Ltd; Subsequent Registration - Buyer In Good Faith (saberon).pdf

FIRST DIVISION

government as well as the provincial and city governments shall be exempt from the payment of

UDK No. 7671 June 23, 1988

such fees in advance in order to be entitled to entry and registration.

DEVELOPMENT BANK OF THE PHILIPPINES, registrant-appellant, vs.

xxx xxx xxx

THE ACTING REGISTER DEEDS OF NUEVA ECIJA, respondentappellee.

The facts are few and undisputed. On June 13, 1980, the Development Bank of the Philippines (hereafter, DBP) presented for registration to the Register of Deeds of Nueva Ecija, Cabanatuan City, a sheriff's certificate of sale in its favor of two parcels of land covered by Transfer

NARVASA, J.:

Certificates of Title Nos. NT-149033 and NT-149034, both in the names of the spouses Andres Bautista and Marcelina Calison, which

This case, rather cut-and-dried as far as factual background is concerned, turns upon a determination of the true meaning and intendment of Section 56 of Presidential Decree No. 1529, 1 which in part reads:

said institution had acquired as the highest bidder at an extrajudicial foreclosure sale. The transaction was entered as Entry No. 8191 in the Registry's Primary Entry Book and DBP paid the requisite registration fees on the same day. Annotation of the sale on the covering

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

certificates of title could not, however be effected because the originals of those certificates were found to be missing from the files of the Registry, where they were supposed to be kept, and could not be located. 2 On the advice of the Register of Deeds, DBP instituted proceedings in the Court of First Instance of Nueva Ecija to reconstitute said certificates, and reconstitution was ordered by that court in a decision rendered on June 15, 1982. 3For reasons not apparent on the record, the certificates of title were reconstituted only on June 19,1984. 4 On June 25, 1984, DBP sought annotation on the reconstituted titles of the certificate of sale subject of Entry No. 8191 on the basis of that same four-year-old entry. The Acting Register of Deeds, being in doubt

of the proper action to take on the solicitation, took the matter to the

That view fails to find support from a consideration of entire context of

Commissioner of Land Registration by consulta raising two questions:

said Section 56 which in another part also provides that the instrument

(a) whether the certificate of sale could be registered using the old

subject of a primary entry "... shall be regarded as registered from the

Entry No. 8191 made in 1980 notwithstanding the fact that the original

time so noted ...," and, at the very least, gives such entry from the

copies of the reconstituted certificates of title were issued only on June

moment of its making the effect of putting the whole world on notice

19, 1984; and (b) if the first query was answered affirmatively,

of the existence the instrument on entered. Such effect (of

whether he could sign the proposed annotation, having assumed his

registration) clearly attaches to the mere making of the entry without

duties only in July 1982.5

regard to the subsequent step of annotating a memorandum of the instrument subject of the entry on the certificate of title to which it

The resolution on the consulta held that Entry No. 8191 had been

refers. Indeed, said Section, in also providing that the annotation, "...

rendered "... ineffective due to the impossibility of accomplishing

when made ... shall bear the same date ..." as the entry, may be said

registration at the time the document was entered because of the non-

to contemplate unspecified intervals of time occurring between the

availability of the certificate (sic) of title involved. For said certificate of

making of a primary entry and that of the corresponding annotation on

sale to be admitted for registration, there is a need for it to be re-

the certificate of title without robbing the entry of the effect of being

entered now that the titles have been reconstituted upon payment of

equivalent to registration. Neither, therefore, is the implication in the

new entry fees," and by-passed the second query as having been

appealed resolution that annotation must annotation entry

rendered moot and academic by the answer to the first. 6

immediately or in short order justified by the language of Section 56.

Unwilling to accept that result, the DBP appealed the resolution to the

Furthermore, it is amply clear that the four-year hiatus between

Court of Appeals (then the Intermediate Appellate Court) 7 which,

primary entry and proposed annotation in this case has not been of

after reviewing the record, certified the appeal to this Court as

DBP's making. Though it was under no necessity to present the

involving a question purely of law.8

owner's duplicates of the certificates of title affected for purposes of primary entry, since the transaction sought to be recorded was an

The appealed resolution appears to be based upon a reading of the

involuntary transaction, 9 and the record is silent as to whether it

cited Section 56 of PD No. 1529, and particularly of the provision

presented them or not, there is nonetheless every probability that it

therein referring to the Register's act of making a primary entry as "

did so. It was the mortgagee of the lands covered by those titles and it

... a preliminary process in registration ...," as depriving of any effect a

is usual in mortgage transactions that the owner's duplicates of the

primary entry without a corresponding annotation thereof on the

encumbered titles are yielded into the custody of the mortgage until

certificate of title to which the instrument subject of said entry refers.

the mortgage is discharged. Moreover, the certificates of title were reconstituted from the owner's duplicates, 10 and again it is to be

presumed that said duplicates were presented by DBP, the petitioner

inscription." Seemingly, that ruling was abandoned in the wartime case

in the reconstitution proceedings.

of Basa vs. De la Rama, 14 where it was held that the entry of an instrument in the primary entry book produces no legal effect unless a

It is, furthermore, admitted that the requisite registration fees were

memorandum thereof is noted on the certificate of title. Villasor vs.

fully paid and that the certificate of sale was registrable on its

Camon, 15 however, clarified that Aballe was never really abandoned

face. 11 DBP, therefore, complied with all that was required of it for

or reversed insofar as it applied to involuntary transactions. Said the

purposes of both primary entry and annotation of the certificate of

Court in that case, which involved a voluntary transactions — a deed

sale. It cannot be blamed that annotation could not be made

of assignment of rights in a parcel of land and its improvements:

contemporaneously with the entry because the originals of the subject certificates of title were missing and could not be found, since it had

The appellant cannot invoke in support of her

nothing to do with their safekeeping. If anyone was responsible for

contention, the ruling laid down in the case of

failure of annotation, it was the Register of Deeds who was chargeable

Government of the Philippine Islands vs. Aballe, 60

with the keeping and custody of those documents.

Phil., 986, which was followed in Director of Lands vs. Abad, 61 Phil. 479, to the effect that an attachment

It does not, therefore, make sense to require DBP to repeat the

entered upon the entry book is duly registered

process of primary entry, paying anew the entry fees as the appealed

although the duplicate certificate is not presented at

resolution disposes, in order to procure annotation which through no

the time of registration to the register of deeds.

fault on its part, had to be deferred until the originals of the

Appellant cannot invoked said ruling, not because it

certificates of title were found or reconstituted. That it is hardly just or

has been abandoned by the Supreme Court during the

equitable to do so also seems to have occurred to the Solicitor

Japanese occupation in the case of Bass VS. De la

General, who dilutes his argument in support of the appealed

Rama, et al., ... in which it was said that "we are

resolution with the suggestion that "... the making of a new entry ...

constrained to abandon the ruling in said two cases,"-

would be the more orderly procedure," and that DBP should not be

it was not abandoned for the decision was concurred

made to pay filing fees anew.12

by only two justices or less than a majority, and said statement was not necessary or an obiter dictum and

Jurisprudence on the subject, while it has not been entirely consistent,

against the law, as correctly stated by the two

is not wanting. In Government vs. Aballe, 13this Court ruled that " ...

associate justices who dissented and only concurred

(a)lthough a notice of attachment has not been noted on the certificate

in the result, but because said ruling, subsisting and

of title, its notation in the book of entry of the register of deeds

in force, does not support appellant's contention, for it

produces all the effects which the law gives to its registration or

is only applicable to registration of involuntary

instruments, such as attachment, or other liens and

Later cases appear to have applied the Aballe ruling that entry in the

adverse claims of any description. This ruling is

day book, even without the corresponding annotation on the certificate

correct or in conformity with the provisions of section

of title, is equivalent to, or produces the effect of, registration to

72 of Act No. 496, which do not require the

voluntary transactions, provided the requisite fees are paid and the

production by the registrant of the duplicate

owner's duplicates of the certificates of title affected are presented.

certificate of the land to be affected, ... (emphasis

Thus, in Levin vs. Bass, et al., 17 it was held:

supplied) ... Under the Torrens system the act of registration is The decision in Villasor also quoted with approval the following excerpt

the operative act to convey and affect the land. Do

from an earlier case, Philippine National Bank vs. Fernandez. 16

the entry in the day book of a deed of sale which was presented and filed together with owner's duplicate

Coming now to the second ground on which the

certificate of title which the office of the Registrar of

appellant bases his claims, we find that when Simona

Deeds and full payment of registration fees constitute

Fausa executed the document, Exhibit 3, on October

a complete act of registration which operates to

17, 1928, conveying her interest in the land to the

convey and affect the land? In voluntary registration,

appellant, her interest therein had already been

such as a sale, mortgage, lease and the like, if the

attached by the provincial sheriff and also by him at

owner's duplicate certificate be not surrendered and

public auction to the Philippine National Bank, and the

presented or if no payment of registration fees be

certificate of sale filed in the office of the register of

made within 15 days, entry in the day book of the

deeds in accordance with the law (sections 429 and

deed of sale does not operate to convey and affect

450 of the Code of Civil Procedure). It was not

the land sold. In involuntary registration, such as an

necessary for the sheriff to present the owner's

attachment, levy upon execution, lis pendens and the

duplicate of the certificate of title when he filed notice

like entry thereof in the day book is a sufficient notice

of attachment with the register of deeds, nor was it

to all persons of such adverse claim. ... The

necessary for the Philippine National Bank to present

pronouncement of the court below is to the effect that

the owner's duplicate when the bank filed its

an innocent purchaser for value has no right to the

certificate of sale for registration (sections 71 and 72

property because he is not a holder of a certificate of

of Act No. 496).

title to such property acquired by him for value and in good faith. It amounts to holding that for failure of the Registrar of Deeds to comply and perform his

duty, an innocent purchaser for value loses that

The judgment creditor contends that entry of the

character-he is not an "innocent holder for value of a

deed in the day book is not sufficient registration.

certificate of title." ... Neither violence to, nor

Both upon law and authority this contention must be

stretching of the meaning of, the law would be done,

rejected. Section 56 of the Land Registration Act says

if we should hold that an innocent purchaser for value

that deeds relating to registered land shall, upon

of registered land becomes the registered owner and

payment of the filing fees, be entered in the entry

in contemplation of law the holder of a certificate

book — also called day book in the same section —

thereof the moment he presents the owner's duplicate

with notation of the year, month, day, hour, and

certificate of title to the property sold and pays the

minute of their reception and that "they shall be

full amount of registration fees, because what

regarded as registered from the moment so

remains to be done lies not within his power to

noted." And applying this provision in the cases of

perform. The Registrar of Deeds is in duty bound to

Levin vs. Bass, etc., G.R. Nos. L-4340 to 4346,

perform it. We believe that is a reasonable and

decided on May 28, 1952, this Court held that "an

practical interpretation of the law under

innocent purchaser for value of registered land

considerations-a construction which would lead to no

becomes the registered owner and in contemplation of

inconsistency and injustice. (emphasis supplied)

law the holder of a certificate thereof the moment he presents and files a duly notarized and lawful deed of

A similar ruling was made in Potenciano vs. Dineros, et

sale and the same is entered on the day book and at

al., 18 concerning land a deed of sale of which was entered in the day

the same time he surrenders or presents the owner's

book upon payment of the corresponding fees and presentation of the

duplicate certificate of title to the property sold and

owner's duplicate of the covering certificate of title, on November 4,

pays the full amount of registration fees, because

1944. However, due to the confusion arising from the bombing of

what remains to be done lies not within his power to

Manila (this having happened during the final months of the Japanese

perform."

Occupation), the papers presented by the registrant were either lost or destroyed, no certificate of title was issued to him and as far as the

Current doctrine thus seems to be that entry alone produces the effect

records of the Register of Deeds showed, the property remained in the

of registration, whether the transaction entered is a voluntary or an

name of the vendor. Another party later sued the vendor, obtained

involuntary one, so long as the registrant has complied with all that is

judgment against him and purchased the property on execution sale.

required of him for purposes of entry and annotation, and nothing

In affirming judgment annulling the execution sale in an action

more remains to be done but a duty incumbent solely on the register

brought by the original purchaser, this Court held:

of deeds.

Therefore, without necessarily holding that annotation of a primary

Philippines as entered under Entry No. 8191 dated June 13, 1980 of

entry on the original of the certificate of title may be deferred

the Primary Entry (Day) Book of said Registry. No pronouncement as

indefinitely without prejudice to the legal effect of said entry, the Court

to costs.

rules that in the particular situation here obtaining, annotation of the disputed entry on the reconstituted originals of the certificates of title to which it refers is entirely proper and justified. To hold said entry "ineffective," as does the appealed resolution, amounts to declaring that it did not, and does not, protect the registrant (DBP) from claims arising, or transactions made, thereafter which are adverse to or in derogation of the rights created or conveyed by the transaction thus entered. That, surely, is a result that is neither just nor can, by any reasonable interpretation of Section 56 of PD 1529, be asserted as warranted by its terms. The qualms implicit in the query of the respondent (and present appellee) register of deeds about making annotation of an entry effected before he assumed that office are more imagined than real. He would only be making a memorandum of an instrument and of its entry based on or reciting details which are already of indubitable record and, pursuant to the express command of the law, giving said memorandum the same date as the entry. No part of that function is exclusive to the incumbent of the office at the time entry was made or is forbidden to any of his successors. WHEREFORE, the appealed resolution of the Acting Commissioner of Land Registration is SET ASIDE. The respondent-appellee Register of Deeds of Nueva Ecija, or his successor, is ordered to annotate on the originals of the reconstituted Transfer Certificates of Title Nos. NT149033 and NT-149034 of his Registry a memorandum of the certificate of sale in favor of appellant Development Bank of the

SO ORDERED.

since the titles in the custody of the Register of Deeds were among those burned down when a fire gutted the City Hall of Quezon City on G.R. No. 149121 : April 20, 2010 NATIONAL HOUSING AUTHORITY, Petitioner, v. AUGUSTO BASA, JR., LUZ BASA and EDUARDO S. BASA, Respondents.

June 11, 1988.5cЃa On April 16, 1992, the redemption period expired,6cЃa without respondents having redeemed the properties. Shortly thereafter, on April 24, 1992, NHA executed an Affidavit of Consolidation of

DECISION LEONARDO-DE CASTRO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Amended Decision1cЃa of the Court of Appeals dated November 27, 2000 and its Resolution dated July 19, 2001 denying the motion for reconsideration of the National Housing Authority (NHA). On April 19, 1983, spouses Augusto and Luz Basa loaned from NHA the amount of P556,827.10 secured by a real estate mortgage over their properties covered by Transfer Certificates of Title (TCTs) Nos. 287008 and 285413, located at No. 30 San Antonio St., San Francisco

Ownership7cЃa over the foreclosed properties, and the same was inscribed by the Register of Deeds on the certificates of title in the hand of NHA under Entry No. 6572/T-287008-PR29207.8cräläwvirtualibräry On June 18, 1992, NHA filed a petition for the issuance of a Writ of Possession. The said petition was granted by the Regional Trial Court (RTC) in an Order9cЃa dated August 4, 1992. A Writ of Possession10cЃa was issued on March 9, 1993 by the RTC, ordering spouses Augusto and Luz Basa to vacate the subject lots. The writ, however, remained unserved. This compelled NHA to move for the issuance of an alias writ of possession on April 28, 1993.

del Monte, Quezon City.2cЃa Spouses Basa did not pay the loan despite

Before the RTC could resolve the motion for the issuance of an alias

repeated demands. To collect its credit, the NHA, on August 9, 1990,

writ of possession, respondents spouses Basa and Eduardo Basa, on

filed a verified petition for extrajudicial foreclosure of mortgage before

June 2, 1993, filed a Motion for Leave to Intervene and Petition in

the Sheriff's Office in Quezon City, pursuant to Act No. 3135, as

Intervention (with Prayer for Temporary Restraining Order and/or Writ

amended.3cräläwvirtualibräry

of Preliminary Injunction).11cЃa Respondents anchored said petition for

After notice and publication, the properties were sold at public auction where NHA emerged as the highest bidder.4cЃa On April 16, 1991, the sheriff's certificate of sale was registered and annotated only on the owner's duplicate copies of the titles in the hands of the respondents,

intervention on Section 812cЃa of Act No. 3135, as amended, which gives the debtor/mortgagor the remedy to petition that the sale be set aside and the writ of possession be cancelled. In the said petition for intervention, respondents averred that the extrajudicial foreclosure of

the subject properties was a nullity since notices were not posted and

a year earlier, or on April 16, 1991. It pointed out that the RTC, via its

published, written notices of foreclosure were not given to them, and

Order dated August 4, 1992, had already ruled that respondents' right

notices of sale were not tendered to the occupants of the sold

of redemption was already gone without them exercising said right.

properties, thereby denying them the opportunity to ventilate their

Since said order had already attained finality, the ruling therein could

13

rights. cЃa Respondents likewise insisted that even assuming

no longer be disturbed.

arguendo that the foreclosure sale were valid, they were still entitled to redeem the same since the one-year redemption period from the

On January 2, 1995, the RTC issued the first assailed Order21cЃa with

registration of the sheriff's certificate of foreclosure sale had not yet

the following directives: 1) granting the issuance of the alias writ of

prescribed.14cЃa Citing Bernardez v. Reyes15cЃa and Bass v. De la

possession which allowed NHA to take possession of the subject

Rama,16cЃa respondents theorized that the instrument is deemed

properties; 2) admitting the Petition in Intervention and "treating the

registered only upon actual inscription on the certificate of title in the

same as the petition to set aside sale mentioned in [Sec. 8] of Act No.

custody of the civil registrar. cЃa Since the sheriff's certificate was

3155"; and 3) granting the issuance of a Writ of Preliminary Injunction

only inscribed on the owner's duplicate certificate of title, and not on

in favor of respondents that ordered NHA to refrain from selling or

the certificate of title in the possession of the Register of Deeds, then

disposing of the contested properties. The pertinent portion of the

there was no effective registration and the one-year redemption period

order reads:

17

had not even begun to run. Thus, respondents asked the RTC, among others, to declare the foreclosure sale null and void, to allow the

After examining the record and following precedents x x x this Court

respondents to redeem the mortgaged properties in the amount

hereby orders:

of P21,160.00, and to cancel the Writ of Possession dated March 9, 1993. NHA opposed respondents' petition for intervention.18cЃa It countered that the extrajudicial foreclosure sale was conducted validly and made in accordance with Act No. 3135 as evidenced by the publication of the Notice of Sheriff's Sale in the Manila Times in its issues dated July 14, 21 and 28, 1990.19cЃa NHA also said that respondents had been furnished with a copy of the Notice of Sheriff's Sale as shown at the bottom portion of said notice.20cЃa NHA maintained that respondents' right of redemption had long expired on April 15, 1992 since the certificate of sale was inscribed on their TCT Nos. 285413 and 287008

1. The issuance of an alias writ of possession; 2. Admission of the "Petition in Intervention," treating the same as the "petition" to set aside sale, etc., mentioned in [Sec. 8] of Act No. 3155; 3. The issuance of a writ of preliminary injunction, after a BOND in the amount of P20,000.00 had been duly filed by intervenors, ordering movant National Housing Authority, its agents and/or any other person acting under its command, to desist and refrain from selling or in any manner from disposing of the subject properties covered by TCT Nos. 287008 and 285413 and located at No. 30, San Antonio Street, San

Francisco del Monte, Quezon City, pending the termination of this

The motion is without merit. The admission of the intervention is

proceeding and/or unless a contrary order is issued by this Court;

sanctioned by Sec. 8 of Act No. 3135. And, because, otherwise or if no preliminary injunction is issued, the movant NHA may, before final

4. Setting the hearing of the petition in intervention (to set aside) on March 17, 1995, at 8:30 a.m.

22

judgment, do or continue the doing of the act with the intervenor asks the court to restrain, and thus make ineffectual the final judgment rendered afterwards which may grant the relief sought by the

NHA filed a motion for reconsideration23cЃa assailing the RTC's Order

intervenor.

insofar as it admitted respondents' motion for intervention and issued a writ of preliminary injunction. NHA argued that respondents should

ACCORDINGLY, the motion for reconsideration is DENIED.25

have assailed the foreclosure sale during the hearing in the petition for the issuance of a Writ of Possession, and not during the hearing in the

Undaunted, NHA filed on November 24, 1995, a special civil action

petition for the issuance of an alias writ of possession since the

for certiorariand prohibition before the Court of Appeals.

"petition" referred to in Section 8 of Act No. 3135 pertains to the original petition for the issuance of the Writ of Possession and not the

The Court of Appeals rendered a Decision26cЃa dated February 24,

Motion for the Issuance of an Alias Writ of Possession. NHA stressed

2000, in favor of the NHA. It declared null and void the assailed orders

that another reason why the petition for intervention should be denied

of the RTC dated January 2, 1995 and September 4, 1995, to the

was the finality of the Order dated August 4, 1992 declaring

extent that the said orders admitted the petition in intervention and

respondents' right of redemption barred by prescription. Lastly, NHA

granted the issuance of the preliminary injunction; but it upheld the

asserted that the writ of possession was issued as a matter of course

grant of the alias writ of possession, thus:

upon filing of the proper motion and thereby, the court was bereft of WHEREFORE, the petition is GRANTED, and the assailed order of

discretion.

