots Teodoro

On 5 August 1978, the probate court denied the motion for reconsideration of Milagros Vao on the ground that the conflicting claims regarding the ownership of Lot Nos. 5 and 6 were already under litigation in Civil Case No. R-15342.

17 On 8 April 1991, the Regional Trial Court of Cebu City (trial court), Branch 14, rendered judgment against Frank Liu as follows:

upheld the unilateral rescission subject to refund by the Estate of Jose Vao of one-half (1/2) of what Frank Liu paid under the contract.

attorneys fees. Besides, the Court of Appeals held that where there is no basis to award moral damages, there is also no basis to award attorneys fees.

WHEREFORE, judgment is hereby rendered:

The trial court ruled that Teodoro Vao, as administrator of the Estate of Jose Vao and as sole heir of Jose Vao, acted both as principal and as agent when he sold the lots to Alfredo Loy, Jr. and Teresita Loy. The probate court subsequently approved the sales. The trial court also found that Alfredo Loy, Jr. and Teresita Loy were purchasers in good faith.

The Issues

(1) Dismissing the complaint at bar; and (2) Confirming the unilateral extrajudicial rescission of the contract Exhibit A by the late Teodoro Vao, conditioned upon the refund by the Estate of Jose Vao of one-half (1/2) of what the plaintiff had paid under that contract. The counterclaims by the defendants Alfredo A. Loy, Jr. and Teresita A. Loy and by the defendant Estate of Jose Vao, not having been substantiated, are hereby denied. Without special pronouncement as to costs. SO ORDERED.[26] Frank Liu appealed to the Court of Appeals, which affirmed in toto the decision of the trial court. Frank Liu[27] filed a motion for reconsideration but the Court of Appeals denied the same. Hence, the instant petition. The Trial Courts Ruling The trial court held that the contract between Teodoro Vao and Benito Liu was a contract to sell. Since title to Lot Nos. 5 and 6 never passed to Benito Liu due to non-payment of the balance of the purchase price, ownership of the lots remained with the vendor. Therefore, the trial court ruled that the subsequent sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6, respectively, were valid. The trial court viewed the letter of Teodoro Vao dated 1 January 1995 addressed to Frank Liu as a unilateral extrajudicial rescission of the contract to sell. The trial court

The Court of Appeals Ruling In affirming in toto the trial courts decision, the appellate court found no evidence of fraud or ill-motive on the part of Alfredo Loy, Jr. and Teresita Loy. The Court of Appeals cited the rule that the law always presumes good faith such that any person who seeks to be awarded damages due to the acts of another has the burden of proving that the latter acted in bad faith or ill-motive. The Court of Appeals also held that the sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6, respectively, were valid despite lack of prior approval by the probate court. The Court of Appeals declared that Teodoro Vao sold the lots in his capacity as heir of Jose Vao. The appellate court ruled that an heir has a right to dispose of the decedents property, even if the same is under administration, because the hereditary property is deemed transmitted to the heir without interruption from the moment of the death of the decedent. The Court of Appeals held that there is no basis for the claim of moral damages and attorneys fees. The appellate court found that Frank Liu failed to prove that he suffered mental anguish due to the actuations of the Loys. The Court of Appeals likewise disallowed the award of attorneys fees. The fact alone that a party was compelled to litigate and incur expenses to protect his claim does not justify an award of

Petitioners[28] raise the following issues:[29] 1. Whether prior approval of the probate court is necessary to validate the sale of Lot Nos. 5 and 6 to Loys; 2. Whether the Loys can be considered buyers and registrants in good faith despite the notice of lis pendens; 3. Whether Frank Liu has a superior right over Lot Nos. 5 and 6; 4. Whether the Court of Appeals erred in not passing upon the trial courts declaration that the extra-judicial rescission by Teodoro Vao of the sale in favor of Frank Liu is valid; 5.Whether petitioners are entitled to moral damages and attorneys fees. The Courts Ruling The petition is meritorious. Whether there was a valid cancellation of the contract to sell There was no valid cancellation of the contract to sell because there was no written notice of the cancellation to Benito Liu or Frank Liu. There was even no implied cancellation of the contract to sell. The trial court merely viewed the alleged unilateral extrajudicial rescission from the letter of Teodoro Vao, dated 1 January 1955, addressed to Frank Liu, stating that: Two months, I believe, is ample for the allowance of delays caused by your (sic) either too busy, or having been some place else, or for consultations. These are the only reasons I can think of that could have caused the delay in your answer,

18 unless you do not think an answer is necessary at all, as you are not the party concerned in the matter. I shall therefor (sic) appreciate it very much, if you will write me within ten days from receipt of this letter, or enterprete (sic) your silence as my mistake in having written to the wrong party, and therefor (sic) proceed to write Misters: B. Liu and C. Pangalo.[30] (Emphasis supplied) Obviously, we cannot construe this letter as a unilateral extrajudicial rescission of the contract to sell. As clearly stated in the letter, the only action that Teodoro Vao would take if Frank Liu did not reply was that Teodoro Vao would write directly to Benito Liu and Cirilo Pangalo. The letter does not mention anything about rescinding or cancelling the contract to sell. Although the law allows the extra-judicial cancellation of a contract to sell upon failure of one party to comply with his obligation, notice of such cancellation must still be given to the party who is at fault.[31] The notice of cancellation to the other party is one of the requirements for a valid cancellation of a contract to sell, aside from the existence of a lawful cause. Even the case cited by the trial court emphasizes the importance of such notice: Of course, it must be understood that the act of a party in treating a contract as cancelled or resolved on account of infractions by the other contracting party must be made known to the other and is always provisional, being ever subject to scrutiny and review by the proper court. If the other party denies that rescission is justified, it is free to resort to judicial action in its own behalf, and bring the matter to court. Then, should the court, after due hearing, decide that the resolution of the contract was not warranted, the responsible party will be sentenced to damages; in the contrary case, the resolution will be affirmed, and the consequent indemnity awarded to the party prejudiced.[32] (Emphasis supplied)

The fact that Teodoro Vao advised Frank Liu to file his claim with the probate court is certainly not the conduct of one who supposedly unilaterally rescinded the contract with Frank Liu.[33] In this case, there was prior delay or default by the seller. As admitted by Teodoro Vao, he could not deliver the titles because of a case questioning the authenticity of the will of his father. In a letter[34] to Frank Liu dated 16 October 1954, Teodoro Vao stated: Some time last May, if I remember correctly, you offered to settle the whole balance of your account if I can have the Titles transferred immediately in your brothers name, and to that of Mr. Pangalos. I cannot blame you if you were disappointed then, to know that I could not have the titles transferred, even should you have paid in full. (Emphasis supplied) In the same letter of 16 October 1954, Teodoro Vao informed Frank Liu that the titles were ready for transfer, thus: However, last June 30, of this year, the Supreme Court, unanimously concurred in the reversal of the decision of the Court of First Instance, as regard the legality of the Will of my father. Now that the Will of my Father has been declared Legal, my opponents have lost their personality in the case, and with it their power to harass me in court. Also, sometime in the middle of July, also this year, the Supreme Court again declared that all the sales I have made of the properties of my Father, were Legal, and that I should be empowered to have the Titles transferred in the buyers names, should they have paid in full. A few have already received their Titles. And yours can be had too in two days time from the time you have paid in full. Nevertheless, the subsequent approval by the probate court of the sale of Lot Nos. 5 and 6 to Frank Liu rendered moot any question on the continuing validity of the contract to sell.

Whether the lis pendens in the Davao case served as notice to the Loys The lis pendens in the Davao case did not serve as notice to the Loys. The Register of Deeds of Cebu City denied registration of the lis pendens on 19 December 1968.[35] Frank Liu did not appeal to the Land Registration Commission[36] to keep alive the lis pendens. Republic Act No. 1151,[37] which took effect 17 June 1954, provides: SEC. 4. Reference of doubtful matters to Commissioner of Land Registration. When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage, or other instrument presented to him for registration, or where any party in interest does not agree with the Register of Deeds with reference to any such matter, the question shall be submitted to the Commissioner of Land Registration either upon the certification of the Register of Deeds, stating the question upon which he is in doubt, or upon the suggestion in writing by the party in interest; and thereupon the Commissioner, after consideration of the matter shown by the records certified to him, and in case of registered lands, after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made. His decision in such cases shall be conclusive and binding upon all Registers of Deeds: Provided, however, That when a party in interest disagrees with a ruling or resolution of the Commissioner and the issue involves a question of law, said decision may be appealed to the Supreme Court within thirty days from and after receipt of the notice thereof. (Emphasis supplied) Frank Lius failure to appeal[38] the denial of the registration rendered the lis pendens ineffective. The Court of First Instance of Davao City eventually dismissed Frank Lius complaint on 3 October 1970. Whether the registration by the Loys of their contracts of sale made them the first registrants in good faith to defeat prior buyers

19 The registration by the Loys of their contracts of sale did not defeat the right of prior buyers because the person who signed the Loys contracts was not the registered owner. The registered owner of Lot Nos. 5 and 6 was the Estate of Jose Vao. Teodoro Vao was the seller in the contract of sale with Alfredo Loy, Jr. The Estate of Jose Vao was the seller in the contract of sale with Teresita Loy. Teodoro Vao signed both contracts of sale. The rule is well-settled that one who buys from a person who is not the registered owner is not a purchaser in good faith.[39] As held in Toledo-Banaga v. Court of Appeals:[40] To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither the registered owner nor was the former authorized by the latter to sell the same. She knew she was not dealing with the registered owner or a representative of the latter. One who buys property with full knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith and cannot claim that he acquired title in good faith as against the owner or of an interest therein. When she nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation. She is bound by the outcome of her indifference with no one to blame except herself if she looses her claim as against one who has a superior right or interest over the property. x x x. The Loys were under notice to inquire why the land was not registered in the name of the person who executed the contracts of sale. They were under notice that the lots belonged to the Estate of Jose Vao and any sale of the lots required court approval. Any disposition would be subject to the claims of creditors of the estate who filed claims before the probate court.[41] The contracts of the Loys did not convey ownership of the lots to them as against third persons. The contracts were binding only on the seller, Teodoro Vao. The contracts of the Loys would become binding against third persons only upon approval of the sale by the probate court and registration

with the Register of Deeds. Registration of the contracts without court approval would be ineffective to bind third persons, especially creditors of the estate. Otherwise, this will open the door to fraud on creditors of the estate.

administratrix, who had already signed the deed of sale to Frank Liu as directed by the same probate court, objected to the sale of the same lots to the Loys. Thus, as found by the trial court:

Whether the probate courts ex-parte

On June 3, 1976, Milagros H. Vao moved for the reconsideration of the Order issued by Judge Ramolete on March 19, 1976 and March 23, 1976, contending that she had not been personally served with copies of the motions presented to the Court by Alfredo Loy, Jr. and by Teresita Loy seeking the approval of the sales of the lots in their favor, as well as the Orders that were issued by the Court pursuant thereto; that the Court in its Order of February 24, 1976 had ordered her (Milagros H. Vao), to execute a deed of absolute sale in favor of the plaintiff, which sale had been approved by the Court; that she had not known of the sale of Lots 5 and 6 to any other person except to the plaintiff; that the sale of the two lots in favor of plaintiff was made earlier, when there was yet no litigation with the Bureau of Internal Revenue, while those in favor of the defendant Loys were made when there was already a prohibition by the Court against any sale thereof; that the sales in favor of the Loys were made without Court authority; and that if the approval of the sales had not been obtained ex-parte she would have informed the Court of the complication arising therefrom, and she would not have executed the sale in favor of plaintiff, and she would have asked the Court to decide first as to who had preference over said lots.[43]

approval of the contracts of the Loys was valid Section 8, Rule 89 of the 1964 Rules of Court[42] specifically requires notice to all interested parties in any application for court approval to convey property contracted by the decedent in his lifetime. Thus: SECTION 8. When court may authorize conveyance of realty which deceased contracted to convey. Notice. Effect of deed. Where the deceased was in his lifetime under contract, binding in law, to deed real property, or an interest therein, the court having jurisdiction of the estate may, on application for that purpose, authorize the executor or administrator to convey such property according to such contract, or with such modifications as are agreed upon by the parties and approved by the court; and if the contract is to convey real property to the executor or administrator, the clerk of the court shall execute the deed. The deed executed by such executor, administrator, or clerk of court shall be as effectual to convey the property as if executed by the deceased in his lifetime; but no such conveyance shall be authorized until notice of the application for that purpose has been given personally or by mail to all persons interested, and such further notice has been given, by publication or otherwise, as the court deems proper; nor if the assets in the hands of the executor or administrator will thereby be reduced so as to prevent a creditor from receiving his full debt or diminish his dividend. (Rule 89, 1964 Rules of Court) (Emphasis supplied) Despite the clear requirement of Section 8 of Rule 89, the Loys did not notify the administratrix of the motion and hearing to approve the sale of the lots to them. The

The failure to notify the administratrix and other interested persons rendered the sale to the Loys void. As explained by Justice J.B.L. Reyes in De Jesus v. De Jesus:[44] Section 9, Rule 90, however, provides that authority can be given by the probate court to the administrator to convey property held in trust by the deceased to the beneficiaries of the trust only after notice given as required in the last preceding section; i.e., that no such conveyance shall be authorized until notice of the application for that purpose has been given personally or by mail to all persons

20 interested, and such further notice has been given, by publication or otherwise, as the court deems proper (sec. 8, Rule 90). This rule makes it mandatory that notice be served on the heirs and other interested persons of the application for approval of any conveyance of property held in trust by the deceased, and where no such notice is given, the order authorizing the conveyance, as well as the conveyance itself, is completely void. (Emphasis supplied)

In Opulencia v. Court of Appeals,[46] an heir agreed to convey in a contract to sell her share in the estate then under probate settlement. In an action for specific performance filed by the buyers, the seller-heir resisted on the ground that there was no approval of the contract by the probate court. The Court ruled that the contract to sell was binding between the parties, but subject to the outcome of the testate proceedings. The Court declared:

In this case, the administratrix, the wife of the deceased Teodoro Vao, was not notified of the motion and hearing to approve the sale of the lots to the Loys. Frank Liu did not also receive any notice, although he obviously was an interested party. The issuance of new titles to the Loys on 10 May 1976 by the Registry of Deeds did not vest title to the Loys because the conveyance itself was completely void. The consequences for the failure to notify the administratrix and other interested parties must be borne by the Loys.

x x x Consequently, although the Contract to Sell was perfected between the petitioner (seller-heir) and private respondents (buyers) during the pendency of the probate proceedings, the consummation of the sale or the transfer of ownership over the parcel of land to the private respondents is subject to the full payment of the purchase price and to the termination and outcome of the testate proceedings. x x x Indeed, it is settled that the sale made by an heir of his share in an inheritance, subject to the pending administration, in no wise stands in the way of such administration. (Emphasis supplied)

Necessity of court approval of sales Indisputably, an heir can sell his interest in the estate of the decedent, or even his interest in specific properties of the estate. However, for such disposition to take effect against third parties, the court must approve such disposition to protect the rights of creditors of the estate. What the deceased can transfer to his heirs is only the net estate, that is, the gross estate less the liabilities. As held in Baun v. Heirs of Baun:[45] The heir legally succeeds the deceased, from whom he derives his right and title, but only after the liquidation of the estate, the payment of the debts of the same, and the adjudication of the residue of the estate of the deceased; and in the meantime the only person in charge by law to attend to all claims against the estate of the deceased debtor is the executor or administrator appointed by the court.

In Alfredo Loys case, his seller executed the contract of sale after the death of the registered owner Jose Vao. The seller was Teodoro Vao who sold the lot in his capacity as sole heir of the deceased Jose Vao. Thus, Opulencia applies to the sale of the lot to Alfredo Loy, Jr., which means that the contract of sale was binding between Teodoro Vao and Alfredo Loy, Jr., but subject to the outcome of the probate proceedings. In Frank Lius case, as successor-in-interest of Benito Liu, his seller was Jose Vao, who during his lifetime executed the contract to sell through an attorney-in-fact, Teodoro Vao. This is a disposition of property contracted by the decedent during his lifetime. Section 8 of Rule 89 specifically governs this sale: SECTION 8. When court may authorize conveyance of realty which deceased contracted to convey. Notice. Effect of deed. Where the deceased was in his lifetime under contract, binding in law, to deed real property, or an interest therein,

the court having jurisdiction of the estate may, on application for that purpose, authorize the executor or administrator to convey such property according to such contract, or with such modifications as are agreed upon by the parties and approved by the court; x x x Thus, Frank Liu applied to the probate court for the grant of authority to the administratrix to convey the lots in accordance with the contract made by the decedent Jose Vao during his lifetime. The probate court approved the application. In Teresita Loys case, her seller was the Estate of Jose Vao. Teodoro Vao executed the contract of sale in his capacity as administrator of the Estate of Jose Vao, the registered owner of the lots. The Court has held that a sale of estate property made by an administrator without court authority is void and does not confer on the purchaser a title that is available against a succeeding administrator.[47] Manotok Realty, Inc. v. Court of Appeals[48] emphasizes the need for court approval in the sale by an administrator of estate property. The Court held in Manotok Realty: We also find that the appellate court committed an error of law when it held that the sale of the lot in question did not need the approval of the probate court. Although the Rules of Court do not specifically state that the sale of an immovable property belonging to an estate of a decedent, in a special proceeding, should be made with the approval of the court, this authority is necessarily included in its capacity as a probate court. An administrator under the circumstances of this case cannot enjoy blanket authority to dispose of real estate as he pleases, especially where he ignores specific directives to execute proper documents and get court approval for the sales validity.

21 Section 91 of Act No. 496 (Land Registration Act) specifically requires court approval for any sale of registered land by an executor or administrator, thus: SEC. 91. Except in case of a will devising the land to an executor to his own use or upon some trust or giving to the executor power to sell, no sale or transfer of registered land shall be made by an executor or by an administrator in the course of administration for the payment of debts or for any other purpose, except in pursuance of an order of a court of competent jurisdiction obtained as provided by law. (Emphasis supplied) Similarly, Section 88 of Presidential Decree No. 1529 (Property Registration Decree) provides: SEC. 88. Dealings by administrator subject to court approval. After a memorandum of the will, if any, and order allowing the same, and letters testamentary or letters of administration have been entered upon the certificate of title as hereinabove provided, the executor or administrator may alienate or encumber registered land belonging to the estate, or any interest therein, upon approval of the court obtained as provided by the Rules of Court. (Emphasis supplied) Clearly, both the law and jurisprudence expressly require court approval before any sale of estate property by an executor or administrator can take effect. Moreover, when the Loys filed in March 1976 their ex-parte motions for approval of their contracts of sale, there was already a prior order of the probate court dated 24 February 1976 approving the sale of Lot Nos. 5 and 6 to Frank Liu. In fact, the administratrix had signed the deed of sale in favor of Frank Liu on 5 March 1976 pursuant to the court approval. This deed of sale was notarized on 5 March 1976, which transferred ownership of Lot Nos. 5 and 6 to Frank Liu on the same date.[49]

Thus, when the probate court approved the contracts of the Loys on 19 and 23 March 1976, the probate court had already lost jurisdiction over Lot Nos. 5 and 6 because the lots no longer formed part of the Estate of Jose Vao.

Whether the Loys were in good faith when they built on the Lots.

In Dolar v. Sundiam,[50] an heir sold parcels of land that were part of the estate of the decedent. The probate court approved the sale. Thereafter, the probate court authorized the administrator to sell again the same parcels of land to another person. The Court ruled that the probate court had already lost jurisdiction to authorize the further sale of the parcels of land to another person because such property no longer formed part of the estate of the decedent. The Court declared:

Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

In our opinion, where, as in this case, a piece of property which originally is a part of the estate of a deceased person is sold by an heir of the deceased having a valid claim thereto, and said piece of property is, by mistake, subsequently inventoried or considered part of the deceaseds estate subject to settlement, and, thereafter, with the authority and approval of the probate court, it sold once more to another person, a receiver of the property so sold may, during the pendency of a motion to set aside the second sale, be appointed by the court when in its sound judgment the grant of such temporary relief is reasonably necessary to secure and protect the rights of its real owner against any danger of loss or material injury to him arising from the use and enjoyment thereof by another who manifestly cannot acquire any right of dominion thereon because the approving surrogate court had already lost jurisdiction to authorize the further sale of such property. (Emphasis supplied) Similarly, in this case, the Loys cannot acquire any right of dominion over Lot Nos. 5 and 6 because the probate court had already lost jurisdiction to authorize the second sale of the same lots. Moreover, the probate courts approval of the sale to the Loys was completely void due to the failure to notify the administratrix of the motion and hearing on the sale.

The Civil Code describes a possessor in good faith as follows:

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. Mistake upon a doubtful or difficult question of law may be the basis of good faith. Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. In Duran v. Intermediate Appellate Court,[51] the Court explained possession in good faith in this manner: Guided by previous decisions of this Court, good faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title (Arriola vs. Gomez de la Serna, 14 Phil. 627). Good faith, while it is always presumed in the absence of proof to the contrary, requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest intention to abstain from taking unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). The Loys were not in good faith when they built on the lots because they knew that they bought from someone who was not the registered owner. The registered owner on the TCTs of the lots was the Estate of Jose Vao, clearly indicating that the sale required probate court approval. Teodoro Vao did not show any court approval to the Loys when they

22 purchased the lots because there was none. To repeat, any one who buys from a person who is not the registered owner is not a purchaser in good faith.[52] If the Loys built on the lots before the court approval, then they took the risk. Contract to sell versus contract of sale A prior contract to sell made by the decedent prevails over the subsequent contract of sale made by the administrator without probate court approval. The administrator cannot unilaterally cancel a contract to sell made by the decedent in his lifetime.[53] Any cancellation must observe all legal requisites, like written notice of cancellation based on lawful cause.[54] It is immaterial if the prior contract is a mere contract to sell and does not immediately convey ownership.[55] If it is valid, then it binds the estate to convey the property in accordance with Section 8 of Rule 89 upon full payment of the consideration. Frank Lius contract to sell became valid and effective upon its execution.[56] The seller, Jose Vao, was then alive and thus there was no need for court approval for the immediate effectivity of the contract to sell. In contrast, the execution of the contracts of sale of the Loys took place after the death of the registered owner of the lots. The law requires court approval for the effectivity of the Loys contracts of sale against third parties. The probate court did not validly give this approval since it failed to notify all interested parties of the Loys motion for court approval of the sale. Besides, the probate court had lost jurisdiction over the lots after it approved the earlier sale to Frank Liu. Clearly, Frank Lius contract to sell prevails over the Loys contracts of sale. Whether petitioners are entitled to award of moral damages and attorneys fees. The Court upholds the ruling of the trial and appellate courts that petitioners are not entitled to moral damages. Moral

damages should not enrich a complainant at the expense of the defendant.[57] Likewise, as found by the trial court and the appellate court, there is no basis to award attorneys fees. The policy of the law is to put no premium on the right to litigate.[58] The court may award attorneys fees only in the instances mentioned in Article 2208 of the Civil Code. The award of attorneys fees is the exception rather than the rule.[59] None of the instances mentioned in Article 2208 apply to this case. Conclusion Since the Loys have no contract of sale validly approved by the probate court, while Frank Liu has a contract of sale approved by the probate court in accordance with Section 8 of Rule 89, Lot Nos. 5 and 6 belong to Frank Liu. The Estate of Jose Vao should reimburse the Loys their payments on Lot Nos. 5 and 6, with annual interest at 6% from 4 June 1976, the date of filing of the complaint, until finality of this decision, and 12% thereafter until full payment.[60]

G.R. No. 147029 February 27, 2004 SPOUSES LEONARDO P. DIMACULANGAN and LUZ DIMACULANGAN, SPOUSES NORBERTO M. VILLALUNA and MILAGROS VILLALUNA, ROSAURO K. HERNANDEZ, SPOUSES FLORENTINO C. REYES, JR. and LOLITA REYES, petitioners, vs. VIRGINIA AQUINO ROMASANTA, ROSALINDA A. BALAGTAS, GLORIA A. SANTOS, REBECCA A. LEDESAMA, VALENTINA A. INOCENTES, ROMAN AQUINO, RODOLFO AQUINO and VIOLETA A. FOJAS, substituted by ROYAL MOLUCCAN REALTY HOLDINGS, INC., respondents. CARPIO-MORALES, J.: The present petition for review on certiorari seeks to set aside and nullify the January 31, 2001 decision of the Court of Appeals in CA-GRCV. No. 58048. The antecedents of the case culled from the records are as follows:

1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vao in favor of Alfredo Loy, Jr. and Teresita Loy, respectively.

On November 11, 1954, Roman Aquino, owner of a parcel of land located in San Mateo, Norzagaray, Bulacan, containing 75 hectares, 51 ares and 12 centares and registered in his name under Original Certificate of Title No. 6 issued by the Register of Deeds of Meycauayan, Bulacan, together with his wife Valentina Bernardo Aquino executed a Deed of Absolute Sale covering the land in favor of the spouses Juan and Esperanza Fabella (spouses Fabella or the Fabellas) in consideration of P17,500.00. The real agreement of the parties, however, was one of mortgage to secure the payment of a loan extended by the Fabellas in favor of the Aquinos.

2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. 64522 and 64523 and to issue a new one in the name of petitioner Frank N. Liu;

By virtue of the Deed of Absolute Sale, Juan Fabella was able to transfer the title of the land to his name, under Transfer Certificate of Title (TCT) No. 15770.lawphi1.nêt

3. Ordering the Estate of Jose Vao to reimburse to respondent Loys the amounts paid on Lot Nos. 5 and 6, with interest at 6% per annum from 4 June 1976 until finality of this decision, and 12% per annum thereafter until full payment.

Juan Fabella later sold the land to the siblings Saturnino, Domingo, Raymundo and Rosie D. Liwanag (Liwanag group) in consideration of P40,000.00. TCT No. 15770 was thus cancelled and TCT No. 17592 was in its stead issued in the name of the Liwanag group.

SO ORDERED.

On September 9, 1956, Valentina, on her behalf and in her capacity as administratrix of the estate of her deceased

WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and a new one is RENDERED:

23 husband Roman Aquino, filed before the then Court of First Instance of Bulacan a complaint against the Fabellas for reformation of the Deed of Absolute Sale to Deed of Mortgage, cancellation of TCT Nos. 15770 and 17592, and damages, which complaint was docketed as Civil Case No. 1376-M. Valentina lost no time in causing the annotation of a Notice of Lis Pendens on the Liwanag group’s TCT No. 17592 at the local Registry of Deeds which recorded it as follows: Entry No. 36645;

pesos extended by the defendants ESPERANZA VDA. DE FABELLA to the plaintiff and her deceased husband ROMAN AQUINO, but not a sale of said property to defendant JUAN FABELLA; 4. x x x x 5. That with plaintiffs case already rested and on the basis of the foregoing manifestation and confession of judgment, herein defendants respectfully submit this case for decision. x x x.2 (Emphasis and underscoring supplied)

Kind: Notice of Lis Pendens; Executed in favor of: Valentina Bernardo Vda. de Aquino; Conditions: A complaint has been filed in Court (Civil Case No. 1376, Court of First Instance of Bulacan), affecting the parcel of land herein described and now pending; Date of the Instrument: Oct. 9, 1956; Date of Inscription: Oct. 9, 1956 at 9:40 a.m.

The Liwanag group subsequently filed on November 21, 1968 a Manifestation stating that the "confession of judgment [contained in the partly quoted Manifestation of the Fabellas] appears to have been executed under oath by defendants alone and does not show whether the same was prepared and filed with the assistance and/or consent of their counsel as the latter has no signature thereon," hence, its [Liwanag group] filing of a Manifestation "in order to insure whether the confession of judgment was prepared and filed [by the Fabellas] knowing the full meaning of the same, to afford the intervenor [Liwanag group] opportunity to amend [its] pleadings in accordance therewith; and to determine whether [the Fabellas] may be proceeded against for violation of the provisions of the Revised Penal Code."3

the case for the intervenor without submission of any evidence inasmuch as the defendant Esperanza Vda. de Fabella had confessed judgment as of July 2, 1968 in favor of intervenor Liwanag in the amount of P15,000.00." The trial court concluded its order by stating that "if no request to submit memorandum is received, within ten days from receipt hereof, the case will be deemed submitted for decision." About four years later or on October 18, 1976, the trial court, under a new presiding judge,8 issued an order calling the parties to an annual conference and setting the same to November 13, 1976. The parties, however, failed to appear at said scheduled conference of November 13, 1976, drawing the trial court to, on even date, consider them as lacking interest "to proceed with this case."9 The trial court thereupon ordered the case dismissed "for failure to prosecute." Before the court adjourned its session, the counsel of Valentina arrived and verbally moved to reconsider the order of dismissal. The trial court thereafter issued the following order:

In the meantime or on August 24, 1972, Valentina died.6

After the case was ordered dismissed for failure of the parties and their counsels to appear and before the Court adjourned its session, Atty. Arsenio L. Cabrera came in to move for a reconsideration of the order of dismissal. Considering this has been pending for twenty (20) years and the Court is now busy trying other cases, the Court believes that the movant should better be given ten (10) days from today to submit his written motion for reconsideration stating therein the history of the case and the reason why the order of dismissal should be set aside. A copy of such motion should be furnished the defendants who shall have five (5) days from receipt of a copy thereof to reply thereto, if they so desire and thereafter, the motion for reconsideration shall be submitted for resolution.[10] (Emphasis supplied)

By Order of August 31, 1972, the trial court reconsidered the February 22, 1972 order dismissing the case.