January 2, 1995 is declared NULL AND VOID except for the portion In the second assailed Order cЃa dated September 4, 1995, the RTC

directing the issuance of an alias writ of possession. Likewise declared

denied NHA's motion for reconsideration reasoning that the admission

NULL AND VOID is the second assailed order of September 4, 1995

of the intervention was sanctioned by Section 8 of Act No. 3135. As to

denying the petitioner's motion for reconsideration. Let an alias writ of

the grant of preliminary injunction, the RTC made the justification that

possession be issued and executed/implemented by the public

if the NHA was not restrained, the judgment which may be favorable

respondent without further delay.27

24

to respondents would be ineffectual. The order partly provides: The Court of Appeals defended its affirmation of the RTC's grant of the alias writ of possession in NHA's favor by saying that it was a necessary consequence after the earlier writ was left unserved to the

party. It further explained that NHA was entitled to the writ of

Also, respondents would like the Court of Appeals to treat the petition

possession as a matter of course after the lapse of the redemption

for intervention not only as an opposition to the issuance of the alias

period.

writ of possession, but also as a proper remedy under Section 8 of Act No. 3135, as amended, in view of the various issues raised.

As to the RTC's admission of respondents' petition for intervention, the appellate court opined that it was improperly and erroneously made.

On November 27, 2000, the Court of Appeals, in its Amended Decision,

The Court of Appeals believed that the only recourse available to a

reconsidered its earlier stance. It declared that the period of

mortgagor, in this case the respondents, in a foreclosure sale is to

redemption had not expired as the certificate of sale had not been

question the validity of the sale through a petition to set aside the sale

registered or annotated in the original copies of the titles supposedly

and to cancel the writ of possession, a summary procedure provided

kept with the Register of Deeds since said titles were earlier razed by

for under Section 112 of the Land Registration Act. It also observed

fire. Taking its cue from Bass v. De la Rama where the Court

that the grant of the preliminary injunction by the RTC was uncalled

purportedly made a ruling that entry of a document, such as sale of

for as it would effectively defeat the right of NHA to possession, the

real property, in the entry book is insufficient to treat such document

latter having been entitled by virtue of the grant of the alias writ of

as registered, unless the same had been annotated on the certificate

possession.

of title; the Court of Appeals went on to say that the entry of the certificate of sale in the owner's duplicate of the titles could not have 28

Respondents filed a motion for reconsideration. cЃa They alleged that

been sufficient to register the same since anyone who would wish to

since they raised the issue that their right of redemption had not

check with the Register of Deeds would not see any annotation. Thus,

prescribed, said fact should have changed the whole scenario such that

entry made on the owner's duplicate of the titles cannot be considered

the issuance of a writ of possession ceased to be summary in nature

notice that would bind the whole world. Having been deprived of their

and was no longer ministerial. Respondents then concluded that their

right of redemption, the Court of Appeals deemed it proper to allow

right to redeem the properties against NHA's right to the writ of

respondents to intervene. The dispositive part of the amended decision

possession must be threshed out in a hearing of the case on its merits.

decrees:

With regard to the RTC Order dated August 4, 1992 granting the writ

WHEREFORE, the motion for reconsideration is GRANTED. Our

of possession which, according to the NHA, became final and

decision dated February 24, 2000, is RECONSIDERED and SET ASIDE

executory, respondents argued that said order did not constitute res

and the petition DISMISSED .29

judicata so as to bar the filing of the petition for intervention since the said order was not a judgment on the merits that could attain finality.

Unfazed, NHA filed a motion for reconsideration, which the Court of Appeals denied in its July 19, 2001 Resolution, to wit:

ACCORDINGLY, the Motion for Reconsideration dated February 24, 2000 is DENIED for lack of merit.

30

On the procedural aspect, respondents question NHA's alleged failure to include in its petition copies of material portions of the record such as pleadings filed in the RTC and the Court of Appeals as required

Hence, the instant petition.

under Section 4, Rule 45 of the Rules of Court. Respondents also pointed out the purported defective verification of NHA in view of the

In its memorandum, NHA tendered the following issues:

fact that it merely stated that the one verifying had read the allegations of the petition and that the same were true and correct to

1. WHETHER OR NOT THE ANNOTATION OF THE SHERIFF'S CERTIFICATE OF SALE IN THE PRIMARY ENTRY BOOK OF THE REGISTER OF DEEDS AND ON THE OWNER'S DUPLICATE TITLE IS SUFFICIENT COMPLIANCE WITH THE REQUIREMENT OF LAW ON REGISTRATION.

the best of his knowledge. According to respondents, such declarations were not in accordance with the rules which require that a verified pleading must state that the affiant had read the pleading and that the allegations therein were true and correct based on his personal knowledge and not only to the "best" of his knowledge.

2. WHETHER OR NOT THE CASE OF BASS VS. DE LA RAMA HAS BEEN SUPERSEDED.31

As to the merits, NHA stresses that the annotation and entry in the owner's duplicate certificate of titles of the sheriff's certificate of sale

Respondents, on the other hand, offered the following as issues: I WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE LOWER COURT DID NOT ACT WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ADMITTING THE RESPONDENTS' INTERVENTION AND GRANTING THE EQUITABLE WRIT OF INJUNCTION THEREBY DISMISSING THE PETITION FOR CERTIORARI AND PROHIBITION.

are sufficient compliance with the requirement of law on registration. To support this, NHA refers to Land Registration Administration Circular No. 3 dated December 6, 1988, entitled "Entry and Provisional Registration of Instruments Pending Reconstitution of Title" which allegedly authorized all Registers of Deeds to accept for entry and provisional registration instruments affecting lost or destroyed certificates of title pending reconstitution of the original. The legality and validity of the disputed registration on its duplicate copies of the sheriff's certificate of sale, NHA insists, are backed by this Court's ruling in Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,33cЃawhere purportedly, this Court made a

II

favorable interpretation of Section 56 of Presidential Decree No. 1529. NHA says that the inscription of the sheriff's certificate of sale only to

WHETHER OR NOT THE INSTANT PETITION COMPLIES WITH THE

the owner's duplicate copies, but not to those in the custody of the

REQUIREMENTS OF RULE 45 OF THE RULES OF COURT.32

register of deeds is justified as the latter were burned down. Thus, it

could not be blamed for the non-registration of the sale in the original

Ascribing NHA's inaction to have the burned titles reconstituted,

copies.

respondents assert that such neglect should not be used as a justification for the non-inscription in the original titles of the

NHA faults the Court of Appeals' reliance on Bass v. De la Rama since

certificate of sale. Additionally, respondents insist that the question of

the ruling therein stating that entry and annotation of a sale

whether the redemption period should be reckoned from the

instrument on the owner's duplicate copy only as insufficient

inscription on the owner's duplicate copies is a factual and legal issue

registration, was already abandoned in Development Bank of the

that is appropriately adjudicated in a hearing on the merits of their

Philippines v. Acting Register of Deeds of Nueva Ecija, where it was

petition in intervention, and not in the instant special civil action

allegedly ruled that the primary entry alone of the transaction

for certiorariand prohibition which is limited in scope, namely, whether

produces the effect of registration so long as the registrant has

the RTC committed grave abuse of discretion amounting to lack of

complied with all that is required of him for purposes of entry and

jurisdiction in admitting their petition in intervention.

annotation. Respondents reiterate that the issuance of the writ of possession In contrast, respondents submit that annotation of the sheriff's

prayed for by NHA before the RTC is no longer ministerial since it

certificate of sale on the owner's copy is inadequate to propel the

raised the issue of whether their period of redemption has already

running of the redemption period. They firmly believe that for the sale

expired. They cite Barican v. Intermediate Appellate Court35cЃa as the

instrument to be considered as registered, the inscription must be

authority to this argument.

made on the reconstituted titles. We dwell first with the procedural issues before the main controversy. Respondents disagree with NHA's opinion that Bass v. De la Rama was

Respondents contend that the instant petition is dismissible on the

superceded by Development Bank of the Philippines v. Acting Register

ground that NHA failed to attach pleadings filed in the RTC and the

of Deeds of Nueva Ecija. They are of the persuasion that the ruling

Court of Appeals as required under Section 4, Rule 45 of the Rules of

in DBP pertains exclusively to the unique factual milieu and the issues

Court which partly provides:

attendant therein, but not to the instant case where Basspurportedly applies. Respondents also assail NHA's citation of Sta. Ignacia Rural

SEC. 4. Contents of petition. — The petition shall be filed in eighteen

Bank, Inc. v. Court of Appeals.34cЃaAccording to them, said case finds

(18) copies, with the original copy intended for the court being

no application to the instant controversy because the issue involved in

indicated as such by the petitioner, and shall x x x (d) be accompanied

the former was whether the redemption period should be reckoned

by a clearly legible duplicate original, or a certified true copy of the

from the date of the auction sale or the registration of the certificate of

judgment or final order or resolution certified by the clerk of court of

sale, which ostensibly is not the bone of contention in this case.

the court a quo and the requisite number of plain copies thereof, and

such material portions of the record as would support the petition; x x

because the CA records containing the promissory notes and the real

x.

estate and chattel mortgages were elevated to this Court. Without a doubt, we have sufficient basis to actually and completely dispose of

In its petition, NHA attached the February 24, 2000 Decision, the

the case.

November 27, 2000 Amended Decision, and the July 19, 2001 Resolution all of the Court of Appeals; copies of the transfer

We must stress that cases should be determined on the merits, after

certificates of title of the disputed properties; and the June 13, 1994

all parties have been given full opportunity to ventilate their causes

Order of the Quezon City RTC ordering the reconstitution of the said

and defenses, rather than on technicalities or procedural

titles. This Court finds that NHA substantially complied with the

imperfections. In that way, the ends of justice would be served better.

requirements under Section 4 of Rule 45. The same conclusion was

Rules of procedure are mere tools designed to expedite the decision or

arrived at by this Court in Development Bank of the Philippines v.

resolution of cases and other matters pending in court. A strict and

36

Family Foods Manufacturing Co., Ltd. cЃa when it was faced with the

rigid application of rules, resulting in technicalities that tend to

same procedural objection, thus:

frustrate rather than promote substantial justice, must be avoided. In fact, Section 6 of Rule 1 states that the Rules shall be liberally

As held by this Court in Air Philippines Corporation v. Zamora:

construed in order to promote their objective of ensuring the just, speedy and inexpensive disposition of every action and proceeding.

[E]ven if a document is relevant and pertinent to the petition, it need not be appended if it is shown that the contents thereof can also [be]

Contrary to respondents' assertion, NHA's verification conforms to the

found in another document already attached to the petition. Thus, if

rule. Section 4, Rule 7 of the Rules of Court states:

the material allegations in a position paper are summarized in a questioned judgment, it will suffice that only a certified true copy of

SEC. 4. Verification. – Except when otherwise specifically required by

the judgment is attached.

law or rule, pleadings need not be under oath, verified or accompanied by affidavit.

Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated (if earlier dismissed)

A pleading is verified by an affidavit that the affiant has read the

upon showing that petitioner later submitted the documents required,

pleading and that the allegations therein are true and correct of his

or that it will serve the higher interest of justice that the case be

personal knowledge or based on authentic records.

decided on the merits. A pleading required to be verified which contains a verification based Nevertheless, even if the pleadings and other supporting documents were not attached to the petition, the dismissal is unwarranted

on "information and belief," or upon "knowledge, information and

belief," or lacks a proper verification, shall be treated as an unsigned

Jurisprudence is replete with analogous cases. Of foremost importance

pleading.

is Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija40cЃa where the Court listed cases where the transaction or

The reason for requiring verification in the petition is to secure an

instrument was annotated not on the original certificate but

assurance that the allegations of a pleading are true and correct; are

somewhere else. In that case, DBP, following the extrajudicial

not speculative or merely imagined; and have been made in good

foreclosure sale where it emerged as the highest bidder, registered

37

faith. cЃa To achieve this purpose, the verification of a pleading is

with the Register of Deeds the sheriff's certificate of sale in its favor.

made through an affidavit or sworn statement confirming that the

After it had paid the required fees, said transaction was entered in the

affiant has read the pleading whose allegations are true and correct of

primary entry book. However, the annotation of the said transaction to

the affiant's personal knowledge or based on authentic

the originals of the certificates of title could not be done because the

records.38cräläwvirtualibräry

same titles were missing from the files of the Registry. This prompted DBP to commence reconstitution proceedings of the lost titles. Four

The General Manager of NHA verified the petition as follows:

years had passed before the missing certificates of title were reconstituted. When DBP sought the inscription of the four-year old

3. I have read the allegations contained therein and that the same are true and correct to the best of my own personal knowledge.39cЃa A reading of the above verification reveals nothing objectionable about it. The affiant confirmed that he had read the allegations in the petition which were true and correct based on his personal knowledge. The addition of the words "to the best" before the phrase "of my personal knowledge" did not violate the requirement under Section 4 of Rule 7, it being sufficient that the affiant declared that the allegations in the petition are true and correct based on his personal knowledge. Now, as to the merits of the case. The main issue before us is whether the annotation of the sheriff's certificate of sale on the owner's duplicate certificate of titles is sufficient registration considering that the inscription on the original certificates could not be made as the same got burned.

sale transaction on the reconstituted titles, the Acting Register of Deeds, being in doubt of the proper action to take, referred the matter to the Commissioner of the Land Registration Authority by consulta, the latter resolved against the annotation of the sale transaction and opined that said entry was "ineffective due to the impossibility of accomplishing registration at the time the document was entered because of the non-availability of the certificate (sic) of title involved."41cЃa In other words, annotation on the primary book was deemed insufficient registration. The Court disagreed with this posture. Considering that DBP had paid all the fees and complied with all the requirements for purposes of both primary entry and annotation of the certificate of sale, the Court declared that mere entry in the primary book was considered sufficient registration since "[DBP] cannot be blamed that annotation could not be made contemporaneously with the entry because the originals of the subject certificates of title were missing and could not be found, since it had

nothing to do with their safekeeping. If anyone was responsible for

In the recent case of Autocorp Group v. Court of Appeals,49cЃa the

failure of annotation, it was the Register of Deeds who was chargeable

respondent was awarded the foreclosed parcels of land. A sheriff's

with the keeping and custody of those documents."42cЃa To buttress

certificate of sale was thereafter issued in its favor. Thereafter,

its conclusion, the Court reviewed the relevant jurisprudence starting

petitioners in that case filed a complaint before the RTC with a prayer

from 1934. The Court noted that before the Second World War,

for the issuance of an ex parte TRO aimed at preventing the Register

43

particularly in Government of the Philippine Islands v. Aballe, cЃa the

of Deeds from registering the said certificate of sale in the name of the

prevailing doctrine was an inscription in the book of entry even without

respondent and from taking possession of the subject

the notation on the certificate of title was considered as satisfactory

properties.50cЃa Before the RTC could issue a TRO, respondent

and produced all the effects which the law gave to its registration.

presented the sheriff's certificate of sale to the Register of Deeds who

During the war, however, the Court observed that there was apparent

entered the same certificate in the primary book, even if the

departure from said ruling since in Bass v. De la Rama, the holding

registration fee was paid only the following day. Four days after, the

was that entry of an instrument in the primary entry book does not

RTC issued a TRO directing the Register of Deeds to refrain from

confer any legal effect without a memorandum thereof inscribed on

registering the said sheriff's certificate of sale. A preliminary injunction

44

the certificate of title. cЃa DBP noted that Bass v. De la Rama,

was thereafter issued as the TRO was about to expire. The preliminary

however, survived only for a little while since "later cases appear to

injunction was questioned by therein respondent. One of the main

have applied the Aballe ruling that entry in the day book, even without

issues raised there was whether the entry of the certificate of sale in

the corresponding annotation on the certificate of title, is equivalent

the primary book was equivalent to registration such that the TRO and

to, or produces the effect of, registration to voluntary transactions,

the preliminary injunction issues would not lie anymore as the act

provided the requisite fees are paid and the owner's duplicates of the

sought to be restrained had become an accomplished act. The Court

45

certificates of title affected are presented." cЃa

held that the TRO and the preliminary injunction had already become moot and academic by the earlier entry of the certificate of sale in the

46

These later cases are Levin v. Bass cЃa and Potenciano v.

primary entry book which was tantamount to registration, thus:

47

Dineros, cЃa both of which involve the issue of whether entry in the day book of a deed of sale, payment of the fees, and presentation of

In fine, petitioner's prayer for the issuance of a writ of injunction, to

the owner's duplicate certificate of title constitute a complete act of

prevent the register of deeds from registering the subject certificate of

48

registration. cЃa

sale, had been rendered moot and academic by the valid entry of the instrument in the primary entry book. Such entry is equivalent to

Simply, respondents' resort to Bass v. De la Rama is futile as the same

registration. Injunction would not lie anymore, as the act sought to be

was abandoned by the later cases, i.e., Bass, Potenciano and DBP.

enjoined had already become a fait accompli or an accomplished act.51

Indeed, the prevailing rule is that there is effective registration once

reconstituted as early as July 15, 1988.56cЃa NHA did everything within

the registrant has fulfilled all that is needed of him for purposes of

its power to assert its right.

entry and annotation, so that what is left to be accomplished lies solely on the register of deeds. The Court thus once held:

While it may be true that, in DBP, the Court ruled that "in the particular situation here obtaining, annotation of the disputed entry on

Current doctrine thus seems to be that entry alone produces the effect

the reconstituted originals of the certificates of title to which it refers is

of registration, whether the transaction entered is a voluntary or an

entirely proper and justified," this does not mean, as respondents

involuntary one, so long as the registrant has complied with all that is

insist, that the ruling therein applies exclusively to the factual milieu

required of him for purposes of entry and annotation, and nothing

and the issue obtaining in said case, and not to similar cases. There is

more remains to be done but a duty incumbent solely on the register

nothing in the subject declaration that categorically states its pro hac

of deeds.

52

vice character. For in truth, what the said statement really conveys is that the current doctrine that entry in the primary book produces the

In the case under consideration, NHA presented the sheriff's certificate

effect of registration can be applied in the situation obtaining in that

of sale to the Register of Deeds and the same was entered as Entry

case since the registrant therein complied with all that was required of

No. 2873 and said entry was further annotated in the owner's transfer

it, hence, it was fairly reasonable that its acts be given the effect of

certificate of title.53cЃa A year later and after the mortgagors did not

registration, just as the Court did in the past cases. In fact the Court

redeem the said properties, respondents filed with the Register of

there continued with this pronouncement:

54

Deeds an Affidavit of Consolidation of Ownership after which the same instrument was presumably entered into in the day book as the 55

To hold said entry ineffective, as does the appealed resolution,

same was annotated in the owner's duplicate copy. cЃa Just like in

amounts to declaring that it did not, and does not, protect the

DBP, Levin, Potenciano and Autocorp, NHA followed the procedure in

registrant (DBP) from claims arising, or transactions made, thereafter

order to have its sheriff's certificate of sale annotated in the transfer

which are adverse to or in derogation of the rights created or

certificates of title. There would be, therefore, no reason not to apply

conveyed by the transaction thus entered. That, surely, is a result that

the ruling in said cases to this one. It was not NHA's fault that the

is neither just nor can, by any reasonable interpretation of Section 56

certificate of sale was not annotated on the transfer certificates of title

of Presidential Decree No. 1529 be asserted as warranted by its

which were supposed to be in the custody of the Registrar, since the

terms.57

same were burned. Neither could NHA be blamed for the fact that there were no reconstituted titles available during the time of

What is more, in Autocorp Group v. Court of Appeals,58cЃa the

inscription as it had taken the necessary steps in having the same

pertinent DBP ruling was applied, thereby demonstrating that the said

ruling in DBP may be applied to other cases with similar factual and

since the one-year period of redemption is reckoned from the date of

legal issues, viz:

registration of the certificate of sale.61cЃaIt must be noted that on April 16, 1991, the sheriff's certificate of sale was registered and annotated

Petitioners contend that the aforecited case of DBP is not apropos to

only on the owner's duplicate copies of the titles and on April 16,

the case at bar. Allegedly, in DBP, the bank not only paid the

1992, the redemption period expired, without respondents having

registration fees but also presented the owner's duplicate certificate of

redeemed the properties. In fact, on April 24, 1992, NHA executed an

title. We find no merit in petitioner's posture x x x.

Affidavit of Consolidation of Ownership. Clearly, respondents have lost their opportunity to redeem the properties in question.

xxx As regards respondents' allegation on the defect in the publication and Like in DBP v. Acting Register of Deeds of Nueva Ecija, the instrument

notice requirements of the extrajudicial foreclosure sale, the same is

involved in the case at bar, is a sheriff's certificate of sale, We hold

unavailing. The rule is that it is the mortgagor who alleges absence of

now, as we held therein, that the registrant is under no necessity to

a requisite who has the burden of establishing such fact.62cЃa This is

present the owner's duplicates of the certificates of title affected, for

so because foreclosure proceedings have in their favor the

purposes of primary entry, as the transaction sought to be recorded is

presumption of regularity and the burden of evidence to rebut the

an involuntary transaction.

same is on the party who questions it.63cЃa Here, except for their bare allegations, respondents failed to present any evidence to support xxx

x x x Such entry is equivalent to registration. Injunction would not lie anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished act.59 Moreover, respondents' stand on the non-applicability of the DBP case to other cases, absent any statement thereof to such effect, contravenes the principle of stare decisis which urges that courts are to apply principles declared in prior decisions that are substantially similar to a pending case.60cЃa Since entry of the certificate of sale was validly registered, the redemption period accruing to respondents commenced therefrom,

them. In addition, NHA stated in its Comment to Motion for Leave of Court to Intervene that it had complied with the publication of the Notice of Sheriff's Sale in the Manila Times in the latter's issues dated July 14, 21 and 28, 1990.64cЃa It also claimed that an Affidavit of Publication of said newspaper was attached as Annex "B" in the said comment.65cЃa NHA also said that respondents had been furnished with a copy of the Notice of Sheriff's Sale as shown at the bottom portion of said notice.66cЃa From all these, it would tend to show that respondents' aspersion of non-compliance with the requirements of foreclosure sale is a futile attempt to salvage its statutory right to redeem their foreclosed properties, which right had long been lost by inaction.

Considering that the foreclosure sale and its subsequent registration

This provision of law authorizes the purchaser in a foreclosure sale to

with the Register of Deeds were done validly, there is no reason for

apply for a writ of possession during the redemption period by filing

the non-issuance of the writ of possession. A writ of possession is an

an ex parte motion under oath for that purpose in the corresponding

order directing the sheriff to place a person in possession of a real or

registration or cadastral proceeding in the case of property with

personal property, such as when a property is extrajudicially

Torrens title.68cЃa Upon the filing of such motion and the approval of

foreclosed.67cЃa Section 7 of Act No. 3135 provides for the rule in the

the corresponding bond, the law also in express terms directs the

issuance of the writ of possession involving extrajudicial foreclosure

court to issue the order for a writ of possession.69cräläwvirtualibräry

sales of real estate mortgage, to wit: The time-honored precept is that after the consolidation of titles in the Sec. 7. In any sale made under the provisions of this Act, the

buyer's name, for failure of the mortgagor to redeem, the writ of

purchaser may petition the [Regional Trial Court] of the province or

possession becomes a matter of right.70cЃa Its issuance to a purchaser

place where the property or any part thereof is situated, to give him

in an extrajudicial foreclosure is merely a ministerial function.71cЃa The

possession thereof during the redemption period, furnishing bond in an

writ of possession issues as a matter of course upon the filing of the

amount equivalent to the use of the property for a period of twelve

proper motion and the approval of the corresponding bond. The judge

months, to indemnify the debtor in case it be shown that the sale was

issuing the writ following these express provisions of law neither

made without violating the mortgage or without complying with the

exercises his official discretion nor judgment.72cЃa As such, the court

requirements of this Act. Such petition shall be made under oath and

granting the writ cannot be charged with having acted without

filed in the form of an ex parte motion in the registration or cadastral

jurisdiction or with grave abuse of discretion.73cЃa To accentuate the

proceedings if the property is registered, or in special proceedings in

writ's ministerial character, the Court disallowed injunction to prohibit

the case of property registered under the Mortgage Law or under

its issuance despite a pending action for annulment of mortgage or the

section one hundred and ninety-four of the Administrative Code, or of

foreclosure itself.74cräläwvirtualibräry

any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing

Believing that the instant case does not come within the penumbra of

law, and in each case the clerk of the court shall, upon the filing of

the foregoing rule, respondents resort to the ruling in Barican v.

such petition, collect the fees specified in paragraph eleven of section

Intermediate Appellate Court.75cЃa Unfortunately for them, the instant

one hundred and fourteen of Act Numbered Four Hundred and ninety-

case does not even come close to the cited case. There, the Court

six, as amended by Act Numbered Twenty-eight hundred and sixty-six,

deemed it inequitable to issue a writ of possession in favor of the

and the court shall, upon approval of the bond, order that a writ of

purchaser in the auction sale considering that the property involved

possession issue, addressed to the sheriff of the province in which the

was already in the possession of a third person by virtue of a deed of

property is situated, who shall execute said order immediately.

sale with assumption of mortgage even before the purchaser could

register the sheriff's certificate of sale. Also, the auction buyer therein

In fine, this Court finds that the Court of Appeals committed reversible

unreasonably deferred to exercise its right to acquire possession over

error in ruling that the annotation of NHA's sheriff's certificate of sale

the property. These circumstances are not present in the instant case.

on the duplicate certificates of title was not effective registration and in holding that respondents' redemption period had not expired.

76

Moreover, in Fernandez v. Espinoza, cЃa the Court refused to apply the ruling in Barican v. Intermediate Appellate Court77cЃaand Cometa 78

WHEREFORE, premises considered, the instant petition is

v. Intermediate Appellate Court, cЃa two cases which are exemptions

hereby GRANTED. The Amended Decision of the Court of Appeals

to the stated rule, reasoning that:

dated November 27, 2000 is SET ASIDE.

In Cometa, which actually involved execution of judgment for the

SO ORDERED.

prevailing party in a damages suit, the subject properties were sold at the public auction at an unusually lower price, while in Barican, the mortgagee bank took five years from the time of foreclosure before filing the petition for the issuance of writ of possession. We have considered these equitable and peculiar circumstances in Cometa and Baricanto justify the relaxation of the otherwise absolute rule. None of these exceptional circumstances, however, attended herein so as to place the instant case in the same stature as that of Cometa and Barican. Instead, the ruling in Vaca v. Court of Appeals is on all fours with the present petition. In Vaca, there is no dispute that the property was not redeemed within one year from the registration of the extrajudicial foreclosure sale; thus, the mortgagee bank acquired an absolute right, as purchaser, to the issuance of the writ of possession. Similarly, UOB, as the purchaser at the auction sale in the instant case, is entitled as a matter of right, to the issuance of the writ of possession. Just as in Fernandez, this Court does not see any compelling reason to veer away from the established rule.

FIRST DIVISION

344-square meter parcel of land in Richdale Subdivision, Antipolo City covered by Transfer Certificate of Title (TCT) No. R-17571 in the name

[G.R. No. 179884 : January 25, 2012]

of LBB Construction. A Notice of Levy on Attachment was annotated in TCT No. R-17571's Memorandum of Encumbrances on the same day,

DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC.,

June 17, 2004.

PETITIONER, VS. CANDICE S. BONA, RESPONDENT. On July 13, 2004, respondent Candice S. Bona (Candice) filed a Motion DECISION

seeking leave to intervene in Civil Case No. 04-7240. Attached to said Motion was Candice's Answer in Intervention, her Third Party Claim

LEONARDO-DE CASTRO, J.:

addressed to Sheriff Leyva, and a copy of TCT No. R-17571. Candice claimed therein that she is a co-owner of the property covered by TCT

[1]

This is a Petition for Review on Certiorari assailing the Decision

of

the Court of Appeals in CA-G.R. SP No. 94479 dated April 18, 2007 and its Resolution

[2]

dated September 18, 2007.cralaw

No. R-17571. She alleged that LBB Construction had sold the property to her and her siblings, Michael Angelo S. Bona, Diane Sheila S. Bona, Glenda May S. Bona and Johann Louie Sebastian S. Bona, through a Deed of Absolute Sale dated June 2, 2004. Candice asserted that

On June 3, 2004, petitioner Durawood Construction and Lumber

the sale is the subject of Entry No. 30549 dated June 16, 2004 in

Supply, Inc. (Durawood) filed an action for sum of money plus

the books of the Registry of Deeds of Antipolo City, while the levy on

damages with a prayer for the issuance of a writ of preliminary

attachment is only Entry No. 30590 dated June 17, 2004. What

attachment against LBB Construction and Development Corporation

was attached to the Motion was a copy of TCT No. R-17571, and not a

(LBB Construction) and its president Leticia Barber (Barber) before the

title in Candice and her co-owners' names.

Regional Trial Court (RTC) of Antipolo. In said suit, which was docketed as Civil Case No. 04-7240, Durawood prayed for the sum of

On August 11, 2004, the RTC issued an Order granting Candice's

P665,385.50 as payment for construction materials delivered to LBB

Motion to Intervene.

Construction. LBB Construction and Barber filed their Answer in Civil Case No. 04On June 14, 2004, the RTC issued an Order granting Durawood's

7240, but failed to attend the scheduled hearings, including the pre-

prayer for the issuance of a writ of attachment. On June 16, 2004, the

trial. Consequently, Durawood was allowed to present its evidence ex

corresponding writ was issued.

parte.

On June 17, 2004, Sheriff Rolando C. Leyva (Sheriff Leyva) levied on a

On July 21, 2005, the RTC rendered its Decision[3] in Civil Case No. 04-

7240 in favor of Durawood. The dispositive portion of the Decision

issuance of the new one was antedated, since Atty. Rutaquio was still

reads:

the Register of Deeds of Malabon on said date.[5] According to a certification of the Land Registration Authority,[6] it was a certain Atty.

WHEREFORE, in view of the foregoing consideration, judgment is

Edgar D. Santos (Atty. Santos) who was the Acting Register of Deeds

rendered in favor of the plaintiff and against the defendants, viz:

of Antipolo City on June 16, 2004.

1.

Ordering the defendants to pay plaintiff the sum of Six Hundred Sixty[-]Five Thousand Three Hundred Eighty[-]Five Pesos and Fifty Centavos (P665,385.50) plus two percent

Durawood filed a Motion to Reinstate Notice of Levy on Attachment in TCT No. R-22522 and Cite Atty. Randy A. Rutaquio for Contempt[7] on the following grounds:

(2%) interest per month from May 11, 2004 up to the present;

5. The cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522 was made by Atty. Randy A. Rutaquio who, on June 2004,

2.

Ordering the defendants to pay plaintiff twenty-five percent (25%) of the amount due to the plaintiff by way of attorney's fees; and

3.

To pay the costs of suit.[4]

The Decision became final and executory. On September 12, 2005, Durawood filed a Motion for the Issuance of a Writ of Execution. On November 15, 2005, the RTC issued a Writ of Execution. It was when this Writ was about to be enforced that Durawood discovered the cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522 in the name of Candice and her siblings. It would appear from the records that on June 16, 2004, the supposed Register of Deeds of Antipolo City, Atty. Randy A. Rutaquio (Atty. Rutaquio), cancelled TCT No. R-17571 and issued TCT No. R22522 in the name of Candice and her co-owners. The parties, however, do not dispute that said cancellation of the old TCT and

was not the Register of Deeds of Antipolo City. As evidence of such fact, plaintiff corporation was issued a certification by LRA Human Resource Management Officer IV Loreto I. Orense that Atty. Edgar D. Santos was the Acting Register of Deeds of Antipolo City from June 130, 2004. 6. While the Deed of Sale annotated in TCT No. R-17571 appears to have been made on June 16, 2004, the fact of its inscription was made after that of the levy on attachment as it obviously appears below and next to it. 7. The records of this case reveal that in the Third Party Claim filed by Candice Bona sometime in July 2004, there was never any mention of any recording about a Deed of Absolute Sale in the Memorandum of Encumbrances in TCT No. R-17571. It is difficult to comprehend that Atty. Hernando U. Salvador, Bona's lawyer, would miss mentioning that a Deed of Absolute Sale was inscribed ahead of the notice of levy on attachment if ever such sale was made on June 16, 2004.

as Acting Register of Deeds and was therefore already clothed with the 8. Thus, under the circumstances, plaintiff corporation cannot help

authority to issue and sign TCT No. R-22522.

speculate that [the] Deed of Sale between LBB Construction and the Bonas was made to appear to have been recorded a day before the

Atty. Rutaquio also submitted a letter dated June 25, 2004 from Atty.

attachment.

Santos to Land Registration Authority (LRA) Administrator Benedicto B. Ulep (Administrator Ulep) consulting the latter as regards the

9. While the Notice of Levy on Attachment was inscribed in TCT No. R-

registration of the Deed of Absolute Sale and the Notice of Levy on

17571 ahead and before of the Deed of Sale between LBB Construction

Attachment.[9] In said letter received by the LRA on July 1, 2004, Atty.

Co., Inc. and the Bonas, the said notice was not carried over in TCT

Santos stated that he had not acted on the Deed of Absolute Sale

No. R-22522 despite the fact that there was no order coming from this

since the required registration fees were not paid

Honorable Court dissolving the Writ of Preliminary Attachment dated

therefor.[10] Administrator Ulep was able to reply to said letter on

June 16, 2004.

October 6, 2004, when Atty. Rutaquio was already the Acting Register of Deeds. Administrator Ulep stated that since the Deed of Sale was

10. Randy Rutaquio's unauthorized acts of cancelling TCT No. R-

considered registered on June 16, 2004, the same shall take

17571 and issuing TCT No. R-22522 without inscribing the Notice of

precedence over the Notice of Levy on Attachment registered on June

Levy on Attachment despite the absence of a court order dissolving the

17, 2004.[11]

writ of Preliminary Attachment constitute improper conduct tending to directly or indirectly to impede, obstruct or degrade the administration

Acting on the Motion to Reinstate Notice of Levy on Attachment in TCT

of justice.[8]

No. R-22522 and Cite Atty. Randy A. Rutaquio for Contempt, the RTC issued an Order[12] dated March 2, 2006, ruling in favor of

Atty. Rutaquio filed a Manifestation alleging that the sale was entered

Durawood. The RTC gave great weight to the certification by LRA

in the Primary Entry Book prior to the Levy on Attachment. The two

Human Resource Management Officer IV Loreto I. Orense that Atty.

transactions were assigned to different examiners and it just so

Santos was the Acting Register of Deeds from June 1-30, 2004, and

happened that the examiner to whom the levy on attachment was

held that this proves the fact that Atty. Santos was the only person

assigned was able to inscribe the memorandum ahead of the sale,

authorized to sign and approve all the transactions with the Registry of

although the inscription of the sale was entered ahead of the

Deeds of Antipolo City at the time. Moreover, according to the RTC,

levy. The levy on attachment was not inscribed on TCT No. R-22522

the alienation of LBB Construction in favor of the Bonas without

because allegedly the sale should have priority and preference. The

leaving sufficient property to pay its obligation is considered by law in

cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522

fraud of creditor under Articles 1381[13] and 1387[14] of the Civil Code.

was already completed when he took over the position of Atty. Santos

The RTC did not rule on Durawood's prayer to cite Atty. Rutaquio for

the title, while the supposedly earlier inscription of the Deed of Sale by

contempt. The dispositive portion of the March 2, 2006 Order reads:

Atty. Rutaquio dated June 16, 2004 was found in page B (a separate page) of the title. The RTC found this fact, as well as the above-

WHEREFORE, premises considered, the instant motion to reinstate

mentioned certification that Atty. Santos was the Acting Register of

notice of levy on attachment in TCT No. R-22522 now in the name of

Deeds of Antipolo City from June 1 to 30, 2004, sufficient proof of the

the intervenors is hereby GRANTED its non-inscription therein having

irregularity of the June 16, 2004 inscription of the Deed of Sale.

been made without order of this Court. On April 11, 2006, Sheriff Leyva sold the subject property at public The Register of Deeds of Antipolo City is directed to reinstate the

auction for P1,259,727.90 with Durawood being the lone bidder, and

notice of levy on attachment in TCT No. R-22522 in the names of

issued the corresponding Certificate of Sale. The sale was inscribed in

intervenors immediately upon receipt of this Order.[15]

TCT No. R-22522 on the same date.[16]

Candice filed a Motion for Reconsideration of the above Order. In the

Candice filed with the Court of Appeals a Petition for Certiorari and

meantime, on March 13, 2006, Sheriff Leyva issued a Notice of

Prohibition assailing the March 2, 2006 and April 7, 2006 Orders of the

Sheriff's Sale setting the sale of the property covered by TCT No. R-

RTC.

22522 at public auction on April 11, 2006 at 10:00 a.m., pursuant to the November 15, 2005 Writ of Execution. Candice filed an Urgent Ex-

On April 18, 2007, the Court of Appeals rendered the assailed Decision

Parte Motion to Order the Branch Sheriff to Desist from the Sale of

in favor of Candice. According to the Court of Appeals, the sequence

Intervenor's Property for Being Premature, which was granted by the

of presentation of the entries in the TCT cannot control the

RTC in an Order dated March 29, 2006.

determination of the rights of the claimants over a disputed property. It is the registration in the Primary Entry Book (also referred

On March 8, 2006, the new Acting Register of Deeds Jose S. Loriega,

to in other cases as the day book) that establishes the order of

Jr. complied with the March 6, 2006 Order of the RTC by reinstating in

reception of instruments affecting registered land. As explained by

TCT No. R-22522 the Notice of Levy on Attachment in favor of

Atty. Rutaquio, the entry in the day book is only the preliminary step

Durawood.

in the registration. The inscription of the levy on attachment on TCT No. R-17571 (which was made before the inscription of the Deed of

On April 7, 2006, the RTC issued an Order denying Candice's Motion

Sale on said title) retroacts to the date of entry in the Primary Entry

for Reconsideration. In said Order, the RTC highlighted its observation

Book, which is June 17, 2004. However, the inscription of the Deed of

that in TCT No. R-17571, the inscription of the levy on attachment by

Sale on TCT No. R-17571, although made after the inscription of the

Atty. Santos dated June 17, 2004 was in page A (the dorsal portion) of

levy on attachment, retroacts to the earlier date of entry in the

Primary Entry Book, which is June 16, 2004.

or diminished except in a direct proceeding permitted by law. Finally, an action for rescission of contracts entered into in fraud of creditors

As regards the issuance by Atty. Rutaquio of TCT No. R-22522 on June

cannot be instituted except when the party suffering damage has no

16, 2004 despite the fact that he was not yet the Register of Deeds of

other legal means to obtain reparation for the same.[18]

Antipolo City at that time, the Court of Appeals held that there was substantial compliance with the National Land Titles and Deeds

The dispositive portion of the Decision reads:

Registration Administration (NALTDRA; now the Land Registration Authority [LRA]) Circular No. 94 on "Certificates of title and documents

WHEREFORE, in view of the foregoing, the assailed Orders of public

left unsigned by former Register of Deeds," which provides:

respondent judge ordering the reinstatement of the subject notice of levy on attachment in TCT No. R-22522 are hereby ANNULLED and

It has been brought to the attention of this Registration that, in some

SET ASIDE. As a result thereof, the public auction sale carried out

Registries, there are certificates of title with the full transcriptions and

pursuant to said levy is also declared null and void.[19]

inscriptions, including the volume and page numbers, the title number, the date and the name of the former Register of Deeds, already

Durawood filed a Motion for Reconsideration, but the same was denied

typewritten thereon but which, for some reasons, cannot anymore be

by the Court of Appeals in its Resolution dated September 18, 2007.

signed by the former official. In such cases and to resolve this problem, the present Register of Deeds may, without changing or

Durawood filed the instant Petition for Review, with the following

altering the transcriptions and inscriptions, affix his signature below

Assignment of Errors:

the name of the former Register of Deeds but placing the actual date and time of signing enclosed in parenthesis below his signature.[17]

I.

The Court of Appeals accepted Atty. Rutaquio's manifestation that he

THE COURT OF APPEALS IGNORED THE FACT THAT NON-PAYMENT OF

signed TCT No. R-22522 subsequent to June 16, 2004, on a date when

THE REQUIRED REGISTRATION FEES BY CANDICE S. BONA AND HER

he was already the Acting Register of Deeds of Antipolo City. Since

SIBLINGS DID NOT COMPLETE THE REGISTRATION OF THE DEED OF

the entry in the Primary Entry Book was made at the time of the

ABSOLUTE SALE ON JUNE 16, 2004.

incumbency of Atty. Santos, the name of the latter still appears on the document. According to the Court of Appeals, Candice cannot be made to suffer for the failure of Atty. Rutaquio to affix the date when he signed the document. Furthermore, a certificate of title, once registered, cannot be impugned, altered, changed, modified, enlarged

II. THE COURT OF APPEALS GRAVELY ERRED WHEN IT DISREGARDED THE FACT THAT NALTDRA CIRCULAR NO. 94 WAS NOT COMPLIED WITH BY ATTY. RANDY RUTAQUIO.

III. The Court of Appeals, in considering the date of entry in the day book THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO

of the Registry of Deeds as controlling over the presentation of the

CONSIDER THAT THE ENTRIES IN TCT NO. R-17571 (THE

entries in TCT No. R-17571, relied on Section 56 of Presidential Decree

PREDECESSOR OF TCT NO. R-22522) ARE EVIDENCES OF THE FACTS

No. 1529 which provides that:

STATED THEREIN. SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of IV.

Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments

THE COURT OF APPEALS OVERLOOKED THE FACT THAT THE REAL

including copies of writs and processes filed with him relating to

PROPERTY COVERED BY TCT NO. R-17571 AND SUBSEQUENTLY BY

registered land. He shall, as a preliminary process in registration, note

TCT NO. R-22522 HAS ALREADY BEEN ATTACHED BUT WAS

in such book the date, hour and minute of reception of all instruments,

UNILATERALLY RELEASED FROM THE COURT'S JURISDICTION BY A

in the order in which they were received. They shall be regarded as

USURPER.

[20]

registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which

All these allegations are specific matters to be resolved by this Court in

it refers, shall bear the same date: Provided, that the national

determining the overriding issue of the case at bar: whether the Court

government as well as the provincial and city governments shall be

of Appeals correctly granted Candice's Petition for Certiorari and

exempt from the payment of such fees in advance in order to be

Prohibition on its finding that the RTC committed grave abuse of

entitled to entry and registration. (Emphasis supplied.)

discretion in issuing its March 2, 2006 and April 7, 2006 Orders. In other words, the main issue to be determined by this Court is whether

The consequence of the highlighted portion of the above section is

or not there was grave abuse of discretion in the RTC's order to

two-fold: (1) in determining the date in which an instrument is

reinstate the notice of levy on attachment in TCT No. R-22522. "Grave

considered registered, the reckoning point is the time of the reception

abuse of discretion" signifies "such capricious and whimsical exercise

of such instrument as noted in the Primary Entry Book; and (2) when

of judgment that is equivalent to lack of jurisdiction. The abuse of

the memorandum of the instrument is later made on the certificate of

discretion must be grave as where the power is exercised in an

title to which it refers, such memorandum shall bear the same date as

arbitrary or despotic manner by reason of passion or personal hostility,

that of the reception of the instrument as noted in the Primary Entry

and must be so patent and gross as to amount to an evasion of

Book. Pursuant to the second consequence stated above, the Court of

positive duty or to a virtual refusal to perform the duty enjoined by or

Appeals held that Atty. Rutaquio correctly placed the date of entry in

to act all in contemplation of law."