It appears, however, that no written motion reconsideration was ever filed by Valentina’s counsel.

By Order of October 31, 1972, the trial court, under a new presiding judge,7 noted that during the hearing of the case on October 26, 1972, "only Camalayan, for the office of K. V. Faylona, appeared and manifested that he was submitting

In the meantime, the Liwanag group offered to sell the property to herein petitioners spouses Leonardo and Luz Dimaculangan, et al. Upon noting the notice of lis pendens annotated on the Liwanag group’s TCT No. 17592, petitioners

xxx1 The Liwanag group moved to intervene in Civil Case No. 1376-M which was granted by the trial court on March 4, 1961.

On October 31, 1971, Valentina filed a "Motion to Render Judgment," which was set for hearing on February 22, 1972 on which latter date, however, the parties failed to appear despite notice, prompting the trial court4 to dismiss the case.5

After Valentina rested her case in court, the defendants Fabellas, instead of presenting evidence, filed a Manifestation dated July 17, 1968, the pertinent portion of which reads:

Both Valentina and the Liwanag group moved to reconsider the dismissal order.

2. x x x x 3. That however, in fairness to the plaintiff, herein defendants confirm plaintiffs testimony to the effect, among others, that the true intention and real agreement between her and herein defendants with respect to the property in litigation has always been one of mortgage to secure the payment of the original consolidated loan of P16,500.00

for

24 imposed the condition that such annotation must first be cancelled before they consider the offer.11

No. 0923146, issued on June 1, 1978. (Emphasis and underscoring supplied)

Lawyer-real estate broker Florentino Reyes, Jr., one of herein petitioners, thereafter helped 12 the Liwanag group secure a certification13 dated January 27, 1977, issued by one "Spl. Deputy Clerk" Serafin R. Santos, who appears to have been a court interpreter of the Court of First Instance of Bulacan, Branch I, reading:

On August 10, 1978, the Liwanag group executed a Deed of Absolute Sale16 covering the land in favor of petitioners.

This is to certify that the Order issued by this Court on November 13, 1976 [dismissing] Civil Case No. 1376-M, entitled VALENTINA BERNARDO DE AQUINO, Versus ESPERANZA VDA. DE FABELLA. et al., SATURNINO LIWANAG, et al., Intervenors, is already final and executory.

On February 16, 1983, the Aquino children (respondentsheirs of Valentina) filed a motion to set aside the order of dismissal issued on November 13, 1976 (for failure of the parties to appear for the annual conference) at Branch 8 of the now Regional Trial Court where the case was eventually lodged, anchored on the following grounds:

Issued upon request of Rosie D. Liwanag of 1167 Antipolo cor. J.A. Santos, Tondo, Manila for all legal intents and purposes. (Emphasis and underscoring supplied) On the basis of the above-mentioned certification, the following entry was annotated on TCT No. T-17592: Entry No. 3629 (M). Kind: Order of the Court of First Instance of Bulacan, Branch I, dismissing Civil Case No. 1376-M, VALENTINA BERNARDO DE AQUINO versus ESPERANZA VDA. DE FABELLA, Defendants, for failure to prosecute, which Order has become final and executory as per Certificate of the Deputy Clerk of Court dated January 27, 1977, copies of which are on file with this Office. Date of Instrument: November 13, 1976; Date of Inscription: January 27, 1977 at 10:40 a.m.14 On June 1, 1978, the Registry of Deeds of Meycauayan, Bulacan issued the following certification:15 This is to certify that according to the records available in this Office, the original of Transfer Certificate of Title No. T-17592 (T-2942 (m), Bulacan Registry, (Meycauayan Branch), is complete and intact; and that there are no liens and/or encumbrance appearing at the time of the issuance of this certificate. Issued at the request of Mr. Domingo Liwanag. of Tondo Manila, who paid the certification fee of P3.00 under O.R.

TCT No. T-17592 was thus cancelled on August 11, 1978 and TCT No. T-1702-P was in its stead issued in the name of petitioners.17

xxx 7. That, the apparent reason as to why Atty. Arsenio M. Cabrera, counsel for plaintiff Valentina B. Vda. de Aquino, was not so able to file his promised Motion to Set Aside Order of Dismissal, was that plaintiff had already died as evidenced by her Certificate of Death, certifying that she died on AUGUST 24, 1972, EXHIBIT "A" of Motion for Substitution of plaintiff, and for which reasons, she was unable to appear anymore on November 13, 1976 when so called for conference by then Honorable Fidel L. Purisima, on which date the above-entitled case was ordered dismissed for failure to prosecute; 8. That, plaintiffs now most respectfully submit that the then plaintiff Valentina B. de Aquino had already prosecuted her case, duly submitted and closed her case and it was then for the defendants and intervenors to present their evidence, which by reason of technicalities of the law and dilatory tactics resorted to by said defendants and intervenors, the above-entitled case had up to the present remained pending; 9. That, it is further respectfully submitted that Sec. 6 of Rule 22 of the Rules of Court refers to annual conference on pending cases, and with due respect to this Honorable Court, the said conference is a matter of an administrative ways and means in order to justifiable termination of all cases pending before courts of justice and does not become a ground for

dismissal of any case on the basis of parties’ and counsels’ non-appearance in said conference. x x x"18 (Emphasis and underscoring supplied) The motion was denied by Order of June 7, 1983. Respondents-heirs of Valentina filed a Motion for Reconsideration of said June 7, 1983 Order which was, by Order of August 26, 1986, by again a new presiding judge,19 granted on the ground that respondents-heirs of Valentina did not fail to prosecute the case.20 Said the trial court: First for reconsideration is the issue of whether the dismissal done in open court by then Judge Purisima has ever become final. Nowhere in the record does it show that the motion for its reconsideration interposed immediately after the dismissal has been resolved. It is true that counsel for the plaintiffs failed to file within the extended time the formal motion as required by then Judge Purisima in his order, but after a scrutinizing second look at the circumstances, the court now believes that such failure should not be held to have resulted in the cancellation or withdrawal of the standing verbal motion. A careful perusal of said order reveals that it was not meant to disregard the oral motion but to afford the then presiding judge, who was still unfamiliar with the progress of the case, the opportunity to be better apprised of its history and development. Proof enough that the judge needed a briefing is the fact that he dismissed the case "for failure to prosecute" when the voluminous record shows that there had already been several incidents, and in fact, trial, particularly the presentation of evidence by the plaintiff, and the confession of judgment by the defendant, had taken place before he became a judge of this court. In fact, the record reveals that the plaintiff has submitted an unusual bulk of documentary evidence consisting of thirty-nine (39) exhibits ("A" to "Z" to "AA-1").21 (Emphasis and underscoring supplied) On the merits of respondents-heirs of Valentina’s Motion for Reconsideration of the November 13, 1976 Order of dismissal, the trial court held: And now to the merits of the oft-repeated verbal motion for reconsideration. With respect to the question of whether it is in order for the substituting plaintiffs to suffer dismissal of

25 their case by the mere tardiness of their counsel at the conference set on November 13, 1976, it should be emphasized that this conference was called under Section 6 of Rule 22 of the Rules of Court, which reads: Sec. 6. Annual Conference on pending cases. -At the end of one year from the day the trial proper has commenced, and every year thereafter, if the trial has not been terminated, the judge shall call the parties and their counsel to a conference to devise ways and means of terminating the trial. A statement of the result of the conference, signed by the judge and counsel, shall be attached to the record, showing the reason why the trial has not terminated, number and names of witnesses yet to be presented by the parties; any facts stipulated during the conference; the efforts exerted to settle the case and similar matters. Copy of the statement shall be furnished the Supreme Court and the Secretary of Justice within ten (10) days after such conference.22 The trial court thus disposed: Premises considered, 1) The order of June 7, 1983 denying the motion to set aside is hereby reconsidered in the sense that the order dated November 13, 1976 is deemed not to have become final; 2) The said order of dismissal of November 13, 1976 is hereby reconsidered, since factually, the plaintiffs did not fail to prosecute; and 3) The parties are hereby enjoined to move in the premises within fifteen days from receipt hereof for whatever further proceedings that may now follow in accordance with the rules 23 On October 4, 1988, the trial court, under still another judge,24 finding that the contract between the Aquinos and the Fabellas was one of equitable mortgage, rendered judgment in favor of respondents-heirs of Valentina, the dispositive portion of which reads: WHEREFORE, the Court hereby renders judgment as follows:

1) Declaring the Contract of Deed of Sale dated November 11, 1954, executed by the spouses Roman Aquino and Valentina Bernardo in favor of Juan Fabella over the property covered by Original Certificate of Title No. 6, Registry of Deeds of Bulacan, as an equitable mortgage; 2) Ordering the Register of Deeds of Malolos, Bulacan, to annul and cancel Transfer Certificate of Title No. 15770 in the name of Juan Fabella, and Transfer Certificate of Title No. 17592 in the names of Saturnino D. Liwanag, Domingo D. Liwanag, Raymundo D. Liwanag, and Rosie D. Liwanag, over the property subject matter of this case, and to issue the corresponding title thereon in the names of Spouses Roman Aquino and Valentina Bernardo; 3) Ordering the spouses Roman Aquino and Valentina Bernardo to pay the amount of P40,000.00 to the intervenors as reimbursement of the purchase price of the land subject thereof, with legal interest of 12% per annum from October 1956 until paid, the amount of P12,000.00 as moral and exemplary damages, and P15,000.00 as attorney’s fees, plus expenses of litigation.25 (Emphasis and underscoring supplied) There appears to have been no appeal taken from the abovesaid judgment. Respondents-heirs of Valentina, alleging that when their counsel sought to execute the judgment, he discovered that the Liwanag group had sold the land to petitioners, filed on August 14, 1992 before the RTC of Bulacan a complaint,26 docketed as Civil Case No. 534-M-92, for revocation and annulment of title and reconveyance, against petitioners and the Liwanag group, they alleging that they (said respondentsheirs of Valentina) have been in open, continuous possession and occupation of the land, and that the defendants were in bad faith. In their Answer with compulsory counterclaim,27 petitioners denied that respondents-heirs of Valentina have been in open, continuous possession and occupation of the land, they contending that they were the ones who exercised ownership thereover after they bought it (on August 10, 1978) and have been paying real estate taxes thereon; and that they are innocent purchasers for value of the land

because at the time of the purchase, there were no liens and/or encumbrances annotated on the title. Replying,28 respondents-heirs of Valentina denied the allegations of petitioners, they contending that payment of real estate taxes does not accord petitioners better right to the land; that petitioners were not in good faith and purchasers for value considering that the land has been under litigation for more than 30 years; and that the January 27, 1977 certification issued by the "Spl. Deputy Clerk" that the November 13, 1976 dismissal order of the trial court had become final and executory should have necessarily put petitioners on guard and prompted them to determine the actual status of the land. Claiming res judicata, the Liwanag group filed a motion to dismiss29 the case, inviting attention to a portion of the decision rendered in Civil Case No. 1376-M reading: xxxx The resolution of this Court to decide this case is not based merely on the desire to give the parties their just due and put an end to a protracted litigation. Rather, it finds support under the assumption that the confession of judgment made by the defendant and concurred in by the plaintiffs and the intervenors with their corresponding rights and obligations is in the form of a compromise agreement. xxxx Defendants (Esperanza Vda. de Fabella, et al.) admit the claim of plaintiffs that the contested document was in fact a mortgage and not a sale, and his liability to the intervenors (Saturnino D. Liwanag, et al.). Plaintiffs, in exchange for having the title of the property reverted to them, will assume the liabilities of defendants to intervenors and also waived their claim for damages. On reimbursement of the purchase price, damages and attorney’s fees without presenting evidences, but will return the title to the plaintiffs. Although no direct confrontation or meeting was held among the parties, it is evident and apparent that there is an agreement to settle the dispute in court. A confession of judgment which is intended to put an end to a litigation is in the nature of a compromise. (Republic vs. Gacuy, L-21416, Dec. 31,

26 1965). CONTRACT OR AGREEMENT, THEREFORE, IS PRESUMED TO HAVE BEEN ENTERED INTO. (Underlining in the original)30 In respondents-heirs of Valentina’s opposition31 to the Liwanag group’s motion to dismiss, they contended that there was no identity of cause of action between Civil Case No. 1376-M and Civil Case No. 534-M-92 as the former involved a reformation of contract while the latter involved the cancellation of title of petitioners due to fraud and bad faith; and that the Liwanag group should not be given the "courtesy" of a liberal interpretation of the Rules since they are the ones to be blamed for this second action as they, in bad faith, sold the land. Petitioners also filed their own motion to dismiss,32 alleging that they are innocent purchasers for value, it having sufficed that a certificate of title on its face is free from all liens and encumbrances, valid and on file with the Register of Deeds at the time of purchase; and that they had been paying the real property taxes thereon under color of a valid title for more than ten (10) years and, therefore, they are deemed to have acquired the land by ordinary prescription, hence the complaint in Civil Case No. 534-M-92 had long prescribed under Article 1134 of the Civil Code. Respondents-heirs of Valentina later filed a motion for admission33 of, to which was attached, their amended complaint,34 alleging that, inter alia., the certification issued by the "Spl. Deputy Clerk" was illegal and improper and had no legal force and effect as he is not a lawyer and no entry of such order appeared in the judgment book; that both petitioners and the Liwanag group concocted the strategy of procuring said certification for they fully knew that at the time of the issuance of the dismissal order, the case was already submitted for decision and there was a pending verbal motion for reconsideration of the same order; and that at the time of purchase by petitioners, the land was still under litigation and the sale should, therefore, have borne the approval of the trial court.

No. 1529 (PD1529) which provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified or cancelled except in a direct proceeding in accordance with law.

taken by respondents [-heirs of Valentina] against the Liwanag group has not yet prescribed,"39 partially reconsidered its decision by Order of August 20, 1997. In partially reconsidering its decision, the trial court held:

As defined in the trial court’s Pre-trial Order, the following issues were raised:36

As the Court has found and still finds clear from the evidence presented, it was the group of the sellers, the defendant Liwanags, who defrauded the plaintiffs and apparently misled defendant Dimaculangans. et al., as their innocent buyers, into believing that the case against them by plaintiffs had indeed been already terminated for good, as attested to by the certification of the finality of the dismissal order. The truth, however, and these defendant Dimaculangans knew about it all along, is that they had no right to sell the property to anyone, because the court then trying plaintiffs’ complaint against them had already declared that plaintiffs had a better right to the property in question.40

1. Whether or not the Order of the Court dismissing Civil Case No. 1376-[M] for failure to prosecute, dated November 13, 1976, was ever entered in the Judgment Book pursuant to Sec. 9 of Rule 136 of the Rules of Court: 2. Whether or not the certification issued by [Spl. Deputy Clerk] Serafin Santos that the Order of Dismissal of Civil Case No. 1376-[M] had become final and executory was valid; ISSUE: 3. Whether or not the plaintiffs have been in open, adverse, continuous possession and occupation in the concept of owners of the property subject matter of the instant case since the time of Roman Aquino up to the present; ISSUE: Whether the action already prescribed? --- NO!!!!! 4. Whether or not the defendants Dimaculangans, et al., are buyers in good faith and for value;--- NO!!!!! 5. Whether or not moral and exemplary damages as well as attorney’s fees may be awarded to the prevailing party. (Underscoring supplied) Finding petitioners to be buyers in good faith and for value, and the cause of action for damages against the Liwanag group to have prescribed, the trial court, by Decision37 of June 25, 1996, dismissed the complaint "including the counterclaims of both sets of defendants for damages and attorney’s fees which are considered as mere natural consequences of a legitimate litigation not tainted with malice."

The Amended Complaint was admitted. Answering the Amended Complaint,35 petitioners raised prescription and invoked Section 48 of Presidential Decree

On respondents-heirs of Valentina’s motion for reconsideration, the trial court,38 holding that "it is more in accord with justice and equity to rule x x x [that] the action

The trial court accordingly disposed as follows: WHEREFORE, conformably with all the foregoing, the Decision of the Court dated June 25, 1996, is hereby partially reconsidered and modified with the judgment ordering defendants Saturnino D. Liwanag, Domingo D. Liwanag, Raymundo D. Liwanag, Rosie D Liwanag. and/or their respective lawful heirs in case of death, to pay, jointly and severally, the herein plaintiffs the amount of P5,000,000.00 as damages[,] including actual, moral, exemplary, and attorney’s fees. The dismissal of the case against defendant Dimaculangans, et al.. including the counterclaims, remains, still without pronouncement as to costs.41 (Underscoring supplied) Respondents-heirs of Valentina and the Liwanag group appealed to the Court of Appeals. During the pendency of the appeal or on February 15, 2000, the Court of Appeals approved the sale of the rights and interests of respondents-heirs of Valentina to Royal Moluccan Realty Holdings, Inc. and granted the motion for substitution of parties.

27 By its challenged decision,42 the Court of Appeals, finding petitioners not to be innocent purchasers for value, modified that of the trial court, disposing as follows: WHEREFORE, premises considered, the Decision dated June 25, 1996 as modified by the Order dated August 20, 1997 is further MODIFIED. Transfer Certificate of Title No. T-1702 P(M) issued in the names of Sps. Leonardo and Luz Dimaculangan, Sps. Norberto and Milagros Villaluna, Rosauro Hernandez and Sps. Florentino and Lolita Reyes, Jr.. is hereby declared NULL and VOID, and the Register of Deeds of Bulacan is ORDERED to issue a new Transfer Certificate of Title to Royal Moluccan Realty Holdings, Inc.. The award of P5,000,000.00 as damages and attorney’s fees being excessive is likewise reduced to P50,000.00. Costs against the LIWANAG GROUP. Hence, the present petition by petitioners Dimaculangan et al. raising the following issues: A. WHETHER OR NOT THE COURT OF APPEALS RADICALLY DEPARTED FROM JURISPRUDENCE IN HOLDING THAT PETITIONERS ARE INNOCENT PURCHASERS FOR VALUE OF THE SUBJECT PROPERTY[;] B. WHETHER OR NOT THE COURT OF APPEALS ACTED CONTRARY TO LAW AND JURISPRUDENCE IN REJECTING THE PETITIONERS’ ARGUMENT OF PRESCRIPTION AND LACHES[; and] C. WHETHER OR NOT THE COURT OF APPEALS ACTED CONTRARY TO LAW, JURISPRUDENCE AND DEVIATED FROM ACCEPTED STANDARDS IN APPLYING THE DOCTRINE OF CONCLUSIVENESS OF JUDGMENT TO PETITIONERS DESPITE THEIR BEING INNOCENT PURCHASERS FOR VALUE. In holding that petitioners were not innocent purchasers for value, the Court of Appeals rationalized: In the case at bar, it is undisputed that defendant-appellee Florentino C. Reyes, Jr., one of the co-owners of the lot subject of this case, the others being Spouses Leonardo P. Dimaculangan x x x , was the lawyer and broker in the negotiations for the purchase of the lot from appellees LIWANAG GROUP. As broker and agent of the LIWANAG

GROUP and as lawyer, consultant and broker of Leonardo Dimaculangan, et al., it cannot be doubted that Atty. Reyes was very much aware of Civil Case No. 1376-M involving the same land subject of the negotiations between the LIWANAG GROUP and the DIMACULANGAN GROUP, to wit: xxx From the foregoing admissions of Florentino C. Reyes, Jr., it can be inferred that he went over the records of Civil Case No. 1376-M. Presumably, he read and went over the major pleadings of the parties, the orders in said Civil case No. 1376-M and the transcripts and minutes of the proceedings. And, assuming that Atty. Reyes did not go over the case records of Civil Case No. 1376-M by reason of the November 13, 1976 Order of Dismissal, such failure or refusal to verify the actual status of the case when such knowledge of the dismissal order should put him to possible defects of the title of the LIWANAGs will not make him and the rest of the DIMACULANGAN GROUP innocent purchasers in good faith if afterwards it turns out that such title is actually defective. The purchasers, DIMACULANGAN GROUP, by the carry over of the notice of lis pendens from TCT No. 15770 registered in the name of Juan Fabella and Esperanza to the title of LIWANAGs should have been put on guard of the legality and validity of the title of the LIWANAGs since the case dates back to the title of the predecessors-in-interest of the LIWANAGs and therefore, the title of the LIWANAGs were issued even during the pendency of Civil Case No. 1376-M. Moreover, as lawyer and as broker of the proposed seller and the proposed buyer, Atty. Reyes should have conducted a thorough research and investigation of the title and rights of LIWANAG. More so that the order of dismissal was made under Rule 22 which is not a judgment on the merits. Wellestablished is the rule that a purchaser who has knowledge of the facts should put him into inquiry and investigation as to possible defects of the title of the vendor and fails to make such inquiry and investigation cannot claim that he is purchaser in good faith. Knowledge of prior transfer of registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the later instrument of conveyance which was registered in the Registry of Property.43 (Citations omitted)

Petitioners contend that there is nothing in the testimony of Atty. Reyes, or any other witness, to support the conclusion of the Court of Appeals that Atty. Reyes acted as counsel for the petitioners and/or for the Liwanag group in the negotiations for the purchase of the land, for while he testified that he was the only lawyer in the group, it does not follow that he acted as lawyer in the consummation of the sale. Petitioners also claim that no bad faith can be imputed to Atty. Reyes in proceeding with the sale as he was armed with the dismissal order of Civil Case No. 1376-M and the certification of finality thereof issued by the "Spl. Deputy Clerk." Invoking the ruling in Maneclang v. Baun,44 petitioners contend that it was not incumbent upon them to go beyond the order of dismissal, otherwise, as Maneclang held, no order of any court can be relied upon by the parties. In Centeno v. Court of Appeals,45 this Court ruled: Well settled is the rule that all persons dealing with property covered by Torrens certificate of title are not required to go beyond what appears on the face of the title. When there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance therein, the purchaser is not required to explore further than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. (Underscoring supplied) In the present case, although at the time of purchase by petitioners, the notice of lis pendens annotated on the Liwanag groups title was already cancelled by a subsequent annotation, they were put ‘on notice of a litigation involving the land as the title of the Liwanag group bore the said annotations as in fact they even imposed as a condition before purchasing the property the cancellation thereof. Even if petitioners were issued the certification, they should have been put on guard as to the possibility of the existence of any defect or flaw therein since it did not mention that the judgment was entered in the book of entries of judgments as required by the Rules of Court,46 knowledge or awareness of

28 which by petitioner Atty. Reyes, a member of the legal profession, was expected. As held in Egao v. Court of Appeals:[47]

Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering,

Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility of the existence of a defect in his vendor’s title, and relying on the belief that there was no defect in the title of the vendor, purchases the property without making any further investigation, he cannot claim that he is a purchaser in good faith for value.

Petitioners argue that if the action for reconveyance is based on fraud, it prescribes in four (4) years from discovery thereof, and if it is based on the existence of a constructive trust, it prescribes in ten (10) years from the date of its creation. In both cases, petitioners continue, discovery of fraud and the creation of the trust are deemed to have taken place at the time of registration, they citing Buenaventura v. Court of Appeals [49] and Millena v. Court of Appeals. [50] They conclude that as the instant case was filed by respondents-heirs of Valentina on August 14, 1992 or fourteen (14) years after the title of petitioners were registered, the action had already prescribed. Petitioners’ thesis does not persuade.

In ruling out prescription of respondents-heirs of Valentina’s cause of action, the Court of Appeals declared: As discussed earlier, the date of registration of the title to the names of the DIMACULANGAN GROUP on August 11, 1978 cannot be the date when the ten (10) year prescription should be reckoned because on that date, Civil Case No. 1376-M was still pending as per the Ligot-Telan Order. Moreover, it was only on October 4, 1989 when Civil Case No. 1376-M was finally decided by Judge Valentin Cruz in their favor and that the instant suit was filed on August 14, 1992 or only three (3) years since then. Therefore, in view of such fact, the present case has not yet prescribed in the same manner that the principle of laches cannot also be applied, for it was only when they tried to execute the final judgment in Civil Case No. 1376-M that they discovered that the property was already sold to the DIMACULANGAN GROUP. The provision therefore that an action for reconveyance of real property resulting from fraud prescribes in four (4) years from the discovery of fraud or that an action based on implied constructive trust prescribes in ten (10) years cannot be applied in the case at bar based on attendant circumstances above stated.48 (Underscoring supplied)

With the annotation of lis pendens on the spouses Fabellas’ title, which annotation was subsequently carried over to the title issued to the Liwanag group, respondents-heirs of Valentina were assured that their rights would be protected regardless of how many times ownership of the land is transferred since the annotation would always be carried over to subsequent titles. As Civil Case No. 1376-M was terminated only in 1988, respondents-heirs of Valentina had the right to believe that it was only at such time that the notice of lis pendens would be cancelled and any transfer of the subject property before 1988 would always be subject to the notice of lis pendens.

Petitioners submit that the above ruling is contrary to Section 52 of PD 1529 which reads:

Since the cancellation of the Fabellas’ title while the litigation remained pending did not cancel the notice of lis pendens as it was carried over to the subsequent titles of the Liwanag group, to consider the prescriptive period to have run from the registration of petitioners’ title would result to manifest injustice to respondents-heirs of Valentina. It bears emphasis that the rules on prescription and constructive notice are intended to prevent, not cause, injustice.

SECTION 52. Constructive notice upon registration. - Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of

The Liwanag group’s submission in its Comment to the petition at bar that it cannot be considered guilty of fraud in the absence of supporting evidence; and that the trial court’s dismissal order in Civil Case No. 1376-M, together with the

certification as to its finality and the records of the Register of Deeds, led them to entertain the honest belief that it was already free to sell the land, does not lie. For it knew that its predecessors, the spouses Fabella, were not the owners of the land as they were just mortgagees. WHEREFORE, the petition is hereby DENIED. SO ORDERED. G.R. No. 202414 June 4, 2014 JOSEPHINE WEE, Petitioner, vs. FELICIDAD MARDO, Respondent. MENDOZA, J.: This is a petition for review on certiorari under Rule 45 assailing the June 26, 2012 Decision of the Court of Appeals (CA), which reversed and set aside the September 4, 2009 Decision of the Regional Trial Court, Branch XVIII, Tagaytay City, Cavite (RTC), granting petitioner's "Application for Registration of Title." Factual and Procedural Antecedents: Respondent Felicidad Gonzales, married to Leopoldo Mardo, was granted a registered Free Patent No. (IV-2) 15284, dated April 26, 1979, covering Lot No. 8348, situated in Puting Kahoy, Silang, Cavite. On February 1, 1993, respondent allegedly conveyed to petitioner, Josephine Wee, through a Deed of Absolute Sale,1 a portion of Lot No. 8348 known as Lot No. 8348-B, for a consideration of ₱250,000.00 which was fully paid. Respondent, however, refused to vacate and turn over the subject property claiming that the alleged sale was falsified. On December 22, 1994, petitioner filed an Application for Original Registration of a parcel of land located at Barangay Putting Kahoy, Silang, Cavite, known as Lot No. 8349. Said application was amended on September 19, 1996, this time covering a parcel of land known as Lot 8348-B situated in Barangay Puting Kahoy, Silang, Cavite. Petitioner claimed that she is the owner of the said unregistered land by virtue of a deed of absolute sale.

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

based on the plan and technical description of said land as submitted by the applicant and the Register of Deeds of the Province of Cavite to issue title in her name.

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

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

Thereafter, petitioner completed her presentation of evidence and filed a formal offer which was admitted by the RTC. On June 10, 2003, during the pendency of the case, respondent managed to register the land in her name under Original Certificate of Title (OCT) No. OP-1840. Petitioner filed a Notice of Lis Pendens with the Registry of Deeds of Cavite on May 10, 2005 which was annotated on the title. A "Motion for Leave to File Supplemental Pleading and to Admit Attached Supplemental Complaint for Reconveyance" was filed by petitioner which was denied by the RTC on the ground that a motion for reconveyance was different from an application for registration of title. Consequently, respondent presented her own evidence, through the testimony of her counsel, who testified that the parcel of land subject of the application for registration was the property she bought ten (10) years ago. Respondent, however, did not state from whom she bought it. As proof of her alleged ownership, she presented copies of tax declarations in the absence of any deed of sale in her favor. On September 4, 2009, the RTC rendered a Decision2 granting the application of petitioner. The dispositive portion of said decision reads:

SO ORDERED.

On June 26, 2012, the CA handed down a Judgment3 reversing and setting aside the RTC decision. The decretal portion of the CA decision reads:

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

WHEREFORE, the appeal is GRANTED. The Decision, dated September 4, 2009, of the Regional Trial Court (Branch XVIII) of Tagaytay City, Cavite, in LRC No. TG-647 is SET ASIDE. Accordingly, applicant-appellee’s Application for Original Registration of a parcel of land located at Barangay Putting Kahoy, Silang Cavite, known as Lot No. 8349, Cad. Lot 042118-011719-D of Silang Cadastre, is hereby DENIED. SO ORDERED. The CA held, among others, that petitioner was not able to comply with the requirement of possession and occupation under Sec. 14 (1) of P.D. No. 1529. Her admission that the subject lot was not physically turned over to her due to some objections and oppositions to her title suggested that she was not exercising any acts of dominion over the subject property, an essential element in the requirement of possession and occupation contemplated under Sec. 14 (1) of P.D. No. 1529. A copy of the decision was received by petitioner on July 2, 2012. On August 15, 2012, petitioner filed this subject petition for review challenging the CA decision. Hence, this petition.

WHEREFORE, judgment is hereby rendered granting the applicant, Josephine Wee, as qualified to register the subject land in her name, and the Administrator of LRA is hereby directed to issue the corresponding decree in her name

I.

Moreover, petitioner was denied actual possession of the subject land by circumstances amounting to a fortuitous event. By express provision of Sec. 48(b) of the Public Land Act, such fortuitous event does not affect her vested right to register the property under her name. III. The Court of Appeals likewise seriously erred and ruled contrary to the law and to the evidence in not finding that petitioner’s predecessor-in-interest, respondent Felicidad Mardo, had possession and occupation of the subject parcel of land under a bona fide claim of ownership since June 12, 1945, or earlier. IV. In view of the fact that the validity of the sale of the subject parcel of land to petitioner in 1993 was duly established before the trial court and affirmed by the Court of Appeals and considering further that the registration of the said land under respondents name was fraudulently secured, in order to avoid multiplicity of suits and to put an end to the long pending dispute between the parties, the Court of Appeals should have ordered the reconveyance of the subject parcel of land to the petitioner as its rightful owner.

In advocacy of her petition, petitioner assigns the following ERRORS:

ISSUE: Whether petitioner is entitled of the subject property by virtue of the Deed of Sale?—NO!!!!

30 Petitioner presents the theory that she must be deemed to have been in possession and occupation of the subject property through respondent, her predecessor-in-interest, who after the sale in 1993 and despite demands from her, unexpectedly and unjustifiably continued to occupy the property and refused to turn over physical possession to her. Petitioner argues that it is not necessary that the person in possession should himself be the occupant as the occupancy can be held by another in his name. Moreover, petitioner also seeks reconveyance of the subject property arguing that by virtue of its fraudulent registration, respondent became a trustee of an implied trust for her benefit, as its real owner, having validly acquired the same from respondent through an absolute deed of sale. The Court’s Ruling The petition deserves no merit. P.D. 1529, otherwise known as Property Registration Decree, governs the original registration proceedings of unregistered land. The subject application for original registration was filed pursuant to Sec. 14(1) of PD 1529, which provides the condition necessary for registration. Thus: SEC 14. Who may apply.—The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives: (1) Those who by themselves or through their predecessorsin-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.(Emphasis supplied) Based on these legal parameters, applicants for registration of title under Section 14(1) must sufficiently establish: (1) that the subject land forms part of the disposable and alienable lands of the public domain; (2) that the applicant and his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and

occupation of the same; and (3) that it is under a bona fide claim of ownership since June 12, 1945 or earlier.4 The CA denied the application on the issue of open, continuous, exclusive, and notorious possession and occupation of the subject land. It was of the view that she could not have complied with the requirement of possession and occupation under Sec. 14 (1) of P.D. No. 1529 considering that she had admitted that it was not physically turned over to her. As she was not in actual and physical possession, she could not have exercised any acts of dominion over the subject property which was essential to the requirement of possession and occupation contemplated under Sec. 14 (1) of P.D. No. 1529. A more important consideration, however, is that the subject land is already registered under OCT No. OP-1840 (Patent No. 042118-03-6111) of the Registry of Deeds of Cavite, under the name of respondent Felicidad Gonzales. In the case of Republic vs. Umali,5 this Court ruled that once a patent is registered and the corresponding certificate of title is issued, the land ceases to be part of public domain and becomes private property over which the Director of Lands has neither control nor jurisdiction. A public land patent, when registered in the corresponding Register of Deeds, is a veritable Torrens title, and becomes as indefeasible upon the expiration of one (1) year from the date of issuance thereof. Said title, like one issued pursuant to a judicial decree, is subject to review within one (1) year from the date of the issuance of the patent. This rule is embodied in Section 103 of PD 1529, which provides that: Section 103. Certificates of title pursuant to patents. – Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree. x x x After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree. (Emphasis supplied) Accordingly, respondent’s registered patent in the corresponding Registry of Deeds is a veritable Torrens title and becomes as indefeasible as a Torrens title upon the expiration of one (1) year from the date of its issuance.6

For said reason, the order of the RTC directing the Administrator of LRA to issue a corresponding decree in petitioner’s name is null and void. A land registration court has no jurisdiction to order the registration of land already decreed in the name of another in an earlier land registration case. A second decree for the same land would be null and void, since the principle behind the original registration is to register a parcel of land only once.7 Verily, once a title is registered, as a consequence either of judicial or administrative proceedings, the owner may rest secure, without the necessity of waiting in the portals of the court sitting in the mirador de su casa to avoid the possibility of losing his land.8 The certificate of title cannot be defeated by adverse, open and notorious possession. Neither can it be defeated by prescription. As provided under Sec. 47 of PD 1529, no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. A Certificate of Title Not Subject to Collateral Attack Petitioner argued that the rule on indefeasibility of title does not attach to titles secured by fraud and misrepresentation. In this case, she alleged that the respondent fraudulently registered the subject property under her name after she (respondent) had already sold a portion thereof to her (petitioner). By virtue of the deed of sale, petitioner insists that she is considered to be the real owner of the subject parcel of land. The Court finds no merit in petitioner’s argument. It is settled in this jurisdiction that the issue of the validity of title can only be assailed in an action expressly instituted for such purpose.9 A certificate of title cannot be attacked collaterally. This rule is provided under Section 48 of PD 1529 which states that: SEC. 48. Certificate not subject to collateral attack. ― A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law. (Emphasis supplied)

31 In Lagrosa v. Court of Appeals,10 it was stated that it is a well-known doctrine that the issue as to whether title was procured by falsification or fraud as advanced by petitioner can only be raised in an action expressly instituted for the purpose. A Torrens title can be attacked only for fraud, within one year after the date of the issuance of the decree of registration. Such attack must be direct, and not by a collateral proceeding. The title represented by the certificate cannot be changed, altered, modified, enlarged, or diminished in a collateral proceeding. In this case, the petitioner is contesting the indefeasibility of title on the ground of fraud and misrepresentation. Applying the abovementioned doctrine, even assuming that the petitioner’s allegations are true, the same are considered as collateral attacks, and such must be raised in an action expressly instituted for such purpose and in a proper proceeding. Thus, in Carvajal v. Court of Appeals,11 it was ruled that an application for registration of an already titled land constitutes a collateral attack on the existing title. The title may be challenged only in a proceeding for that purpose, not in an application for registration of a land already registered in the name of another person. After one year from its registration, the title is incontrovertible and is no longer open to review. Remedy of the petitioner is to file a separate proceeding such as an action for specific performance or for reconveyance Petitioner further argues that considering the registration of the said land under respondent’s name was fraudulently secured, in order to avoid multiplicity of suits and to put an end to the long pending dispute between the parties, the courts below should have ordered the reconveyance of the subject land to her as its rightful owner. Petitioner advances the theory that by virtue of the fraudulent registration of a subject property, respondent is a trustee of an implied trust for her benefit, being the real owner of the subject property, as she had validly acquired the same from respondent through an absolute deed of sale.

Petitioner’s argument fails to persuade. The issue of fraudulent alienation raised in the second application for registration of the subject property is collateral attack which should be directly raised in a separate proceeding filed for such purpose. It cannot be entertained in this proceeding. In several cases, the Court has ruled that an attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment or proceeding is nevertheless made as an incident thereof.12 The RTC was, thus, correct in denying petitioner’s "Motion for Leave to File Supplemental Pleading and to Admit Attached Supplemental Complaint For Reconveyance." Allowing it would not have been permissible because the application for original registration of title over a parcel of land already registered is a collateral attack itself. It is settled that an application for registration of a parcel of land already covered by a Torrens title is actually a collateral attack, not permitted under the principle of indefeasibility of a Torrens title.13 Registration, however, does not deprive an aggrieved party of a remedy in law. What cannot be collaterally attacked is the certificate of title and not the title or ownership which is represented by such certificate. Ownership is different from a certificate of title. The fact that a person was able to secure a title in his name did not operate to vest ownership upon him of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein.1âwphi1 It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud: neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real prope1iy may be coowned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.14 The remedy of the petitioner is to file a separate proceeding or action to protect her alleged interest. As she claimed that she bought the subject property for value from the

respondent as evidenced by a deed of sale, she can file an action for specific performance to compel the respondent to comply with her obligation in the alleged deed of sale and/or an action for reconveyance of the property. She can also file an action for rescission. Needless to state, petitioner must prove her entitlement because the respondent claims that the sale was falsified. Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which states that in all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title.15 It is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another's name.16 It does not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner to the rightful owner.17 Reconveyance is always available as long as the property has not passed to an innocent third person for value.18 WHEREFORE, the petition is hereby DENIED, without prejudice to any remedial action by the petitioner to protect her claimed interest. SO ORDERED. G.R. No. 204626 June 9, 2014 PAUL P. GABRIEL, JR., IRENEO C. CALWAG, THOMAS L. TINGGA-AN, and the Heirs of JULIET B. PULKERA, Petitioners, vs. CARMELING CRISOLOGO, Respondent. MENDOZA, J.: Assailed in this petition for review on certiorari under Rule 45 is the June 14, 2012 Decision1 of the Court of Appeals (CA) and its November 14, 2012 Resolution2 which reversed the April 18, 201 1 Decision3 of the Regional Trial Court, Branch 6, Baguio City (RTC), and reinstated the September 15, 2009 Decision4 of the Municipal Trial Court in Cities, Branch 1, Baguio City (MTCC). in Civil Case No. 13209, a complaint for recovery of possession. The Facts

32 Records show that Carmeling Crisologo (Crisologo), represented by her attorney-in-fact, Pedro Isican (Isican), filed her complaint5 for Recovery of Possession and/or Ownership with Damages against Juliet B. Pulkera, Paul P. Gabriel, Ireneo C. Calwag, and Thomas L. Tingga-an (petitioners) before the MTCC. Crisologo alleged, among others, that she was the registered owner of two parcels of land with a total area of approximately 2,000 square meters, described in, and covered by, two (2) certificates of title – Transfer Certificate of Title (TCT)Nos. T-13935 and T-13936;that the properties were covered by an Assessment of Real Property; that the payments of realty taxes on the said properties were updated; that sometime in 2006, she discovered that petitioners unlawfully entered, occupied her properties by stealth, by force and without her prior consent and knowledge, and constructed their houses thereon; that upon discovery of their illegal occupation, her daughter, Atty. Carmelita Crisologo, and Isican personally went to the properties and verbally demanded that petitioners vacate the premises and remove their structures thereon; that the petitioners begged and promised to buy the said properties for 3,500.00 per square meter; that she gave petitioners time to produce the said amount, but they reneged on their promise to buy them; that petitioners refused to vacate the subject properties despite several demands; that the petitioners knew full well that the subject premises they were occupying were titled properties but they insisted on unlawfully holding the same; and that she was unlawfully dispossessed and displaced from the subject properties due to petitioners’ illegal occupation.

Crisologo failed to comply with the conditions provided in Section 1 of P.D. No. 1271 for the validation of said titles, hence, the titles were void; that petitioners had been in open, actual, exclusive, notorious, uninterrupted, and continuous possession of the subject land, in good faith; and that Crisologo was never in prior possession and had no valid title over the subject land.8 MTCC Ruling On September 15, 2009, the MTCC rendered a decision in favor of Crisologo, the dispositive portion of which reads: WHEREFORE, the Court renders JUDGMENT in favor of the plaintiff directing the defendants, their heirs, assigns, representatives and/or any person acting for and in their behalves to: a) Immediately vacate the subject properties, and to demolish/dismantle all their houses and other structures on the properties; should defendants refuse to comply, the plaintiff may demolish/dismantle them at the expense of the defendants; b) Pay reasonable rentals of the use and occupation of the subject properties at Php4,000.00 per month from January 2006 for each of the defendants; c) Pay Php20, 000.00 as attorney’s fees, and d) Costs of litigation. SO ORDERED.

On the other hand, petitioners countered that the titles of Crisologo were products of Civil Registration Case No. 1, Record 211, which were declared void by the Supreme Court in Republic v. Marcos,6 and reiterated in Republic v. Marcos;7 that the said case was later enacted into law, Presidential Decree (P.D.)No. 1271, entitled "An Act Nullifying Decrees of Registration and Certificates of Title within the Baguio Town site Reservation Case No.1, GLRO Record No. 211, pursuant to Act No. 931, as amended, but Considering as Valid Certain Titles of Lands that are Alienable and Disposable Under Certain Conditions and For Other Purposes" which took effect on December 22, 1977; that

The MTCC ruled that Crisologo was the registered owner of the subject parcels of land, who, as such, had declared these properties for taxation purposes since 1969 and regularly paid the realty taxes thereon. It stated that with Crisologo being the owner, petitioners were illegally occupying the land. The MTCC added that petitioners could not question Crisologo’s titles over the subject parcels of land in an ordinary civil action for recovery of possession because such defense was a collateral attack which was prohibited under

P.D. No. 1529, otherwise known as the Property Registration Decree. Thus, it could not inquire into the intrinsic validity of Crisologo’s titles. Ruling of the RTC On April 18, 2011, the RTC reversed and set aside the decision of the MTCC. It was of the view that petitioners’ assertion of the TCTs’ invalidity was not a collateral attack. It cited the rulings in Republic v. Marcos,9 and Republic v. Marcos,10 which perpetually prohibited the reopening of Civil Reservation Case No. 1, LRC Rec. No. 211, and, therefore, the registration of parcels of lands. For said reason, the titles of Crisologo were products of illegal proceedings nullified by this Court. She also failed to comply with the conditions set forth in P.D. No. 1271. Accordingly, the titles were void and the same could not be a legal basis for Crisologo to justify the eviction of petitioners from the subject premises. Having been nullified, these certificates of title ceased to be the best proof of ownership. Ruling of the CA On June 14, 2012, the CA rendered the assailed decision, setting aside the RTC decision and reinstating that of the MTCC. The CA held that Crisologo was entitled to the possession of the subject parcels of land. It explained that her possession was established when she acquired the same by sale sometime in 1967 and when the certificates of title covering the properties were subsequently issued. It added that her payment of realty taxes due on the said properties since 1969 further strengthened her claim of possession. Moreover, her appointment of Isican as administrator of the subject properties and her offer to sell the lots to the petitioners showed that she had control over the same. Accordingly, the CA concluded that Crisologo’s right to remain in possession of the subject lots should be preferred over the petitioners’ possession regardless of the actual condition of her titles. Hence, the petitioners, who used force in occupying her properties, should respect, restore and not disturb her lawful possession of the subject parcels of land.

33 Unsatisfied with the CA decision, the petitioners instituted this petition anchored on the following

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS DISTURBED THE POSSESSION OF HEREIN RESPONDENT BY FORCE.

ASSIGNMENT OF ERRORS (7) (1) THE HONORABLE COURT OFAPPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT RULED THAT RESPONDENT HAS ACTUAL OR WAS IN PRIOR POSSESSION OF THE LANDS INVOLVED CONTRARY TO THE EVIDENCE, THE FACTS AND THE CIRCUMSTANCES OF THIS CASE.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT’SSUPPOSED POSSESSION OVER THE SUBJECT LOTS SHOULD BE PREFERRED DESPITE THE NATURE OR CONDITION OF THE PROPERTY AS PART OF THE PUBLIC DOMAIN.11 Petitioners’ position

(2) THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE PURPORTED EXECUTION AND REGISTRATION OF THE PUBLIC INSTRUMENTS RELATIVE TO THE SALE IN 1967 OF THE SUBJECT LANDS AND THE SUBSEQUENT ISSUANCE OF THE TITLES IN HER NAME ESTABLISH POSSESSION. (3) THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE TAX DECLARATIONS AND RECEIPTS IN THE NAME OF THE RESPONDENT ESTABLISH HER POSSESSION OVER THE SUBJECT LOTS. (4) THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE SUPPOSED APPOINTMENT OF PEDRO ISICAN AS ADMINISTRATOR ESTABLISHES HER POSSESSION OVER THE LANDS IN DISPUTE.

Petitioners aver that Crisologo failed to show documentary or testimonial evidence that she acquired the subject properties by sale or by any other mode of acquisition from its previous owner. Her only bases in claiming them were the titles issued in her name, without a deed of sale. Petitioners further argue that assuming that there was really a sale that took place, its execution and registration cannot establish her right of possession, whether actual or constructive. First, the validity of the subject titles was stricken down by Republic vs. Marcos cases and P.D. No. 1271. Hence, the TCTs could not be sources of legal rights. Second, Crisologo never took actual possession of the subject properties after the alleged sale in 1967. She appointed an administrator over the said property only in 2006. Moreover, petitioners claim that her tax declarations and receipts evidencing payment of taxes cannot prove her possession or ownership over the subject properties without proof of actual possession.

(5) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT IS THE PRESENT POSSESSOR OF THE SUBJECT LANDS REGARDLESS OF THE ACTUAL CONDITION OF HER TITLES, IGNORING THE PRINCIPLE OF STARE DECISIS AND ADHERENCE TO LAW. (6)

Baguio City; that she presented no witnesses to prove her intention to possess the subject lots; that the documents she presented are not reliable because they were issued only in 2008; that no improvements were introduced by her; and that she is guilty of laches due to her inaction to validate her titles. Respondent’s position Crisologo opposes the petition mainly on technical grounds. First, she argues that the supposed representatives of the petitioners who filed this petition and signed the certification on non-forum shopping have no authority to do so. Hence, they have no standing to prosecute because they are not the real parties in interest. Second, she claims that the petitioners failed to furnish the CA a copy of their motion for extension of time to file this petition for review. The Court’s Ruling ISSUE: Whether who between petitioners and respondent Crisologo have a better right of possession over the subject parcel of land?—The Court held the CRISOLOGO has a better right of possession over the subject parcels of land!!!!! The only question that needs to be resolved in this petition is – who between petitioners and respondent Crisologo have a better right of possession over the subject parcels of land. Both contending parties claim that they have a superior possessory right over the disputed lands. After a careful review of the records, the Court holds that Crisologo has a better right of possession over the subject parcels of land. Accion Publiciana: its nature and purpose

Finally, petitioners submit that there are facts and circumstances that militate against her claim of possession. They point out that the titles over the subject properties have no encumbrances or annotations whatsoever; that for more than forty (40) years, the subject lots have not been subjected to any deed, agreement, contract, mortgage or any other property dealings; that the said titles are not validated up to the present as certified by the Register of Deeds of

Also known as accion plenaria de posesion, accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty.

34 The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership. When parties, however, raise the issue of ownership, the court may pass upon the issue to determine who between the parties has the right to possess the property. This adjudication, nonetheless, is not a final and binding determination of the issue of ownership; it is only for the purpose of resolving the issue of possession, where the issue of ownership is inseparably linked to the issue of possession. The adjudication of the issue of ownership, being provisional, is not a bar to an action between the same parties involving title to the property. The adjudication, in short, is not conclusive on the issue of ownership.12 In her complaint, Crisologo prayed that she be declared in prior actual possession of the properties in dispute and that petitioners vacate the same and demolish their houses therein. She alleged, among others, that she was the registered owner of the subject parcels of land and that petitioners unlawfully entered her properties by stealth, force and without her prior consent and knowledge. Clearly, she primarily wanted to recover possession of the subject parcels of land from petitioners. Hence, the case is an accion publiciana. Nonetheless, the petitioners have raised the issue of ownership in their pleadings. They mainly argue that Crisologo’s titles on the subject properties are void and that they have been in open, actual, exclusive, notorious, uninterrupted and continuous possession over the subject properties in good faith. The nullity of the decrees of registration and certificates of titles in Section 1 of P.D. No. 1271 is not absolute Although Section 1 of P.D. No. 127113 invalidated decrees of registration and certificates of title within the Baguio Town site Reservation Case No. 1, GLRO Record No. 211, the nullity, however, is not that sweeping. The said provision expressly states that "all certificates of titles issued on or before July 31, 1973shall be considered valid and the lands covered by them shall be deemed to have been conveyed in fee simple to the registered owners" upon 1) showing proof that the land covered by the subject title is not within any government, public or quasi-public reservation, forest,

military or otherwise, as certified by appropriating government agencies; and 2) compliance by the titleholder with the payment to the Republic of the Philippines of the correct assessed value of the land within the required period. In the case at bench, the records show that the subject parcels of land were registered on August 24, 1967. The titles are, thus, considered valid although subject to the conditions set. But whether or not Crisologo complied with the said conditions would not matter because, this would be a collateral attack on her registered titles, as would be discussed later. At any rate, petitioners, as private individuals, are not the proper parties to question the status of the respondent’s registered titles. Section 6 of P.D. No. 127114 expressly states that the "Solicitor General shall institute such actions or suits as may be necessary to recover possession of lands covered by all void titles not validated under this Decree." The respondent’s certificates of title give her the better right to possess the subject parcels of land It is settled that a Torrens title is evidence of indefeasible title to property in favor of the person in whose name the title appears.1âwphi1 It is conclusive evidence with respect to the ownership of the land described therein. It is also settled that the titleholder is entitled to all the attributes of ownership of the property, including possession. Thus, in Arambulo v. Gungab,15 this Court declared that the "age-old rule is that the person who has a Torrens title over a land is entitled to possession thereof."16 The records show that TCT No. T-1393517 and TCT No. T1393618 bear the name of Carmeling P. Crisologo, as the registered owner. Petitioners do not dispute the fact that she has a Torrens title over the subject parcels of land. The respondent’s Torrens certificates of title are immune from a collateral attack. As a holder of a Torrens certificate of title, the law protects Crisologo from a collateral attack on the same. Section 48 of P.D. No. 1529, otherwise known as the Property Registration

Decree, provides that a certificate of title cannot be the subject of a collateral attack. Thus: SEC. 48. Certificate not subject to collateral attack. – A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law. This rule has been applied in innumerable cases, one of which was Francisco Madrid v. Spouses Mapoy,19 where it was written: Registration of land under the Torrens system, aside from perfecting the title and rendering it indefeasible after the lapse of the period allowed by law, also renders the title immune from collateral attack. A collateral attack transpires when, in another action to obtain a different relief and as an incident of the present action, an attack is made against the judgment granting the title. This manner of attack is to be distinguished from a direct attack against a judgment granting the title, through an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property titled under the judgment had been disposed of. To permit a collateral attack on respondents-plaintiffs' title is to water down the integrity and guaranteed legal indefeasibility of a Torrens title. The petitioners-defendants' attack on the validity of respondents-plaintiffs' title, by claiming that fraud attended its acquisition, is a collateral attack on the title. It is an attack incidental to their quest to defend their possession of the properties in an "accion publiciana," not in a direct action whose main objective is to impugn the validity of the judgment granting the title. This is the attack that possession of a Torrens Title specifically guards against; hence, we cannot entertain, much less accord credit to, the petitionersdefendants' claim of fraud to impugn the validity of the respondents-plaintiffs' title to their property. As the lawful possessor. the respondent has the right to eject the petitioners

35 The Court agrees with the CA that the only question that needs to be resolved in this suit to recover possession is who between the parties is entitled to the physical or material possession of the subject parcels of land. Therefore, the foremost relevant issue that needs to be determined here is simply possession, not ownership. The testimonial and documentary evidence on record prove that Crisologo has a preferred claim of possession over that of petitioners. It cannot be denied that she bought the subject properties from the previous owner in 1967, which was why the transfer certificates of title were subsequently issued in her name. Records further show that she has been paying the realty taxes on the said properties since 1969. She likewise appointed Isican as administrator of the disputed lands. More importantly, there is no question that she offered to sell to petitioners the portions of the subject properties occupied by them. Hence, she deserves to be respected and restored to her lawful possession as provided in Article 539 of the New Civil Code.20 WHEREFORE, the petition is DENIED. SO ORDERED. G.R. No. 163551 July 18, 2011 DATU KIRAM SAMPACO, substituted by HADJI SORAYA S. MACABANDO, Petitioner, vs. HADJI SERAD MINGCA LANTUD, Respondent. PERALTA, J.: This is a petition for review on certiorari of the Court of Appeals’ Decision dated August 15, 2003 in CA-G.R. CV No. 63801 and its Resolution dated May 13, 2004, denying petitioner’s motion for reconsideration. The facts, as stated by the Court of Appeals, are as follows: On September 14, 1984, respondent Hadji Serad Mingca Lantud, the plaintiff in the lower court, filed an action to quiet title with damages1 with the Regional Trial Court (RTC) of Lanao del Sur, Branch 8, Marawi City (trial court), against petitioner Datu Kiram Sampaco (deceased), the defendant in the lower court, who has been substituted by his heirs, represented by Hadji Soraya Sampaco-Macabando.2

Respondent alleged in his Complaint3 that he is the owner in fee simple of a parcel of residential lot located at Marinaut, Marawi City, with an area of 897 square meters covered by Original Certificate of Title (OCT) No. P-658. On August 25, 1984, petitioner Datu Kiram Sampaco, through his daughter Soraya Sampaco-Macabando with several armed men, forcibly and unlawfully entered his property and destroyed the nursery buildings, cabbage seedlings and other improvements therein worth ₱10,000.00. On August 30, 1984, Barangay Captain Hadji Hassan Abato and his councilmen prepared and issued a decision4 in writing stating that petitioner Datu Kiram Sampaco is the owner of the subject parcel of land. Respondent stated that the acts of petitioner and the said decision of the Barangay Captain may cast a cloud over or otherwise prejudice his title. Respondent stated that he and his predecessors-in-interest have been in open, public and exclusive possession of the subject property. He prayed that the acts of petitioner and the decision of Barangay Captain Hadji Hassan Abato and his councilmen be declared invalid, and that petitioner be ordered to pay respondent damages in the amount of ₱10,000.00 and attorney’s fees. In his Answer,5 defendant Datu Kiram Sampaco, petitioner herein, denied the material allegations of the Complaint. Petitioner asserted that he and his predecessors-in-interest are the ones who had been in open, public, continuous, and exclusive possession of the property in dispute. Petitioner alleged that OCT No. P-658 was secured in violation of laws and through fraud, deception and misrepresentation, considering that the subject parcel of land is a residential lot and the title issued is a free patent. Moreover, respondent and his predecessors-in-interest had never taken actual possession or occupied the land under litigation. On the contrary, petitioner has all the evidence of actual possession and ownership of permanent improvements and other plants on the land in dispute. Petitioner filed a counterclaim for actual and moral damages, and attorney's fees for the unfounded complaint and prayed for its dismissal. He also sought the cancellation of respondent’s OCT No. P-658 and the reconveyance of the subject parcel of land.

During the trial, respondent Hadji Lantud testified that he acquired the subject lot from his grandmother, Intumo Pagsidan, a portion thereof from his grandmother’s helper, Totop Malacop, pursuant to a court decision after litigating with him.6 Respondent had been residing on the lot for more than 30 years, applied for a title thereto and was issued OCT No. P-658.7 He paid the corresponding real estate taxes for the land.8 He planted assorted trees and plants on the lot like bananas, jackfruits, coconuts and others.9 He testified that he was not aware of the alleged litigation over the lot before Barangay Captain Hadji Hassan Abato, although he was furnished a copy of the decision.10 On the other hand, petitioner Datu Kiram Sampaco testified that the land under litigation is only a portion of the 1,800 square meters of land that he inherited in 1952 from his father, Datu Sampaco Gubat.11 Since then, he had been in adverse possession and ownership of the subject lot, cultivating and planting trees and plants through his caretaker Hadji Mustapha Macawadib.12 In 1962, he mortgaged the land (1,800 square meters) with the Development Bank of the Philippines, Ozamis branch.13 He declared the land (1,800 square meters) for taxation purposes14 and paid real estate taxes, and adduced in evidence the latest Tax Receipt No. 1756386 dated September 15, 19[9]3.15 Petitioner presented four corroborating witnesses as regards his possession of the subject property. After trial on the merits, the trial court rendered a Decision on March 31, 1999 in favor of petitioner, the dispositive portion of which reads: WHEREFORE, premises considered the court is of the opinion and so holds that the preponderance of evidence is in favor of the defendant and against the plaintiff. Judgment is hereby rendered as follows: 1. Dismissing plaintiff’s complaint for lack of merit; 2. Declaring Original Certificate of Title No. P-658 (Exh. A) null and void and of no legal effect; 3. Declaring the defendant the absolute or true owner and possessor of the land in dispute; and

36 4. Ordering the plaintiff to pay the defendant the sum of ₱10,000.00 for attorney’s fees plus ₱500.00 per appearance.16

2. To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud is confirmed the owner of the parcel of land covered by Original Certificate of Title No. P-658;

The trial court held that the issuance of respondent’s title, OCT No. P-658, was tainted with fraud and irregularities and the title is, therefore, spurious; hence, it is null and void, and without any probative value. The finding of fraud was based on: (1) the Certification issued by Datu Samra Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi City, stating that the data contained in respondent’s title were verified and had no record in the said office; (2) the said Certification was not refuted or rebutted by respondent; (3) while free patents are normally issued for agricultural lands, respondent’s title is a free patent title issued over a residential land as the lot is described in the Complaint as a residential lot; and (4) Yusoph Lumampa, an employee of the local Bureau of Lands, to whom respondent allegedly entrusted the paperwork of the land titling, was not presented as a witness.