[21]

the Primary Entry Book as the date of the memorandum of the

registration of the deed of sale in TCT No. R-17571.

constitute a complete act of registration which operates to convey and affect the land? In voluntary registration, such as a sale, mortgage,

As regards the first consequence, this Court has applied the same in [22]

several cases. Thus, in the old cases of Levin v. Bass, Dineros,

[23]

Potenciano v.

and Development Bank of the Philippines v. Acting Register

of Deeds of Nueva Ecija,

[24]

as well as in the fairly recent cases

lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within 15 days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. x x x.[28]

of Autocorp Group v. Court of Appeals,[25] Armed Forces and Police Mutual Benefit Association, Inc. v. Santiago,[26] and National Housing Authority v. Basa, Jr.,

[27]

we upheld the entry of instruments in the

Levin, which was decided in 1952, applied Section 56 of the Land Registration Act[29] which provides:

Primary Entry Book to be equivalent to registration despite even the failure to annotate said instruments in the corresponding certificates of

Sec. 56. Each register of deeds shall keep an entry book in which,

title.

upon payment of the filing fee, he shall enter in the order of their reception all deeds and other voluntary instruments, and all copies of

Based on this alone, it appears that the RTC was in error when it

writs or other process filed with him relating to registered land. He

considered the registration of the Absolute Deed of Sale on June 16,

shall note in such book the year, month, day, hour, and minute of

2004 inferior to the registration of the Notice of Levy on Attachment

reception of all instruments in the order in which they were

on June 17, 2004 on the ground that the Attachment was annotated

received. They shall be regarded as registered from the time so

on TCT No. R-17571 earlier than the Deed of Sale. As discussed in the

noted, and the memorandum of each instrument when made on the

above-mentioned cases, the annotation in the certificate of title is not

certificate of title to which it refers shall bear the same

determinative of the effectivity of the registration of the subject

date; Provided, however, That no registration, annotation, or

instrument.

memorandum on a certificate of title shall be made unless the fees prescribed therefor by this Act are paid within fifteen days'

However, a close reading of the above-mentioned cases reveals that

time after the date of the registration of the deed, instrument,

for the entry of instruments in the Primary Entry Book to be equivalent

order or document in the entry book or day book, and in case

to registration, certain requirements have to be met. Thus, we held

said fee is not paid within the time above mentioned, such

in Levin that:

entry shall be null and void: Provided further, That the Insular Government and the provincial and municipal governments need not

Do the entry in the day book of a deed of sale which was presented

pay such fees in advance in order to be entitled to entry or

and filed together with the owner's duplicate certificate of title with the

registration. (Emphasis supplied.)

office of the Registrar of Deeds and full payment of registration fees

This provision is the precursor of the aforequoted Section 56 of

This pronouncement, which was reiterated in National Housing

Presidential Decree No. 1529, which seems to have dispensed with the

Authority v. Basa, Jr.,[32] shows that for the entry to be considered to

provision nullifying the registration if the required fees are not paid:

have the effect of registration, there is still a need to comply with all that is required for entry and registration, including the payment of

SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of

the prescribed fees. Thus, in Autocorp Group v. Court of

Deeds shall keep a primary entry book in which, upon payment of the

Appeals,[33] this Court compared the date when the required fees were

entry fee, he shall enter, in the order of their reception, all instruments

paid with the therein assailed writ of preliminary injunction:

including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note

Petitioners contend that payment of the entry fee is a condition sine

in such book the date, hour and minute of reception of all instruments,

qua non before any valid entry can be made in the primary entry book.

in the order in which they were received. They shall be regarded as

Allegedly, the Court of Appeals resorted to judicial legislation when it

registered from the time so noted, and the memorandum of each

held that the subsequent payment of the entry fee was curative and a

instrument, when made on the certificate of title to which it refers,

substantial compliance with the law. Petitioners claim that the ruling

shall bear the same date: Provided, that the national government as

in DBP vs. Acting Register of Deeds of Nueva Ecija does not apply to

well as the provincial and city governments shall be exempt from the

this case. As there was no valid registration, petitioners conclude that

payment of such fees in advance in order to be entitled to entry and

the order of the trial court issuing a writ of preliminary injunction was

registration.

proper, considering the irregularities present in the conduct of the extrajudicial foreclosure x x x.

In Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,[30] this Court applied the provisions of Presidential Decree

We find the petition bereft of merit.

No. 1529 and modified the doctrine as follows: First. The objection as to the payment of the requisite fees is Current doctrine thus seems to be that entry alone produces the effect

unavailing. There is no question that the fees were

of registration, whether the transaction entered is a voluntary or an

paid, albeit belatedly. Respondent bank presented the certificate of

involuntary one, so long as the registrant has complied with all

sale to the Office of the Register of Deeds of Cebu City for registration

that is required of him for purposes of entry and annotation,

on January 21, 1999 at 4:30 p.m. As the cashier had already left,

and nothing more remains to be done but a duty incumbent

the Office could not receive the payment for entry and registration

solely on the register of deeds.[31]

fees, but still, the certificate of sale was entered in the primary entry book. The following day, respondent bank paid the requisite entry and

registration fees. Given the peculiar facts of the case, we agree with the Court of Appeals that the payment of respondent bank must be

However, on 17 June 2004 at 11:45 a.m. a Notice of Levy on

deemed to be substantial compliance with the law; and, the entry of

Attachment (a photocopy of which is hereto attached as Annex "B")

the instrument the day before, should not be invalidated. In any case,

with Entry No. 30590 was filed and annotated against TCT No. R-

even if we consider the entry to have been made on January 22, the

17571/T-87.

important fact is that the entry in the primary entry book was done prior to the issuance of the writ of injunction [on February 15,

In view of the foregoing, we are now in a quandary as to what proper

1999; TRO issued on January 25, 1999] by the trial

steps should be taken. It should be noted further that the

court.

[34]

(Emphases supplied.)

required registration fees of the abovementioned sale was not paid the reason for which the same was not immediately acted

Records in the case at bar reveal that as of June 25, 2004, the date

upon by the undersigned.[35]

of the letter of Atty. Santos seeking the opinion of the LRA as regards the registration of the Deed of Sale and the Notice of Levy on

Since there was still no compliance of "all that is required x x x for

Attachment, the required registration fees for the Deed of Sale has not

purposes of entry and annotation"[36]of the Deed of Sale as of June

yet been paid:

25, 2004, we are constrained to rule that the registration of the Notice of Levy on Attachment on June 17, 2004 should take

25 June 2004

precedence over the former. Considering that the Notice of Levy on

[received by the LRA: July 01, 2004]

Attachment was deemed registered earlier than the Deed of Sale, the TCT issued pursuant to the latter should contain the annotation of the

HON. BENEDICTO B. ULEP

Attachment.

Administrator This Authority

In view of the foregoing, we find that the RTC was, in fact, acting properly when it ordered the reinstatement of the Notice of Levy on

Sir:

Attachment in TCT No. R-22522. Since the RTC cannot be considered as to have acted in grave abuse of its discretion in issuing such Order,

This has reference to the TCT No. R-17571/T-87 registered under the

the Petition for Certiorari assailing the same should have been

name of LBB Construction and Development Corporation relative to the

dismissed.cralaw

Deed of Absolute Sale with Entry No. 30549, which was sought to be registered on 16 June 2004 at 11:20 a.m. (a photocopy of which is

WHEREFORE, premises considered, the instant Petition for Review

hereto attached as Annex "A").

on Certiorari is hereby GRANTED. The Decision of the Court of

Appeals in CA-G.R. SP No. 94479 dated April 18, 2007 and its Resolution dated September 18, 2007 are REVERSED and SET ASIDE. SO ORDERED.

price, Neri will surrender the mother title to the Municipality for THIRD DIVISION

subdivision of the property on the condition that Neri will equitably share in the expense thereof.6chanrobleslaw

G.R. No. 199180, July 27, 2016 Lot 398 was subsequently subdivided into 5 lots: Lot 398-A, Lot 398THELMA RODRIGUEZ, JOINED BY HER

B, Lot 398-C, Lot 398-D, and Lot 398-E. Lots 398-C and 398-D pertain

HUSBAND, Petitioners, v. SPOUSES JAIME SIOSON AND ARMI SIOSON, ET AL., Respondents.

to the portions that were sold to the Municipality, while Lot 398-E is a road lot. Consequently, only Lots 398-A and 398-B were left as the remaining portions over which Neri retained absolute title. TCT Nos. T-

DECISION

209894 and T-209895 were then respectively issued over Lots 398-A REYES, J.:

Before the Court is a petition for review1 under Rule 45 of the Rules of Court assailing the Decision2dated May 26, 2011 and Resolution3 dated October 21, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 94867, which nullified the Joint Decision4 dated August 13, 2009 of the Regional Trial Court (RTC) of Bataan, Branch 3.

and 398-B and were both registered in the name of "Neri delos Reyes, married to Violeta Lacuata." The owner's duplicate copies of TCT Nos. T-209894 and T-209895, however, were retained by the Municipality pending Neri's payment of his share in the expenses incurred for the subdivision of Lot 398. These were placed under the custody of the Municipal Treasurer, where they continue to remain.7chanrobleslaw Neri, however, alleged that then Municipal Mayor Mario Zuñiga suggested that he sell Lot 398-A to his aunt, petitioner Thelma

The Facts

Rodriguez (Thelma). The Municipality would then expropriate the same This petition is the aftermath of a series of sales transactions entered

from Thelma. Neri agreed to the suggestion.8chanrobleslaw

into by Neri delos Reyes (Neri) over a portion of a property formerly identified as Lot 398, with an area of 22,398 square meters, covered

After agreeing to the amount of P1,243,000.00 as the selling price,

by Transfer Certificate of Title (TCT) No. T-86275 and registered in the

Thelma, on March 20, 1997, issued a check for said amount payable to

5

name of "Neri delos Reyes, married to Violeta Lacuata." chanrobleslaw

Neri. When it fell due, no sufficient funds were available to cover the check. Consequently, it was agreed that Thelma would pay the

Sometime in 1997, the Municipality of Orani, Bataan (Municipality)

purchase price in installments from March 20, 1997 to September 4,

purchased from Neri an area of about 1.7 hectare of Lot 398, to be

1997. Thelma, however, was only able to pay

used for the extension of the Municipality's public market. Among

P442,293.50.9chanrobleslaw

other things, it was agreed that upon full payment of the purchase

On November 12, 2001, Thelma caused the annotation of an adverse 10

claim on TCT No. T-209894.

At about the same time, Thelma saw an

Upon the issuance of TCT No. T-226775, the respondents declared Lot 398-A for tax purposes and paid them accordingly. They sought to

announcement that a new Orani Common Terminal would be built on

take actual possession thereof by filling it; however, after they filled

Lot 398-A. As she has not yet entered into any agreement regarding

said lot with about 40 truckloads of soil/fillings, Thelma sent two

the utilization of said lot, Thelma filed a Complaint for

armed blue guards who entered the premises and set up a tent

Injunction docketed as Civil Case No. 7394 against then incumbent

therein. The respondents brought the matter to the attention of

mayor Efren Pascual, Jr. (Mayor Pascual), and the Municipality under

barangay authorities who referred them to the municipal mayor. As

claim of ownership. To support her claim, Thelma incorporated in her

the municipal mayor did not take any action, the respondents filed a

complaint a copy of an undated and unnotarized deed of absolute

forcible entry case against Thelma before the Municipal Circuit Trial

11

sale allegedly executed by Neri in her favor. chanrobleslaw

Court of Orani-Samal, Bataan, docketed as Civil Case No. 843. The said ejectment case is still pending.17chanrobleslaw

In their joint verified answer, Mayor Pascual and the Municipality acknowledged that Thelma became the owner of Lot 398-A by way of 12

purchase from Neri. chanrobleslaw

After Thelma learned of the second sale of Lot 398-A, she filed against the respondents a complaint for the Declaration of Nullity of the Second Sale and TCT No. T-226775 on February 11, 2003, docketed

In 2002, Neri executed an affidavit claiming that the owner's copies of

as Civil Case No. 7664. In support of her claim, Thelma once again

TCT No. T-209894 (covering Lot 398-A) and TCT No. T-209895

presented a deed of absolute sale executed by Neri in her favor. This

(covering Lot 398-B) were lost, which was annotated on the original

time, the deed of sale she presented was duly signed by her and

copy of TCT No. T-209894 on May 8, 2002.13 Two days after, or on

Neri, witnessed, notarized and dated April 10,

May 10, 2002, Neri caused the cancellation of Thelma's adverse

1997.18chanrobleslaw

claim.14 Neri also caused the reconstitution of new owner's copies of TCT Nos. T-209894 and T-209895.15 Thereafter, new copies of TCT

The respondents countered that they are innocent purchasers for value

Nos. T-209894 and T-209895 were issued, and Neri then sold Lot 398-

having bought Lot 398-A at the time when Thelma's adverse claim was

A to Spouses Jaime and Armi Sioson, Spouses Joan and Joseph

already cancelled. While they admit Thelma's possession of the subject

Camacho, and Agnes Samonte (respondents) - in a deed of sale dated

property, they, however, qualify that possession is being contested in

November 27, 2002. A special power of attorney was executed by

a separate action for forcible entry.19chanrobleslaw

Violeta delos Reyes (Violeta) in favor of Neri for the purpose. Consequently, TCT No. T-209894 was cancelled, and TCT No. T16

226775 was thus issued in the respondents' names. chanrobleslaw

The respondents also filed a verified answer-in-intervention in Civil Case No. 7394 (injunction case) contending that they are the present

registered owners of Lot 398-A, and as such, Thelma is not entitled to 20

any relief. chanrobleslaw

and is presently in the custody of the Municipal Treasurer of Orani, Bataan. In consequence, defendant Register of Deeds of Bataan is directed to cancel said new owner's copy of [TCT] No. T-209894;

Ruling of the RTC

and cralawlawlibrary

The RTC jointly heard Civil Case No. 7394 and Civil Case No. 7664 and

4) [The respondents] are hereby ordered to jointly and severally pay

after trial, rendered judgment in favor of Thelma. The dispositive

to [Thelma] attorney's fees in the amount of Twenty[-]Five Thousand

portion of the Joint Decision21 dated August 13, 2009

Pesos (P25,000.00).

reads:ChanRoblesVirtualawlibrary

All counterclaims of [the respondents] are denied for lack of basis in

WHEREFORE, judgment is hereby rendered declaring

fact and in law.

that:ChanRoblesVirtualawlibrary 1) [Thelma] is entitled to the relief of permanent injunction prayed for

No pronouncement as to costs.

in Civil Case No. 7394 against the respondents. Insofar as defendants [Mayor Pascual] and the [Municipality] are concerned, not only did

SO ORDERED.22chanroblesvirtuallawlibrary

they acknowledge expressly the ownership of [Thelma] of Lot 398-A,

The RTC concluded that by Neri's admission that he sold the subject

they have disowned the commission of any act in derogation of

lot to Thelma for a consideration of P1,243,000.00, and his

[Thelma's] right of ownership of the lot and did not contest anymore

acknowledgement receipt of P442,293.50 as partial payment from the

the action of [Thelma] in said case;

latter, the transaction between Thelma and Neri should be regarded as an executed contract of sale. Hence, Lot 398-A was subjected to a

2) Insofar as Civil Case No. 7664 is concerned, the second deed of sale

double sale when Neri sold the same property to the

entered into by [Neri] with the [respondents] is hereby declared null

respondents.23 The RTC further ruled that the contract of sale between

and void, and [TCT] No. T-226775 of the Registry of Deeds of Bataan

Neri and the respondents is null and void because it was transacted

which was issued by defendant Register of Deeds pursuant to said

and executed at the time when Neri was no longer the owner of Lot

second deed of sale is likewise declared null and void, and accordingly,

398-A. It was legally inexistent for lack of object certain. Thereupon,

the Register of Deeds for the Province of Bataan is ordered to cancel

the fact that the respondents were able to register their acquisition

said certificate of title and to reinstate [TCT] No. T-209894 in the

first is of no moment. Registration does not legitimize a void contract

name of [Neri], married to [Violeta];

and thus, TCT No. T-226775 should be cancelled.24chanrobleslaw

3) The new owner's copy of [TCT] No. T-209894 is hereby declared

The respondents moved for reconsideration but it was denied by the

null and void as the original owner's copy is not lost but actually exists

RTC per Order25cralawred dated January 13, 2010. Hence, they elevated their case to the CA.

SO ORDERED.27 (Emphasis in the original) Contrary to the findings of the RTC, the CA found that the contract

Ruling of the CA

between Neri and Thelma was a mere contract to sell and not a contract of sale; hence, there was no double sale of Lot 93 8-A.

On May 26, 2011, the CA promulgated the assailed Decision,26 with

According to the CA, the question of whether or not the respondents

the following dispositive portion:ChanRoblesVirtualawlibrary

are buyers in good faith is unavailing since the concept of a "buyer in

WHEREFORE, the instant Appeal is GRANTED. The Joint Decision

good faith" finds relevance only in cases of double sale. The CA further

dated August 13, 2009 and the Order dated January 13, 2010 of the

stated that even if it is assumed that the contract between Neri and

[RTC] of Bataan are hereby declared NULLand VOID insofar as it (1)

Thelma was an absolute contract of sale, the same is nonetheless void

granted permanent injunction in favor of [Thelma] in Civil Case No.

for lack of consent of Neri's wife, Violeta, insofar as the object of the

7394 against [the respondents];T2) declared null and void the deed of

transaction is a conjugal property.

sale between [Neri] and [the respondents] in Civil Case No. 7664; (3) declared null and void the [TCT] No. T-226775; (4) ordered the

Thelma moved for reconsideration of the CA decision, which was

cancellation of [TCT] No. T-226775 and reinstatement of [TCT] No. T-

denied for lack of merit in Resolution28dated October 21, 2011.

209894 in the name of [Neri], married to [Violeta]; and (5) ordered the payment of attorney's fees.

Hence this petition.

Consequently, the following are hereby declared VALID: (1) the

Thelma argues that there was double sale and the CA erred in

Deed of Sale between [Neri] and [the respondents]; and (2) the [TCT]

reversing the RTC decision: (1) by interpreting the sale between

No. T-226775 in the names of [the respondents].

Thelma and Neri as a mere contract to sell; (2) by declaring the deed of sale in favor of Thelma as null and void due to lack of Violeta's

This Decision is without prejudice to any right which [Thelma] may

consent or conformity; and (3) by declaring the respondents as buyers

have against [Neri] for the refund of the amount of Four Hundred

in good faith despite prior registration of Thelma's notice of adverse

Forty-Two Thousand Two Hundred Ninety-Three and 50/100

claim in TCT No. T-209894, and her actual possession of the subject

Pesos (P442,293.50).

property.29chanrobleslaw

The Complaints in Civil Cases Nos. 7394 and 7664 are

Ruling of the Court

hereby DISMISSED. The resolution of this case basically rests on the determination of

whether the transaction between Neri and Thelma is a contract of sale or a contract to sell. The rule on double sale, as provided in Article

"The real character of the contract is not the title given, but the

1544 of the Civil Code,30 does not apply to a case where there was a

intention of the parties."34 In this case, there exist two deeds of

sale to one party of the land itself while the other contract was a mere

absolute sale. Though identically worded, the first contract was

promise to sell the land or at most an actual assignment of the right to

undated, not notarized, signed only by Neri, and was presented in Civil

31

repurchase the same land. chanrobleslaw

Case No. 7394 for Injunction,35 while the second deed was dated April 10, 1997, notarized on September 5, 1997, signed by both Neri and

Both the RTC and the CA concur in the finding that Neri agreed to sell

Thelma, and was presented in Civil Case No. 7664 for Declaration of

Lot 398-A to Thelma for an agreed price of P1,243,000.00. The RTC,

Nullity of Deed of Sale and Title.36chanrobleslaw

however, concluded that by Neri's admission that he sold the subject lot to Thelma for a consideration of P1,243,000.00, and that he

In determining the nature of the agreement between Thelma and Neri,

acknowledged receipt of P442,293.50 as partial payment from the

the CA took note of these two documents, and, coupled with Thelma's

latter, the transaction between Thelma and Neri should be regarded as

own admissions, correctly found that it was a mere contract to sell.

an executed contract of sale, and not a merely executory one. The RTC

According to the CA:ChanRoblesVirtualawlibrary

likewise took into consideration Thelma's alleged possession of the

During trial, Thelma explained the apparent disparity between the two

property and Neri's failure to rescind the contract as indicative of the

(2) "deeds of absolute sale" by testifying that the undated and

32

nature of their agreement as one of sale. chanrobleslaw

unnotarized deed of sale served only as a "receipt" which was signed by Neri when the latter received the downpayment for the lot. The

On the other hand, the CA ruled that "the contract between Thelma

dated and notarized deed of sale, on the other hand, was signed by

and Neri was a mere contract to sell, the transfer of ownership over

both Thelma and Neri upon Thelma's alleged full payment of the

Lot 398-A being conditioned on Thelma's full payment of the purchase

purchase price:

price."

33

As regards the existence of the two contracts of sale, the CA

concluded that Thelma admitted on trial that the first deed of sale was

chanRoblesvirtualLawlibraryx x x x

only meant to be an acknowledgment receipt for the down payment she made on the subject lot, and the second deed of sale was

Second, the execution of the "deed of absolute sale" dated August 10,

allegedly executed after Thelma pays in full the purchase price of the

1997 and the transfer and delivery of the title to Thelma's name

lot.

covering Lot No. 398-A were conditioned upon full payment of the purchase price.

A review of this case shows that the CA ruled in accord with existing jurisprudence.

Thelma testified that the "deed of absolute sale" dated August 10,

1997 and which was attached to Thelma's complaint in Civil Case No.

1997; and (5) Neri acknowledged receipt from Thelma the total

7664 was signed by her, Neri and their witnesses only upon full

amount of P442,293.50.40chanrobleslaw

payment of the purchase price. Thelma further testified that she and Neri agreed to place the amount of the purchase price on the deed of

To bolster her claim, Thelma insists that she now holds title over the

absolute sale only at the time when Thelma had fully paid the same: x

subject property after Neri allegedly delivered the subject lot to her

xx

37

(Italics ours and emphasis deleted)

right after the execution of the sale.41 There is, however, nothing on

Despite the denomination of their agreement as one of sale, the

record to support this claim aside from her bare assertions. There was

circumstances tend to show that Neri agreed to sell the subject

no testimony or any proof on her part showing when and how she took

property to Thelma on the condition that title and ownership would

possession of the property. At best, what is extant from the records is

pass or be transferred upon the full payment of the purchase price.

that Thelma paid taxes on the property for the years 2000 and 2001,

This is the very nature of a contract to sell, which is a "bilateral

which was three years after the alleged sale. "But tax declarations, by

contract whereby the prospective seller, while expressly reserving the

themselves, are not conclusive evidence of ownership of real

ownership of the property despite delivery thereof to the prospective

property."42 Aside from this, the tax receipts showed that the property

buyer, binds himself to sell the property exclusively to the prospective

was still declared in the name of Neri.43chanrobleslaw

buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the purchase price."38 As stated by the Court, the

Moreover, the alleged delivery of the property, even if true, is

agreement to execute a deed of sale upon full payment of the

irrelevant considering that in a contract to sell, ownership is retained

purchase price "shows that the vendors reserved title to the subject

by the registered owner in spite of the partial payment of the purchase

property until full payment of the purchase price."39chanrobleslaw

price and delivery of possession of the property. Thus, in Roque v. Aguado,44 the Court ruled that since the petitioners have not paid the

It was likewise established that Thelma was not able to pay the full

final installment of the purchase price, the condition which would have

purchase price, and that she was only able to pay P442,293.50 of the

triggered the parties' obligation to enter into and thereby perfect a

agreed selling price of P1,243,000.00. The RTC, in fact, made the

contract of sale cannot be deemed to have been fulfilled;

following findings: (1) the consideration for Lot 398-A was

consequently, they "cannot validly claim ownership over the

P1,243,000.00; (2) Thelma issued a check on March 20, 1997 for said

subject portion even if they had made an initial payment and

amount, payable to Neri; (3) the agreement was that the check would

even took possession of the same."45chanrobleslaw

only be held by Neri for safekeeping as it was yet unsure if there was ample funds to cover the check; (4) the check was not covered by

Accordingly, the CA did not commit any reversible error in concluding

sufficient funds when presented for payment, so Thelma subsequently

that "the contract between Thelma and Neri was a mere contract to

paid Neri in installments starting from March 20, 1997 to September 4,

sell, the transfer of ownership over Lot 398-A being conditioned on

Thelma's full payment of the purchase price. Having failed to pay the purchase price in full, Thelma cannot claim ownership over Lot 398-A and Neri is not legally proscribed from alienating the same lot to other buyers."46chanrobleslaw Finally, while the CA correctly ruled that the agreement was a contract to sell, the Court, however, does not share its position that the subject property is a conjugal property, and as such, the absence of Violeta's consent should be held as among the factors which could have adversely affected the validity of the purported contract of sale between Neri and Thelma. This is due to the following reasons: first, the subject property, Lot 398-A, is registered in the name of "Neri delos Reyes, married to Violeta Lacuata," and so was its mother lot, Lot 398. In Metropolitan Bank and Trust Company v. Tan,47 it was held that such form of registration is determinative of the property's nature as paraphemal. That the only import of the title is that Neri is the owner of the subject property, it being registered in his name alone, and that he is married to Violeta; and second, the record is bereft of proof that said property was acquired during Neri and Violeta's marriage - such that, the presumption under Article 116 of the Family Code that properties acquired during the marriage are presumed to be conjugal cannot apply. WHEREFORE, the petition is DENIED for lack of merit. Accordingly, the Decision dated May 26, 2011 and Resolution dated October 21, 2011 of the Court of Appeals in CA-G.R. CV No. 94867 are AFFIRMED. SO ORDERED.chanRoblesvirtualLawlibrary

Leoncia Amodia and petitioners Cecilia Amodia Vda. de Melencion, THIRD DIVISION

Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia8 (the Amodias). The entire property was brought under the operation of the

[G.R. NO. 148846 : September 25, 2007]

Torrens System.9 However, the title thereto was lost during the Second World War.

CECILIA AMODIA VDA. DE MELENCION, VENERANDA AMODIA, FELIPE AMODIA, EUTIQUIO AMODIA and GO KIM

On July 10, 1964, the Amodias allegedly executed an Extra-Judicial

CHUAN, Petitioners, v. HONORABLE COURT OF APPEALS and

Partition of Real Estate with Deed of Absolute Sale10 whereby they

AZNAR BROTHERS REALTY COMPANY, Respondents.

extra-judicially settled the estate of Esteban Bonghanoy and conveyed the subject property to respondent Aznar Brothers Realty Company

DECISION

(AZNAR) for a consideration of P10,200.00. On August 10, 1964, the NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated March 30, 2001 and praying that the Decision3 of the Regional Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld.

said Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act 334411 as there was no title on file at the Register of Deeds of Lapu-Lapu City (Register of Deeds). Thereafter, AZNAR made some improvements and constructed a beach house thereon. On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion,

The Facts The subject property is a 30,351 square meter parcel of land (subject property) particularly denominated as Lot No. 3368, located at Subabasbas, Marigondon, Lapu-Lapu City, Cebu, and part of a total area of 30,777 square meters covered by Transfer Certificate of Title (TCT) No. 206264 (entire property) in the name of the late petitioner Go Kim Chuan (Go Kim Chuan).5 The entire property was originally owned by Esteban Bonghanoy6 who had only one child, Juana Bonghanoy-Amodia,7 mother of the late

Veneranda Amodia, Felipe Amodia and Eutiquio Amodia12 (petitioners Amodias) executed a Deed of Extra-Judicial Settlement with Absolute Sale,13 conveying the subject property in favor of Go Kim Chuan for and in consideration of P70,000.00. The lost title covering the subject property was reconstituted pursuant to Republic Act (RA) No. 26.14 A reconstituted title particularly designated as Original Certificate of Title (OCT) No. RO-2899 was issued in the name of Esteban Bonghanoy15 and, subsequently, a derivative title (TCT No. 20626) was issued in the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and dominion over the

subject property in an adverse and continuous manner and in the

Aggrieved, AZNAR appealed the RTC Decision to the CA.20

concept of an owner. The CA's Decision On February 14, 1990, AZNAR wrote a letter

16

to petitioners Amodias

asking the latter to withdraw and/or nullify the sale entered into

On March 30, 2001, the CA rendered a Decision holding that the Extra-

between them and Go Kim Chuan. On the same date, a Notice of

Judicial Partition of Real Estate with Deed of Absolute Sale executed by

Adverse Claim17 was annotated by AZNAR on TCT No. 20626. Because

the Amodias in favor of AZNAR was registered ahead of the Deed of

petitioners did not heed AZNAR's demand, on April 25, 1990, AZNAR

Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan,

filed a case against petitioners Amodias and Go Kim Chuan for

thus, pursuant to Article 1544 of the New Civil Code, the former deed

Annulment of Sale and Cancellation of TCT No. 20626

18

alleging that

should be given preference over the latter; that AZNAR's adverse claim

the sale to Go Kim Chuan was an invalid second sale of the subject

was annotated earlier than the execution of the Deed of Extra-Judicial

property which had earlier been sold to it. Petitioners Amodias denied

Settlement with Absolute Sale in favor of Go Kim Chuan; hence, the

that they executed the Extra-Judicial Partition of Real Estate with Deed

latter should have respected said adverse claim and should have made

of Absolute Sale in favor of AZNAR, claiming that their purported

inquiries as to possible defects that may exist in the title over the

signatures thereon were forged.19 Trial on the merits ensued.

subject property; and that in the absence of a final determination by a court of proper jurisdiction on the alleged forged signatures of the

The RTC's Decision

Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, the finding of the document examiner was insufficient

On February 18, 1993, the RTC dismissed AZNAR's complaint and

for the RTC to rule in favor of the petitioners.

declared Go Kim Chuan as the real owner of the subject property. The RTC ratiocinated that the signatures of the Amodias in the Extra-

The CA disposed of the case in this wise:

Judicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by the document examiner of the

WHEREFORE, premises considered, the assailed decision dated

Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the

February 18, 1993 of the Regional Trial Court of Lapu-Lapu City,

said deed did not convey anything in favor of AZNAR. Moreover, the

Branch 27, in Civil Case No. 2254-L is hereby REVERSED and SET

subject property had been brought under the Land Registration Act;

ASIDE and a new one is hereby entered as follows:

hence, all transactions involving the same should have complied with the said law. Finally, the RTC held that AZNAR failed to show that Go

(1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the

Kim Chuan acquired the subject property in bad faith.

real owner of the land in question;

(2) Declaring both the Deed of Extra-judicial Settlement with Absolute

better rights and the provision of Article 1544 of the New Civil Code

Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia

would be inapplicable;

Amodia, Veneranda A. Ibag and Eustaquio Amodia in favor of Go Kim III

Chuan and the Transfer Certificate of Title No. 20626 in the name of Go Kim Chuan as NULL AND VOID;

The Honorable Court of Appeals erred in holding that an adverse claim (3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-

was already existing at the time the subject land was sold to petitioner

appellant the possession of the land in question and to execute a

Go Kim Chuan; on the contrary, the latter had purchased the said land

registrable deed of conveyance of the subject property to the said

in good faith and for value, without notice of any fact that would

plaintiff-appellant.

reasonably impel a closer inquiry as to the possibility of a defect in the vendor's title; and

No costs. IV SO ORDERED.

21

The Court of Appeals has misapplied the case of Heirs of Severa Petitioners filed a Motion for Reconsideration its Resolution

23

22

which the CA denied in

dated June 5, 2001.

Gregorio v. CA, 300 SCRA 565, cited in support of its ruling that the court a quo committed error in appreciating the testimony of an expert witness as to the forgery of the first Deed of Sale.24

Hence, this Petition based on the following grounds: In its Comment25 dated September 18, 2001, AZNAR argued, among I

others, that the Petition is dismissible because the Verification and Certification of Non-forum Shopping were not signed by all the

Lot 3368 was already a registered land under Act 496, thus, the

petitioners, invoking this Court's Decision in the case of Loquias v.

registration by respondent of the Deed of Sale in 1964 under Act 3344

Office of the Ombudsman,26 and that the same were signed only by

produces no legal effect whatsoever;

one April Socorro Go, daughter of the late Go Kim Chuan, who did not even appear to be authorized to file the instant case in behalf of the

II Even assuming arguendo that the lot in question was duly registered under Act 3344 as an unregistered land, it is without prejudice to

other petitioners. In their Reply27 dated October 22, 2001, petitioners contended that April Socorro Go is one of the legitimate children and an heir of the late Go Kim Chuan and, as such, she has personal knowledge of the

truth of the facts alleged in the Petition. Petitioners submitted that

admission since the names of the petitioners Amodias were deleted

they substantially complied with the Rules of Court by attaching the

without their written consent.

required Verification and Certification of Non-Forum Shopping and since the same are required simply to facilitate and promote the

In their Reply,32 the Heirs of Go Kim Chuan, through counsel, claimed

orderly administration of justice, compliance therewith should not be

that petitioners Amodias were excluded from the Amended Petition

imposed with absolute literalness.

because they can no longer be located despite diligent efforts exerted by counsel. The counsel claims that after the rendition of the assailed

On December 19, 2001, petitioners, through counsel, filed a Motion

28

for Leave to Admit Amended Petition

29

for Review

on Certiorari (Amended Petition). Petitioners manifested that they

CA Decision, he sent several letters to petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left with no choice, filed the instant case before this Court on their own.

were seeking to correct a defect in the designation of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella S. Go, Sonia

The Court issued a Resolution33 dated September 16, 2002 giving due

Beth Go-Reynes, Daryl Go, and April Socorro Go be impleaded as

course to the Petition and requiring the parties to submit their

petitioners instead of the earlier designated petitioners, Cecilia Amodia

respective Memoranda.

Vda. de Melencion, Veneranda Amodia, Felipe Amodia, Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners admitted that he

In their Memorandum,34 petitioners Heirs of Go Kim Chuan reiterate

inadvertently included the petitioners Amodias in the initial Petition for

the same issues raised in the Original Petition and the Amended

Review on Certiorari (Original Petition), as they were parties before

Petition. They argue that Act 3344 only refers to transactions affecting

the RTC and CA. The counsel also manifested that he was only

lands or interests therein not previously registered under the Spanish

representing the Heirs of Go Kim Chuan in this case. Lastly, he claimed

Mortgage Law or under the Torrens system; that if AZNAR could not

that other than the substitution of the original petitioners, both the

have registered the sale in 1964 under Act 496 because the title over

Original Petition and Amended Petition uniformly raised the same

the subject property was lost, AZNAR should have availed itself of the

issues and should be given due course in the greater interest of justice

remedy of reconstitution; that registration under Act 3344 is without

and that the instant Motion was not interposed for delay.

legal effect and could not operate as constructive notice to petitioners and third persons, hence, may not be used as basis for the application

Per directive of the Court,

30

AZNAR filed its Comment

31

on the said

of Art. 1544 of the New Civil Code; that the Notice of Adverse Claim of

motion wherein AZNAR manifested that it had no serious objection to

AZNAR was annotated on TCT No. 20626 only on February 14, 1990

the admission of the Amended Petition if the same was intended

after the execution of the Deed of Extra-Judicial Settlement with

merely to implead the Heirs of Go Kim Chuan as petitioners. However,

Absolute Sale in favor of Go Kim Chuan on February 18, 1989, hence,

AZNAR interposed strong opposition to the Amended Petition's

the CA erred when it held that Go Kim Chuan was not a buyer in good

faith for supposedly having knowledge of such adverse claim; and that the doctrine laid down in Heirs of Severa Gregorio v. CA

35

is

Before resolving the main issues raised, the Court shall first deal with an apparent procedural lapse in this case.

inapplicable since it referred to a case wherein the original copy of the document under review was not produced in evidence while in the

Counsel for petitioners filed a Motion for Leave to Admit Amended

instant case, the original copy of the Extra-Judicial Partition of Real

Petition for Review on Certiorari in order to implead the Heirs of the

Estate with Deed of Absolute Sale executed by the Amodias in favor of

late Go Kim Chuan as the new petitioners and to delete the names of

AZNAR was presented before the trial court judge.

petitioners Amodias because they could no longer be located. Said petitioners sought the relaxation of the rules so that in the interest of

On the other hand, in its Memorandum,

36

AZNAR maintains that the

justice, the case can be decided on the merits. AZNAR opposes the

Original Petition is dismissible because the Verification and

Amended Petition because it was allegedly filed to cure a fatal defect in

Certification of Non-Forum Shopping thereof were not signed by all the

the original petition â‖€ non-compliance with the rules on Verification

petitioners. AZNAR further claims that the Amended Petition was filed

and Certification of Non-Forum Shopping.

in order to cure a fatal defect which should not be countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer in

In this regard, the case of Iglesia ni Cristo v. Ponferrada37 is

bad faith as he had prior constructive notice that the subject property

instructive, viz.:

was sold to AZNAR because the sale was registered with the Register of Deeds under Act 3344; that the 1964 sale was registered under Act

The purpose of verification is simply to secure an assurance that the

3344 because the subject property was not actually covered by a

allegations of the petition (or complaint) have been made in good

Torrens title at the time; that there was no other mode of registration

faith; or are true and correct, not merely speculative. This requirement

except under Act 3344; that Go Kim Chuan had to wait for the

is simply a condition affecting the form of pleadings, and

reconstitution of the lost title, hence, it could not be said that he

noncompliance therewith does not necessarily render it fatally

examined any certificate of title and could feign ignorance of the sale

defective. Indeed, verification is only a formal, not a jurisdictional

in favor of AZNAR; that the second sale did not transfer the subject

requirement.

property to Go Kim Chuan since it was no longer within the vendors' power to convey; that with respect to the issue of forgery, the finding of the document examiner is not conclusive; and that such issue was belied by petitioner Veneranda Amodia herself when she declared that the negotiated sale in 1964 between AZNAR and the Amodias was not consummated because the latter did not receive the full consideration for the subject property.

The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint),

signed the verification attached to it. Such verification is deemed

denied that the ends of justice are better served when cases are

sufficient assurance that the matters alleged in the petition have been

determined on the merits - after all parties are given full opportunity

made in good faith or are true and correct, not merely speculative.

to ventilate their causes and defenses - rather than on technicality or some procedural imperfections.38

The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must

The Issues

be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number

We now proceed to the merits of the case. From the issues raised,

of cases that the rules on forum shopping were designed to promote

there are ultimately two questions that require resolution:

and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own

First, did the CA misapply the doctrine in Heirs of Severa Gregorio v.

ultimate and legitimate objective. The rule of substantial compliance

CA in ruling that the RTC committed an error in appreciating the

may be availed of with respect to the contents of the certification. This

testimony of an expert witness as to the forgery of the Extra-Judicial

is because the requirement

Partition of Real Estate with Deed of Absolute Sale?cra lawlibrary

of strict compliance with the provisions merely underscores its

Second, who between Go Kim Chuan and AZNAR has the better right

mandatory

over the subject property?cra lawlibrary

nature in that the certification cannot be altogether dispensed with or

We resolve the first question in the negative.

its requirements completely disregarded. Forgery cannot be presumed. It must be proved by clear, positive and Thus, we held in Iglesia ni Cristo that the commonality of interest is

convincing evidence and the burden of proof rests on the party

material and crucial to relaxation of the Rules.

alleging forgery. Handwriting experts are usually helpful in the examination of forged documents because of the technical procedure

In the case at bench, the petitioners in the Amended Petition are Heirs

involved in analyzing them. But 1resort to these experts is not

of the late Go Kim Chuan. They represent their predecessor-in-interest

mandatory or indispensable. A finding of forgery does not depend

in whose favor a title was issued covering the subject property and

entirely on the testimonies of handwriting experts, because the judge

said title is sought to be canceled by AZNAR. Clearly, there is presence

must conduct an independent examination of the questioned signature

of the commonality of interest referred to in Iglesia ni Cristo. Under

in order to arrive at a reasonable conclusion as to its authenticity.39

the circumstances, the rules may be reasonably and liberally construed to avoid a patent denial of substantial justice, because it cannot be

The RTC's finding with respect to the issue of forgery reads:

After a thorough study of the pleadings and evidence of the parties,

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

the court finds that preponderance of evidence heavily tilts in favor of

person acquiring it who in good faith first recorded it in the Registry of

the defendants. The document relied upon by the plaintiff in its claim

Property.

of ownership over the land in question, the extrajudicial partition and sale, has been found by the document examiner of the PC Crime

Should there be no inscription, the ownership shall pertain to the

Laboratory to be a forgery. Being a forgery, said document conveyed

person who in good faith was first in the possession; and, in the

nothing in favor of the plaintiff. Hence, plaintiff's claim of ownership

absence thereof, to the person who presents the oldest title, provided

over the same has no more leg to stand on. x x x

40

there is good faith.

While it is true that the original document was produced before the

We have already ruled that the registration contemplated in this

RTC, the finding of forgery relies wholly on the testimony of the

provision refers to registration under the Torrens System, which

document examiner. It falls short of the required independent

considers the act of registration as the operative act41 that gives

examination to be conducted by the trial court judge. Other than the

validity to the transfer or creates a lien upon the land.42 This rule

statement of the document examiner, the RTC decision contains no

precisely applies to cases involving conflicting rights over registered

other basis to support its conclusion of the existence of forgery.

property and those of innocent transferees who relied on the clean title

Accordingly, the CA was correct in rejecting the RTC's finding and in

of the properties.43 Thus, we held that registration must be done in the

applying the doctrine laid down in the case of Heirs of Severa Gregorio

proper registry in order to bind the same.44

v. CA. In the case at bench, it is uncontroverted that the subject property However, we resolve the second question in favor of Go Kim Chuan.

was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made.

Without doubt, we have here a case of double sale of registered land.

AZNAR knew of this, and admits this as fact. Yet, despite this

Apropos is Article 1544 of the New Civil Code which provides:

knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file. We

ART. 1544. If the same thing should have been sold to different

are not persuaded by such a lame excuse.

vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be

Act 3344 provides for the system of recording of transactions or claims

movable property.

over unregistered real estate45without prejudice to a third party with a better right.46 But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is

registered not under the Land Registration Act but under Act 3344, as

jura subveniunt. Laws must come to the assistance of the vigilant, not

amended, such sale is not considered registered, as the term is used

of the sleepy.51

under Art. 1544 of the New Civil Code.