3. The defendant-appellee is ordered to pay ₱50,000.00 as attorney’s fees to the plaintiff-appellant; and

Moreover, the trial court stated that respondent failed to establish with competent and credible evidence that he was in prior possession of the subject property. No corroborative witness was presented to further prove his prior possession. On the other hand, the trial court stated that petitioner offered documentary evidence, consisting of a contract of real estate mortgage of the subject property, tax declarations, an official tax receipt, and testimonial evidence to prove that he had been in open, public, continuous, and lawful possession of the subject property in the concept of owner. Respondent appealed the decision of the trial court to the Court of Appeals. On August 15, 2003, the Court of Appeals rendered a Decision reversing the decision of the trial court, the dispositive portion of which reads:

4. Costs against the defendant-appellee.17 Petitioner’s motion for reconsideration was denied by the Court of Appeals in its Resolution18 dated May 13, 2004. The Court of Appeals held that there is no controversy that respondent is a holder of a Torrens title; hence, he is the owner of the subject property. The appellate court stressed that Section 4719 of the Land Registration Act (Act No. 496) provides that the certificate of title covering registered land shall be received as evidence in all courts of the Philippines and shall be conclusive as to all matters stated therein. The Court of Appeals stated that the Torrens title has three attributes: (1) a Torrens title is the best evidence of ownership over registered land and, unless annulled in an appropriate proceeding, the title is conclusive on the issue of ownership; (2) a Torrens title is incontrovertible and indefeasible upon the expiration of one year from the date of the entry of the decree of registration;20 and (3) a Torrens title is not subject to collateral attack.21 The Court of Appeals held that petitioner’s counterclaim filed on October 15, 1984 for cancellation of respondent’s original certificate of title issued on May 22, 1981 was filed beyond the statutory one-year period; hence, petitioner’s title had become indefeasible, and cannot be affected by the decision made by Barangay Captain Hadji Hassan Abato and his councilmen. Moreover, the appellate court held that petitioner’s prayer for the cancellation of respondent’s title, OCT No. P-658, through a counterclaim included in his Answer is a collateral attack, which the law does not allow, citing Cimafranca v. Court of Appeals22 and Natalia Realty Corporation v. Valdez.23

WHEREFORE: 1. The appeal is granted and the appealed judgment is hereby totally REVERSED.

appellate court as it was supported only by testimonial evidence that did not show how (by metes and bounds) and why the property in dispute could not have been the subject of a free patent. The appellate court stated that a mere preponderance of evidence is not adequate to prove fraud;24 it must be established by clear and convincing evidence.

The allegation of fraud in securing OCT No. P-658 on the ground that the property in dispute is a residential lot and not subject of a free patent was not given weight by the

The Court of Appeals also noted that petitioner claimed that the subject property is only part of his larger property. Although petitioner introduced proof of payment of the real estate taxes of the said property, as well as a previous mortgage of the property, petitioner did not show that the disputed property is part of his larger property. Hence, the appellate court stated that under such circumstances, it cannot rule that petitioner owned the land under litigation, since petitioner failed to show that it is part of his larger property. The Court of Appeals did not award actual and moral damages, because respondent failed to prove the amount of any actual damages sustained, and the instances enumerated under Article 2219 of the Civil Code warranting the award of moral damages were not present. However, the Court of Appeals awarded attorney's fees in the amount of ₱50,000.00, considering that respondent was forced to incur expenses to protect his right through the action to quiet title. Petitioner filed this petition raising the following issues: I THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE FACT THAT THE TORRENS TITLE INVOLVED HEREIN WAS ISSUED PURSUANT TO A FREE PATENT WHICH COULD NOT BE VALIDLY ISSUED OVER A PRIVATE LAND. II THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT AS CERTIFIED TO BY THE BUREAU OF LANDS ITSELF NO SUCH FREE PATENT OVER THE SUBJECT LAND WAS ISSUED BY IT; HENCE, SAID FREE PATENT IS SPURIOUS.

37 III THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE TRIAL COURT THAT THE SUBJECT LOT HAD LONG BEEN OWNED, POSSESSED AND CULTIVATED BY THE DEFENDANT (PETITIONER HEREIN) OR HIS PREDECESSORS-ININTEREST SINCE TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.

which can be litigated and decided in land registration proceedings.26 Tax declarations and tax receipts cannot prevail over a certificate of title which is an incontrovertible proof of ownership.27 An original certificate of title issued by the Register of Deeds under an administrative proceeding is as indefeasible as a certificate of title issued under judicial proceedings.28 However, the Court has ruled that indefeasibility of title does not attach to titles secured by fraud and misrepresentation.29

IV THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONER’S COUNTERCLAIM FOR CANCELLATION OF RESPONDENT’S TITLE IS BARRED. V THE COURT OF APPEALS ERRED IN RULING THAT THE COUNTERCLAIM IN THE INSTANT CASE IS A COLLATERAL ATTACK ON RESPONDENT-PLAINTIFF’S TITLE. VI THE COURT OF APPEALS ERRED IN DENYING PETITIONER’S MOTION FOR RECONSIDERATION.25 ISSUE: The main issue is whether or not the Court of Appeals erred in sustaining the validity of OCT No. P-658 and confirming respondent as owner of the property in dispute.--- NO!!!!!! Petitioner contends that the Court of Appeals erred in disregarding the fact that the Torrens title was issued to respondent by virtue of a free patent covering a residential lot that is private land as it has been acquired by petitioner through open, public, continuous and lawful possession of the land in the concept of owner. Petitioner thus prayed for the cancellation of respondent’s title and the reconveyance of the subject property. Hence, the Court of Appeals erred in declaring that the subject lot belongs to respondent. The contention is without merit. The Torrens title is conclusive evidence with respect to the ownership of the land described therein, and other matters

In this case, petitioner alleged in his Answer to respondent’s Complaint in the trial court that respondent’s title, OCT No. P-658, was secured in violation of the law and through fraud, deception and misrepresentation, because the subject parcel of land is a residential lot, which cannot be subject of a free patent, since only agricultural lands are subject of a free patent. The trial court found that "[t]he lot under litigation as clearly described in the complaint is a residential lot and a free patent title thereto cannot validly be issued." This finding was one of the bases for the trial court’s declaration that the issuance of OCT was tainted with fraud and irregularities and is, therefore, spurious; thus, OCT No. P-658 is null and void. It should be pointed out that the allegation in the Complaint that the land is residential was made only by respondent, but the true classification of the disputed land as residential was not shown to have been made by the President, upon recommendation by the Secretary of Environment and Natural Resources, pursuant to Section 9 of Commonwealth Act No. 141, otherwise known as The Public Land Act.30 Hence, the trial court erred in concluding that there was fraud in the issuance of respondent’s free patent title on the ground that it covered residential land based only on the Complaint which stated that the property was residential land when it was not shown that it was the President who classified the disputed property as residential, and OCT No. P-658 itself stated that the free patent title covered agricultural land. It has been stated that at present, not only agricultural lands, but also residential lands, have been made available by recent legislation for acquisition by free patent by any natural born Filipino citizen.31 Nevertheless, the fact is that in this case, the free patent title was granted over agricultural land as stated in OCT No. P-658.

Moreover, petitioner contends in his petition that the Certification32 dated July 24, 1987 issued by Datu Samra I. Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Bureau of Lands, Marawi City, certifying that the data contained in OCT No. P-658 in respondent’s name had no records in the said office, showed that respondent’s Torrens title was spurious. The Court holds that the certification, by itself, is insufficient to prove the alleged fraud. Fraud and misrepresentation, as grounds for cancellation of patent and annulment of title, should never be presumed, but must be proved by clear and convincing evidence, mere preponderance of evidence not being adequate.33 Fraud is a question of fact which must be proved.34 The signatory of the certification, Datu Samra Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi City, was not presented in court to testify on the due issuance of the certification, and to testify on the details of his certification, particularly the reason why the said office had no records of the data contained in OCT No. P-658 or to testify on the fact of fraud, if any. Thus, the Court holds that the evidence on record is insufficient to prove that fraud was committed in the issuance of respondent’s Torrens title. Hence, respondent’s Torrens title is a valid evidence of his ownership of the land in dispute. On the other hand, petitioner claims ownership of the subject lot, which is merely a portion of a larger property (1,800 square meters) that he allegedly inherited from his father in 1952, by virtue of open, public and continuous possession of the land in the concept of owner making it petitioner’s private property. Hence, petitioner prays for reconveyance of the said property. Article 434 of the Civil Code governs an action for reconveyance, thus: Art. 434. In an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant’s claim. Under Article 434 of the Civil Code, to successfully maintain an action to recover the ownership of a real property, the

38 person who claims a better right to it must prove two (2) things: first, the identity of the land claimed; and second, his title thereto.35 In regard to the first requisite, in an accion reinvindicatoria, the person who claims that he has a better right to the property must first fix the identity of the land he is claiming by describing the location, area and boundaries thereof.36 In this case, petitioner claims that the property in dispute is part of his larger property. However, petitioner failed to identify his larger property by providing evidence of the metes and bounds thereof, so that the same may be compared with the technical description contained in the title of respondent, which would have shown whether the disputed property really formed part of petitioner’s larger property. The appellate court correctly held in its Resolution dated May 13, 2004 that petitioner’s claim is solely supported by testimonial evidence, which did not conclusively show the metes and bounds of petitioner’s larger property in relation to the metes and bounds of the disputed property; thus, there is no sufficient evidence on record to support petitioner’s claim that the disputed property is part of his larger property. In regard to the second requisite of title to property, both petitioner and respondent separately claim that they are entitled to ownership of the property by virtue of open, public, continuous and exclusive possession of the same in the concept of owner. Petitioner claims that he inherited the subject property from his father in 1952, while respondent claims that he acquired the property from his grandmother Intumo Pagsidan, a portion thereof from his grandmother’s helper Totop Malacop pursuant to a court decision after litigating with him.37 Respondent has OCT No. P-658 to prove his title to the subject property, while petitioner merely claims that the property is already his private land by virtue of his open, public, continuous possession of the same in the concept of owner. The Court holds that petitioner failed to prove the requisites of reconveyance as he failed to prove the identity of his larger property in relation to the disputed property, and his claim of title by virtue of open, public and continuous possession of the disputed property in the concept of owner

is nebulous in the light of a similar claim by respondent who holds a free patent title over the subject property. As stated in Ybañez v. Intermediate Appellate Court,38 it is relatively easy to declare and claim that one owns and possesses public agricultural land, but it is entirely a different matter to affirmatively declare and to prove before a court of law that one actually possessed and cultivated the entire area to the exclusion of other claimants who stand on equal footing under the Public Land Act (Commonwealth Act No. 141, as amended) as any other pioneering claimants. Further, petitioner contends that the Court of Appeals erred in ruling that petitioner’s counterclaim is time-barred, since the one-year prescriptive period does not apply when the person seeking annulment of title or reconveyance is in possession of the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago.39 Petitioner also contends that the Court of Appeals erred in ruling that the counterclaim in this case is a collateral attack on respondent’s title, citing Cimafranca v. Intermediate Appellate Court.40 Petitioner cites the case of Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago,41 which held that a counterclaim can be considered a direct attack on the title. The Court notes that the case of Cimafranca v. Intermediate Appellate Court,42 cited by the Court of Appeals to support its ruling that the prayer for the cancellation of respondent’s title through a counterclaim included in petitioner’s Answer is a collateral attack on the said title, is inapplicable to this case. In Cimafranca, petitioners therein filed a complaint for Partition and Damages, and respondents therein indirectly attacked the validity of the title involved in their counterclaim. Hence, the Court ruled that a Torrens title cannot be attacked collaterally, and the issue on its validity can be raised only in an action expressly instituted for that purpose. Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, declared that the one-year prescriptive period does not apply when the party seeking annulment of title or reconveyance is in possession of the lot, as well as distinguished a collateral attack under Section 48 of PD No. 1529 from a direct attack, and held that a counterclaim may be considered as a complaint or an

independent action and can be considered a direct attack on the title, thus: The one-year prescriptive period, however, does not apply when the person seeking annulment of title or reconveyance is in possession of the lot. This is because the action partakes of a suit to quiet title which is imprescriptible. In David v. Malay, we held that a person in actual possession of a piece of land under claim of ownership may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, and his undisturbed possession gives him the continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his title. xxxx Section 48 of P.D. 1529, the Property Registration Decree, provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding. An action is an attack on a title when the object of the action is to nullify the title, and thus challenge the judgment or proceeding pursuant to which the title was decreed. The attack is direct when the object of an action is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment or proceeding is nevertheless made as an incident thereof. x x x A counterclaim can be considered a direct attack on the title. In Development Bank of the Philippines v. Court Appeals, we ruled on the validity of a certificate of title despite the fact that the nullity thereof was raised only as a counterclaim. It was held that a counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff.1avvphi1 It stands on the same footing and is to be tested by the same rules as if it were an independent action. x x x43 The above ruling of the court on the definition of collateral attack under Section 48 of P.D. No. 1529 was reiterated in Leyson v. Bontuyan,44 Heirs of Enrique Diaz v. Virata,45 Arangote v. Maglunob,46 and Catores v. Afidchao.47

39 Based on the foregoing, the Court holds that petitioner’s counterclaim for cancellation of respondent’s title is not a collateral attack, but a direct attack on the Torrens title of petitioner. However, the counterclaim seeking for the cancellation of title and reconveyance of the subject property has prescribed as petitioner has not proven actual possession and ownership of the property due to his failure to prove the identity of his larger property that would show that the disputed property is a part thereof, and his claim of title to the subject property by virtue of open, public and continuous possession in the concept of owner is nebulous in the light of a similar claim by respondent who holds a Torrens title to the subject property. Respondent’s original certificate of title was issued on May 22, 1981, while the counterclaim was filed by petitioner on October 15, 1984, which is clearly beyond the one-year prescriptive period. In fine, the Court of Appeals did not err in confirming that respondent is the owner of the parcel of land covered by OCT No. P-658. WHEREFORE, the petition is DENIED. The Court of Appeals’ decision dated August 15, 2003, and its Resolution dated May 13, 2004 in CA-G.R. CV No. 63801, are hereby AFFIRMED. No costs. SO ORDERED. GR No. 77541, Nov 29, 1988 HEIRS OF GREGORIO TENGCO v. HEIRS OF JOSE CORTES, J.: The instant case stemmed from an action to quiet title instituted by the late Victoria L. Vda. de Aliwalas against the Heirs of Gregorio Tengco, the Director of Lands and the Register of Deeds of Pampanga. The facts as found by the Court of First Instance of San Fernando, Pampanga, Branch VI, in Civil Case No. 4308, are as follows:

The evidence adduced by the parties in this case shows that Lot No. 3563 of the Arayat Cadastre was originally a part of the public domain and it was so declared on October 12, 1933 (Exh. "A-2"). Thereafter, Dr. Jose Aliwalas applied with the Bureau of Lands for the issuance of a homestead patent covering this lot. On December 12, 1936, the Director of Lands granted this application and issued in favor of Jose Aliwalas Homestead Patent No. 38588 (Exh. "E"). This patent was duly registered in the Register of Deeds of Pampanga on April 8, 1937 after the corresponding fees thereon were paid (Exhs. "D-5" and "D-6"). On the same day, the Register of Deeds of Pampanga issued OCT No. 159 (Exh. "D") in the name of Jose Aliwalas. From that time on, Dr. Aliwalas paid the corresponding land taxes thereon (Exh. "I", "I-1" to "I25") after having declared the land for taxes (sic) purposes in his name (Exh. "F", "G" and "H"). As owner of this property, Jose Aliwalas, thru his overseer Espiridion Manaul, had this parcel fenced and vegetables were planted in some portions thereof. Other portions were dedicated initially to cattle raising until the last war broke out. After the war, palay was planted on some portions of this land, by the tenants of Jose Aliwalas who gave the owner's share to him, thru his caretaker and overseer Espiridion Manaul. Other seasonal crops were also planted on the land as well as ipil-ipil trees for firewood purposes. There were also planted mango trees which ultimately bore fruit which, were harvested by the caretaker of Aliwalas in this property and who delivered them to Jose Aliwalas until he died in 1962 when the administration and management was assumed by Jose Aliwalas, Jr., a son of Dr. Aliwalas. When the properties left by Dr. Jose Aliwalas were partitioned among his surviving heirs, the lot in question was allotted in favor of the plaintiff Victoria L. Vda. de Aliwalas as indicated in the amended project of partition (Exh. "B") executed by her and her nine children, one of whom is Jose Aliwalas, Jr. After this amended project of partition was approved (Exh. "C") and registered with the Register of Deeds of Pampanga, OCT No. 52526-R (Exh. "A") was issued in the name of the plaintiff on November 14, 1966 (Exh. "A-1"). Thereafter, the tax declaration pertaining to this parcel of land was also

transferred to her name (Exhs. "O", "P" and "A"). She also paid the real estate taxes thereon (Exhs. "N", "N-1" to "N14", Exhs. "R", "R-1" to "R-53"). On the other hand, the evidence further shows that on October 31, 1973, the defendant Ponciano Tengco in representation of the defendants Heirs of Gregorio Tengco filed an application with the Bureau of Lands, thru its District Land Office here in San Fernando, Pampanga. Among other things, he alleged in his application that this parcel of land had been occupied and cultivated originally and continuously thereafter by Gregorio Tengco. After being given due course, this application was approved by the Director of Lands who issued Free Patent No. 557692 covering this lot on February 5, 1974 (Exh. "3" Tengco; Exh. "6", Dir. of Lands). This free patent issued in favor of the Heirs of Gregorio Tengco was predicated on the assumption that the lot still formed part of the public domain and on the findings of the Public Land Inspector Romeo Buenaventura who conducted an investigation thereon and who also reported that the land in question was possessed and occupied by the applicant, Heirs of Gregorio Tengco (Exh. "2"-Tengco and Exh. "5"-Dir. of Lands) who had planted different kinds of trees on the land aside from rice and corn. The defendants Heirs of Gregorio Tengco also adduced evidence tending to show that their late grandfather Gregorio Tengco had occupied this parcel of land exclusively years before the last (sic) and after he died in 1934, his children succeeded him in its possession and enjoying the fruits from the different trees planted thereon, and that the possession of Gregorio Tengco and his successors-in-interest have not been disturbed by anyone including the Aliwalas family. On rebuttal, the plaintiff adduced evidence showing that the pre-war records of the Bureau of Lands pertaining to public land applications were burned during the war as indicated in the certification issued by the Chief of the Records Management Division of the Bureau of Lands. This is to explain why the Bureau has no more record pertaining to the Homestead Patent issued in favor of Jose Aliwalas in 1936 which gave rise to the issuance of OCT No. 159 of the Register of Deeds of Pampanga on April 8, 1937. The

40 certification also attests that what is now found in the files of the Bureau of Lands is Free Patent V-557692 issued on February 5, 1974 in favor of the Heirs of Gregorio Tengco pertaining to Lot No. 3563. [Rollo, pp. 18-20.] On the basis of the evidence, the trial court rendered judgment as follows:

the petitioner filed a reply to private respondent's memorandum, the case was deemed submitted for decision. In their petition the Heirs of Gregorio Tengco have ascribed several errors to the Court of Appeals, which involve mixed questions of fact and law [Rollo, p. 4.] But, as stated in their memorandum, the issues may be limited to the following:

WHEREFORE, and in view of all the foregoing, judgment is hereby rendered: 1. Declaring the herein plaintiff Victoria Vda. de Aliwalas as the true owner of Lot No. 3563 of Arayat Cadastre embraced in TCT No. 52526-R of the Register of Deeds of Pampanga in her name;

(a) Whether or not the court of origin and/or, subsequently, the respondent Honorable Court of Appeals, had jurisdiction to take cognizance of, and pass upon, the instant case;

2. Ordering the Register of Deeds of Pampanga to cancel TCT Nos. 132263-R, 132264--R and 132349-R in the name of Cipriano Tengco, Ponciano Tengco, et al., and Eugenia Tengco, respectively, covering portions of this Lot No. 3563;

ISSUE: (c) Whether or not the private respondents, assuming for the sake of argument, that they have proprietary rights on and to the land in question, have not long lost such rights by laches and/or prescription. -- Title acquired through a homestead patent registered under the Land Registration Act is imprescriptible. Thus, prescription cannot operate against the registered owner!!!!!! [Memorandum for Petitioners, p. 6.]

3. Ordering the herein defendants-Heirs of Gregorio Tengco to vacate the land in question and to pay the amount of P5,000.00 a year to the plaintiff beginning from the year 1974 until the land is vacated by them and turned over to the plaintiff; and 4. Ordering the defendants-Heirs of Gregorio Tengco to pay the plaintiff the sum of P2,000.00 as attorney's fees, plus costs. [Rollo, pp. 17-18.] Dissatisfied with the trial court's judgment, the Heirs of Gregorio Tengco interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 69706. The appellate court, adopting the trial court's findings of fact, affirmed the latter's judgment [Rollo, pp, 17-24.] Petitioners moved for reconsideration but their motion was denied [Rollo, pp. 2526.] Hence, the instant petition. Private respondents filed a comment to the petition, to which petitioners replied. On September 16, 1987, the Court resolved to give due course to the petition and the parties were required to submit their respective memoranda. After

(b) Whether or not the claim or contention of the private respondents will hold true and prosper before a proper forum; and

1. Petitioners contend that the trial court (and, consequently, the Court of Appeals) had no jurisdiction to take cognizance of and pass upon the instant case as private respondents have failed to exhaust administrative remedies. They point out that instead of bringing her case to the Bureau of Lands, Victoria Vda. de Aliwalas went directly to the court. On the other hand, private respondents argue that since a homestead patent and an original certificate of title had already been issued to their predecessor-in-interest, the land had ceased to be part of the public domain and, hence, the Bureau of Lands had no jurisdiction over the controversy. Private respondents add that since an original certificate of title had been issued pursuant to the homestead patent, their title to the property had become conclusive, absolute, indefeasible and imprescriptible. In rebuttal, petitioners contend that private respondents' title had not acquired said qualities as it was derived from a homestead patent. Petitioners advanced the view that only

titles based upon a judicial declaration can be vested with the attributes of conclusiveness, indefeasibility and imprescriptibility. Petitioners' theory is not supported by the jurisprudence on the matter. The rule is well-settled that an original certificate of title issued on the strength of a homestead patent partakes of the nature of a certificate of title issued in a judicial proceeding, as long as the land disposed of is really part of the disposable land of the public domain, and becomes indefeasible and incontrovertible upon the expiration of one year from the date of the promulgation of the order of the Director of Lands for the issuance of the patent [Republic v. Heirs of Carle, 105 Phil. 1227 (1959); Ingaran v. Ramelo, 107 Phil. 498 (1960); Lopez v. Padilla, G.R. No. L-27559, May 18, 1972, 45 SCRA 44.] A homestead patent, once registered under the Land Registration Act, becomes as indefeasible as a Torrens Title [Pamintuan v. San Agustin, 43 Phil. 558 (1922); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v. Oliva, 113 Phil. 144 (1961); Pajomayo v. Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA 676.] The contention of non-exhaustion of administrative remedies, on the theory that the case should have been brought before the Director of Lands, had already been rejected by the Court in earlier decisions. Thus, while the Director of Lands has the power to review homestead patents, he may do so only so long as the land remains part of the public domain and continues to be under his exclusive control; but once the patent is registered and a certificate of title is issued, the land ceases to be a part of public domain and becomes private property over which the Director of Lands has neither control nor jurisdiction [Sumail v. Judge of Court of First Instance, 96 Phil. 946 (1955); Republic v. Heirs of Carle, supra.] 2. Anent the second issue, petitioners contend that petitioners' title to the property was defective for the following reasons: (a) Dr. Jose Aliwalas was not qualified to be a homesteader being a rich landed person; and (b) private respondents and their predecessors-in-interest have never been in actual or physical possession of the property, unlike petitioners and their predecessor-in-interest who have been in continuous and open possession of the property since

41 1918. Thus, petitioners rely on a report prepared by a certain Librado B. Luna, hearing officer of the Bureau of Lands, attesting to such facts [Memorandum for Petitioners, p. 13.] But, as correctly pointed out by the respondent Court of Appeals, Dr. Aliwalas' title to the property having become incontrovertible, such may no longer be collaterally attacked. If indeed there had been any fraud or misrepresentation in obtaining the title, an action for reversion instituted by the Solicitor General would be the proper remedy [Sec. 101, C.A. No. 141; Director of Lands v. Jugado, G.R. No. L-14702, May 21, 1961, 2 SCRA 32; Lopez v. Padilla, supra.]

facts show that plaintiff-appellee and her predecessor-ininterest occupied, possessed and exercised rights of ownership over the subject land prior to the filing of the instant suit. [Rollo, pp. 23-24.] The Court finds no cogent reason to disturb the appellate court's findings, in the absence of a clear showing that the facts have been misapprehended. WHEREFORE, finding no reversible error, the petition is DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 69706 is AFFIRMED.

3. Finally, petitioners contend that private respondents have lost their title to the property through laches and prescription. They assert that private respondents and their predecessors-in-interest have never actually possessed the property while petitioners and their predecessor-in-interest have been in actual, open, uninterrupted and adverse possession of the property since 1918.

SO ORDERED.

But as stated above, title acquired through a homestead patent registered under the Land Registration Act is imprescriptible. Thus, prescription cannot operate against the registered owner.

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, as amended, of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 51081, which affirmed the Decision[2] of the Regional Trial Court of Sorsogon, Branch 51, in Civil Case No. 93-5871.