47

Although it is obvious that Go Kim Chuan registered the sale in his In this case, since the Extra-Judicial Partition of Real Estate with Deed

favor under Act 496 while AZNAR did not, we still cannot make an

of Absolute Sale in favor of AZNAR was registered under Act No. 3344

outright award of the subject property to the petitioners solely on that

and not under Act No. 496, the said document is deemed not

basis. For the law is clear: mere registration of title is not enough.

registered.48 Rather, it was the sale in favor of Go Kim Chuan which

Good faith must accompany the registration.

was registered under Act No. 496. Thus, to be able to enjoy priority status, the second purchaser must be AZNAR insists that since there was no Torrens title on file in 1964,

in good faith, i.e., he must have no knowledge of the previous

insofar as the vendors, AZNAR, and the Register of Deeds are

alienation of the property by the vendor to another. Notably, what is

concerned, the subject property was unregistered at the time. The

important for this purpose is not whether the second buyer is a buyer

contention is untenable. The fact that the certificate of title over the

in good faith, but whether he registers the second sale in good faith,

registered land is lost does not convert it into unregistered land. After

meaning, he does so without knowledge of any defect in the title over

all, a certificate of title is merely an evidence of ownership or title over

the property sold.52

the particular property described therein.49 This Court agrees with the petitioners that AZNAR should have availed itself of the legal remedy

To fully resolve the second question, therefore, it is imperative that we

of reconstitution of the lost certificate of title, instead of registration

determine whether Go Kim Chuan was a registrant in good faith.

under Act 3344. We note that in Aznar Brothers Realty Company v. Aying,50 AZNAR, beset with the similar problem of a lost certificate of

The CA found that AZNAR registered its Notice of Adverse Claim ahead

title over a registered land, sought the reconstitution thereof. It is

of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of

unfortunate that, in the instant case, despite the sale of the subject

Go Kim Chuan. Because of this, the CA declared that Go Kim Chuan

property way back in 1964 and the existence of the remedy of

was not a buyer in good faith, because he should have respected such

reconstitution at that time, AZNAR opted to register the same under

adverse claim or, at least, inquired into the validity thereof.

the improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did not bother to have the lost title reconstituted or even have the subject property declared under its name for taxation purposes. Vigilantibus, non dormientibus,

We do not agree. While factual issues are not within the province of this Court, as it is not a trier of facts and is not required to examine the oral and documentary evidence de novo, this Court has the authority to review

and, in proper cases, reverse the factual findings of lower courts in the

effect of constructive notice to the second buyer that can defeat his

following instances: (a) when the findings of fact of the trial court are

right as such buyer in good faith."

in conflict with those of the appellate court; (b) when the judgment of the appellate court is based on a misapprehension of facts; and, (c)

AZNAR's reliance on Santiago is misplaced. In Santiago, the first

when the appellate court manifestly overlooked certain relevant facts

buyers registered the sale under the Torrens System, as can be

which, if properly considered, would justify a different conclusion.

53

inferred from the issuance of the TCT in their names. There was no registration under Act 3344. Conversely, in the instant case, AZNAR

The instant case falls squarely within the foregoing exceptions.

registered the sale in its favor under Act 3344 despite its full knowledge that the subject property is under the operation of the

Concededly, inscription of an adverse claim serves as a warning to

Torrens System. To repeat, there can be no constructive notice to the

third parties dealing with a piece of real property that someone claims

second buyer through registration under Act 3344 if the property is

an interest therein or that there is a right superior to that of the titled

registered under the Torrens system.56

owner.

54

However, as pointed out by petitioners and as admitted by

AZNAR, the Notice of Adverse Claim was annotated on TCT No. 20626

Moreover, before buying the subject property, Go Kim Chuan made

only on February 4, 1990, after the lost certificate of title was

verifications with the Office of the City Assessor of Lapu-Lapu City and

reconstituted and after the issuance of said TCT in the name of Go Kim

the Register of Deeds. He likewise visited the premises of the subject

Chuan on December 1, 1989. It is, therefore, absurd to say that Go

property and found that nobody interposed any adverse claim against

Kim Chuan should be bound by

the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial

an adverse claim which was not previously annotated on the lost title

Settlement with Absolute Sale in a newspaper of general circulation,

or on the new one, or be shackled by a claim which he did not have

caused the reconstitution of the lost certificate of title and caused the

any knowledge of.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

issuance of the assailed TCT in his name.57Given these antecedents, good faith on the part of Go Kim Chuan cannot be doubted.

Citing Santiago v. Court of Appeals,55 AZNAR contends that even if the adverse claim was annotated on TCT No. 20626 only on February 4,

We also note that AZNAR's complaint for cancellation of title contains

1990, the prior registration of the sale in its favor under Act 3344

no allegation that the (second) purchaser was aware of defects in his

served as constructive notice to Go Kim Chuan and thus negates the

title. In the absence of such an allegation and proof of bad faith, it

latter's claim of good faith, since the Court held in that case,

would be grossly inappropriate for this Court to render judgment

"Registration, however, by the first buyer under Act 3344 can have the

against the purchaser who had already acquired title not only because

of lack of evidence, but also because of the indefeasibility and conclusiveness of such title.58 Finally, it is worth stressing that 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 insure 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 losing his acquisition. 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.59 WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L, is REINSTATED. No costs. SO ORDERED.

Cainta, Rizal. He averred that, as evidenced by certificates of payment SECOND DIVISION

of realty taxes for the years 1918 and 1919, the property was previously owned by his father and that in 1984, he filed before

[G.R. NO. 149238 : November 22, 2007]

Branch 71, RTC, Antipolo, Rizal, an application for the registration of two parcels of land, one of which was Lot No. 11703, CAD 688-D,

SIXTO ANTONIO, Petitioner, v. SPS. SOFRONIO SANTOS & AURORA SANTOS, SPS. LUIS LIBERATO & ANGELINA LIBERATO

situated in Barangay San Juan, Cainta, Rizal. His application was docketed as Land Registration Case No. 142-A (LRC No. 142-A).

and SPS. MARIO CRUZ & VICTORIA CRUZ, Respondents. Although the RTC, Branch 71, declared him the true and absolute RESOLUTION

owner in fee simple of the two parcels of land he applied for, it set QUISUMBING, J.:

This is an appeal from the Decision1 dated July 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58246, affirming, with modification, the Decision2 dated October 7, 1997 of Branch 72, Regional Trial Court (RTC) in Antipolo, Rizal in Civil Case No. 1261-A. The RTC had dismissed the complaint for Reconveyance, Annulment of Title and Damages filed by petitioner Sixto Antonio against respondents. The antecedent facts, culled from the records, are as follows: On September 19, 1988, petitioner Sixto Antonio filed before Branch 72, RTC, Antipolo, Rizal, a complaint for Reconveyance, Annulment of Title and Damages against respondents spouses Sofronio and Aurora Santos, Luis and Angelina Liberato, and Mario and Victoria Cruz. The complaint was docketed as Civil Case No. 1261-A. In his complaint,3 Antonio alleged that he is the absolute owner of a 13,159-square meter parcel of land denominated as Lot No. 11703, CAD 688-D, Cainta-Taytay Cadastre, situated in Barangay San Juan,

aside its decision with respect to Lot No. 11703, CAD 688-D in an Order dated August 21, 1986, to avoid duplication of issuance of titles. Antonio said that after investigation, he discovered that Lot No. 11703, CAD 688-D was already titled in the name of respondents. He then filed the complaint for Reconveyance, Annulment of Title and Damages against respondents, averring that respondents committed fraud in their application for titling because they made it appear in their application for registration that the subject property was located in Pinagbuhatan, Pasig, Rizal, when in fact, the property is located in Barangay San Juan, Cainta, Rizal. He added, respondents also made it appear in their application for registration that the subject property is bound on the North East by the Pasig River when in fact it is bound on the North East by the Tapayan River. Furthermore, the Pasig River does not traverse any portion of the jurisdiction of Cainta, Rizal. He argued that Original Certificate of Title No. 108 (OCT No. 108) in respondents' names, insofar as it included Lot No. 11703, CAD 688-D, is, therefore, null and void because it was obtained through fraudulent misrepresentations and machinations.

In their Answer4 dated July 26, 1989, respondents averred that OCT

WHEREFORE, with modification deleting [or] setting aside the award

No. 108 was duly issued to them by the Register of Deeds for Metro

for moral damages and attorney's fees, the decision appealed from

Manila, District II, on May 20, 1977. They alleged that prior to the

is AFFIRMED with costs against the plaintiff-appellant.

issuance of OCT No. 108, they, as registered owners, had always been in peaceful possession of the property and at no time had Antonio

SO ORDERED.6

possessed the property, nor did he ever make any claim against the said property.

Hence, the instant petition, raising the following issues: I.

The RTC of Antipolo, Rizal, Branch 72, in a Decision dated October 7, 1997 dismissed the complaint and ordered Antonio to pay respondents moral damages and attorney's fees. The dispositive portion of the decision reads:

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE DECISION IN LAND REGISTRATION CASE NO. 142-A, LRC RECORD NO. 58707, REGIONAL TRIAL COURT OF

WHEREFORE, premises considered, judgment is hereby rendered

ANTIPOLO CITY, BRANCH 71, IS SUFFICIENT BASIS OF PETITIONER'S

DISMISSING the instant complaint, and orders plaintiff as follows:

CLAIM OF RIGHT OF OWNERSHIP OVER THE PROPERTY SUBJECT OF ACTION FOR RECONVEYANCE.

1. To pay defendants Sofronio Santos, Aurora Santos, Sps. Luis II.

Liberato and Angelina Santos, the amount of P100,000.00 each, by way of moral damages;

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN 2. To pay defendants the amount of P60,000.00, by way of attorney's

TREATING PETITIONER'S ACTION FOR RECONVEYANCE AS ONE FOR

fees, and costs of suit.

TITLING OF A PARCEL OF LAND.

SO ORDERED.5

III.

The Court of Appeals in a Decision dated July 31, 2001 affirmed with

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT

modification the abovementioned decision by deleting the award of

HOLDING THAT RESPONDENTS HAVE FRAUDULENTLY REGISTERED

moral damages and attorney's fees. The dispositive portion of the

AND TITLED SUBJECT PROPERTY IN THEIR NAMES.

decision of the Court of Appeals states: IV.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING

father, Gavino Santos, who allegedly bought the property from

THAT RESPONDENTS' MOTHER ACQUIRED SUBJECT PROPERTY FROM

Ladislao Rivera.

HER FATHER, GAVINO SANTOS, WHICH THE LATTER ALLEGEDLY Respondents, on the other hand, in their Comments,8 contend that

PURCHASED FROM LADISLAO RIVERA.

they have proved they have a better title to the property. They argue V.

that petitioner's attempt to register Lot No. 11703, CAD 688-D in his name is tainted with fraud, and that petitioner had failed to adduce

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

any evidence of fraud on their part. They assert that their

AFFIRMING THE DECISION OF THE COURT A QUO DISMISSING

documentary and testimonial evidence which were unrebutted by

PETITIONER'S ACTION FOR RECONVEYANCE.

7

petitioner show original ownership of the land by Ladislao Rivera from whom their grandfather bought the property.

Simply put, the issues raised are: (1) Did the Court of Appeals err in not holding that the decision in LRC No. 142-A was sufficient basis of

After serious consideration, we find that petitioner's arguments lack

petitioner's claim of ownership over the subject property? (2) Did the

merit.

Court of Appeals and RTC erroneously treat petitioner's action for reconveyance as one for titling of a parcel of land? (3) Did respondents

On the first issue, petitioner argues that in LRC No. 142-A, the RTC of

fraudulently title the subject property in their names? (4) Did the

Antipolo, Branch 71, rendered a Decision on January 7, 1986

Court of Appeals err in finding that respondents' mother acquired the

adjudicating ownership of two lots, including Lot No. 11703, CAD 688-

subject property from her father, Gavino Santos, who purchased it

D, in his favor. He adds that on February 19, 1986, after said decision

from Ladislao Rivera? and (5) Did the Court of Appeals err in affirming

has become final and executory, the said RTC issued a certification for

the decision of the RTC dismissing petitioner's action for

issuance of decree, directing the Land Registration Commission to

reconveyance?cra lawlibrary

issue the corresponding decree of registration. Hence, he argues, his right of ownership over the land has already been fully established, but

Petitioner argues that the Court of Appeals erred in not holding that

no certificate of title was issued to him only because the property was

the decision in LRC No. 142-A is sufficient basis for his claim of

already registered in the name of respondents.

ownership over the property; in treating his action for reconveyance as one for titling; in not holding that respondents had fraudulently

But we agree with respondents that petitioner cannot rely on the

registered the property in their names; and in holding that

decision in LRC No. 142-A. As pointed out by the Court of Appeals,

respondents' mother had acquired the subject property from her

even if a title had been issued to petitioner based on said decision, his title would be of a later date than the title of respondents, hence

inefficacious and ineffective. This Court has ruled that, when two

by public records in the custody of the RTC, Pasig City and the Land

certificates of title are issued to different persons covering the same

Registration Authority, petitioner's claim that the property was

land in whole or in part, the earlier in date must prevail; and in case of

fraudulently titled in the names of respondents is baseless. Thus,

successive registrations where more than one certificate is issued over

petitioner's contention that the RTC and the Court of Appeals treated

the same land, the person holding a prior certificate is entitled to the

his action for reconveyance as one for titling of property lacks any

land as against a person who relies on a subsequent certificate.

9

persuasive basis.

On the second issue, petitioner contends that it is very apparent the

On the third and fourth issues, we find them to be factual issues,

RTC and Court of Appeals had the notion that his case a quo was not

hence beyond our jurisdiction to resolve. In a Petition for Review under

an action for reconveyance, but rather an application for registration of

Rule 45 of the 1997 Rules of Civil Procedure, this Court's power of

land where the applicant and oppositor had to prove their respective

review is limited to questions of law only.11

registrable titles. This, he adds, could be gleaned from the RTC's findings that "the claim of plaintiff on the basis of said documents

Note, however, should be taken of the established doctrine that an

cannot prevail over the adverse, public, open, peaceful and continuous

action for reconveyance resulting from fraud prescribes four years

possession by the defendants over the subject property," and that "it

from the discovery of the fraud. Such discovery is deemed to have

was indubitably shown that the defendants have occupied said

taken place upon the issuance of the certificate of title over the

property since time immemorial while plaintiff has never at anytime

property. Registration of real property is considered a constructive

taken possession of said property."

notice to all persons, thus, the four-year period shall be counted therefrom.12It appears that OCT No. 108 was issued to respondents by

We find petitioner's contentions unconvincing. For an action for

the Register of Deeds for Metro Manila on May 20, 1977. From the

reconveyance based on fraud to prosper, this Court has held that the

time of registration of the land in the name of respondents on May 20,

party seeking reconveyance must prove by clear and convincing

1977 to the filing of the complaint on September 19, 1988, more than

evidence his title to the property and the fact of fraud.

10

The RTC, in

making the abovementioned findings, was not treating petitioner's

four years had already elapsed. Hence, it cannot be denied that petitioner's action had already prescribed.

action for reconveyance as one for titling of property. But it was weighing whether petitioner has, by clear and convincing evidence,

Based on the foregoing considerations, we find that the Court of

proven his title to the property. Moreover, the RTC, in its decision,

Appeals did not err in affirming the decision of the RTC dismissing

discussed the merits of petitioner's ground for his action for

petitioner's action for reconveyance.

reconveyance, i.e. whether or not respondents committed fraud in titling the subject property in their names. The RTC held that as shown

Finally, concerning the deletion of moral damages and attorney's fees, we agree with the ruling of the Court of Appeals that here an award of moral damages is not warranted since the record is bereft of any proof that Antonio acted maliciously or in bad faith in filing the action.13 Neither should attorney's fees be awarded. The accepted rule is that the reason for the award of attorney's fees must be stated in the text of the trial court's decision; otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed.14 In this case, we find that the trial court's decision failed to show the reason for the award of attorney's fees, hence it was properly deleted by the appellate court. WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated July 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58246 is AFFIRMED. No pronouncement as to costs. SO ORDERED.

obtained a P300,000.00 loan from Kabalikat ng Pamayanan ng SECOND DIVISION

Nagnanais Tumulong at Yumaman Multi-Purpose Cooperative (Kapantay). Poblete mortgaged Lot No. 29 to Kapantay to guarantee

G.R. No. 196577 : February 25, 2013

payment of the loan. Kapantay, in turn, used OCT No. P-12026 as collateral under its Loan Account No. 97-CC-013 with Land Bank-

LAND BANK OF THE PHILIPPINES, Petitioner, v. BARBARA

Sablayan Branch.

SAMPAGA POBLETE, Respondent. In November 1998, Poblete decided to sell Lot No. 29 to pay her loan. DECISION

She instructed her son-in-law Domingo Balen (Balen) to look for a CARPIO, J.:

The Case This Petition for Review on Certiorari1 seeks to reverse the Court of Appeals' Decision2 dated 28 September 20 I 0 and its Resolution3 dated 19 April 2011 in C A-G.R. CV No. 91666. The Court of Appeals (C A) affirmed in toto the Decision4 of the Regional Trial Court (RTC) of San Jose, Occidental Mindoro, Branch 46, in Civil Case No. R-1331.

buyer. Balen referred Angelito Joseph Maniego (Maniego) to Poblete. According to Poblete, Maniego agreed to buy Lot No. 29 for P900,000.00, but Maniego suggested that a deed of absolute sale for P300,000.00 be executed instead to reduce the taxes. Thus, Poblete executed the Deed of Absolute Sale dated 9 November 1998 (Deed dated 9 November 1998) with P300,000.00 as consideration.5 In the Deed dated 9 November 1998, Poblete described herself as a "widow." Poblete, then, asked Balen to deliver the Deed dated 9 November 1998 to Maniego and to receive the payment in her behalf. Balen testified that he delivered the Deed dated 9 November 1998 to Maniego. However, Balen stated that he did not receive from

The Facts

Maniego the agreed purchase price. Maniego told Balen that he would pay the amount upon his return from the United States. In an Affidavit

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

dated 19 November 1998, Poblete stated that she agreed to have the payment deposited in her Land Bank Savings Account.6?r?l1

Petitioner Land Bank of the Philippines (Land Bank) is a banking institution organized and existing under Philippine laws. Respondent

Based on a Certification issued by Land Bank-Sablayan Branch

Barbara Sampaga Poblete (Poblete) is the registered owner of a parcel

Department Manager Marcelino Pulayan on 20 August 1999,7 Maniego

of land, known as Lot No. 29, with an area of 455 square meters,

paid Kapantays Loan Account No. 97-CC-013 for P448,202.08. On 8

located in Buenavista, Sablayan, Occidental Mindoro, under Original

June 2000, Maniego applied for a loan of P1,000,000.00 with Land

Certificate of Title (OCT) No. P-12026. In October 1997, Poblete

Bank, using OCT No. P 12026 as collateral. Land Bank alleged that as

a condition for the approval of the loan, the title of the collateral

proof of the forgery, Poblete presented the Death Certificate dated 27

should first be transferred to Maniego.

April 1996 of her husband and Report No. 294-502 of the Technical Services Department of the National Bureau of Investigation showing

On 14 August 2000, pursuant to a Deed of Absolute Sale dated 11 8

that the signatures in the Deed dated 11 August 2000 were forgeries.

August 2000 (Deed dated 11 August 2000), the Register of Deeds of

Accordingly, Poblete also filed a case for estafa through falsification of

Occidental Mindoro issued Transfer Certificate of Title (TCT) No. T-

public document against Maniego and sought injunction of the

20151 in Maniegos name. On 15 August 2000, Maniego and Land Bank

impending foreclosure proceeding.

executed a Credit Line Agreement and a Real Estate Mortgage over TCT No. T- 20151. On the same day, Land Bank released

On 7 January 2003, Land Bank filed its Answer with Compulsory

the P1,000,000.00 loan proceeds to Maniego. Subsequently, Maniego

Counterclaim and Cross-claim. Land Bank claimed that it is a

failed to pay the loan with Land Bank. On 4 November 2002, Land

mortgagee in good faith and it observed due diligence prior to

Bank filed an Application for Extra-judicial Foreclosure of Real Estate

approving the loan by verifying Maniegos title with the Office of the

Mortgage stating that Maniegos total indebtedness amounted

Register of Deeds. Land Bank likewise interposed a cross-claim against

to P1,154,388.88.

Maniego for the payment of the loan, with interest, penalties and other charges. Maniego, on the other hand, separately filed his Answer.

On 2 December 2002, Poblete filed a Complaint for Nullification of the

Maniego denied the allegations of Poblete and claimed that it was

Deed dated 11 August 2000 and TCT No. T-20151, Reconveyance of

Poblete who forged the Deed dated 11 August 2000. He also alleged

Title and Damages with Prayer for Temporary Restraining Order and/or

that he paid the consideration of the sale to Poblete and even her

Issuance of Writ of Preliminary Injunction. Named defendants were

loans from Kapantay and Land Bank.

Maniego, Land Bank, the Register of Deeds of Occidental Mindoro and Elsa Z. Aguirre in her capacity as Acting Clerk of Court of RTC San

The Ruling of the Regional Trial Court

Jose, Occidental Mindoro. In her Complaint, Poblete alleged that despite her demands on Maniego, she did not receive the consideration

On 28 December 2007, the RTC of San Jose, Occidental Mindoro,

of P900,000.00 for Lot No. 29. She claimed that without her

Branch 46, rendered a Decision in favor of Poblete, the dispositive

knowledge, Maniego used the Deed dated 9 November 1998 to acquire

portion of which reads:cralawlibrary

OCT No. P-12026 from Kapantay. Upon her verification with the Register of Deeds, the Deed dated 11 August 2000 was used to obtain

WHEREFORE, by preponderance of evidence, judgment is hereby

TCT No. T-20151. Poblete claimed that the Deed dated 11 August

rendered in favor of the plaintiff and against the defendants, as

2000 bearing her and her deceased husbands, Primo Poblete,

follows:cralawlibrary

supposed signatures was a forgery as their signatures were forged. As

1. Declaring the Deed of Sale dated August 11, 2000 over O.C.T. No.

The RTC ruled that the sale between Poblete and Maniego was a

P-12026, as null and void;

nullity. The RTC found that the agreed consideration was P900,000.00 and Maniego failed to pay the consideration. Furthermore, the

2. Declaring Transfer of Certificate of Title No. T-20151 as null and

signatures of Poblete and her deceased husband were proven to be

void, it having been issued on the basis of a spurious and forged

forgeries. The RTC also ruled that Land Bank was not a mortgagee in

document;

good faith because it failed to exercise the diligence required of banking institutions. The RTC explained that had Land Bank exercised

3. The preliminary [i]njunction issued directing the defendants to

due diligence, it would have known before approving the loan that the

refrain from proceedings [sic] with the auction sale of the plaintiffs

sale between Poblete and Maniego had not been consummated.

properties, dated February 10, 2002, is hereby made permanent;

Nevertheless, the RTC granted Land Banks cross-claim against Maniego.

4. Ordering defendant Angelito Joseph Maniego to return to the plaintiff O.C.T. No. P-12026; and

In an Order dated 17 March 2008, the RTC denied the Motion for Reconsideration filed by Land Bank for want of merit. Thereafter, Land

5. Ordering defendant Angelito Joseph Maniego to pay plaintiff the amount of P50,000.00, as and for reasonable attorneys

Bank and Maniego separately challenged the RTCs Decision before the CA.

fees. ???ñr?bl?š ??r†??l l?? l?br?rÿ The Ruling of the Court of Appeals Judgment is furthermore rendered on the cross-claim of defendant Land Bank of the Philippines against defendant Angelito Joseph

On 28 September 2010, the CA promulgated its Decision affirming in

Maniego, as follows:cralawlibrary

toto the Decision of the RTC.10Both Land Bank and Maniego filed their Motions for Reconsideration but the CA denied both motions on 19

A. Ordering defendant Angelito Joseph Maniego to pay his co-

April 2011.11?r?l1

defendant [L]and Bank of the Philippines his loan with a principal of P1,000,000.00, plus interests, penalties and other charges thereon;

In a Resolution dated 13 July 2011,12 the Second Division of this Court

and

denied the Petition for Review on Certiorari filed by Maniego. This Resolution became final and executory on 19 January 2012.

B. Ordering defendant Angelito Joseph Maniego to pay the costs of this suit. ???ñr?bl?š ??r†??l l?? l?br?rÿ SO ORDERED.9?r?l1

On the other hand, Land Bank filed this petition. The Issues

Land Bank seeks a reversal and raises the following issues for

exceptional circumstances14 which are not present in this case. Hence,

resolution:cralawlibrary

factual findings of the trial court, especially if affirmed by the CA, are binding on us.15 In this case, both the RTC and the CA found that the

1. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)

signatures of Poblete and her deceased husband in the Deed dated 11

ERRED IN UPHOLDING THE FINDING OF THE TRIAL COURT

August 2000 were forged by Maniego. In addition, the evidence is

DECLARING TCT NO. T-20151 AS NULL AND VOID. THE COURT OF

preponderant that Maniego did not pay the consideration for the sale.

APPEALS MISCONSTRUED AND MISAPPRECIATED THE EVIDENCE AND

Since the issue on the genuineness of the Deed dated 11 August 2000

THE LAW IN NOT FINDING TCT NO. T-20151 REGISTERED IN THE

is essentially a question of fact, we are not dutybound to analyze and

NAME OF ANGELITO JOSEPH MANIEGO AS VALID.

weigh the evidence again.16?r?l1

2. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)

It is a well-entrenched rule, as aptly applied by the CA, that a forged

MISCONSTRUED THE EVIDENCE AND THE LAW IN NOT FINDING LAND

or fraudulent deed is a nullity and conveys no title.17 Moreover, where

BANK A MORTGAGEE IN GOOD FAITH.

the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is void ab initio for lack of

3. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)

consideration.18 Since the Deed dated 11 August 2000 is void, the

MISCONSTRUED THE EVIDENCE AND THE LAW IN NOT FINDING THE

corresponding TCT No. T-20151 issued pursuant to the same deed is

RESPONDENT AND ANGELITO JOSEPH MANIEGO AS IN PARI DELICTO.

likewise void. In Yu Bun Guan v. Ong,19 the Court ruled that there was no legal basis for the issuance of the certificate of title and the CA

4. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) ERRED IN NOT APPLYING THE PRINCIPLE OF ESTOPPEL OR LACHES ON RESPONDENT IN THAT THE PROXIMATE CAUSE OF HER LOSS WAS HER NEGLIGENCE TO SAFEGUARD HER RIGHTS OVER THE SUBJECT PROPERTY, THEREBY ENABLING ANGELITO JOSEPH MANIEGO TO MORTGAGE THE SAME WITH LAND BANK.13?r?l1 The Ruling of the Court We do not find merit in the petition. A petition for review under Rule 45 of the Rules of Court specifically provides that only questions of law may be raised, subject to

correctly cancelled the same when the deed of absolute sale was completely simulated, void and without effect. In Ereña v. QuerrerKauffman,20 the Court held that when the instrument presented for registration is forged, even if accompanied by the owners duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the mortgagee acquire any right or title to the property. In such a case, the mortgagee under the forged instrument is not a mortgagee protected by law.21?r?l1 The issue on the nullity of Maniegos title had already been foreclosed when this Court denied Maniegos petition for review in the Resolution dated 13 July 2011, which became final and executory on 19 January

2012.22 It is settled that a decision that has acquired finality becomes

apply to banks, which are required to observe a higher standard of

immutable and unalterable and may no longer be modified in any

diligence.28 A bank whose business is impressed with public interest is

respect, even if the modification is meant to correct erroneous

expected to exercise more care and prudence in its dealings than a

conclusions of fact or law and whether it will be made by the court that

private individual, even in cases involving registered lands.29 A bank

rendered it or by the highest court of the land.23 This is without

cannot assume that, simply because the title offered as security is on

prejudice, however, to the right of Maniego to recover from Poblete

its face free of any encumbrances or lien, it is relieved of the

what he paid to Kapantay for the account of Poblete, otherwise there

responsibility of taking further steps to verify the title and inspect the

will be unjust enrichment by Poblete.

properties to be mortgaged.30?r?l1

Since TCT No. T-20151 has been declared void by final judgment, the

Applying the same principles, we do not find Land Bank to be a

Real Estate Mortgage constituted over it is also void. In a real estate

mortgagee in good faith.

mortgage contract, it is essential that the mortgagor be the absolute owner of the property to be mortgaged; otherwise, the mortgage is

Good faith, or the lack of it, is a question of intention.31 In ascertaining

void.24?r?l1

intention, courts are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with

Land Bank insists that it is a mortgagee in good faith since it verified

safety, be determined.32?r?l1

Maniegos title, did a credit investigation, and inspected Lot No. 29. The issue of being a mortgagee in good faith is a factual matter, which

Based on the evidence, Land Bank processed Maniegos loan

cannot be raised in this petition.25 However, to settle the issue, we

application upon his presentation of OCT No. P-12026, which was still

carefully examined the records to determine whether or not Land Bank

under the name of Poblete. Land Bank even ignored the fact that

is a mortgagee in good faith.

Kapantay previously used Pobletes title as collateral in its loan account with Land Bank.33 In Bank of Commerce v. San Pablo, Jr.,34 we held

There is indeed a situation where, despite the fact that the mortgagor

that when "the person applying for the loan is other than the

is not the owner of the mortgaged property, his title being fraudulent,

registered owner of the real property being mortgaged, [such fact]

the mortgage contract and any foreclosure sale arising therefrom are

should have already raised a red flag and which should have induced

given effect by reason of public policy.26 This is the doctrine of "the

the Bank x x x to make inquiries into and confirm x x x [the] authority

mortgagee in good faith" based on the rule that buyers or mortgagees

to mortgage x x x. A person who deliberately ignores a significant fact

dealing with property covered by a Torrens Certificate of Title are not

that could create suspicion in an otherwise reasonable person is not an

required to go beyond what appears on the face of the

innocent purchaser for value."???ñr?bl?š ??r†??l l?? l?br?rÿ

title.

27

However, it has been consistently held that this rule does not

The records do not even show that Land Bank investigated and

present case should be made permanent. Since Lot No. 29 has not

inspected the property to ascertain its actual occupants. Land Bank

been transferred to a third person who is an innocent purchaser for

merely mentioned that it inspected Lot No. 29 to appraise the value of

value, ownership of the lot remains with Poblete. This is without

the property. We take judicial notice of the standard practice of banks,

prejudice to the right of either party to proceed against Maniego.

before approving a loan, to send representatives to the premises of On the allegation that Poblete is in pari delicto with Maniego, we find

the land offered as collateral to investigate its real owners.

35

In Prudential Bank v. Kim Hyeun Soon,

36

the Court held that

the principle inapplicable. The pari delicto rule provides that "when two

the bank failed to exercise due diligence although its representative

parties are equally at fault, the law leaves them as they are and denies

conducted an ocular inspection, because the representative

recovery by either one of them."40 We adopt the factual finding of the

concentrated only on the appraisal of the property and failed to inquire

RTC and the CA that only Maniego is at fault.

as to who were the then occupants of the property. Finally, on the issues of estoppel and laches, such were not raised Land Bank claims that it conditioned the approval of the loan upon the

before the trial court. I fence, we cannot rule upon the same. It is

transfer of title to Maniego, but admits processing the loan based on

settled that an issue which was neither alleged in the complaint nor

Maniegos assurances that title would soon be his.37 Thus, only one day

raised during the trial cannot be raised for the tirst time on appeal, as

after Maniego obtained TCT No. T-20151 under his name, Land Bank

such a recourse would be offensive to the basic rules of t}1ir play,

and Maniego executed a Credit Line Agreement and a Real Estate

justice and due process, since the opposing party would be deprived of

Mortgage. Because of Land Banks haste in granting the loan, it

the opp01iunity to introduce evidence rebutting such new issue.41?r?l1

appears that Maniegos loan was already completely processed while the collateral was still in the name of Poblete. This is also supported by

WHEREFORE, we DENY the petition. We AFFIRM the 28 September

the testimony of Land Bank Customer Assistant Andresito

2010 Decision and the 19 April 2011 Resolution of the Court of Appeals

Osano.38?r?l1

in CA-Ci.R. CV No. 91666. The injunction against the foreclosure proceeding, issued by the Regional Trial Court of San Jose, Occidental

Where the mortgagee acted with haste in granting the mortgage loan

Mindoro, Branch 46, is made permanent. Costs against Land Bank.

and did not ascertain the ownership of the land being mortgaged, as well as the authority of the supposed agent executing the mortgage, it cannot be considered an innocent mortgagee.39?r?l1 Since Land Bank is not a mortgagee in good faith, it is not entitled to protection. The injunction against the foreclosure proceeding in the

SO ORDERED.

EN BANC

to file an answer within the extended period. His client was eventually declared in default, Cathay was allowed to present evidence ex-parte,

[G.R. No. 94457. October 16, 1997.]

and on March 25, 1985, a judgment by default was reached by the trial court ordering Legarda to execute the lease contract in favor of,

VICTORIA LEGARDA, Petitioner, v. THE HONORABLE COURT OF

and to pay damages to, Cathay.

APPEALS, NEW CATHAY HOUSE, INC., THE HONORABLE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH

On April 9, 1985, a copy of said decision was served on Atty. Coronel

94, Respondents.

but he took no action until the judgment became final and executory. A month later, the trial court issued a writ of execution and a public auction was held where Cathay’s manager, Roberto V. Cabrera, Jr., as

RESOLUTION

highest bidder, was awarded the property for P376,500.00 in satisfaction of the judgment debt. Consequently, a Certificate of Sale was issued by the sheriff on June 27, 1985. Upon failure of Legarda to ROMERO, J.:

redeem her property within the one-year redemption period, a Final Deed of Sale was issued by the sheriff on July 8, 1986, which was registered by Cabrera with the Register of Deeds three days later.

For our resolution is the motion for reconsideration of the March 18,

Hence, Legarda’s Transfer Certificate of Title (TCT) No. 270814 was

1991, decision of the Court’s First Division, filed by private respondent

cancelled with the issuance of TCT No. 350892 in the name of Cabrera.

New Cathay House, Inc. (Cathay). A brief narration of facts is in order. Despite the lapse of over a year since the judgment by default became The parties hereto entered into a lease agreement over a certain

final and executory, Atty. Coronel made no move on behalf of his

Quezon City property owned by petitioner Victoria Legarda. For some

client. He did not even inform her of all these developments. When

reason or another, she refused to sign the contract although

Legarda did learn of the adverse decision, "she nevertheless did not

respondent lessee, Cathay, made a deposit and a down payment of

lose faith in her counsel" 2 and prevailed upon him to seek appropriate

rentals, prompting the latter to file before the Regional Trial Court of

relief. Thus, on October 23, 1986, he filed a petition for annulment of

Quezon City, Branch 94 a complaint 1 against the former for specific

judgment with prayer for the issuance of a writ of preliminary

performance with preliminary injunction and damages. The court a quo

mandatory injunction before the Court of Appeals. 3chanrobles.com :

issued the injunction. In the meantime, Legarda’s counsel, noted

virtual lawlibrary

lawyer Dean Antonio Coronel, requested a 10-day extension of time to file an answer which the court granted. Atty. Coronel, however, failed

On November 29, 1989, the appellate court rendered a decision

affirming the March 25, 1985, decision of the trial court, dismissing the

Register of Deeds to cancel the registration of said property in the

petition for annulment of judgment, and holding Legarda bound by the

name of Cathay (not Cabrera) and to issue a new one in Legarda’s

negligence of her counsel. It considered her allegation of fraud by

name.

Cathay to be "improbable," and added that there was "pure and simple negligence" on the part of petitioner’s counsel who failed to file an

The Court then declared that Atty. Coronel committed, not just

answer and, later, a petition for relief from judgment by default. Upon

ordinary or simple negligence, but reckless, inexcusable and gross

notice of the Court of Appeals decision, Atty. Coronel again neglected

negligence, which deprived his client of her property without due

to protect his client’s interest by failing to file a motion for

process of law. His acts, or the lack of it, should not be allowed to bind

reconsideration or to appeal therefrom until said decision became final

Legarda who has been "consigned to penury" because "her lawyer

on December 21, 1989.

appeared to have abandoned her case not once but repeatedly." Thus, the Court ruled against tolerating "such unjust enrichment" of Cathay

Sometime in March 1990, Legarda learned of the adverse decision of

at Legarda’s expense, and noted that counsel’s "lack of devotion to

the Court of Appeals dated November 29, 1989, not from Atty. Coronel

duty is so gross and palpable that this Court must come to the aid of

but from his secretary. She then hired a new counsel for the purpose

his distraught client."cralaw virtua1aw library

of elevating her case to this Court. The new lawyer filed a petition for certiorari praying for the annulment of the decision of the trial and

Aggrieved by this development, Cathay filed the instant motion for

appellate courts and of the sheriff’s sale, alleging, among other things,

reconsideration, alleging, inter alia, that reconveyance is not possible

that Legarda lost in the courts below because her previous lawyer was

because the subject property had already been sold by its owner,

grossly negligent and inefficient, whose omissions cannot possibly bind

Cabrera, even prior to the promulgation of said decision.

her because this amounted to a violation of her right to due process of law. She, therefore, asked Cathay (not Cabrera) to reconvey the

By virtue of the Gancayco decision, Cathay was duty bound to return

subject property to her.

the subject property to Legarda. The impossibility of this directive is immediately apparent, for two reasons: First, Cathay neither

On March 18, 1991, a decision 4 was rendered in this case by Mr.

possessed nor owned the property so it is in no position to reconvey

Justice Gancayco, ruling, inter alia, as follows: (a) granting the

the same; second, even if it did, ownership over the property had

petition; (b) nullifying the trial court’s decision dated March 25, 1985,

already been validly transferred to innocent third parties at the time of

the Court of Appeals decision dated November 29, 1989, the Sheriff’s

promulgation of said judgment.

Certificate of Sale dated June 27, 1985, of the property in question, and the subsequent final deed of sale covering the same property; and

There is no question that the highest bidder at the public auction was

(c) ordering Cathay to reconvey said property to Legarda, and the

Cathay’s manager. It has not been shown nor even alleged, however,

that Roberto Cabrera has all the time been acting for or in behalf of Cathay. For all intents and purposes, Cabrera was simply a vendee

We do not have to belabor the fact that all the successors-in-interest

whose payment effectively extinguished Legarda’s liability to Cathay as

of Cabrera to the subject lot were transferees for value and in good

the judgment creditor. No proof was ever presented which would

faith, having relied as they did on the clean titled of their

reveal that the sale occurred only on paper, with Cabrera acting as a

predecessors. The successive owners were each armed with their own

mere conduit for Cathay. What is clear from the records is that the

indefeasible titles which automatically brought them under the aegis of

auction sale was conducted regularly, that a certificate of sale and,

the Torrens System. As the Court declared in Sandoval v. Court of

subsequently, a final deed of sale were issued to Cabrera which

Appeals, 6" (i)t is settled doctrine that one who deals with property

allowed him to consolidate his ownership over the subject property,

registered under the Torrens system need not go beyond the same,

register it and obtain a title in his own name, and sell it to Nancy Saw,

but only has to rely on the title. He is charged with notice only of such

an innocent purchaser for value, at a premium price. Nothing on

burdens and claims as are annotated on the title." 7 In the case at bar,

record would demonstrate that Cathay was the beneficiary of the sale

it is not disputed that no notice of lis pendens was ever annotated on

between Cabrera and Saw. Cabrera himself maintained that he was

any of the titles of the subsequent owners. And even if there were

"acting in his private (as distinct from his corporate) capacity" 5 when

such a notice, it would not have created a lien over the property

he participated in the bidding.

because the main office of a lien is to warn prospective buyers that the property they intend to purchase is the subject of a pending litigation.

Since the decision of the Court of Appeals gained finality on December

Therefore, since the property is already in the hands of Luminlun, an

21, 1989, the subject property has been sold and ownership thereof

innocent purchaser for value, it can no longer be returned to its

transferred no less than three times, viz.: (a) from Cabrera to Nancy

original owner by Cabrera, much less by Cathay itself.chanrobles

Saw on March 21, 1990, four months after the decision of the Court of

virtual lawlibrary

Appeals became final and executory and one year before the promulgation of the March 18, 1991, decision under reconsideration;

Another point to consider, though not raised as an issue in this case, is

(b) from Nancy Saw to Lily Tanlo Sy Chua on August 7, 1990, more

the fact that Cabrera was impleaded as a party-respondent only on

than one year before the Court issued a temporary restraining order in

August 12, 1991, after the promulgation of the Gancayco decision. 8

connection with this case; and (c) from the spouses Victor and Lily Sy

The dispositive portion itself ordered Cathay, instead of Cabrera, to

Chua to Janet Chong Luminlun on April 3, 1992. With these transfers,

reconvey the property to Legarda. Cabrera was never a party to this

Cabrera’s TCT No. 350892 gave way to Saw’s TCT No. 31672, then to

case, either as plaintiff-appellee below or as respondent in the present

Chua’s TCT No. 31673, and finally to Luminlun’s TCT No. 99143, all

action. Neither did he ever act as Cathay’s representative. As we held

issued by the Register of Deeds of Quezon City on April 3, 1990,

in the recent case of National Power Corporation v. NLRC, Et Al., 9"

August 8, 1990, and November 24, 1993, respectively.

(j)urisdiction over a party is acquired by his voluntary appearance or

submission to the court or by the coercive process issued by the court

denied due process of law, for this opportunity to be heard is the very

to him, generally by service of summons." 10 In other words, until

essence of due process. The chronology of events shows that the case

Cabrera was impleaded as party respondent and ordered to file a

took its regular course in the trial and appellate courts but Legarda’s

comment in the August 12, 1991, resolution, the Court never obtained

counsel failed to act as any ordinary counsel should have acted, his

jurisdiction over him, and to command his principal to reconvey a

negligence every step of the way amounting to "abandonment," in the

piece of property which used to be HIS would not only be

words of the Gancayco decision. Yet, it cannot be denied that the

inappropriate but would also constitute a real deprivation of one’s

proceedings which led to the filing of this case were not attended by

property without due process of law.

any irregularity. The judgment by default was valid, so was the ensuing sale at public auction. If Cabrera was adjudged highest bidder

Assuming arguendo that reconveyance is possible, that Cathay and

in said auction sale, it was not through any machination on his part. All

Cabrera are one and the same and that Cabrera’s payment redounded

of his actuations that led to the final registration of the title in his

to the benefit of his principal, reconveyance, under the facts and

name were aboveboard, untainted by any irregularity.

evidence obtaining in this case, would still not address the issues raised herein.

The fact that Cabrera is an officer of Cathay does not make him a purchaser in bad faith. His act in representing the company was never

The application of the sale price to Legarda’s judgment debt

questioned nor disputed by Legarda. And while it is true that he won in

constituted a payment which extinguished her liability to Cathay as the

the bidding, it is likewise true that said bidding was conducted by the

party in whose favor the obligation to pay damages was established.

book. There is no call to be alarmed in case an official of the company

11 It was a payment in the sense that Cathay had to resort to a court-

emerges as the winning bidder since in some cases, the judgment

supervised auction sale in order to execute the judgment. 12 With the

creditor himself personally participates in the bidding.

fulfillment of the judgment debtor’s obligation, nothing else was required to be done.