Moreover, as found by the Court of Appeals: . . . The allegation of defendants-appellants (petitioners herein) that plaintiff-appellee (Victoria L. Vda. de Aliwalas) and her predecessor-in-interest slept on their rights for over 40 years, since 1936 when the patent was issued to Aliwalas is untenable. It has been established that Jose Aliwalas through his overseer Espiridion Manaul planted the subject land to vegetables and raised cattle therein until the last war broke out. After the war, the land was planted with palay, seasonal crops, ipil-ipil trees and mango trees. When Jose Aliwalas died in 1962, the administration and management of the farm was assumed by his son, Jose Aliwalas, Jr. Upon the partition of the properties left by the late Jose Aliwalas, the subject property was allotted to and registered in the name of plaintiff-appellee. It was in 1974 when the defendants-Heirs of Gregorio Tengco wrested possession of the subject land from plaintiff-appellee's caretaker and deprived her of its produce. On October 14, 1976, the plaintiff filed her second amended complaint. The foregoing

G.R. No. 157767 REYNALDO BALOLOY and ADELINA BALOLOY-HIJE, - versus AUSTRIA-MARTINEZ,* September 9, 2004 CALLEJO, SR., J.:

The antecedents are as follows: On May 11, 1993, respondent Alfredo Hular filed a complaint for quieting of title of real property with damages against the children and heirs of Iluminado Baloloy, namely, Anacorita, Antonio, and petitioners Reynaldo and Adelina, all surnamed Baloloy. The respondent alleged, inter alia, in his complaint that his father, Astrologo Hular, was the owner of a parcel of residential land located in Sitio Page, Biriran, Juban, Sorsogon, with an area of 287 square meters, and that such lot was part of Lot No. 3347 of the Juban Cadastre. The respondent alleged that Iluminado Baloloy, the petitioners predecessor-in-interest, was able to secure a Free Patent over the property through fraud on March 1, 1968, on the basis of which the Register of Deeds issued OriginalCertificate of Title (OCT) No. P-16540 in his name. The respondent later discovered that in the cadastral survey of lands in Juban, the property of his father, which actually

consisted of 1,405 square meters was made to form part of Lot No. 3353, the property of Iluminado Baloloy. According to the respondent, even if the residential land was made to form part of Lot No. 3353 registered under the name of Iluminado Baloloy, he had acquired ownership of the property by acquisitive prescription, as he and his predecessors had been in continuous, uninterrupted and open possession of the property in the concept of owners for more than 60 years. The respondent prayed for alternative reliefs that, after due hearing, judgment be rendered in his favor, thus: a) Declaring the plaintiff as the absolute owner of the land in question; b) Ordering the defendants to perpetually refrain from disturbing plaintiff in his peaceful possession in the land in question; c) Ordering the defendants to remove their houses in the land in question, and to declare OCT No. P-16540, and whatever paper, form, document or proceeding the defendants may have, as null and void and without any effect whatsoever as far as the land in question is concerned as they cast cloud upon the title of the plaintiff; d) In the alternative, defendants be ordered to reconvey the title in favor of the plaintiff as far as the land in question is concerned; e) Ordering the defendants to jointly and severally pay the plaintiff the amount of P50,000.00 as moral damages; P5,000.00 as attorneys fee plus P500.00 for every appearance or hearing of his lawyer in court; P1,500.00 as consultation fee; P5,000.00 as incidental litigation expenses; P20,000.00 as exemplary damages; and to pay the costs. Plaintiff further prays for such other relief [as are] just and equitable in the premises.[3]

The Evidence of the Respondent

42 The respondent adduced evidence that the Spouses Lino and Victoriana Estopin were the original owners of a parcel of land located in Barangay Biriran, Juban, Sorsogon, designated as Lot No. 3347 of the Juban Cadastre. A major portion of the property, where a house of strong materials was constructed, was agricultural, while the rest was residential. The respondent also averred that the Spouses Estopin declared the property in their names under Tax Declaration No. 4790. On the north of the agricultural portion of the property was the road leading to Biriran, while north of the residential portion was a creek (canal) and the property of Iluminado. When Lino Estopin died intestate, his widow, Victoriana Lagata, executed a Deed of Absolute Sale[4] on November 11, 1961 over the agricultural portion of Lot No. 3347, which had an area of 15,906 square meters, more or less, in favor of Astrologo Hular, married to Lorenza Hular. Shortly thereafter, on November 25, 1961, Lagata executed a Deed of Absolute Sale[5] over the residential portion of the property with an area of 287 square meters, including the house constructed thereon, in favor of Hular. Hular and his family, including his son, the respondent, then resided in the property. In 1961 or thereabouts, Iluminado asked Hulars permission to construct a house on a portion of Lot No. 3347 near the road, and the latter agreed. In l977, Lorenza Hular, wife of Astrologo, declared the residential land in the latters name under Tax Declaration No. 6841.[6] Earlier, or on August 14, 1945, Irene Griarte had executed a Deed of Absolute Sale over a coconut land located in Barangay Biriran, Juban, with an area of 6,666 square meters in favor of Martiniano Balbedina, with the following boundaries: North, Alejandro Gruta; South, Lino Estopin; East, River Page; West, Pedro Grepal and Esteban Grepal.[7] Subsequently, after a cadastral survey was conducted on lands in Juban, the property of Balbedina was designated as Lot No. 3353, with the following boundaries: North: Lot No. 3353 (portion), Alejandro Gruta; South: Lino Estopin; West: Lot No. 3349; East: creek. A trail was then established between Lot No. 3353 and Lot No. 3347 resulting in the decrease of Lot No. 3353 owned by Balbedina to 4,651 square meters. He declared the property under his name under Tax Declaration No. 191 with the following

boundaries: North: Lot No. 3353 (portion) Alejandro Gruta; South: trail; East: creek; West: Lot No. 3349.[8] On June 4, 1951, Balbedina executed a Deed of Absolute Sale over Lot No. 3353 with an area of only 4,651 square meters in favor of Iluminado.[9] The latter declared the property in his name under Tax Declaration No. 5359.[10] Iluminado filed an application with the Bureau of Lands for a free patent over the entirety of Lot No. 3353 on January 5, 1960.[11] He indicated in his application that the property was not occupied by any person and was disposable or alienable public land. In support thereof, he executed an affidavit wherein he declared that he purchased about one-half portion of the property in 1951 based on a deed of absolute sale attached to said affidavit; that in 1957, he purchased the other one-half portion, but for economic reasons, no deed of sale was executed by the parties. He also alleged that the improvements on the land consisted of coconut trees.[12] The Bureau of Lands processed the application in due course. In the meantime, Iluminado constructed his house on a portion of Lot No. 3353 near the trail (road) leading to Biriran. He and his family, including his children, forthwith resided in said house. On March 1, 1968, the Secretary of Agricultural and Natural Resources approved Iluminados application and issued Free Patent No. 384019 covering Lot No. 3353 with an area of 9,302 square meters, on the basis of which OCT No. P-16540 was thereafter issued by the Register of Deeds on March 1, 1968.[13] On August 2, 1975, Alejandro Gruta had executed a deed of absolute sale over a portion of Lot No. 3353 with an area of 4,651 square meters in favor of Estelito Hije, the husband of petitioner Adelina Baloloy, one of Iluminados children.[14] Before he left for employment in Saudi Arabia in 1979, respondent Hular had his house constructed near the trail (road) on Lot No. 3347, which, however, occupied a big portion of Lot No. 3353.[15]

Iluminado died intestate on November 29, 1985. His widow and their children continued residing in the property, while petitioner Reynaldo Baloloy, one of Iluminados children, later constructed his house near that of his deceased father. When Astrologo died intestate on December 25, 1989, he was survived by his children, Jose, Romeo, Anacleto, Elena, Leo, Teresita, and the respondent, among others,[16] who continued to reside in their house.[17] Sometime in l991, the respondents house helper was cleaning the backyard, but was prevented from doing so by petitioner Adelina Baloloy who claimed that their father Iluminado owned the land where the respondents house was located. To determine the veracity of the claim, the respondent had Lot No. 3353 surveyed by Geodetic Engineer Rodolfo Cunanan on February 16, 1993, in the presence of Balbedina, Antonio Baloloy and petitioner Reynaldo Baloloy. Cunanan prepared a Special Sketch Plan of Lot No. 3353[18] showing that the house of Iluminado was constructed on Lot No. 3353[19] near the road behind the houses owned by Astrologo and Alfredo.[20] The engineer discovered that the residential area deeded by Lagata to Hular had an area of 1,405 square meters, instead of 287 square meters only.[21] In their Answer to the complaint, the heirs of Iluminado Baloloy averred that Iluminados house was built in 1962 on a portion of Lot No. 3353, which the latter purchased from Balbedina, and not on a portion of Lot No. 3347 which Hular purchased from Lagata. They alleged that Hular constructed his house on a portion of Lot No. 3353 after securing the permission of their father Iluminado, and that the respondent had no cause of action for the nullification of Free Patent No. 384019 and OCT No. P-16540 because only the State, through the Office of the Solicitor General, may file a direct action to annul the said patent and title; and even if the respondent was the real party in interest to file the action, such actions had long since prescribed. The heirs of Baloloy prayed that judgment be rendered in their favor, thus: WHEREFORE, it is most respectfully prayed of the Honorable Court to DISMISS this case pursuant to paragraph 15, et seq., hereof, and/or DECIDE it in favor of the defendants by UPHOLDING the sanctity of OCT No. P-16540 and ordering plaintiff to:

43 1. RESPECT defendants proprietary rights and interests on the property in question covered by OCT No. P-16540;

On December 4, 1995, the trial court rendered judgment in favor of the respondent. The fallo of the decision reads:

2. VACATE it at his sole and exclusive expense, and never to set foot on it ever again;

a/ Declaring plaintiff the absolute owner of the land in question, consisting of 1,405 square meters, more or less, and entitled to the peaceful possession thereof;

3. a)

PAY defendants: MORAL DAMAGES at P50,000.00 EACH;

b) ACTUAL DAMAGES and UNREALIZED PROFITS at P1,000.00/MONTH COMPUTED UP TO THE TIME OF PAYMENT PLUS LEGAL RATE OF INTEREST; c)

EXEMPLARY DAMAGES of P50,000.00

d) ATTYS FEES and LITIGATION EXPENSES of P100,000.00; and e)

b/ Ordering the defendants to reconvey the title to the plaintiff as far as the land in question is concerned within fifteen (15) days counted from the finality of the decision, failing in which, the Clerk of Court is hereby ordered to execute the necessary document of reconveyance of the title in favor of the plaintiff after an approved survey plan is made;

THE COSTS OF THIS SUIT.

DEFENDANTS pray for all other reliefs and remedies consistent with law and equity.[22]

c/ Ordering defendants to remove their houses from the land in question at their own expense within fifteen (15) days after the decision has become final; d/ Ordering the defendants to pay jointly and severally plaintiff the amount of P5,000.00 as attorneys fees. P5,000.00 as incidental litigation expenses; e/ To pay the costs.

On appeal, the Court of Appeals rendered judgment affirming the decision of the trial court, and thereafter denied the motion for reconsideration thereof. The Present Petition The petitioners, who are still residing on the subject property, filed their petition for review on certiorari for the reversal of the decision and resolution of the Court of Appeals. The issues for resolution are: (1) whether all the indispensable parties had been impleaded by the respondent in the trial court; (2) whether the said respondent had a cause of action against the petitioners for the nullification of Free Patent No. 384019 and OCT No. P-16540; for reconveyance and for possession of the subject property; and for damages; and ISSUE: (3) whether the respondent had acquired ownership over the property through acquisitive prescription. --- NO!!!!!!!

The Evidence for the Petitioners SO ORDERED.[25] Sometime in 1982, Hular asked permission from Iluminado to construct his house on Lot No. 3353 near the road leading to Biriran. Iluminado agreed, in the presence of his daughter, petitioner Adelina Baloloy. As per the plan of Lot No. 3353 certified by a Director of the Bureau of Lands on November 6, 1961, Lot No. 3353 had an area of 9,302 square meters.[23] As gleaned from the Sketch Plan of Lot Nos. 3347 and 3353 prepared on February 7, 1991 by Geodetic Engineer Salvador Balilo, the houses of the Baloloy siblings and those of Astrologo and Alfredo were located in Lot No. 3353.[24] In the said sketch plan, Lot No. 3353 had an area of 9,302 square meters, while Lot No. 3347 had an area of 15,905 square meters. When apprised of Hulars claim over the property, the petitioners and their co-heirs filed a complaint for unlawful detainer with the Municipal Trial Court of Juban, docketed as Civil Case No. 331. The case was, however, dismissed for lack of jurisdiction.

The trial court ruled that the property subject of the complaint, with an area of 1,405 square meters, was part of Lot No. 3347 which the Spouses Estopin owned, and which they later sold to Astrologo Hular. The trial court also held that Iluminado committed fraud in securing the free patent and the title for the property in question, and that when Victoriana Lagata executed the deed of absolute sale on the residential portion of Lot No. 3347, she did not know that it formed part of Lot No. 3353. It further held that the action of the plaintiff to nullify the title and patent was imprescriptible. The petitioners filed on December 8, 1995 a motion to reopen the case to admit Tax Declaration Nos. 6957 and 4790 covering Lot No. 3347, under the names of Astrologo Hular and Victoriana Lagata, respectively, in which it was declared that Lot No. 3347 was coconut land. The trial court ruled that the motion had been mooted by its decision.

The first issue, while not raised by the parties in the trial court and in the Court of Appeals, is so interwoven with the other issues raised therein and is even decisive of the outcome of this case; hence, such issue must be delved into and resolved by this Court.[26] We note that the action of the respondent in the trial court is for: (a) reinvidicatoria, to declare the respondent the absolute owner of the subject property and its reconveyance to him as a consequence of the nullification of Free Patent No. 384019 and OCT No. P-16540; (b) publiciana, to order the petitioners and the other heirs of Iluminado Baloloy to vacate the property and deliver possession thereof to him; and (c) damages and attorneys fees. It is the contention of the respondent that the subject property was sold by Lagata to his father, Astrologo Hular, in 1961. He adduced evidence that when his parents died intestate, they were survived by their children, the respondent and his siblings Elena, Jose, Romeo, Anacleto,

44 Leo, and Teresita. Article 1078 of the Civil Code provides that where there are two or more heirs, the whole estate of the decedent is, before partition, owned in common by such heirs, subject to the payment of the debts of the deceased. Until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants, joint ownership over the pro indiviso property, in addition to the use and enjoyment of the same. Under Article 487 of the New Civil Code, any of the coowners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reinvidicatory action. A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all.[27] Any judgment of the court in favor of the co-owner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners. If the action is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other coowners who are indispensable parties. In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived their rights over the subject property or conveyed the same to the respondent or such co-owners were aware of the case in the trial court. The trial court rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latters siblings. Patently then, the decision of the trial court is erroneous. Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being co-owners of the property, as parties. The respondent failed to comply with the rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullification of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as party-defendant, any decision of the Court would not be binding on it. It has been held that the absence of an indispensable party in a case

renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment.[28] The absence of the respondents siblings, as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present.[29] Even if we glossed over the procedural lapses of the respondent, we rule that he failed to prove the material allegations of his complaint against the petitioners; and that he is not entitled to the reliefs prayed for. The burden of proof is on the plaintiff to establish his case by the requisite quantum of evidence. If he claims a right granted as created by law or under a contract of sale, he must prove his claim by competent evidence. He must rely on the strength of his own evidence and not on the weakness or absence of the evidence of that of his opponent.[30] He who claims a better right to real estate property must prove not only his ownership of the same but also the identity thereof.[31] In Huy v. Huy,[32] we held that where a property subject of controversy is duly registered under the Torrens system, the presumptive conclusiveness of such title should be given weight and in the absence of strong and compelling evidence to the contrary, the holder thereof should be considered as the owner of the property until his title is nullified or modified in an appropriate ordinary action. A Torrens Certificate is evidence of an indefeasible title to property in favor of the person in whose name appears therein.[33] Such holder is entitled to the possession of the property until his title is nullified. The petitioners aver that Lot No. 3347 owned by the Spouses Estopin was coconut, and not residential, land. The petitioners contend that, under the deed of absolute sale, Victoriana Lagata executed on November 25, 1961 in favor of Astrologo Hular, she sold the residential portion of Lot No. 3347; however, the latter constructed his house on a portion of Lot No. 3353 which Iluminado had purchased from Balbedina, now covered by OCT No. P-16540. The petitioners assert that along with their mother Anacorita and their brother Antonio Baloloy, they constructed their houses on a part of Lot No. 3353, titled in the name of their father Iluminado; hence, they could not be dispossessed of the said

property. The petitioners posit that, whether the house of Hular was constructed on a portion of Lot No. 3353 of the property of Balbedina or Gruta is irrelevant because both properties are now covered by OCT No. P-16540 under the name of Iluminado, their predecessor-in-interest The Court of Appeals ruled that Victoriana Lagata owned the subject property, which turned out to be 1,405 square meters, and sold the same to Hular. In contrast, the RTC declared in its decision that while under the deed of absolute sale executed by Irene Griarte in favor of Balbedina, Lot No. 3353 had an area of 6,666 square meters, Griarte actually owned only 4,651 square meters; a portion of the lot was actually owned by Lino Estopin. Hence, Balbedina sold only 4,651 square meters to Iluminado[34] because he was aware that he owned only 4,651 square meters of the land. It also held that, unknown to Lagata, a portion of Lot No. 3347 was declared as part of Lot No. 3353 when the lands in Juban were surveyed. The trial court concluded that Lagata erroneously declared, under the deed of absolute sale executed on November 25, 1961 in favor of Hular, that the property was part of Lot No. 3347. The trial and appellate courts erred in their decisions. The evidence on record shows that Irene Griarte owned a parcel of land with an area of 6,666 square meters, more or less.[35] When she sold the property to Martiniano Balbedina on August 14, 1945, it was bounded on the south by the property of Lino Estopin. There was no trail yet between the property of Griarte on the south and of Lino Estopin on the north. In the meantime, however, a road (trail) leading to Biriran was established between the property of Balbedina on the south and that of Lino Estopin on the north. Thereafter, a cadastral survey of the lands in Juban was conducted by the Bureau of Lands. The property of Balbedina was designated as a portion of Lot No. 3353, while that of Estopin was designated as Lot No. 3347. The other portion of Lot No. 3353, with an area of 4,561 square meters, belonged to Alejandro Gruta. Because of the construction of the road, the property of Balbedina, which was a part of Lot No. 3353, was reduced to 4,651 square meters. Balbedina declared, under Tax Declaration No. 391, that Lot No. 3353 had an area of 4,651 square meters and was coconut land[36] and that his property was bounded on the south by a trail (road). Lino Estopin declared Lot No. 3347

45 under his name for taxation purposes, in which he stated that his property was bounded on the north by the trail going to Biriran.[37] Clearly, then, Lot No. 3353 and Lot No. 3347 had a common boundary the trail (road) going to Biriran.

A 1941.

Balbedina sold his property, which was a portion of Lot No. 3353, with an area of 4,651 square meters to Iluminado Baloloy on June 4, 1951.[38] Under the deed of absolute sale, the property was bounded on the south by the trail (road) owned by Lino Estopin.[39] The English translation of the deed of sale attached as page 85 to the RTC Records, which both the trial court and the appellate court relied upon, is incorrect.

A That was very long time when Lino Estopin sold the property.

The original deed of absolute sale, which is in Spanish, states that the boundary of the property on the south is con camino, Lino Estopin, while the English version of the deed, indicates that the property is bounded on the south by Lino Estopin. Being an earlier document, the deed in Spanish signed by the parties therefore should prevail. Conformably to such deed, Iluminado Baloloy declared in Tax Declaration No. 5359 under his name that the property is bounded on the south by a trail,[40] and not by Lot No. 3347 owned by Lino Estopin.

Q From whom?

The respondent failed to adduce any documentary evidence to prove how the Spouses Estopin acquired the disputed property. The respondents reliance on the testimonies of Melissa Estopin, the daughter of the Spouses Estopin, and on Porfirio Guamos as well as the May 8, 1993 Affidavit of Martiniano Balbedina, and the deed of sale executed by Victoriana Lagata on November 27, 1961 in favor of Astrologo Hular to corroborate his claim over the lot in question, is misplaced.

A No, Sir.

Q And you said that Lino Estopin was able to acquire the land by purchase?

Q My question is whether you know because you testified earlier that Lino Estopin was able to acquire the land by purchase; do you confirm that? A Yes, Sir.

Q That is why, why are you insisting when you did not see a document? A Well, during the sale that document was used. Q How was it used when you did not see that document? A When the deed of sale was executed I did not see the document, but I insist there was a document. Q Thats why, how were you able to say before the court that there was a document when you contend that you did not see any?

A From Irene Griarte.

A There was basis in the sale the sale was based on a document. You cannot sell a property without document? (sic)

Q Were you present when that sale was consummated?

Q Is that your belief?

A I was not there.

A Yes, Sir.

Q So you do not know how much was it bought by Lino Estopin from Irene Griarte?

Q But you did not see any document? Atty. Diesta:

First. Per the testimony of Porfirio Guamos, the witness of the respondent, Lino Estopin purchased the disputed property in 1941 from Irene Griarte and insisted that there was a deed of sale evidencing the sale:

Already answered. Q You do not know whether a document to that effect was actually drafted and executed?

Witness:

A There was.

A I did not see.

Q Have you seen the document?

Atty. Dealca:

A I did not see but there was a document.

Q You said that that document was used when the property was sold by Lino Estopin to Alfredo Hular. . .

Q You maintain there was a document but you did not see a document, is that it? A In my belief there was a document.

Atty. Dealca: Q The area of the land in question is 1,405 sq. m., you claim that way back in 1944 the owner of the land was Lino Estopin; 41 to 44?

Q In your belief, how did you organize that belief when you did not see a document? A I insist there was a document.

A In 1961. Yes.[41] However, the respondent failed to adduce in evidence the said deed or even an authentic copy thereof. The respondent did not offer any justification for his failure to adduce the same in evidence. As against the respondents verbal claim that his father acquired the property from Lagata, the Torrens title of Iluminado Baloloy must prevail.[42]

46 Second. The respondent even failed to adduce in evidence any tax declarations over the disputed property under the name of Irene Griarte and/or Lino Estopin, or realty tax payment receipts in their names from 1941 to November 1961. The documents are circumstantial evidence to prove that Irene Griarte claimed ownership over the disputed property and that Lino Estopin acquired the same from her. After all, such tax declarations and tax receipts can be strong evidence of ownership of land when accompanied by possession for a period sufficient for acquisitive prescription.[43] Third. The respondent even failed to adduce in evidence Tax Declaration No. 4790 covering the two parcels of land under the name of Lino Estopin to prove his claim that Lot No. 3347 consisted of agricultural and residential lands. We note that the petitioners appended a certified true copy of Tax Declaration No. 4790 under the name of Victoriana Lagata over Lot No. 3347 to their Motion to Reopen the Case. In the said declaration, Lot No. 3347 was described as coconut land; this is contrary to the respondents claim that the said lot was then residential, and that the boundary of the property on the north was the road to Biriran which, in turn, is consistent with the petitioners claim.[44] Unfortunately, the trial court denied the said motion on the ground that it was mooted by its decision. Fourth. During the cadastral survey of lands in Juban, the lot of Gruta and that of Balbedina, inclusive of the subject property, were designated as Lot No. 3353 with a total area of 9,302 square meters under their names, while that of Lino Estopin was designated as Lot No. 3347 with an area of 15,906 square meters. Iluminado Baloloy applied for a free patent over Lot No. 3353, including the disputed property, under his name. The respondent failed to adduce any evidence that the Spouses Estopin and/or Astrologo Hular opposed Balbedina and/or Iluminados claim of ownership of Lot No. 3353 during the survey and after the filing of the application. A propos is our ruling in Urquiaga v. Court of Appeals: [45] As succinctly observed by respondent Court of Appeals in assessing the totality of the evidence

We do not agree with defendants that they are also the occupants and possessors of the subject lot just because it is adjacent to their titled property. Precisely, the boundaries of defendants titled property were determined, delineated and surveyed during the cadastral survey of Dipolog and thereafter indicated in their certificate of title in order that the extent of their property will be known and fixed. Since the subject lot was already found to be outside their titled property, defendants have no basis in claiming it or other adjacent lots for that matter. Otherwise, the very purpose of the cadastral survey as a process of determining the exact boundaries of adjoining properties will be defeated. Defendants own title, O.C.T. No. 0-357 (in the names of Jose Aguirre and Cristina Gonzales), in fact belies their claim of occupation and possession over the adjacent subject lot. Examining said title, we note that: (1) the cadastral survey of Dipolog was conducted from January, 1923 to November 1925; (2) defendants titled property was one of those lots surveyed and this was designated as Lot No. 2623; (3) during the survey, it was already determined and known that Lot No. 2623 is bounded on the northeast, southeast, southwest and west by Lot No. 4443 (as we have seen in our narration of facts, the subject lot is a subdivision lot of Lot No. 6552 which was originally identified as Lot No. 4443-B-1, Dipolog Cadastre 85 Ext.: hence, the subject lot is a portion of Lot No. 4443); and (4) O.C.T. No. 0-357 was issued on October 11, 1965 on the strength of the judgment rendered on July 31 (sic), 1941 by the then Court of First Instance of Zamboanga del Norte in Cadastral Case No. 6, LRC Cadastral Record No. 756. From the foregoing facts, we find that as early as January, 1923 when the cadastral survey was started, the boundaries of Lot Nos. 2623 and 4443 were already determined and delineated. Since the subject lot was surveyed to be part of Lot No. 4443, it means that during that time defendants predecessors-in-interest never claimed ownership or possession over the subject lot. Otherwise, they would have complained so that the subject lot could be excluded from Lot No. 4443 and included in Lot No. 2623, they being adjacent lots. It is obvious then that defendants predecessors only claimed Lot No. 2623 and they pursued their claim in Cadastral Case No. 6, LRC Cadastral Record No. 756 until O.C.T. No. 0-357 was issued to them. The contention of

defendants that they and their predecessors-in-interest occupied and possessed the subject lot since time immemorial therefore is not true.[46] Fifth. Under the deed of absolute sale dated November 25, 1961, Lagata sold to Astrologo Hular Lot No. 3347, and not Lot No. 3353. In Veterans Federation of the Philippines v. Court of Appeals,[47] we ruled that: Petitioner VFP maintains that the deed of sale was valid and enforceable and that it was perfected at the very moment that the parties agreed upon the thing which was the object of the sale and upon the price. The parties herein had agreed on the parcel of land that petitioner would purchase from respondent PNR, and the same was described therein; thus, petitioner VFP cannot conveniently set aside the technical description in this agreement and insist that it is the legal owner of the property erroneously described in the certificate of title. Petitioner can only claim right of ownership over the parcel of land that was the object of the deed of sale and nothing else.[48] Sixth. Under the said deed of sale dated November 11, 1961, Victoriana Lagata sold Lot No. 3347 which had an area of 15,906 square meters and covered by Tax Declaration No. 4790. The deed does not state that what was sold was only a portion of Lot No. 3347, excluding therefrom the disputed property. This is understandable, since the subject property is a portion of Lot No. 3353 owned by Alejandro Gruta and Iluminado Baloloy, and not of Lino Estopin and/or Victoriana Lagata. Lagata could not have sold a portion of Lot No. 3353 which she does not own. As the Latin adage goes: NEMO DAT QUOD NON HABET. Seventh. The Balbedinas Affidavit dated May 8, 1993 offered by the respondent to prove the contents thereof is inadmissible in evidence against the petitioners. Balbedina did not testify; as such, the petitioners were deprived of their right to cross-examine him. The said affidavit is thus hearsay and barren of probative weight. The affidavit varies the contents of the deed of absolute sale which he (Balbedina) executed in favor of Iluminado more than forty years earlier. In the said affidavit, it was made to appear that Balbedina sold to Iluminado on June 4, 1951 only a portion of Lot 3353 with an area of 3,333 square meters, when under the said

47 deed of absolute sale, the property that was sold consisted of 4,651 square meters. The affidavit is proscribed by Section 9, Rule 130 of the Rules of Court, which provides: Section 9. Evidence of written agreements. - When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement. ... It bears stressing that the deed of absolute sale executed by Balbedina in favor of Baloloy was notarized by the Justice of the Peace who was an Ex-Officio Notary Public; hence, entitled to full probative weight. Eighth. The Special Sketch Plan of Lot No. 3353 prepared by Geodetic Engineer Rodolfo P. Cunanan[49] cannot prevail over OCT No. P-16540. In fact, the plan even buttressed the case for the petitioners because it shows that the subject property is a portion of Lot No. 3353, and not of Lot No. 3347, covered by OCT No. P-16540 under the name of Iluminado Baloloy, the deceased father of the petitioners. Ninth. The conclusion of the RTC that Lagata in fact sold a portion of Lot No. 3347 under the deed of absolute sale dated November 25, 1961, unaware that the property was a part of Lot No. 3353, is based on mere speculations and surmises. Iluminado Baloloy included in his application for a free patent the property of Alejandro Gruta, and was able to secure a free patent over said property in addition to his own. As such, Gruta, not the respondent, is the proper party to assail such free patent, as well as OCT No. P-16540 which was issued based thereon. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The decisions of the Regional Trial Court and the Court of Appeals are REVERSED and SET ASIDE. The complaint of the respondent is DISMISSED. No costs. SO ORDERED.

G.R. No. 205867, February 23, 2015 MARIFLOR T. HORTIZUELA, REPRESENTED BY JOVIER TAGUFA, Petitioner, v. GREGORIA TAGUFA, ROBERTO TAGUFA AND ROGELIO LUMABAN, Respondents. MENDOZA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 13, 2012 Decision1 and the January 25, 2013 Resolution2 of the Court of Appeals (CA) in CA- G.R. SP No. 122648 which reversed and set aside the July 1, 2011 Decision3 of the Regional Trial Court, Branch 22, Cabagan, Isabela (RTC), in an action for reconveyance and recovery of possession. The Facts: The undisputed facts were succinctly summarized in the August 31, 2010 Decision4 of the 3rd Municipal Circuit Trial Court, Tumauini-Delfin Albano, Tumauini, Isabela (MCTC) before which a complaint5 for Reconveyance and Recovery of Possession with Damages was filed by petitioner Mariflor Tagufa Hortizuela (Hortizuela) represented by Jovier Tagufa against respondents Gregoria Tagufa, Roberto Tagufa and Rogelio Lumaban (respondents). As quoted by the CA, said undisputed facts are:chanRoblesvirtualLawlibrary Gleaned from the joint testimonies of R[u]nsted Tagufa xxx and Jovier Tagufa xxx are the following facts: The property involved in this case is a parcel of land located at District IV, Tumauini, Isabela containing an area of 539 square meters, more or less, and covered by OCT No. P84609 of the Registry of Deeds of Isabela. By virtue of the special power of attorney xxx executed by Mariflor Tagufa Hortizuela, Jovier Tagufa instituted this case against herein defendants praying for the peaceful surrender of the abovedescribed property unto them and further ordering defendant Gregoria Tagufa to reconvey in plaintiff�s favor the same property which was titled under her name via fraud. Before it was titled in the name of Defendant Tagufa, said property was originally owned by plaintiff�s parents, Spouses Epifanio Tagufa and Godofreda Jimenez. Although untitled, the spouses mortgaged the property with the

Development Bank of the Philippines (DBP, for brevity). For failure to redeem the property, DBP foreclosed the same and sold it to Atty. Romulo Marquez xxx who, in turn, sold it back to Runsted Tagufa, husband of defendant Gregoria Tagufa, on April 4, 2002 xxx using the fund sent by plaintiff Hortizuela who was in America and with the agreement that Runsted will reconvey the said property to her sister when demanded. However, plaintiff discovered that the same unregistered property was titled in the name of Gregoria Tagufa under OCT No. P-84609 of the Registry of Deeds of Isabela xxx. Investigating further, plaintiff discovered that Gregoria Tagufa was able to title the said property by virtue of a free patent application before the Department of Environment and Natural Resources (DENR) and the execution of a Deed of Extrajudicial Settlement of the Estate of the late Spouses Leandro Tagufa and Remedios Talosig dated May 9, 2003 xxx. Plaintiff now seeks to recover possession of the said property which is presently occupied by Gregoria Tagufa and her codefendants and have the same be reconveyed unto them.6 ChanRoblesVirtualawlibrary In its Order, dated May 5, 2010, the MCTC granted the motion to declare defendants in default and allowed Hortizuela to present her evidence ex parte.� Thereafter, on August 31, 2010, the MCTC dismissed the complaint for lack of merit ruling that �in the judicious analysis by this court, plaintiffs have resorted to a wrong cause of action.�7cralawlawlibrary Not in conformity, Hortizuela appealed to the RTC. In its July 1, 2011 Decision, the RTC reversed the MCTC ruling.� The decretal portion of the RTC decision reads as follows:chanRoblesvirtualLawlibrary WHEREFORE, premises considered, the appeal is hereby granted and the Decision dated August 31, 2010, is hereby REVERSED and judgment is hereby rendered as follows: Ordering the defendant Gregorio Tagufa to reconvey to the plaintiff Mariflor Tagufa Hortizuela the land described in paragraph 4 of the complaint; Ordering the defendants to vacate the same land and to surrender the peaceful possession thereof to the plaintiff; Ordering the defendants to pay to the plaintiff the following amounts, jointly and severally:

48 cralawred a) Fifty Thousand (P50,000.00) Pesos as Moral Damages; b) Twenty Thousand (P20,000.00) Pesos as Attorney�s Fees. SO DECIDED.8 Respondents filed a motion for reconsideration, but it was denied by the RTC. The reversal being unacceptable to them, respondents filed a petition for review before the CA questioning the RTC decision. This time, the case was disposed in their favor.� According to the CA, although Hortizuela filed with the MCTC a complaint for reconveyance and recovery of possession of the subject lot, she was also questioning the validity of the Torrens title, Original Certificate of Title (OCT) No. P-846609. 9� The CA pointed out that this was in contravention of Section 48 of Presidential Decree (P.D.) No. 1529 which provides:chanRoblesvirtualLawlibrary Sec. 48. Certificate not subject to collateral attack.- A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law It cited the well-settled rule that a Torrens title could not be collaterally attacked; that the issue of whether or not the title was fraudulently issued, could only be raised in an action expressly instituted for that purpose; and that an action for reconveyance and recovery of possession was not the direct action contemplated by law.10 Hence, the dispositive portion of the CA decision reads in this wise:chanRoblesvirtualLawlibrary WHEREFORE, premises considered, the Decision dated July 1, 2011 rendered by the Regional Trial Court of Cabagan, Isabela, is hereby REVERSED and SET ASIDE. The present Complaint for reconveyance and recovery of possession with damages is DISMISSED. SO ORDERED.11 ChanRoblesVirtualawlibrary Hortizuela filed a motion for reconsideration, but it was denied in a Resolution,12 dated January 25, 2013. Hence, this petition.

ISSUE: WHETHER OR NOT AN ACTION FOR RECONVEYANCE AND RECOVERY OF POSSESSION CONSTITUTES AN INDIRECT OR COLLATERAL ATTACK ON THE VALIDITY OF THE SUBJECT CERTIFICATE OF TITLE WHICH IS PROSCRIBED BY LAW. ----NO!!!!!!!!! the complaint of Hortizuela was not a collateral attack on the title warranting dismissal

others, that an applicant for a free patent must be a Filipino citizen. Hortizuela, by her own admission, is an American citizen who has been residing in Las Vegas, Nevada.

Hortizuela claims that respondent Gregoria Tagufa (Gregoria), being the wife of Runsted, was certainly aware that the subject land was actually sold by Atty. Romulo Marquez (Atty. Marquez) to her (Hortizuela). Runsted, only acted as attorney-in-fact in the sale transaction. Thus, the action for reconveyance was not a collateral attack on the said title because Hortizuela was not seeking the nullification of the title, but rather the reconveyance of the property, covered by the said title, which Gregoria was holding in trust for her benefit as the real owner. Gregoria should, therefore, reconvey the property and its title to her, being the rightful owner.

The Court is not unmindful of the principle of indefeasibility of a Torrens title and Section 48 of P.D. No. 1528 where it is provided that a certificate of title shall not be subject to collateral attack.14 A Torrens title cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. When the Court says direct attack, it means that the object of an action is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment or proceeding is nevertheless made as an incident thereof.15 In its decision, the MCTC wrote:chanRoblesvirtualLawlibrary

Position of Respondents

Obviously, the bone of contention in this case are the deed of sale by and between Romulo Marquez and Runsted Tagufa, the estranged husband of defendant Gregoria Tagufa, and OCT No. P-84609 registered in the name of Gregoria Tagufa who, according to the plaintiff, fraudulently caused the titling of the same.

Respondents counter that although Hortizuela�s complaint was denominated as one for reconveyance and recovery of possession, its main objective was to nullify the title held by Gregoria over the subject property. For said reason, the complaint would amount to a collateral attack on the title which was proscribed under the principle of indefeasibility of a Torrens title. To rule that the action for reconveyance was not a collateral one would result in the nullity of the decree of registration. Another argument that respondents want this Court to consider in resolving the subject petition is the fact that the overriding reason why Hortizuela chose to file a complaint for reconveyance and recovery of possession was that she failed to avail of the remedy provided under Section 3813 of Act 496 within the prescribed period of one (1) year, counted from the issuance of the free patent by the government. Finally, granting that the title over the property would be nullified and the property be reconveyed to Hortizuela, still the latter would be ineligible to own the same pursuant to Batas Pambansa (B.P.) Blg. 223 which requires, among

The Court�s Ruling The Court finds the petition meritorious.

In their lamentations, plaintiff pointed out the following indicia of fraud committed by Gregoria Tagufa that would allegedly justify reconveyance: First, Gregoria Tagufa made it appear in the extrajudicial settlement of the estate of spouses Leandro Tagufa and Remedios Talosig that she is an heir when, in truth, she is only a grand daughter-in-law, Second, she already knew when she applied for free patent that plaintiff was already the owner of the land she was applying for; Third, she already knew that when she applied for free patent that plaintiff�s parents were not anymore the owners of the land as the same was mortgaged with the DBP; and

49

Fourth, defendant has never been in actual possession of the property when she applied for it. All in all, plaintiff argued, Gregoria Tagufa never acquired any valid right or legal title over the property. Studying the merits of this case and removing all its superfluities, plaintiffs plainly question the title generated in the name of defendant Gregoria Tagufa having been obtained by fraud and misrepresentation. However, in the judicious analysis by this court, plaintiffs have resorted to a wrong cause of action.16 ChanRoblesVirtualawlibrary From the foregoing, it can be deduced that the MCTC was convinced that fraud was attendant in the registration of the land but was not convinced that reconveyance was an accepted remedy. Contrary to the pronouncements of the MCTC and the CA, however, the complaint of Hortizuela was not a collateral attack on the title warranting dismissal. As a matter of fact, an action for reconveyance is a recognized remedy, an action in personam, available to a person whose property has been wrongfully registered under the Torrens system in another�s name. In an action for reconveyance, the decree is not sought to be set aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always available as long as the property has not passed to an innocent third person for value.17cralawlawlibrary There is no quibble that a certificate of title, like in the case at bench, can only be questioned through a direct proceeding. The MCTC and the CA, however, failed to take into account that in a complaint for reconveyance, the decree of registration is respected as incontrovertible and is not being questioned. What is being sought is the transfer of the property wrongfully or erroneously registered in another's name to its rightful owner or to the one with a better right. If the registration of the land is fraudulent, the person in whose name the land is registered holds it as a

mere trustee, and the real owner is entitled to file an action for reconveyance of the property.18cralawlawlibrary The fact that Gregoria was able to secure a title in her name does not operate to vest ownership upon her of the subject land. �Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.�19cralawlawlibrary Furthermore, respondents� argument that the overriding reason why Hortizuela chose to file a complaint for reconveyance and recovery of possession was that she failed to avail of the remedy provided under Section 38 of Act 496 within the prescribed period of one (1) year, counted from the issuance of the patent by the government, is weak. As was similarly held in Cervantes v. CA,20 with the land obtained by respondent Gregoria through fraudulent machinations by means of which a free patent and a title were issued in her name, she was deemed to have held it in trust for the benefit of Hortizuela who was prejudiced by her actions. Article 1456 provides:chanRoblesvirtualLawlibrary ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The remedy of reconveyance, based on Section 53 of P.D. No. 1529 and Article 1456, prescribes in ten (10) years from the issuance of the Torrens title over the property. The Court is not unaware of the rule that a fraudulently acquired free patent may only be assailed by the government in an action for reversion� pursuant to Section 101 of the Public Land Act.21 In Sherwill Development Corporation v. Sitio Sto. Ni�o Residents Association, Inc.,22 this Court pointed out that:chanRoblesvirtualLawlibrary

x x x It is to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru its dulyauthorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, may file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of Lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.23 ChanRoblesVirtualawlibrary An action for reconveyance is proper The foregoing rule is, however, not without exception. A recognized exception is that situation where plaintiffclaimant seeks direct reconveyance from defendant of public land unlawfully and in breach of trust titled by him, on the principle of enforcement of a constructive trust. This was the ruling in Larzano v. Tabayag, Jr.,24� where it was written:chanRoblesvirtualLawlibrary A private individual may bring an action for reconveyance of a parcel of land even if the title thereof was issued through a free patent since such action does not aim or purport to reopen the registration proceeding and set aside the decree of registration, but only to show that the person who secured the registration of the questioned property is not the real owner thereof. In Roco, et al. v. Gimeda, we stated that if a patent had already been issued through fraud or mistake and has been registered, the remedy of a party who has been injured by the fraudulent registration is an action for reconveyance, thus: cralawred It is to be noted that the petition does not seek for a reconsideration of the granting of the patent or of the decree

50 issued in the registration proceeding. The purpose is not to annul the title but to have it conveyed to plaintiffs. Fraudulent statements were made in the application for the patent and no notice thereof was given to plaintiffs, nor knowledge of the petition known to the actual possessors and occupants of the property. The action is one based on fraud and under the law, it can be instituted within four years from the discovery of the fraud. (Art. 1146, Civil Code, as based on Section 3, paragraph 43 of Act No. 190.) It is to be noted that as the patent here has already been issued, the land has the character of registered property in accordance with the provisions of Section 122 of Act No. 496, as amended by Act No. 2332, and the remedy of the party who has been injured by the fraudulent registration is an action for reconveyance. (Director of Lands vs. Registered of Deeds, 92 Phil., 826; 49 Off. Gaz. 3 935; Section 55 of Act No. 496.) In the same vein, in Qui�iano, et al. v. Court of Appeals, et al., we stressed that:chanRoblesvirtualLawlibrary The controlling legal norm was set forth in succinct language by Justice Tuason in a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: �The sole remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, as was done in the instant case, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages." Such a doctrine goes back to the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. If it were otherwise the institution of registration would, to quote from Justice Torres, serve "as a protecting mantle to cover and shelter bad faith ...." In the language of the then Justice, later Chief Justice, Bengzon: "A different view would encourage fraud and permit one person unjustly to enrich himself at the expense of another." It would indeed be a signal failing of any legal system if under the circumstances disclosed, the aggrieved party is considered as having lost his right to a property to which he is entitled. It is one thing to protect an innocent third party; it is entirely a different matter, and one devoid of justification, if [deceit] would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious

deed. As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against. So it has been before; so it should continue to be. (Citations omitted) In this case, in filing the complaint for reconveyance and recovery of possession, Hortizuela was not seeking a reconsideration of the granting of the patent or the decree issued in the registration proceedings. What she was seeking was the reconveyance of the subject property on account of the fraud committed by respondent Gregoria. An action for reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or reconvey the land to him.25 Thus, the RTC did not err in upholding the right of Hortizuela to ask for the reconveyance of the subject property. To hold otherwise would be to make the Torrens system a shield for the commission of fraud. To reiterate, The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.26 ChanRoblesVirtualawlibrary Finally, respondents� supposition that Hortizuela was ineligible to own the subject property pursuant to B.P. Blg. 223 because she was no longer a Filipino citizen cannot be considered for having been raised only for the first time on appeal. It must be noted that points of law, theories, issues, and arguments not brought to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal.27 The reason therefor is due process.

WHEREFORE, the petition is GRANTED. The September 13, 2012 Decision and the January 25, 2013 Resolution of the Court of Appeals in CA- G.R. SP No. 122648� are hereby REVERSED and SET ASIDE. The July 1, 2011 Decision of the Regional Trial Court, Branch 22, Cabagan, Isabela, is hereby REINSTATED. SO ORDERED. [G.R. No. 129980. September 20, 2004] ALFREDO APUYAN, represented by ERNESTO A. ARABEJO, petitioner, vs. EVANGELINE A. HALDEMAN, RENATO RADONA, DIONISIO RADONA, DOMINGO RADONA, FRANCISCO RADONA, JOSE RADONA, JR., JOSE RADONA, SR., ISIDRO RADONA, JOSE QUIJANO, EVANGELINE PARADEZA and FLOREN ARAMAN, respondents. AZCUNA, J.: This is a petition for review on certiorari of the Decision of the Court of Appeals dated April 29, 1997 and its Resolution dated July 22, 1997 denying petitioners motion for reconsideration. The factual antecedents are as follows: On June 20, 1994, petitioner Alfredo R. Apuyan filed before the Regional Trial Court of Iba, Zambales, Branch 69, a petition[1] for quieting of title with prayer for preliminary injunction and damages against respondents, docketed as Civil Case No. RTC-1055-I. On November 3, 1994, petitioner filed an amended petition.[2] He claimed that he is the registered owner of a parcel of land, with an area of 5.5860 hectares, situated at Locloc, Palauig, Zambales, designated as Lot No. 1083 (Cad. 364-D), and covered by Original Certificate of Title No. P-11962. He alleged that respondents claim ownership over a portion of said parcel of land on the basis of deeds of absolute sale in their favor, which cast a doubt on his title over the property. Petitioner prayed for the issuance of a temporary restraining order and, thereafter, the issuance of a writ of preliminary injunction upon payment of a bond, and that after due proceedings, judgment be rendered, as follows:

51 a) Making the writ of preliminary injunction permanent. b) Ordering the defendants, Evangeline Haldeman, Renato Radona, Dionisio Radona, Doming[o] Radona, Francisco Radona, Jose Radona, Jr., Jose Radona, Sr., Isidro Radona, Jose Quijano, Jose Sevilla, Evangeline Paradeza and Floren Araman to surrender to the Honorable Court their alleged Deeds of Absolute Sale; c) Ordering that, after the defendants surrender of the [Deeds] of Absolute [Sale], the same be ordered cancelled; d) Ordering the defendants to pay jointly and severally to the plaintiff the sum of P20,000.00 as and for attorneys fees, plus P2,000.00 as and for [counsels] court appearance fee per hearing; e) Ordering each of the defendants to pay P20,000.00 as moral damages to the plaintiff, plus P10,000.00 exemplary damages.[3] The trial court issued a writ of preliminary injunction after petitioner filed a bond of P20,000.[4] On November 10, 1994, respondents filed an Amended Answer[5] alleging, among others, that they have been in possession of their respective properties since 1962, and that petitioner procured his title to the subject property through fraudulent misrepresentation in his application for free patent. They stated that there was an ongoing protest filed with the Department of Environment and Natural Resources (DENR) for the cancellation of and/or recommendation of the DENR to cancel petitioners title. (Respondents filed the protest within one year after the issuance of the patent to petitioner.) Respondents also alleged that the ejectment case filed by petitioner against them was decided in their favor, and the criminal charges filed before the Fiscals Office attacking the genuineness of their Deeds of Sale were dismissed. Respondents prayed for the dismissal of the complaint on the ground of pendency of an action and/or lack of cause of action and, in the alternative, for the declaration of

petitioners title as null and void and that petitioners title be cancelled. On January 16, 1995, the trial court ordered the suspension of the hearing of the case, as prayed for by the parties counsels, until the termination of the proceedings before the DENR. In an Order[6] dated January 23, 1994 [should be 1995], the Regional Executive Director of the DENR, Region III, San Fernando, Pampanga, dismissed respondents protest, thus: From the allegations of the protestants, it is crystal clear that the lot in dispute has already been patented and corresponding certificate of title was already issued in favor of the herein respondent, hence, in the eyes of the law, the same became private land from the time the subject patent was issued. Worthy of note at this juncture, is that the Office of the Solicitor General is presently suspending actions for either cancellation of free patent and reversion or cancellation of title involving private lands. Thus, even assuming arguendo that the protestants allegation of fraud and misrepresentation in the acquisition of patent is true, this Office could not recommend the institution of reversion proceedings to the Office of the Solicitor General in view of the latters suspension of all actions for reversion and/or cancellation of title. It bears stressing that the Office of the Solicitor General is the sole government agency vested by law with authority to institute reversion proceedings and/or cancellation of title. This Office believes that the protestants rights and interest will be adequately protected and their grievances properly ventilated if they, themselves, are the ones who will initiate appropriate action for cancellation before the ordinary court of justice. On February 20, 1995, the trial court scheduled the case for hearing after the termination of the proceedings before the DENR. On August 22, 1995, a pre-trial conference was held where the parties entered into a pre-trial agreement, thus: xxx

2. Plaintiff and defendants admit that OCT No. P-11962 was issued in July 1993 over a parcel of land situated at Locloc, Palauig, Zambales with an area of 55,860 square meters and which is identified as Lot No. 1083, Cadastral No. 364-D, a xerox copy of which is attached as Annex A of the complaint which the defendants admit to be a faithful reproduction of the original. 3. Plaintiff and defendants admit that defendants are presently occupying the premises without prejudice to the submission of any survey plan to be submitted by the defendants during the trial; 4. Plaintiff and defendants admit that a protest was filed by the defendants at DENR, San Fernando, Pampanga asking for the cancellation of the title issued to the plaintiff but it was dismissed by the DENR by Order dated 23 January 1994 x x x; xxx FACTUAL ISSUES TO BE RESOLVED 1. Whether or not the issuance of Original Certificate of Title No. P-11962 was through fraud; ISSUE: 2. Whether or not the defendants are the owners of the corresponding portions of the land occupied by them.[7] During the hearing held on November 21, 1995, petitioner manifested that he was no longer adducing further evidence because of the admissions contained in the Pre-trial Order dated August 22, 1995, and rested his case.[8] Thereafter, respondents presented their evidence and established the following facts: 1) That the property subject matter of the litigation with an area of 5.9800 hectares or 59,800 square meters was declared for taxation purposes in the name of Apolinario Apuyan under Tax Declaration No. 12662 for the year 1944 (Exhibit 1).

52 2) On 04 September 1944, Apolinario Apuyan, then 44 years of age, Filipino and a widower, executed a Pacto de Retro Sale (Exhibits 2 and 2-A) in favor of Segundo Dador over the said parcel of land before Notary Public Jesus T. Amon who entered the document in his notarial register as Document No. 9, Page 3, Book I, Series of 1944, and which deed of sale was registered with the Register of Deeds on 05 September 1944 (Exhibit 2-B) for which the corresponding entry and registration fee under Official Receipt No. 0175555 (Exhibit 2C) was paid. Apolinario Apuyan (and his heirs) failed to repurchase the property within the period of five (5) years as provided for in the Pacto de Retro Sale (Exhibits 2 and 2-A) and because of this Segundo Dador executed an Affidavit for Consolidation of Ownership (Exhibit 3) on 18 November 1949 before Notary Public Jesus T. Amon who entered the same in his notarial register as Document No. 280, Page 82, Book XII, Series of 1949 which was registered with the Register of Deeds also on 18 November 1949 (Exhibit 3-A) for which the corresponding entry and registration fees under Official Receipts Nos. A 18045186 (Exhibit 3-B) and 4095175 (Exhibit 3-C) were paid. 3) Segundo Dador declared the property for taxation purposes per Tax Declaration No. 19288 (Exhibit 4) for the year 1953 with a notation at the bottom thereof which states: taxes paid up to and including 1952. Segundo Dador paid the corresponding real property taxes thereafter up to the year 1960 (Exhibits 4-A, 4-B, 4-C, 4-D, 4-E, and 4-F). While the location of the property in Tax Declaration No. 12662 is Liozon, Palauig, Zambales and the location in Tax Declaration No. 19288 is Locloc Balite, Palauig, Zambales, the area and boundaries in both tax declarations are the same. 4) On 15 January 1960, Segundo Dador executed a Deed of Absolute Sale (Exhibit 4-G) in favor of Emerita Abdon, of legal age, Filipino, and widow, before Notary Public Esteban Q. Amon who entered the same in his notarial register as Document No. 3, Page 55, Book I, Series of 1960, over the subject parcel of land. Corresponding Tax Declaration No. 20362 (Exhibit 5) was issued in favor of Emerita Abdon who paid the corresponding real property taxes for the years 1961 and 1962 (Exhibits 5-A and 5-B). 5) The subject parcel of land was mortgaged by Emerita Abdon in favor of the Rural Bank of San Narciso, Inc. per Real

Estate Mortgage dated 23 May 1960 (Exhibit 6) which was registered with the Register of Deeds (Exhibit 6-A). 6) On 17 December 1964, Emerita Abdon executed a deed of absolute sale (Exhibit 9) in favor of Jose Radona over a portion of the subject parcel of land equivalent to 53,425 square meters before Notary Public Pablo M. Amog who entered the same in his notarial register as Document No. 79, Page 12, Book XV, Series of 1964, and the remaining portion of 6,000 square meters was sold to Jaime R. Abdon per Deed of Absolute Sale (Exhibits 10 and 10-A) executed by Emerita Abdon before Notary Public Pablo M. Amog on 26 January 1972 who entered the same in his notarial register as Document No. 16, Page 40, Book XVII, series of 1972. 7) Jaime Abdon sold his 6,000 square meters to the following: a) In favor of Salvador Radona, 2,553 square meters per Deed of Absolute Sale of a Portion of Real Estate dated 22 May 1972 (Exhibit 11) and Deed of Absolute Sale dated 09 June 1972 (Exhibit 12); b) In favor of Wilfredo Paradeza, 400 square meters per Deed of Absolute Sale of a Portion of Real Estate dated 09 June 1972 (Exhibit 13); c) In favor of Ernesto Abdon, 400 square meters per Deed of Absolute Sale of a Portion of Real Property dated 09 November 1972 (Exhibit 14), and who, in turn sold the same in favor of Avelino Paradeza per Deed of Absolute Sale dated 19 April 1976 (Exhibit 4-D). Avelino Paradeza sold the same to Evangeline Paradeza Sison per Deed of Absolute Sale dated 09 March 1978 (Exhibit 14-G); d) In favor of Teofilo Alarcon, 1,311 square meters per Deed of Absolute Sale of a Portion of Real Property dated 09 November 1972 (Exhibits 15 and 15-A). The same parcel of land was sold by Teofilo Alarcon to Daniel Rivas per Deed of Absolute Sale of a Portion of Real Property dated 14 September 1976 (Exhibit 15-G). After the death of Daniel Rivas, his heirs, namely, Eustaquia Ramos, Modesta R. Mayo and Felimon Rivas executed an Extra-judicial Settlement of Estate with Absolute Sale in favor of Salvador Bergado over the same portion (Exhibit 15-J). Salvador Bergado in turn sold

the same portion to Spouses Floren Araman and Martina Asiatico per Absolute Deed of Sale dated 27 February 1980 (Exhibit 15-O), who in turn sold the same to Evangeline Araman Haldeman per Deed of Absolute Sale dated 10 September 1987 (Exhibit 15-Q); e) In favor of Gregorio Sevilla, 400 square meters per Deed of Absolute Sale of a Portion of Real Property dated 09 November 1972 (Exhibits 16 and 16-A); f) In favor of Jose Quijano, 400 square meters per Deed of Absolute Sale of a Portion of Real Estate dated 29 November 1982 (Exhibits 17 and 17-A). 8) Corresponding real property taxes were paid by the defendants as appearing in Exhibits 11-A to 11-II, 13-G to 13W, 15-C-1, 15-C-3 and 15-K. 9) It appears that plaintiff filed his application for free patent (page 32 of the Records) with the then Bureau of Lands under the Ministry of Natural Resources [for] the subject parcel of land sometime on April 1, 1985 and in support thereof filed a deed of relinquishment of rights and waiver (Exhibit 7-F) executed by the surviving legal heirs of the deceased Apolinario Apuyan, father of the plaintiff, in favor of the plaintiff; joint affidavit (Exhibit 8-A) of a certain Ramerio Paradeza and Elpidio Vanilla; the affidavit of the plaintiff himself; the notice of application for free patent (Exhibit 7-C) which was unsigned and a letter of the department land inspector Doroteo Asuncion (Exhibit 7-E) recommending the granting of the application for free patent of the plaintiff. Apparently, there was no notice to the defendants of the application for free patent of the plaintiff. While free patent No. 037108-93-2320 was issued on 07 July 1993, the defendants Renato Radona, Evangeline Paradeza Sison, Isidro Radona, Floren Araman and a certain Jose Quijano were invited to a conference on November 24, 1993 (Exhibit D).[9] Petitioner, thereafter, adduced rebuttal evidence. According to the trial court, from the rebuttal evidence adduced by petitioner, there was nothing to controvert the evidence for the respondents, except that petitioner was appointed chief of the rural police of Locloc-Balite on

53 October 4, 1940. The trial court also found that Exhibit E, which is the Findings/Decision of the Chairman of the Lupong Tagapayapa at Barangay Locloc, Palauig, Zambales, shows that said chairman assumed the role of a judge of a municipal trial court and ordered the respondents to vacate the premises, which was beyond the power and jurisdiction of the Lupong Tagapayapa.[10] The trial court held that petitioner was guilty of fraud and misrepresentation when he filed his application for free patent in 1985. It also ruled that the respondents are the owners of the corresponding portions of land occupied by them (subject to judicial or administrative legalization) not only by virtue of the documentary and oral evidence adduced during the trial of the case, but likewise by the dismissal of the ejectment case filed by petitioner against the respondents and the criminal case for falsification filed by petitioner against the respondents with the Provincial Prosecutors Office.[11] In its decision dated October 9, 1996, the trial court pronounced judgment, thus: WHEREFORE, premises considered, judgment is rendered in favor of the defendants and against the plaintiff as follows: 1) The amended petition filed by the plaintiff against the defendants is dismissed; 2) Free Patent No. 037108-93-3230 and Original Certificate of Title No. P-11962 are declared null and void; 3) The Register of Deed for the Province of Zambales is directed to cancel Original Certificate of Title No. P-11962 in the name of plaintiff Alfredo Apuyan; and 4) The land in question is reverted to the public domain for which the defendants may file their application for legalization of their ownership. SO ORDERED.[12] Petitioner received a copy of said decision on October 17, 1996. On November 4, 1996, the last day for filing an appeal, petitioner filed a motion for reconsideration, which was

denied by the trial court in its Order[13] dated January 7, 1997. Petitioner received said Order of denial on January 14, 1997. On the same day, petitioner filed a Notice of Appeal,[14] thus: Plaintiff, by counsel unto this Honorable Court, hereby respectfully give notice that they are appealing to the Honorable Court of Appeals the order dated January 7, 1997, copy of which was received by plaintiff on January 14, 1997, the Order being contrary to law and jurisprudence and not supported by evidence. WHEREFORE, it is respectfully prayed that the entire records be forthwith elevated to the Honorable Court. In an Order[15] dated January 22, 1997, the trial court denied the notice of appeal for lack of merit since petitioner only appealed from the Order of the Court dated January 7, 1997 denying his motion for reconsideration and not the decision itself dated October 9, 1996 which finally disposed the case. Petitioner received the Order of January 22, 1997 on January 28, 1997. On January 31, 1997, petitioner filed a motion for reconsideration.[16] He contended that while his notice of appeal only mentioned the Order of January 7, 1997, it inadvertently failed to mention clearly that what was being appealed included the decision of October 9, 1996, although the last paragraph of said notice of appeal stated: Wherefore, it is respectfully prayed that the entire records be forthwith elevated to the Honorable Court. He prayed that his notice of appeal be amended to include the decision of the trial court dated October 9, 1996. On February 11, 1997, the trial court issued an Order[17] denying petitioners motion for reconsideration, thus: xxx The record shows that on 17 October 1996, plaintiff thru counsel received a copy of the Decision dated 09 October 1996. Apparently, the 15th day from receipt of the reglementary period fell on 01 November 1996, a Friday and a holiday. The motion for reconsideration of the decision was filed on the next business day, 04 November 1996. An order dated 07 January 1997 was issued denying the motion, and a

copy of which was received by plaintiff thru counsel on 14 January 1997. Subsequently, a Notice of Appeal was filed on the same day but was denied per order of the Court dated 22 January 1997 which order was allegedly received by counsel for the plaintiff on 28 January 1997. The motion for reconsideration under consideration was filed on 31 January 1997 or three (3) days after. Obviously, plaintiff failed to perfect his appeal and the failure to perfect the appeal rendered the judgment of this Court final and executory (Bank of America vs. Gerochi, Jr., 230 SCRA 9). WHEREFORE, the Motion for Reconsideration dated January 30, 1997 filed by plaintiff is denied for lack of merit. On February 14, 1997, respondents filed a Motion[18] for Issuance of a Writ of Execution. Petitioner opposed said motion on the ground of prematurity and non-compliance with the rules on notice and hearing. The trial court, however, issued an Order[19] dated February 18, 1997 setting said motion for hearing on March 12, 1997. On March 20, 1997, petitioner filed with the Court of Appeals a petition for certiorari and prohibition with prayer for issuance of a temporary restraining order and/or a writ of preliminary injunction to forestall execution of judgment. Petitioner prayed for the following reliefs: 1. Upon the filing of the instant petition and pending notice and hearing, a Temporary Restraining Order (TRO) be forthwith issued enjoining, preventing and prohibiting all the respondents from implementing, enforcing and executing any writ of execution that may be issued in this case, the purpose of which is certainly to render moot and academic and ineffectual the instant petition; 2. Upon hearing the case on its merits but before judgment, a writ of preliminary injunction be issued enjoining, preventing and prohibiting respondents from doing the acts heretofore mentioned in No. 1 above; 3. Thereafter, judgment be issued annulling and setting aside the assailed Orders dated 22 January 1997 and 11 February

54 1997 issued by the respondent trial court, and a new judgment be issued ordering the trial court to give due course to petitioners notice of appeal and to reinstate petitioners appeal therefrom.[20] On April 29, 1997, the Court of Appeals rendered its Decision that dismissed the petition, the dispositive portion thereof stating, thus: WHEREFORE, the present petition for certiorari and prohibition, with prayer for issuance of a temporary restraining order and/or a writ of preliminary injunction, is hereby DENIED DUE COURSE and the same is DISMISSED.[21]

confirming the cancellation of the same document in compliance with the decision of the trial court. On July 1, 1997, the trial court issued an Order[30] denying the Motion to Lift and/or Quash Order of Execution for being moot and academic considering that a return was already submitted to the trial court showing that the writ of execution was fully satisfied. Aggrieved by the aforesaid decision and resolution of the Court of Appeals, petitioner filed the instant petition under Rule 45 of the Rules of Court. In his Memorandum, petitioner raised the following issues:

The Court of Appeals observed that the notice of appeal filed with the [trial] court on January 14, 1997 was not from the decision, but from the order denying the motion for reconsideration, which cannot be done.[22] It stated that although the notice of appeal prayed for the elevation of the entire records to the Court of Appeals, it did not cure the defect in the notice of appeal.[23] It held that since no appeal was perfected from the trial courts decision within the reglementary period, deducting the time during which a motion for reconsideration had been pending, the decision became final and executory.[24] Hence, the Court of Appeals ruled that it did not acquire jurisdiction over the appealed case and had only the power to dismiss it.[25] Petitioner filed a motion for reconsideration, which was denied by the Court of Appeals in its Resolution[26] dated July 22, 1997. In the meantime, on April 29, 1997, the trial court ordered the issuance of a writ of execution.[27] On May 19, 1997, petitioner filed an Urgent Motion to Lift and/or Quash Order of Execution.[28] On June 9, 1997, the sheriff of the trial court filed his Sheriffs Return[29] stating that he served a copy of the writ of execution to petitioners attorney-in-fact by leaving it with his nephew, Ferdinand Valdez; that on June 6, 1997, he (the sheriff) received a photocopy of Original Certificate of Title No. P-11962 from the Register of Deeds of Zambales

I WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT THE INADVERTENT OMISSION IN THE PETITIONERS NOTICE OF APPEAL TO INCLUDE THE TRIAL COURTS DECISION AS BEING APPEALED FROM IS FATAL TO PETITIONERS APPEAL. II WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RULE ON THE MERITS OF PETITIONERS CASE AND TO DELVE ON THE PATENTLY ERRONEOUS DECISION OF THE TRIAL COURT. III WHETHER OR NOT SERIOUS ERRORS AND IRREGULARITIES WERE COMMITTED BY THE TRIAL COURT IN ITS DECISION WHEN IT ORDERED THE CANCELLATION OF THE FREE PATENT AND TITLE OF THE PETITIONER, IN REVERTING THE LAND IN QUESTION TO THE PUBLIC DOMAIN AND IN RULING THAT THE RESPONDENTS MAY FILE THEIR APPLICATION FOR LEGALIZATION OF THEIR OWNERSHIP OVER THE SUBJECT PROPERTY, OVERLOOKING THE FACT THAT PETITIONER IS THE RIGHTFUL OWNER OF THE LAND IN QUESTION AND WHOSE TITLE THERETO AND THAT OF HIS PREDECESSOR-ININTEREST HAD ALREADY BECOME INDEFEASIBLE AND INCONTROVERTIBLE.[31]

In his first assigned error, petitioner contends that the Court of Appeals erred in holding that his inadvertent omission to include in his notice of appeal that he was appealing from the trial courts decision was fatal to his appeal. We agree. Under the Rules of Court, only judgments or final orders of the Regional Trial Court shall be subject to appeal. At the time petitioner filed his notice of appeal on January 14, 1997, Rule 41 of the Rules of Court provided: Sec. 2. Judgments or orders subject to appeal.-- Only final judgments or orders shall be subject to appeal. No interlocutory or incidental judgment or order shall stay the progress of an action nor shall it be the subject of appeal until final judgment or order is rendered for one party or the other. Section 9 of Rule 37[32] and Section 1 of Rule 41[33] of the present Rules of Civil Procedure, which took effect on July 1, 1997, provide: Rule 37, Sec. 9. Remedy against order denying a motion for new trial or reconsideration.An order denying a motion for new trial or reconsideration is not appealable, the remedy being an appeal from the judgment or final order. Rule 41, Sec. 1. Subject of appeal.An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. No appeal may be taken from: (a) An order denying a motion for new trial or reconsideration; xxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special action under Rule 65. (Emphasis supplied.)

55 In Republic v. Court of Appeals,[34] we stated, thus: It is true the present Rules of Civil Procedure took effect only on July 1, 1997 whereas this case involves an appeal taken in February 1995. But Rule 37, 9 and Rule 41, 1 (a) simply codified the rulings in several cases to the effect that an order denying a motion for reconsideration is interlocutory in nature and, therefore, is not appealable. These rules, therefore, are not really new. In this case, petitioner filed his appeal within the reglementary period. However, he did not appeal from the trial courts decision dated October 9, 1996 which disposed the case, but from the trial courts Order dated January 7, 1997, denying his motion for reconsideration of the decision of the trial court. Can we consider said appeal from the Order denying a motion for reconsideration of the judgment of the trial court as an appeal from a final order? We rule in the affirmative. In the recent case of Quelnan v. VHF Philippines, Inc.,[35] we held, thus: [T]his Court finds that the proscription against appealing from an order denying a motion for reconsideration refers to an interlocutory order, and not to a final order or judgment. That that was the intention of the above-quoted rules is gathered from Pagtakhan v. CIR, 39 SCRA 455 (1971), cited in above-quoted portion of the decision in Republic, in which this Court held that an order denying a motion to dismiss an action is interlocutory, hence, not appealable. The rationale behind the rule proscribing the remedy of appeal from an interlocutory order is to prevent undue delay, useless appeals and undue inconvenience to the appealing party by having to assail orders as they are promulgated by the court, when they can be contested in a single appeal. The appropriate remedy is thus for the party to wait for the final judgment or order and assign such interlocutory order as an error of the court on appeal.

The denial of the motion for reconsideration of an order of dismissal of a complaint is not an interlocutory order, however, but a final order as it puts an end to the particular matter resolved, or settles definitely the matter therein disposed of, and nothing is left for the trial court to do other than to execute the order. Not being an interlocutory order, an order denying a motion for reconsideration of an order of dismissal of a complaint is effectively an appeal of the order of dismissal itself. The reference by petitioner, in his notice of appeal, to the March 12, 1999 Order denying his Omnibus MotionMotion for Reconsideration should thus be deemed to refer to the January 17, 1999 Order which declared him non-suited and accordingly dismissed his complaint.

Hence, the Court of Appeals erred in dismissing the petitioners petition for certiorari and in not ruling that the trial court gravely abused its discretion in refusing to give due course to petitioners appeal. In his second assigned error, petitioner contends that the Court of Appeals erred in not deciding the case on the merits. And in his third assigned error, petitioner questions the validity of the trial courts decision in ordering the cancellation of his free patent and title over the subject property and in reverting the property to the public domain when his title to the property is already indefeasible. The normal procedure is that the merits of the main case are to be resolved in the appeal and not in the certiorari proceedings to allow such appeal. [36]

If the proscription against appealing an order denying a motion for reconsideration is applied to any order, then there would have been no need to specifically mention in both above-quoted sections of the Rules final orders or judgments as subject to appeal. In other words, from the entire provisions of Rule 39 and 41, there can be no mistaking that what is proscribed is to appeal from a denial of a motion for reconsideration of an interlocutory order.

In the interest of speedy dispensation of justice, we resolve to make an exception to the normal procedures considering that this case has been pending for ten years. In Leonor v. Court of Appeals,[37] we made an exception to the normal procedures and delved deeper into the substantive issue of the validity/nullity of the trial courts proceedings and judgment as we also considered the delay caused to the parties of the case. We held, thus:

Similarly, in the instant case, the trial courts Order dated January 7, 1997 denying petitioners motion for reconsideration of the trial courts decision dated October 9, 1996 is not an interlocutory order, but a final order, as the trial court finally resolved therein the issues raised in the motion for reconsideration, which were already passed upon in the trial courts decision.

Upon the other hand, remanding the case back to the trial court for the perfection of the appeal and requiring the parties to relitigate in the Court of Appeals with the use of probably the same documents and arguments ventilated in the kilometric pleadings filed here would just unnecessarily clog the courts dockets; besides, in all likelihood the parties would eventually come before this Court anyway.

Petitioners reference in his notice of appeal to the Order of the trial court dated January 7, 1997 denying petitioners motion for reconsideration should also be deemed to refer to the decision of the trial court dated October 9, 1996, which was the subject of the motion for reconsideration.

Also it must be observed that Virginia actually filed a proper Notice of Appeal which the trial court disallowed. Hence, she had no choice but to bring her petition for certiorari in the respondent Court. To constrain her to go back to said court, this time by ordinary appeal, would be tantamount to punishing her and delaying her cause for faults not attributable to her, but rather to the manifest error of the respondent trial judge.[38]

In effect, petitioner appealed from the final order of the trial court dated January 7, 1997 and the decision of the trial court dated October 9, 1996, which appeal was filed on time.

Hence, in the same manner, we proceed to decide the case on the merits to provide the parties speedy relief.

56 ISSUE: The main issue is whether or not the trial court erred in ruling that petitioner is not the rightful owner of the subject property, ---- NO!!!!!!!! having procured his title to the property through fraud and misrepresentation, and that respondents are the rightful owners of the portions of the property occupied by them, subject to judicial or administrative legalization. Petitioner claims that he is the rightful owner of the subject property by virtue of his title to the same, which has become indefeasible. Petitioner argues that the trial court erred, thus: 1) In not holding that the pacto de retro sale allegedly executed by Apolinario Apuyan in 1944 is a fictitious document; 2) In holding that the petitioner herein committed fraud and misrepresentation in his application [for] a free patent over the property in question; 3) In holding that petitioner gave up his claim of ownership of the property when he transferred to another place with his wife; 4) In holding that petitioner has not presented evidence showing his possession, or that he introduced improvement on the land in question;

by respondents and prove that the pacto de retro sale is fictitious. As the trial court correctly ruled: Assuming for the sake of argument that the pacto de retro sale is fictitious, noteworthy is the fact that said contract including the affidavit for consolidation of ownership were registered with the Register of Deeds of Zambales which have the effect of giving notice to the whole world of its existence. Plaintiff (petitioner herein) should have stood guard to protect whatever rights he has. Almost fifty (50) years had lapsed when the instant case was filed. Moreover, the land subject of the litigation was then unregistered and could, therefore, be acquired thru acquisitive prescription. There is no question that defendants and their predecessorsin-interest were in possession of said property for more than thirty (30) years. Article 1137 of the Civil Code provides as follows: Art. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted possession thereof for thirty years, without need of title or of good faith.[41] Moreover, petitioner faulted the trial court for holding that he committed fraud and misrepresentation in his application for free patent over the property in question. We disagree.

5) In holding that the respondents were not notified of the proceedings in the petitioners application of the free patent before the Bureau of Lands.[39] As regards the first argument, we do not agree with petitioner that the Pacto de Retro Sale allegedly executed by his father in 1944 is a fictitious document. Significantly, the Pacto de Retro Sale and the Affidavit for Consolidation of Ownership were both notarized and registered with the Register of Deeds; hence, they are public documents. Public documents are evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter.[40] Petitioner failed to satisfactorily rebut the aforementioned evidence presented

The trial court correctly found that petitioner was guilty of fraud and misrepresentation when he filed his application for free patent in 1985 for the following reasons: a) He knew for a fact that his father, Apolinario Apuyan, who died in 1945, was no longer the owner of the subject parcel of land (Lot No. 1083, Cad. 364-D, Palauig Cadastre) because of the sale with right to repurchase made by his father in favor of Segundo Dador on 04 September 1944 which was duly registered with the Register of Deeds of Zambales and when plaintiffs father and his heirs failed to repurchase the property within the period of five (5) years as provided in the Pacto de Retro Sale, the buyer Segundo Dador executed an affidavit for consolidation of ownership which likewise was

registered with the Register of Deeds of Zambales. From that time on, Apolinario Apuyan and all his successors-in-interest (his heirs) lost all their rights over the subject property and yet when the plaintiff filed his application for free patent, the heirs executed a deed of relinquishment of rights and waiver over the subject property by the surviving legal heirs of the deceased Apolinario Apuyan, father of the plaintiff, in favor of the plaintiff. Plaintiff claims that the sale with right to repurchase is fictitious as his father could not read and write. The document is more that fifty (50) years old and cannot now be repudiated considering that it was registered with the Register of Deeds of Zambales and therefore a public document. b) By his own testimony, he left Barangay Locloc-Balite sometime in 1958 or 1959 and resided at Barangay Bato, both at Palauig, Zambales, and there he started to till a land and became a vice barrio lieutenant at Barangay Bato and later became the barangay captain of said barangay as testified to by him (Tsn, 14 May 1996, pp. 9-11) as follows: Q- And you said that later you transferred to Barrio Bato, when was that? A - Ever since 1958 or 1959, I was already there in Barrio Bato, sir. Q - What were you doing there in Barangay Bato? A - I was tilling a land there, sir, and when election comes (sic), I ran for the position of vice-barrio lieutenant at Barangay Bato. On the following term, I ran for barrio lieutenant until it was changed to barangay captain, and I won in all those elections. Q - Were you also elected as barangay captain? A - Yes, sir. I was even appointed by Governor Barretto as Municipal Councilor and after the term, I ran for Municipal Councilor and I won. c) On rebuttal, plaintiff never presented any tax declaration or tax receipt showing his possession over the subject property and neither were there any evidences introduced to

57 show that he had introduced improvements on the subject parcel of land. xxx d) In the pre-trial agreement, plaintiff admitted that defendants are in possession of the subject property and no evidence was ever presented that plaintiff was ever in possession of the property.[42] Further, Section 44 of Commonwealth Act No. 141, otherwise known as the Public Land Act, as amended by Republic Act No. 6940,[43] provides for the qualification of an applicant for the grant of a free patent over agricultural public land, thus: Any natural-born citizen of the Philippines who is not the owner of more than twelve (12) hectares and who, for at least thirty (30) years prior to the effectivity of this amendatory Act, has continuously occupied and cultivated, either by himself or through his predecessors-in-interest a tract or tracts of agricultural public lands subject to disposition, who shall have paid the real estate tax thereon while the same has not been occupied by any person shall be entitled, under the provisions of this Chapter, to have a free patent issued to him for such tract or tracts of such land not to exceed twelve (12) hectares. In this case, petitioner has not complied with the requirement of continuous occupation and cultivation of the subject property since he admitted during the trial[44] and stated in his Memorandum that he transferred to Barangay Bato, Palauig, Zambales and resided there in 1958, so that when he filed his application for free patent in 1985, he was no longer occupying the land he was applying for in Locloc, Palauig, Zambales. In addition, respondents were then in possession of their respective portions of the property in question. Hence, petitioner could not have qualified to apply for a free patent over the subject property. Petitioner contends that the trial court erred in holding that he gave up his claim of ownership of the subject property when he and his wife lived in another barangay (Barangay Bato) in 1958 or thereabout.

We disagree. Petitioners transfer to Barangay Bato, Palauig, Zambales in 1958 was an abandonment of any claim he had over the subject property. As mentioned earlier, under Section 44 of Commonwealth Act No. 141, as amended, an applicant for a free patent must have, among others, continuously occupied and cultivated, either by himself or through his predecessorsin-interest, a tract or tracts of agricultural public lands subject to disposition to be entitled to the issuance of such patent. Next, petitioner contends that the trial court erred in holding that he has not presented evidence showing his possession or that he had introduced improvements on the land in question. We disagree. As found by the trial court, petitioner neither presented any tax declaration or tax receipt showing his possession of the property nor any evidence showing that he had introduced improvements on the land. Petitioner, however, points out that the certification[45] issued on October 15, 1992 by Jovencio M. Mendi, OIC district supervisor of Region III, Division of Zambales, Palauig District, stating that we are fully aware that the said parcel of land [has] been continuously pursued and developed by the herein instant claimant Alfredo R. Apuyan, impliedly shows that he and his predecessor-in-interest had introduced improvements on the land. We find that said letter/certification is insufficient to prove particular improvements introduced on the land. It also does not prove that petitioner continuously occupied and cultivated the property. In view of petitioners admission that he was already residing in another barangay (Barangay Bato) in 1958, we cannot give credence to petitioners insistence that he has long been in prior, continuous possession of the subject property before the issuance of the patent, and that he merely allowed the respondents to stay on the land by tolerance.

Petitioner also contends that respondents were properly notified of the proceedings before the issuance of the free patent. We agree. Section 46 of Commonwealth Act No. 141, as amended, provides: Sec. 46. If, after the filing of the application and the investigation, the Director of Lands shall be satisfied of the truth of the allegations contained in the application and that the applicant comes within the provisions of this chapter, he shall cause a patent to issue to the applicant or his legal successor for the tract so occupied and cultivated, provided its area does not exceed twenty-four hectares: Provided, That no application shall be finally acted upon until notice thereof has been published in the municipality and barrio in which the land is located and adverse claimants have had an opportunity to present their claims. (Emphasis supplied.) Under Section 2[46] of Republic Act No. 782,[47] it is the Director of Lands who shall cause notices of the application to be posted in conspicuous places in the capital of the province, the municipality and the barrio where the land applied for is situated for a period of two consecutive weeks, requiring in said notices everyone who has any interest in the matter to present his objections or adverse claims, if any, before the application is granted. Section 3[48] of Republic Act No. 782 further provides that at the expiration of the period of posting of the said notices, the Director of Lands, if satisfied with the truth of the statements contained in the application and in the affidavits attached thereto and that the applicant comes within the provisions of said Act, shall issue the corresponding title in favor of the applicant for the tract of land applied for if there were no objections or adverse claims registered in his office. Thus, a notice of the application did not have to be sent or given personally to the respondents since it would be posted in the municipality and barrio where the land is located. In the absence of proof to the contrary, it is presumed that the Director of Lands regularly performed his duty in causing

58 the notice of petitioners application to be posted in the municipality and barrio where the land is located. To show that respondents were properly notified about his application before the issuance of the free patent, petitioner incorrectly referred to the conference held by Rolando P. Mallari, special investigator of the DENR, with respondents Renato Radona, Evangeline Paradeza Sison, Isidro Radona, Floren Araman and Jose Quijano, which was held on November 24, 1993 in connection with the protest they filed against petitioner after the issuance of the free patent.[49] The presumed posting of notices to inform adverse claimants of petitioners application, however, does not change the fact that petitioner was not qualified to apply for a free patent in 1985 over the subject property because he no longer occupied the same since 1958, and the property was then occupied by the respondents. In view of the foregoing, the trial court correctly found that respondents are the rightful owners of the corresponding portions of the property occupied by them, subject to judicial or administrative legalization. It also properly dismissed petitioners petition for the quieting of his title under Article 476[50] of the Civil Code, after finding that respondents claim of ownership over the subject property is valid. Petitioner, however, contends that his title is already indefeasible; hence, the trial court erred in ordering the cancellation of his free patent and title, and in reverting the subject property to the public domain. In Republic v. Court of Appeals,[51] we cited Republic v. Mina,[52] and Piero, Jr. v. Director of Lands,[53] thus: xxx A certificate of title that is void may be ordered cancelled. And, a title will be considered void if it is procured through fraud, as when a person applies for registration of the land on the claim that he has been occupying and cultivating it. In the case of disposable public lands, failure on the part of the grantee to comply with the conditions imposed by law is a ground for holding such title void. x x x The lapse of one (1) year period within which a decree of title may be reopened

for fraud would not prevent the cancellation thereof for to hold that a title may become indefeasible by registration, even if such title had been secured through fraud or in violation of the law would be the height of absurdity. Registration should not be a shield of fraud in securing title. Justifying the above-quoted provision, the Court declared in Piero, Jr. v. Director of Lands: It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a free patent or a homestead patent is as indefeasible as one judicially secured. And in repeated previous decisions of this Court that indefeasibility has been emphasized by Our holding that not even the Government can file an action for annulment, but at the same time, it has been made clear that an action for reversion may be instituted by the Solicitor General, in the name of the Republic of the Philippines. It is to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the State should, therefore, have an ever existing authority, thru its duly authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, may file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.[54] It is, therefore, clear that a certificate of title, issued on the basis of a free patent, that is procured through fraud or in violation of the law may be cancelled, and indefeasibility of the title is no defense. It is true that under the law, it is the Solicitor General or the officer acting in his stead who is authorized under Section 101[55] of Commonwealth Act No. 141, as amended, to institute an action for reversion in the name of the Republic of the Philippines.

A private person is, as a rule, not the proper party to bring such a suit. However, this Court, in the exercise of its equity jurisdiction, may directly resolve the issue of alleged fraud in the acquisition of a public land patent although the action is instituted by a private person, to the end that substantial justice may be dispended to the party litigants, rather than leaving the present controversy unresolved and subject to a circuitous and tedious process.[56] WHEREFORE, the Decision and Resolution of the Court of Appeals are MODIFIED so as to sustain petitioners timely appeal but the decision of the trial court in Civil Case No. RTC-1055-I is AFFIRMED. No costs. SO ORDERED. [G.R. No. 128967. May 20, 2004] PAULINO SACDALAN, ROMEO GARCIA, NUMERIANO BAUTISTA, LEONARDO SACDALAN and SANTIAGO SACDALAN, petitioners, vs. COURT OF APPEALS and BELEN LOPEZ DE GUIA represented by her Attorney-in-Fact MELBA G. VALENZUELA, respondents. AUSTRIA-MARTINEZ, J.: Before this Court is a petition for review under Rule 45 of the Rules of Court, seeking the reversal of the decision of the Court of Appeals (CA for brevity) in CA-G.R. SP No. 39315 dated June 28, 1996[1] and its resolution dated April 23, 1997 denying petitioners motion for reconsideration.[2] The facts of the case as found by the CA are as follows: Belen Lopez Vda. de Guia is the owner of two parcels of agricultural land in Sta. Barbara, Baliwag, Bulacan covered by TCT No. 209298 with an area of 197,594 square meters. Without her knowledge, her son Carlos de Guia forged a deed of sale on March 19, 1975 and made it appear that she sold the land to him. As a result, TCT No. 209298 was cancelled and a new title, TCT No. T-210108, was issued in his name. The following day, Carlos sold the property to Ricardo San Juan who immediately registered the deed of sale with the Register of Deeds of Bulacan. Consequently, TCT No.

59 210338 was issued in his name. Later, Ricardo mortgaged the two parcels of land to Simeon Yangco. Upon learning of the said incidents, Belen filed an adverse claim with the Register of Deeds of Bulacan and a civil case for cancellation of sale, reconveyance and damages against her son Carlos de Guia, Ricardo San Juan and Simeon Yangco with the Court of First Instance of Baliwag, Bulacan (CFI for brevity) which was docketed as Civil Case No. 655-B.[3] On January 20, 1981, the CFI dismissed the complaint, the dispositive portion of which is quoted verbatim, as follows: WHEREFORE, judgment is hereby rendered dismissing the complaint and affirming the deed of sale executed by plaintiff in favor of her son defendant Carlos de Guia, and Carlos de Guias sale in favor of Ricardo San Juan. That plaintiff reimburses the palay withdrawn by her and in the event of failure, the supersedeas bond be declared confiscated and forfeited in favor of defendant San Juan. That plaintiff pays defendants attorneys fees in the sum of P1,000.00 plus costs.

T-210338 was cancelled and TCT No. T-301375 was issued in the names of the said tenants. The land was later subdivided into several lots and individual titles were issued in their names.[9] Belens counsel sent a letter of inquiry to the Clerk of Court of the IAC dated January 11, 1984 and learned for the first time that their appeal docketed as AC-G.R. CV No. 5524-UDK has been dismissed for non-payment of docket fees.[10] She filed with the IAC a motion to reinstate the appeal,[11] and on May 21, 1984, the IAC issued a Resolution granting her motion, thus: WHEREFORE, in the interest of justice, the motion to reinstate appeal is hereby GRANTED and the Clerk of Court of the Court of Origin is hereby ordered to elevate the records of Civil Case No. 655-B to this Court for purposes of the appeal. SO ORDERED.[12] Acting on the reinstated appeal, docketed as AC-G.R. CV No. 02883, the IAC promulgated its decision on February 20, 1986,[13] the dispositive portion of which reads:

SO ORDERED.[4] Belens motion for reconsideration was denied through an Order dated September 9, 1981.[5] She then appealed to the then Intermediate Appellate Court (IAC for brevity), docketed as AC-G.R. CV No. 5524-UDK. The IAC dismissed the appeal per its Resolution dated April 19, 1983 for non-payment of docket fees. The dismissal became final and executory on May 17, 1983[6] and an Entry of Judgment was issued on June 21, 1983. The records of the case were remanded to the court of origin on July 6, 1983. A writ of execution was issued by the CFI on motion of Ricardo San Juan.[7] The tenants-lessees of the property, namely: Romeo Garcia, Numeriano Bautista together with Paulino, Leonardo and Santiago, all surnamed Sacdalan, (petitioners for brevity), invoked their right to redeem the landholdings pursuant to Section 12 of Republic Act No. 3844, as amended.[8] Accordingly, Ricardo San Juan executed a Deed of Reconveyance dated October 24, 1983 in favor of said tenants-lessees. Upon registration of the document, TCT No.

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and another one entered: (1) declaring as null and void and without any effect whatsoever the deed of sale executed by and between appellant Belen Lopez Vda. de Guia and defendant Carlos de Guia, Exhibit A; (2) declaring defendant-appellee Ricardo San Juan as a purchaser in bad faith and ordering him to reconvey to appellant the two (2) parcels of land described in the complaint; (3) ordering the Register of Deeds of Bulacan to cancel and/or annul TCT No. T-210338 in the name of defendantappellee Ricardo San Juan as well as TCT No. T-210108 in the name of defendant-appellee Carlos de Guia for being null and void and to reinstate TCT No. 209298 in the name of appellant as the true and valid title over the lands described therein; and

(4) ordering the defendants-appellees to pay the costs. SO ORDERED.[14] The decision became final on March 15, 1986 and on November 7, 1986,[15] the records of the case were remanded to the former CFI now Regional Trial Court (RTC for brevity). On December 18, 1986, Belen filed with the RTC a motion for execution which was granted. However, before the writ could be executed, she found that Ricardo San Juan had sold the two parcels of land to petitioners. She then filed with the RTC a motion to declare San Juan, petitioner and other tenants of the land in contempt of court for circumventing the final and executory judgment of the Court of Appeals[16] in AC-G.R. CV No. 02883. In an Order dated October 12, 1987, the RTC declared San Juan, petitioners and all the other tenants concerned in contempt of court, and ordered each of them to pay a fine of P200.00, reconvey and deliver to Belen her two parcels of land and her share in the harvest. The fallo reads: WHEREFORE, defendant Ricardo San Juan and his codefendants Mariano Bautista, Numeriano Bautista, Pelagio Bautista, Hermogenes Dimaapi, Romeo Garcia, Bonifacio Sacdalan, Crispin Sacdalan, Santiago Sacdalan, Santos Leonardo, Felipe Leonardo, Leonardo Fajardo, and Emilio Victoria, are hereby declared in contempt of Court for utterly disregarding and circumventing the decision of the Court of Appeals which is final and executory and are fined P200.00 each; ordering the defendants Mariano Bautista, et al., to reconvey the litigated landholding to the plaintiff Belen de Guia and to deliver to the latter or her duly authorized representative her share in the palay and mongo harvest in the next harvest season. SO ORDERED.[17] Herein petitioners filed with the CA, a petition for certiorari, docketed as CA-G.R. SP. No. 14783, assailing the RTC Order dated October 12, 1987 as having been issued with grave abuse of discretion.

60 On July 6, 1989, the CA promulgated its decision holding that while herein petitioners should not have been considered in contempt of court by the RTC, it did not commit any error in ordering them to reconvey the parcels of land to Belen de Guia. It held that: Ricardo San Juan was not the owner of the land and therefore he had no right or title which he could legally convey to anyone, a fact even admitted by petitioners (Petition, p.7). It must also be said that while petitioners were not parties to Civil Case No. 655-B, they could not have been unaware of the dispute over the land. They claim to be tenants thereof. The inevitable conclusion is the sale to petitioners was void from the beginning. Respondent Judge therefore did not commit any error in ordering the petitioner to reconvey the lands to Belen de Guia. As a matter of fact, such was not even necessary. The cancellation of the titles of Carlos and San Juan and the reinstatement of Belens title by virtue of the appellate decision carried with them as a logical consequence the cancellation of petitioners title and any pretended right over the land. Petitioners cannot claim refuge behind their title; to permit them to do so would be to put a premium on bad faith. Such is never the aim of the torrens system. ... WHEREFORE, except for the portion holding petitioners in contempt and ordering them to pay a fine of P200.00 each, which is eliminated, the order of respondent Judge dated October 12, 1987 is AFFIRMED. No costs.

tenants-lessees who have been cultivating the subject property since 1970 up to the present; that starting 1981, they have not been paying their rent; and that despite demands to pay the rent and vacate the premises, they failed and refused to do so.[21] Petitioners contend that they are the registered owners of the landholdings, having acquired the same from Ricardo San Juan. As such, they no longer have any obligation to pay rentals to Belen whose title thereto has long been cancelled.[22] On March 16, 1993, almost five years from the filing of the complaint for ejectment and four years after the CA decision in CA-G.R. SP No. 14783 had become final, Atty. Jose V. Reyes, Provincial Adjudicator, rendered a decision denying Belens complaint for ejectment and collection of rent. The dispositive portion reads: WHEREFORE, premises considered, the Board finds the instant case wanting of merit, the same is hereby dismissed. Consequently, the Transfer Certificate of Title Nos. T-307845, T-307846, T- 307856, T-307857, T-307869, T-307870, T307871, T-307873, and T-307874 issued in the names of Numeriano Bautista, Romeo Garcia, Leonardo Sacdalan, Paulino Sacdalan and Santiago Sacdalan, respectively, are hereby AFFIRMED. The plaintiff and all other persons acting in her behalf are hereby ordered to permanently cease and desist from committing any acts tending to oust or eject the defendants or their heirs or assign from the landholding in question.

to rest. Likewise, it is a well-enshrined principle that litigation must at some time be terminated, even at the risk of occasional errors, for public policy dictates that once a judgment becomes final, executory and unappealable, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Consequently, We deem it appropriate to write finis to the case at bench considering that the title to the property in controversy has already been adjudicated by this Court to herein petitioner in AC-G.R. CV No. 02883 and CA-G.R. SP No. 14783, hence she has the right to eject herein private respondents for their failure to pay rents since 1981. WHEREFORE, the petition is hereby GRANTED. The decision of respondent DARAB affirming the decision of the Provincial Adjudicator is REVERSED and SET ASIDE and another one is entered ordering private respondents to vacate immediately the two parcels of land covered by T.C.T. No. T-209298 and to deliver possession thereof to the petitioner, as well as the rentals due corresponding to the period from 1981 up to the time they shall have left the landholdings. Considering that the amount of rentals have not been determined, let this matter be threshed out in a proper hearing before another Provincial Adjudicator who should conduct the same with dispatch. COSTS against the private respondents. SO ORDERED.[26]

SO ORDERED.[23] Upon appeal, the DARAB affirmed the decision. Complainant filed a motion for reconsideration but was denied by DARAB.[24]

SO ORDERED.[18] (Emphasis supplied) The decision became final and executory on July 31, 1989. [19]

Belen then appealed to the CA, docketed as CA-G.R. SP No. 39315. The CA reversed the DARAB in its decision dated June 28, 1996,[25] ruling as follows:

Eight months before said date, or on November 8, 1988, Belen, through her attorney-in-fact, Melba G. Valenzuela, had filed with the DARAB, Region III at Malolos, Bulacan, a complaint for ejectment and collection of rentals against herein petitioners.[20] Belen alleged that they are her

At this juncture, it is pertinent to state that nothing is more settled in the law than when a final judgment becomes executory, the same becomes immutable and unalterable, can no longer be modified in any respect and that all the issues in between the parties are deemed resolved and laid

A subsequent motion for reconsideration filed by petitioners was denied by the CA on April 23, 1997.[27] Hence, the present petition for review, raising the following issues: 1. WHETHER OR NOT, UNDER EXISTING LAW AND JURISPRUDENCE, PETITIONERS AS TENANTS-LESSEES IN THE EXERCISE OF THEIR RIGHTS OF REDEMPTION UNDER SECTION 12 OF REPUBLIC ACT NO. 3844 ARE PURCHASERS IN GOOD FAITH; 2. CAN THE INTERMEDIATE APPELLATE COURT IN AC-G.R. CV NO. 02883 REINSTATE THE APPEAL AND RENDER A SECOND

61 DECISION AFTER ITS DECISION DISMISSING THE APPEAL IN AC-G.R. CV NO. 5524-UDK BECAME FINAL AND EXECUTORY, WHICH DECISION WAS REMANDED TO THE LOWER COURT FOR EXECUTION, AND IN FACT, BEEN EXECUTED; AND 3. WHETHER OR NOT, PETITIONERS, WHO ARE HOLDERS OF TRANSFER CERTIFICATES OF TITLES BOUND BY THE SECOND DECISION OF THE INTERMEDIATE APPELLATE COURT IN ACG.R. CV NO. 02883. [28] While petitioners raise three issues, as quoted above, only two questions are actually crucial for the resolution of the present petition: ISSUE:(1) Was the reinstatement of Belen de Guias appeal valid? --- YES!!!!!! and (2) Are petitioners bound by the decision rendered by the Court of Appeals on July 6, 1989 in CA-G.R. SP No. 14783?--- YES!!!!!!! After reviewing the records of the case, we find the present petition to be devoid of merit. Belens appeal from the decision of the CFI was dismissed on April 19, 1983 for non-payment of docket fees which becAme final and executory. However, upon her motion, the appeal was reinstated on May 21, 1984 by the IAC explaining that:

justice to the parties who have exerted efforts to perfect their appeal only to be lost by technicality. while the rule is that mistake or negligence of the lawyer binds the client, in the interest of justice and because the appellee itself also failed to file its comment on the instant motion despite receipt of the resolution of this Court on October 16, 1983, the entry of judgment is set aside. WHEREFORE, in the interest of justice, the motion to reinstate appeal is hereby GRANTED and the Clerk of Court of the Court of origin is hereby ordered to elevate the records of Civil Case No. 655-B to this Court for purposes of the appeal. SO ORDERED.[29] (citations omitted) Petitioners, citing Perfecto Fabular vs. Court of Appeals,[30] argue that since the judgment of the CFI had long become final and had in fact been executed, it was already beyond the power of the appellate court to modify the same;[31] and therefore, the IAC erred in reinstating Belen de Guias appeal. The Court is not persuaded to grant their petition.

As gleaned from the records, from the filing of the notice of appeal, appeal bond and record on appeal, plaintiff-appellant had been in earnest effort to elevate her case to this Court. This is indicated by her having engaged the services of a second lawyer to pursue her appeal.

The Court has recognized instances when reinstatement of an appeal was deemed just and proper considering the greater interest of justice.[32] This case is one of them. The IAC, on April 19, 1983, dismissed Belen de Guias appeal for non-payment of docket fees. It is settled however that failure to pay the appeal docket fee confers on the court a mere directory power to dismiss an appeal which must be exercised with sound discretion and with a great deal of circumspection considering all attendant circumstances. Dismissal of an appeal based on this ground is discretionary with the appellate court and should be exercised wisely and prudently with a view to substantial justice.[33]

While, it is true that notice to counsel is binding upon the client the said rule is not here applicable. The notice was not actually received by the counsel to whom it was sent. And although the notice was re-sent to the party herself, still the same was not returned to this Court with the notation moved out. Since the records indicate the presence of a corroborating counsel for the plaintiff-appellant, the notice should have been re-sent to this counsel, if only to give

As noted by the IAC in its decision dated May 21, 1984 in ACG.R. CV No. 5524-UDK, Belen failed to pay the appeal docket fee, not because of lack of interest, but because of lack of proper notice. It was only upon the inquiry of Belens corroborating counsel that they found out, for the first time, the dismissal of her appeal. The Court is aware of its ruling in Arambulo vs. Court of Appeals[34] that failure of the counsel to inquire from either the trial or the appellate court the

After weighting (sic) the respective arguments of the parties, this Court finds that justice and equity must play a heavy role in the determination of the motion to reinstate the appeal.

status of their appeal particularly as to the payment of docket fees, constitutes negligence sufficient to merit the dismissal of the appeal.[35] However, the fact that the appeal of Belen involved her claim that her own son Carlos de Guia forged her signature in a deed of sale transferring to him the ownership of her two parcels of land, the IAC did not commit any reversible error nor grave abuse of discretion in reinstating the appeal. The interest of substantial justice far outweighs whatever negligence Belen and her counsel might have committed. Significantly, it must be emphasized that petitioners purported predecessor-in-interest did not question the reinstatement of the appeal and allowed the same to be final and executory. Thus, for all legal interests and purposes, the reinstatement of the appeal is valid and binding upon the parties and their successors-in-interest, including herein petitioners. Petitioners further claim that they are purchasers in good faith since Ricardo San Juan was the registered owner when they bought the subject landholdings on October 10, 1983 from him.[36] They likewise argue that while there was a second decision rendered by the IAC in AC-G.R. CV No. 02883, said decision does not bind them since they were not parties in said action and said proceeding was in personam and not in rem, thus, a direct action should have been instituted against them for the lower court to acquire jurisdiction over their persons.[37] Here enters the importance of the second issue, i.e., whether or not petitioners are bound by the CAs decision in CA-G.R. SP. No. 14783 dated July 6, 1989. As borne by the records, petitioners filed before the CA a petition for certiorari, docketed as CA-G.R. SP. No. 14783, from the order of the RTC dated October 12, 1987 holding them in contempt of court and ordering them to reconvey the property to Belen. Except as to the findings that petitioners were in contempt of court, the CA affirmed the trial court in its decision dated July 6, 1989 and declared in no uncertain terms that Ricardo San Juan was not the owner of the land and therefore he had no right or title which he could legally convey to anyone, a fact even admitted by petitioners; that while petitioners were not parties to Civil

62 Case No. 655-B, they could not have been unaware of the dispute over the land because they claim to be tenants thereof; that the sale to petitioners was void from the beginning; that respondent Judge therefore did not commit any error in ordering the petitioner to reconvey the lands to Belen de Guia; that the cancellation of the titles of Carlos and San Juan and the reinstatement of Belens title by virtue of the appellate decision carried with them as a logical consequence the cancellation of petitioners title and any pretended right over the land; that petitioners cannot claim refuge behind their title; and that to permit them to do so would be to put a premium on bad faith which is never the aim of the torrens system. Again, petitioners did not appeal from the CA decision in CAG.R. SP No. 14783. It became final and executory on July 31, 1989.[38] And it is this final decision which was totally and erroneously ignored by the DAR Provincial Adjudicator and the DARAB. As petitioners themselves espouse, well settled is the principle that a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land.[39] The reason for this is that litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong the controversies.[40] The only exceptions to the general rule are the correction of clerical errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments,[41] and whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable.[42] Since the present case does not fall under any of the recognized exceptions, it is clear that petitioners are bound by the finality of the CA decision in CA-G.R. SP. No. 14783 which they themselves instituted.

Unlike Belen who appealed the CFI decision in AC-G.R. CV No. 5524-UDK and never lost interest in pursuing her appeal, petitioners in this case never appealed the decision in CAG.R. SP. No. 14783. They cannot therefore successfully raise before another tribunal, as the DARAB, the issues they could have raised through an appeal or a motion for reconsideration within the reglementary period. Petitioners also claim that their titles are unassailable having acquired the same pursuant to law.[43] Again the Court does not agree. The principle of indefeasibility of a Torrens Title does not apply where fraud attended the issuance of the title,[44] as is conclusively established in this case. The Torrens Title does not furnish a shield for fraud.[45] As a final note, the Court reiterates and hereby adopts the observations made by the CA speaking through Justice Angelina Sandoval- Gutierrez in CA-G.R. SP No. 39315, anent the DAR Provincial Adjudicator and the DARAB: Just why the Provincial Adjudicator and the DARAB itself relied on this Courts Resolution dated April 19, 1983 issued in AC-G.R. No. 5524-UDK dismissing petitioners appeal disturbs Us no end. They intentionally disregarded the fact that petitioners appeal was reinstated as shown by this Courts Resolution dated May 21, 1984 in AC-G.R. No. 5524-UDK. They cannot disclaim knowledge of the existence of this Resolution. Petitioners various pleadings and papers submitted to the Provincial Adjudicator and her brief filed with the DARAB repeatedly mentioned and reproduced the same. Yet they simply closed their eyes and refused to take cognizance that petitioners appeal was reinstated (docketed as CA-G.R. CV No. 02883) and was decided by this Court reversing the CFI decision in Civil Case No. 655-B dismissing the petitioners complaint, declaring as null and void Ricardo San Juan title from which private respondents titles were derived; and reinstating T.C.T. No. 209298 in the name of petitioner Belen Lopez Vda. de Guia. Worse, said adjudicators likewise did not recognize and practically impugned the Decision of this Court in CA-G.R. SP. No. 14783 holding inter alia that Ricardo San Juan was not the owner of the land and, therefore, he had no right or title which could regally (sic) convey to anyone, a fact even

admitted by petitioners x x x (referring to herein private respondents). Let it be stressed at this point that the Provincial Adjudicator and the DARAB are bound by the findings of fact and conclusion of law of this Court. Indeed, in disposing of the case at bench in defiance of the clear and categorical ruling of this Court in AC-G.R. CV No. 02883 and CA-G.R. SP No. 14783, both the Provincial Adjudicator and the DARAB committed gross error. Not only that, they manifested their utter disrespect to the Judiciary. Without doubt, their egregious conduct engendered doubt on their honesty and caused serious injustice to herein petitioner. They should have remembered that they owe it to the public to know the law or jurisprudence to be applied in a particular controversy; and that the conduct of those dispensing justice should be circumscribed with the heavy burden or responsibility, comporting themselves in a manner that will not raise any suspicion about their integrity.[46] Indeed, the DAR Provincial Adjudicator and the DARAB should have been more circumspect in the disposition of this case. Instead of facilitating the administration of justice, their obstinate refusal to obey a valid final judgment of the Court of Appeals, further delayed the resolution of this case and added valuable irretrievable years to a case that has already dragged on for decades. It blatantly questioned the wisdom of a higher court by stating that: this Board cannot comprehend how the Honorable Court of Appeals reverse itself in its Decision dated February 20, 1986 in AC-G.R. CV No. 02883, after its Decision has already become final and executory from April 19, 1983 in AC-G.R. No. 5524-UDK[47]. (Emphasis supplied) which statement manifest not only a superficial grasp of the rules, but more disappointingly, a contumacious attitude which this Court cannot countenance. WHEREFORE, the petition is hereby DENIED for lack of merit and the decision of the Court of Appeals in CA-G.R. SP No. 39315 dated June 28, 1996, is hereby AFFIRMED IN TOTO.

63

Costs against petitioners. SO ORDERED. [G.R. No. 128254. January 16, 2004] HEIRS OF POMPOSA SALUDARES represented by ISABEL DATOR, petitioners, vs. COURT OF APPEALS, JOSE DATOR and CARMEN CALIMUTAN, respondents. CORONA, J.: Assailed in the instant petition for review on certiorari is the July 31, 1996 decision[1] of the Court of Appeals reversing the August 27, 1992 decision[2] of the Regional Trial Court of Lucena City, Branch 56, which in turn dismissed private respondents petition for reconveyance on the ground of prescription of action. At the core of the present controversy is a parcel of land, known as Lot 5793, measuring 8,916 square meters, located at Mahabang Parang, Lucban, Quezon. The land formed part of the conjugal properties of spouses Juan Dator and Pomposa Saludares, known as the Tanza estate. Pomposa died on May 1, 1923, leaving herein petitioners, Enrica, Petra, Restituto, Amado, Delfina, Beata, Vicenta and Isabel, all surnamed Dator, as her compulsory heirs (hereinafter referred to as Heirs). On February 28, 1940, the Heirs and their father Juan executed a deed of extra-judicial partition of the share of Pomposa in the Tanza estate. The settlement conferred the eastern half of the Tanza estate to Juan and the western half to the Heirs. Before the aforementioned partition, Juan was in possession of the entire Tanza estate. After the partition, the Heirs took possession of their share and had the same tenanted by a certain Miguel Dahilig, husband of Petra, one of the Heirs, who in turn managed the land in behalf of the other siblings. Juan, the father, remained in possession of his half of the land until his death on April 6, 1940. On December 13, 1976, Isabel Dator applied for a free patent over the entire Tanza estate, including Lot 5793, in behalf of the Heirs. On May 26, 1977, after all the requirements were complied with, the Register of Deeds of Quezon awarded

Free Patent No. 4A-2-8976 and issued Original Certificate of Title (OCT) No. 0-23617 in the names of the Heirs.

review within the time frame, instead it took them eleven (11) long years to question the validity.

Sometime in 1988, the Heirs were informed by their tenant that private respondents cut some 50 coconut trees located within the subject lot. Thus, the Heirs sent a letter,[3] dated July 26, 1988, to private respondents demanding an explanation for their intrusion into their property and unauthorized felling of trees.

The doctrine of stale demands or laches is even applicable in the case at bar. Laches means the failure or neglect for an unreasonable length of time, to do that which by exercising diligence could or should have been done earlier. (Marcelino versus Court of Appeals, G.R. No. 94422, June 26, 1992) xxx xxx xxx

On August 25, 1988, private respondents retaliated by filing an action for reconveyance against petitioners, docketed as civil case no. 88-121, in the Regional Trial Court of Lucena City. Private respondents alleged in their complaint that: (a) they were the owners in fee simple and possessors of Lot No. 5793; (b) they bought the land from the successors-ininterest of Petra Dator, one of the heirs; (c) they were in possession of the subject land from 1966 to the present and (d) petitioner Isabel Dator obtained free patent OCT P-23617 over Lot 5793 in favor of the Heirs by means of fraud and misrepresentation. Thus, private respondents prayed for the cancellation of OCT P-23617 and the issuance of a new title in their names. In their answer, the Heirs denied having sold any portion of the Tanza estate to anyone. They alleged that: (a) they and their predecessors-in-interest had been and were still in actual, continuous, adverse and public possession of the subject land in the concept of an owner since time immemorial and (b) title to Lot 5793 was issued in their favor after faithful compliance with all the requirements necessary for the issuance of a free patent. After trial, the lower court rendered a decision dismissing the action primarily on the ground of prescription of action: More telling is plaintiff Jose Dators admission that the adjacent lot which is 5794 is his and he was a cadastral claimant, in fact, filed (sic) an application for free patent. By and large, if Jose Dator was personally claiming rights on the property now denominated as Lot 5793, the Court is intrigued and cannot see its way clear why Jose Dator did not file any protest in the application of the heirs of Pomposa Saludares, neither had Jose Dator filed any petition for

The issues with respect to ownership have already been amply discussed which brings us to the issue as to whether or not the action has prescribed and whether the original certificate of title in the name of the heirs of Pomposa Saludares is already indefeasible. The action for reconveyance at bar was filed on August 28, 1988 or more than eleven (11) years from the issuance of the title, a fact plaintiffs cannot deny. They cannot claim ignorance that the defendants-heirs of Pomposa Saludares are applying for a free patent of Lot No. 5793 because notices were sent. xxx xxx xxx In the absence of competent and positive evidence that the title of the defendants has been secured thru fraud which in the case at bar is wanting and which would necessarily invalidate it, the presumption is it has been issued regularly in the absence of actual fraud. There being no positive evidence presented which would establish actual fraud in the issuance of Free Patent Title No. P-23617 in the defendants name, their title deserves recognition. In like manner, in an action for reconveyance after the lapse of one year from the date of the registration, actual fraud in securing the title must be proved (J.N. Tuazon Co., Inc. versus Macalindog, G.R. No. L-15398, December 29, 1962, 6 SCRA 938). The plaintiffs claim for reconveyance therefore cannot prosper.

64

WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs ordering the dismissal of the case with costs against plaintiffs and declaring defendants, heirs of Pomposa Saludares, as the rightful owners of the land.

misrepresented herself and the rest of the heirs as owners entitled to the free patent. WHEREFORE, all the above considered, judgment is hereby rendered: 1. Reversing the August 27, 1992 decision of the court below;

The claim of defendants in the matter of attorneys fees and litigation expenses not having been proven by concrete evidence, the Court opts not to award the same. SO ORDERED.[4]

2. Ordering the Register of Deeds of Quezon Province to cancel OCT No. P-23617 in the name of the Heirs of Pomposa Saludares and to issue another for the same property in the name of plaintiffs Jose Dator and Carmen Calimutan;

On appeal, the appellate court reversed the trial court decision:

3. Ordering appellees to pay appellants ten thousand (P10,000.00) pesos for attorneys fees, and to pay the costs.

It is true that the Torrens title issued upon a free patent may not be cancelled after the lapse of ten years from the date of its registration because the statute of limitations bars such cancellation. But this doctrine has long been qualified thusly:

SO ORDERED.[5]

If the registered owner, be he the patentee or his successorin-interest to whom the Free patent was transferred or conveyed, knew that the parcel of land described in the patent and in the Torrens belonged to another who together with his predecessors-in-interest were never in possession thereof, then the statute barring an action to cancel a Torrens title issued upon a free patent does not apply and the true owner may bring an action to have the ownership or title to the land judicially settled and the Court in the exercise of its equity jurisdiction, without ordering the cancellation of the Torrens title issued upon the patent, may direct the defendant, the registered owner, to reconvey the parcel of land to the plaintiff who has been found to be the true owner thereof. (Vital vs. Anore, et al., 90 Phil. 855, Underscoring ours.)

The Court of Appeals erred in tracing the history of the transactions involving the property way back to the year 1923 and render judgment based on its findings, considering that petitioners are the registered owners of the property under a torrens certificate of title which is conclusive, incontrovertible and indefeasible.

Nevertheless, the right to seek reconveyance of registered property is not absolute because it is subject to extinctive prescription. In Caro vs. Court of Appeals,[8] the prescriptive period of an action for reconveyance was explained: Under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis--vis prescription, Article 1144 of the Civil Code is applicable. Article 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract;

In this case, there is clear evidence to show that appellee Isabel had full knowledge that Lot 5793 had been sold to her brother-in-law Miguel Dahilig and her sister Petra, that Lot 5793 no longer belonged to her and to the heirs she claimed to represent. She was signatory to the deed of sale dated April 16, 1940 in favor of appellant. (Exh. I) With this knowledge, there is reason to conclude that appellant Isabel

(2) Upon an obligation created by law; Aggrieved by the appellate court ruling, the Heirs filed the instant petition, assigning the following errors:

The Court of Appeals erred when it did not consider that the complaint filed by the private respondents for reconveyance and cancellation of title before the trial court eleven (11) years after a torrens title over the property was issued in the name of the petitioners (had) prescribed.[6] Notwithstanding the indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the registered property to its true owner. The rationale for the rule is that reconveyance does not set aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been wrongfully or erroneously registered in another persons name, to its rightful or legal owner, or to the one with a better right.[7]

(3) Upon a judgment. xxx xxx xxx An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential Decree No. 1529, which provides: In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder of the decree of registration on the original petition or application, x x x. This provision should be read in conjunction with Article 1456 of the Civil Code, which provides: Article 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The law thereby creates the obligation of the trustee to reconvey the property and the title thereto in favor of the true owner. Correlating Section 53, paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil Code with Article 1144(2) of the Civil Code, supra, the

65 prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the certificate of title. There is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the plaintiff is in possession of the land to be reconveyed.[9] In a series of cases,[10] this Court permitted the filing of an action for reconveyance despite the lapse of ten years and declared that said action, when based on fraud, is imprescriptible as long as the land has not passed to an innocent purchaser for value. But in all those cases including Vital vs. Anore[11] on which the appellate court based its assailed decision, the common factual backdrop was that the registered owners were never in possession of the disputed property. Instead, it was the persons with the better right or the legal owners of the land who had always been in possession of the same. Thus, the Court allowed the action for reconveyance to prosper in those cases despite the lapse of more than ten years from the issuance of title to the land. The exception was based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the expense of another.[12] In the case at bar, however, it is the rule rather than the exception which should apply. This Court does not normally review the factual findings of the Court of Appeals in a petition for review under Rule 45 of the Rules of Court. But when the findings of fact of the appellate court differ from those of the trial court, the Court in the exercise of its power of review may inquire into the facts of a case. The trial court declared the Heirs as having been in actual, open and continuous possession of the disputed lot. On the other hand, the appellate court ruled that it was private respondents. Private respondents presented documents purportedly showing a series of transactions which led to the alleged transfer of ownership of Lot 5793 from the Heirs to them, namely: (1) a Kasulatan Ng Pagbibilihang Lampasan, dated April 16, 1940, wherein the disputed lot was allegedly sold by

the Heirs to their sibling Petra Dator and her husband Miguel Dahilig; (2) an extra-judicial partition showing that, upon the death of Miguel, his heirs Petra, Angel, Anatalia, Catalina, Felimon and Jacinto, inherited Lot 5793 and (3) two deeds of sale dated December 30, 1978 and March 15,1970 wherein Felimon and Jacinto, and later Catalina, sold their undivided shares in Lot 5793 to private respondents. Other than the presentation of these documents, however, private respondents failed to prove that they were in actual, open and continuous possession of Lot 5793. On the other hand, Isabel Dator, who testified for the Heirs, vehemently denied having signed the Kasulatan Ng Pagbibilihang Lampasan and pointed out the absence of the signatures of her other siblings Vicenta, Barcelisa and Adoracion. The Heirs likewise presented proof of payment of realty taxes from 1956 to 1974 in the names of their deceased parents, and from 1975 to 1988 in their names. More importantly, the Heirs convincingly established their open and continuous occupation of the entire Tanza estate, including Lot 5793, through their tenant Miguel Dahilig. After Miguels death, he was succeeded by Marcelo Saludares who testified during the trial that: (a) the farm was under the administration of Beata and Isabel Dator who took over its management after Petra Dator died; (b) he had been consistently tending the land since 1947; (c) he was the one who planted the various crops and trees thereon, except for some 100 coconut trees which he explained were planted by other people in response to the Green Revolution project of then President Marcos. Saludares identified each and every landmark and boundary of the subject lot. He also enumerated all the trees planted on the subject lot and, when asked about the fruits of the land, he told the court that he shared the harvest with the surviving Heirs. In stark contrast, private respondents witness, farm worker Perpetuo Daya could not identify the boundaries of the disputed property, its adjoining owners or recall the dates he worked and tilled the subject lot.

Specially noteworthy was the fact that the recorded cadastral claimant of Lot 5793, Angel Dahilig, testified that he executed a waiver in favor of the Heirs because they were the true owners of the subject parcel of land.[13] Furthermore, we note private respondent Jose Dators declaration that he was the cadastral claimant of and free patent applicant for Lot 5794 which was adjacent to Lot 5793. This being the case, we find private respondents inaction difficult to understand, considering that they were among those who received notices of petitioners free patent application dated January 2, 1979 from the Bureau of Lands.[14] If private respondents indeed owned Lot 5793, they should have filed an application for free patent for it just as they did for Lot 5794, or at least opposed the Heirs application for free patent over Lot 5793, to protect their interests. As a matter of fact, they were aware that the Heirs tenant, Marcelo Saludares, repeatedly harvested the fruits of Lot 5793. But even assuming that private respondents indeed validly acquired Lot 5793 in 1966 as they claimed, they nevertheless slept on their right to secure title thereto. Their unexplained inaction for more than 11 years rendered their demand for reconveyance stale. Vigilantibus sed non dormientibus jura subverniunt. The law aids the vigilant, not those who sleep on their rights. This legal precept finds perfect application in the case at bar. Accordingly, we find that the Court of Appeals committed reversible error in disregarding the ten-year prescriptive period for the reconveyance of registered real property and in giving due course to said action despite the lapse of more than 11 years from the issuance of title thereto, which was clearly barred by prescription. WHEREFORE, the petition is hereby granted. The decision of the Court of Appeals, dated July 31, 1996, is REVERSED and SET ASIDE and the decision of the Regional Trial Court, dated August 27, 1992, is REINSTATED. SO ORDERED.