There is no gainsaying that Legarda is the judgment debtor here. Her property was sold at public auction to satisfy the judgment debt. She

Under the Gancayco ruling, the order of reconveyance was premised

cannot claim that she was illegally deprived of her property because

on the alleged gross negligence of Legarda’s counsel which should not

such deprivation was done in accordance with the rules on execution

be allowed to bind her as she was deprived of her property "without

of judgments. Whether the money used to pay for said property came

due process of law."cralaw virtua1aw library

from the judgment creditor or its representative is not relevant. What is important is that it was purchased for value. Cabrera parted with

It is, however, basic that as long as a party was given the opportunity

real money at the auction. In his "Sheriff’s Certificate of Sale" dated

to defend her interests in due course, she cannot be said to have been

June 27, 1985, 13 Deputy Sheriff Angelito R. Mendoza certified, inter

alia, that the "highest bidder paid to the Deputy Sheriff the said

Neither Cathay nor Cabrera should be made to suffer for the gross

amount of P376,500.00, the sale price of the levied property." If this

negligence of Legarda’s counsel. If she may be said to be "innocent"

does not constitute payment, what then is it? Had there been no real

because she was ignorant of the acts of negligence of her counsel,

purchase and payment below, the subject property would never have

with more reason are respondents truly "innocent." As between two

been awarded to Cabrera and registered in his name, and the

parties who may lose due to the negligence or incompetence of the

judgment debt would never have been satisfied. Thus, to require

counsel of one, the party who was responsible for making it happen

either Cathay or Cabrera to reconvey the property would be an

should suffer the consequences. This reflects the basis common law

unlawful intrusion into the lawful exercise of the latter’s proprietary

maxim, so succinctly stated by Justice J.B.L. Reyes, that." . .

rights over the land in question, an act which would constitute an

(B)etween two innocent parties, the one who made it possible for the

actual denial of property without due process of law.

wrong to be done should be the one to bear the resulting loss." 15 In this case, it was not respondents, but Legarda, who misjudged and

It may be true that the subject lot could have fetched a higher price

hired the services of the lawyer who practically abandoned her case

during the public auction, as Legarda claims, but the records fail to

and who continued to retain him even after his proven apathy and

betray any hint of a bid higher than Cabrera’s which was bypassed in

negligence.

his favor. Certainly, he could not help it if his bid of P376,500.00 was the highest. Moreover, in spite of this allegedly low selling price,

The Gancayco decision makes much of the fact that Legarda is now

Legarda still failed to redeem her property within the one-year

"consigned to penury" and, therefore, this Court "must come to the aid

redemption period. She could not feign ignorance of said sale on

of the distraught client." It must be remembered that this Court

account of her counsel’s failure to so inform her, because such auction

renders decisions, not on the basis of emotions but on its sound

sales comply with requirements of notice and publication under the

judgment, applying the relevant, appropriate law. Much as it may pity

Rules of Court. In the absence of any clear and convincing proof that

Legarda, or any losing litigant for that matter, it cannot play the role

such requisites were not followed, the presumption of regularity

of a "knight in shining armor" coming to the aid of someone, who

stands. Legarda also maintains that she was in the United States

through her weakness, ignorance or misjudgment may have been

during the redemption period, but she admits that she left the

bested in a legal joust which complied with all the rules of legal

Philippines only on July 13, 1985, or sixteen days after the auction

proceedings.

sale of June 27, 1985. Finally, she admits that her mother Ligaya represented her during her absence. 14 In short, she was not totally in

In Vales v. Villa, 16 this Court warned against the danger of jumping

the dark as to the fate of her property and she could have exercised

to the aid of a litigant who commits serious error of judgment resulting

her right of redemption if she chose to, but she did not.

in his own loss:jgc:chanrobles.com.ph

". . . Courts operate not because one person has been defeated or

Cathay to be vindicated for such breach and the liability incurred by

overcome by another, but because he has been defeated or overcome

Legarda in the process were determined.

illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them — indeed, all they have

This judgment became final when she failed to avail of remedies

in the world; but not for that alone can the law intervene and restore.

available to her, such as filing a motion for reconsideration or

There must be, in addition, a violation of law, the commission of what

appealing the case. At the time, the issues raised in the complaint had

the law knows as an actionable wrong, before the courts are

already been determined and disposed of by the trial court. 19 This is

authorized to lay hold of the situation and remedy it."cralaw virtua1aw

the stage of finality which judgments must at one point or another

library

reach. In our jurisdiction, a judgment becomes ipso facto final when no appeal is perfected or the reglementary period to appeal therefrom

Respondents should not be penalized for Legarda’s mistake. If the

expires. "The necessity of giving finality to judgments that are not void

subject property was at all sold, it was only after the decisions of the

is self-evident. The interests of society impose it. The opposite view

trial and appellate courts had gained finality. These twin judgments,

might make litigations more unendurable than the wrongs (they are)

which were nullified by the Gancayco decision, should be respected

intended to redress. It would create doubt, real or imaginary, and

and allowed to stand by this Court for having become final and

controversy would constantly arise as to what the judgment or order

executory.chanroblesvirtuallawlibrary

was. Public policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some

"A judgment may be broadly defined as the decision or sentence of the

definite date fixed by law. The very object for which courts were

law given by a court or other tribunal as the result of proceedings

instituted was to put an end to controversies." 20 When judgments of

instituted therein." 17 It is "a judicial act which settles the issues, fixes

lower courts gain finality, "they, too, become inviolable, impervious to

the rights and liabilities of the parties, and determines the proceeding,

modification. They may, then, no longer be reviewed, or in any way

and it is regarded as the sentence of the law pronounced by the court

modified directly or indirectly, by a higher court, not even by the

on the action or question before it." 18

Supreme Court." 21 In other words, once a judgment becomes final, the only errors that may be corrected are those which are clerical. 22

In the case at bar, the trial court’s judgment was based on Cathay’s evidence after Legarda was declared in default. Damages were duly

From the foregoing precedents, it is readily apparent that the real

awarded to Cathay, not whimsically, but upon proof of its entitlement

issue that must be resolved on this motion for reconsideration is the

thereto. The issue of whether the plaintiff (Cathay) deserved to

alleged illegality of the final judgments of the trial and appellate

recover damages because of the defendant’s (Legarda’s) refusal to

courts.

honor their lease agreement was resolved. Consequently, the right of

Void judgments may be classified into two groups: those rendered by

would have been dismissed outright for being dilatory and appearing

a court without jurisdiction to do so and those obtained by fraud or

as an act of desperation on the part of a vanquished litigant. The

collusion. 23 This case must be tested in light of the guidelines

Gancayco ruling, unfortunately, ruled otherwise.

governing the latter class of judgments. "In this regard, an action to annul a judgment on the ground of fraud will not lie unless the fraud is

Fortunately, we now have an opportunity to rectify a grave error of the

extrinsic or collateral and facts upon which it is based (have) not been

past.

controverted or resolved in the case where (the) judgment was rendered." 24 Where is the fraud in the case at bar? Was Legarda

WHEREFORE, the Motion for Reconsideration of respondent New

unlawfully barred from the proceedings below? Did her counsel sell her

Cathay House, Inc. is hereby GRANTED. Consequently, the decision

out to the opponent?

dated March 18, 1991, of the Court’s First Division in VACATED and SET ASIDE. A new judgment is hereby entered DISMISSING the

It must be noted that, aside from the fact that no extrinsic fraud

instant petition for review and AFFIRMING the November 29, 1989,

attended the trial and resolution of this case, the jurisdiction of the

decision of the Court of Appeals in CA- G.R. No. SP-10487. Costs

court a quo over the parties and the subject matter was never raised

against petitioner Victoria Legarda.

as an issue by Legarda. Such being the case, the decision of the trial court cannot be nullified. Errors of judgment, if any, can only be

SO ORDERED.

reviewed on appeal, failing which the decision becomes final and executory, "valid and binding upon the parties in the case and their

Regalado, Davide, Jr., Melo, Mendoza, Francisco, Panganiban and

successors in interest."25cralaw:red

Torres, Jr., JJ., concur.

At this juncture, it must be pointed out that while Legarda went to the

Narvasa, C.J., I dissent reserving the filing of a separate opinion.

Court of Appeals claiming precisely that the trial court’s decision was fraudulently obtained, she grounded her petition before the Supreme Court upon her estranged counsel’s negligence. This could only imply that at the time she filed her petition for annulment of judgment, she entertained no notion that Atty. Coronel was being remiss in his duties. It was only after the appellate court’s decision had become final and executory, a writ of execution issued, the property auctioned off then sold to an innocent purchase for value, that she began to protest the alleged negligence of her attorney. In most cases, this

L. HERNANDO (ASSOCIATE JUSTICE), HON. NINA G. ANTONIOTHIRD DIVISION

VALENZUELA (ASSOCIATE JUSTICE), HON. EDGARDO T. LLOREN (ASSOCIATE JUSTICE), HON. MICHAEL P. ELBINIAS

G.R. Nos. 185857-58, June 29, 2016

(ASSOCIATE JUSTICE), AND HON. JANE AURORA C. LANTION (ASSOCIATE JUSTICE, ACTING CHAIRMAN), COURT OF

TRIFONIA D. GABUTAN, DECEASED, HEREIN REPRESENTED BY HER HEIRS, NAMELY: ERLINDA LLAMES, ELISA ASOK,

APPEALS, CAGAYAN DE ORO CITY (FORMER SPECIAL TWENTYSECOND DIVISION), PUBLICRespondents.

PRIMITIVO GABUTAN, VALENTINA YANE; BUNA D. ACTUB, FELISIA TROCIO, CRISANTA D. UBAUB, AND TIRSO

DECISION

DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY

JARDELEZA, J.:

DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES NICOLAS & EVELYN DAILO, Petitioners, v. DANTE D. NACALABAN, HELEN N. MAANDIG, SUSAN N. SIAO, AND CAGAYAN CAPITOL COLLEGE, Respondents.

Before us are consolidated petitions questioning the Court of Appeals' (CA) Decision1 dated December 11, 2008 and Resolution2 dated August 17, 2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No. 53598-MIN.3 In G.R. Nos. 185857-58, the heirs of Trifonia D. Gabutan

G.R. NOS. 194314-15

and Tirso Dalondonan, Buna D. Actub, Felisia Trocio and Crisanta D. Ubaub (Gabutan, et al.) filed a partial appeal by way of a petition for

DANTE D. NACALABAN, HELEN N. MAANDIG, AND SUSAN N. SIAO, AS HEIRS OF BALDOMERA D. VDA. DE NACALABAN, Petitioners, v. TRIFONIA D. GABUTAN, BUNA D. ACTUB, FELISIA D. TROCIO, CRISANTA D. UBAUB, AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS

review on certiorari,4 seeking to reverse the portion of the CA Decision declaring Cagayan Capital College (the College) as a buyer in good faith. The other petition, G.R. Nos. 194314-15, is one for certiorari5 filed by Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao as heirs of Baldomera D. Vda. De Nacalaban

HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY

(Nacalaban, et al.). It seeks to annul the CA Decision and Resolution

DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND

which sustained the action for reconveyance filed by Gabutan, et al.

SPOUSES NICOLAS & EVELYN DAILO, CAGAYAN CAPITOL COLLEGE, REPRESENTED BY ITS PRESIDENT, ATTY. CASIMIRO

The Antecedents

B. SUAREZ, JR., PRIVATE Respondent; On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an HON. LEONCIA R. DIMAGIBA (ASSOCIATE JUSTICE), HON. PAUL

800-square meter parcel of prime land (property) in Poblacion, Cagayan de Oro City from Petra, Fortunata, Francisco and Dolores, all

surnamed Daamo.6 Pursuant to the sale, Transfer Certificate of Title 7

(TCT) No. T-2259 covering the property was issued in the name of 8

Godofredo. He thereafter built a house on it. chanrobleslaw

Real Property, Declaration of Nullity of Contracts, Partition and Damages with Writ of Preliminary Attachment and Injunction21 against Nacalaban, et al. and the College. They alleged that: (1) Melecia bought the property using her own money but Godofredo had the

9

Godofredo died on January 7, 1974. ITe was survived by his wife,

Deed of Absolute Sale executed in his name instead of his mother-in-

Baldomera, and their children, Dante, Helen, and Susan. On March 19,

law;22 (2) Godofredo and Baldomera were only trustees of the property

1979, Baldomera issued a Certification10 in favor of her mother,

in favor of the real owner and beneficiary, Melecia;23 (3) they only

Melecia. It provided, in effect, that Baldomera was allowing her mother

knew about the Extrajudicial Settlement with Sale upon verification

to build and occupy a house on the portion of the

with the Registry of Deeds;24 and (4) the College was a buyer in bad

property.11 Accordingly, the house was declared for taxation purposes.

faith, being aware they were co-owners of the

The tax declaration12 presented in evidence showed that Melecia

property.25cralawredchanrobleslaw

owned the building on the land owned by Godofredo.13chanrobleslaw In its Answer with Affirmative Defenses,26 the College claimed that it is Baldomera died on September 11, 1994.14 On July 3, 1996, her

a buyer in good faith and for value, having "made exhaustive

children executed an Extrajudicial Settlement of Estate of Deceased

investigations and verifications from all reliable sources" that Melecia

15

Person with Sale

(Extrajudicial Settlement with Sale) where they

and her heirs were staying in the property by mere tolerance.27 It

adjudicated unto themselves the property and sold it to the College.

alleged that: (1) in the tax declaration28 of the residential house,

On August 22, 1996, TCT No. T-2259 was cancelled and TCT No. T-

Melecia admitted that the lot owner is Godofredo;29 (2) the occupancy

111846

16

covering the property was issued in the name of the

17

College. chanrobleslaw

permit of Melecia was issued only after Godofredo issued a certification30 to the effect that Melecia was allowed to occupy a portion of the property;31 and (3) the Extrajudicial Settlement with

Melecia died on April 20, 199718 and was survived by her children,

Sale was published in three consecutive issues of Mindanao Post, a

Trifonia, Buna, Felisia, Crisanta, and Tirso.

newspaper of general circulation.32chanrobleslaw

In a letter19 dated May 5, 1997, the College demanded Trifonia D.

In their Answer with Counterclaim,33 Nacalaban, et al. denied the

Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn Dailo, the heirs of

allegations of Gabutan, et al. They claimed to have acquired the

Melecia who were occupying the house on the property, to vacate the

property by intestate succession from their parents, who in their

20

premises. chanrobleslaw

lifetime, exercised unequivocal and absolute ownership over the property.34 Nacalaban, et al. also set up the defenses of laches and

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of

prescription, and asserted that the action for reconveyance was

improper because the property had already been sold to an innocent 35

purchaser for value. chanrobleslaw

c.) Pay the plaintiff Attorney's fees amounting to P5,000.00 per defendant; d.) Pay for litigation expenses at the rate of P1,000.00 per defendant.

On September 10, 1997, the College filed a separate Complaint for Unlawful Detainer and Damages36with the Municipal Trial Court in

SO ORDERED.44chanroblesvirtuallawlibrary

Cities (MTCC) against Trifonia, Mary Jane, Allan, Evelyn and Nicolas

On appeal, the Regional Trial Court (RTC) affirmed the MTCC's

Dailo (Heirs of Melecia). In their Answer with Affirmative and/or

Decision46 in all respects, except that the Heirs of Melecia were given

Negative Defenses with Compulsory Counterclaim,37 the Heirs of

30 days from notice to vacate the property.47 They filed a motion for

Melecia claimed that they own and possess the property in co-

reconsideration, but it was denied.49 Thus, the Heirs of Melecia filed a

ownership with Nacalaban, et al. and Gabutan, et al. because it was

petition for review50 before the CA, docketed as CA-G.R. SP No.

purchased by Melecia, their common predecessor.

38

They also claimed

53598.51chanrobleslaw

that the house in which they reside was constructed at her expense.39The College had prior knowledge of this co-ownership, and

Meanwhile, in the reconveyance case, the RTC rendered a Decision52 in

hence, was a purchaser in bad faith.40 The Heirs of Melecia also raised

favor of Gabutan, et al. The RTC found the testimonies of their

the defense of forum-shopping in view of the pendency of the action

witnesses credible, in that the money of Melecia was used in buying

for reconveyance.

41

They then concluded that in view of the issues and

the value of the property, as well, the MTCC had no jurisdiction over 42

the case. chanrobleslaw

the property but the name of Godofredo was used when the title was obtained because Godofredo lived in Cagayan de Oro City while Melecia lived in Bornay, Gitagum, Misamis Oriental.53 Thus, the RTC held that a trust was established by operation of law pursuant to

The MTCC found it had jurisdiction to hear the case and ruled in favor

Article 1448 of the Civil Code.54 The dispositive portion of the RTC's

of the College:43chanrobleslaw

Decision reads:

WHEREFORE, JUDGMENT is hereby rendered ordering each of the

chanRoblesvirtualLawlibrary

defendants to:

WHEREFORE, judgment is hereby rendered, and this Court hereby:

chanRoblesvirtualLawlibrarya.) Immediately vacate the property of the

1.

Declares that the Spouses Godofredo and Baldomera

plaintiff;

Nacalaban held the land covered by Transfer Certificate of

b.) Pay the plaintiff the monthly use compensation for the continued

Title No. T-2259 issued in the name of Godofredo Nacalaban

use of the property at the rate of P500.00 per month from MAY 5,

married to Baldomera Dalondonan issued on January 13, 1959

1997 until the property is actually vacated;

in trust for Melecia Vda. de Dalondonan with the Spouses as

the trustees and Melecia Vda. de Dalondonan as the cestui

from receipt of this decision, plaintiffs' shares of the proceeds

que trust;

of the sale of the land referred to above the amount of which is equivalent to live-sixth (5/6) of said proceeds with the

2.

Declares that upon the death of Melecia Vda. de Dalondonan

remaining one-sixth (1/6) to be retained by the individual

on August 20, 1997, the ownership and beneficial interest of

defendants as their share by virtue of their being the legal

the foregoing Land passed to the plaintiffs and individual

heirs of Baldomera D. Nacalaban;

defendants by operation of law as legal heirs of Melecia Vda. de Dalondonan; 3.

Nullifies the Extrajudicial Settlement of Estate of Deceased Person with Sale executed by the individual defendants on July 30, 1996 and known as Doc. No. 326; Page No. 67; Book No. XX; Series of 1996 in the Notarial Register of Notary Public Victoriano M. Jacot with respect to the Extrajudicial settlement by the individual defendants of the land referred to above;

4.

Declares that defendant Cagayan Capitol College was a buyer in good faith and for value of the land referred to above, and, accordingly, declares that said defendant now owns the land;

5.

SO ORDERED.55chanroblesvirtuallawlibrary Both parties filed separate appeals from this Decision before the CA.57 In a Resolution58 dated October 7, 2004, the CA consolidated both appeals. The C A rendered its Decision59 on December 11, 2008 dismissing the consolidated appeals and affirming in toto the RTC Decisions in the unlawful detainer case and the action for reconveyance. The CA held that: (1) the defense of co-ownership based on an implied trust by a defendant in an unlawful detainer case shall not divest the MTCC of jurisdiction over the case;60 (2) the dead man's statute does not apply because Gabutan, et al.'s counsel did not interpose any objection when

Orders defendant Cagayan Capitol College to inform this Court

the testimony of Crisanta Ubaub was offered and Gabutan, et al.'s

in writing within thirty (30) days from receipt of this decision

counsel even examined her;61 (3) Nacalaban, et al.'s claim that

the amount of the purchase price of the land referred to above

Gabutan, et al.'s witnesses are not competent to testify on matters

bought by it from the individual defendants the amount of

which took place before the death of Godofredo and Melecia is without

which should approximate the prevailing market value of the

merit because Gabutan, et al. have not specified these witnesses and

land at the time of the purchase;

such hearsay evidence alluded to;62 (4) the parole evidence rule does not apply because Melecia and Nacalaban, et al. were not parties to

6.

Orders the individual defendants namely, Dante D. Nacalaban,

the Deed of Conditional Sale;63 (5) the action for reconveyance has not

Helen N. Maandig, and Susan N. Siao, jointly and severally, to

yet prescribed because Gabutan, et al. are in possession of the

deliver and turn over to the plaintiffs, within thirty (30) days

property;64 and (6) the College is a buyer in good faith.65chanrobleslaw

the same parties, we issued a Resolution77 dated December 13, 2010 Nacalaban, et al. filed their motion for reconsideration of the CA

consolidating them.

Decision, but it was denied in a Resolution66 dated August 17, 2010. The Issues

Hence, they filed the present petition for certiorari67 under Rule 65, where they allege that: (1) the action for reconveyance already expired;68 (2) for an action for reconveyance to prosper, the property should not have passed into the hands of another who bought the

The issues for resolution are:

property in good faith and for value;69 and (3) the title of Godofredo under TCT No. T-2259 which was issued on January 13, 1959 could

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not be attacked collaterally.70chanrobleslaw 1.

prosper;

On the other hand, Gabutan, et al. filed the present petition for review on certiorari71 under Rule 45, seeking a partial appeal of the CA Decision. In their petition, Gabutan, et al. allege that the College is not

Whether the petition for certiorari of Nacalaban, et al. shall

2.

Whether the action for reconveyance was proper; and

3.

Whether the College is a buyer in good faith.

a buyer in good faith because it did not buy the property from the registered owner.72 Since Godofredo was the registered owner of the

Our Ruling

property and not Nacalaban, et al., the College should have exercised a higher degree of prudence in establishing their capacity to sell it.73 Further, despite knowing that other persons possessed the property, the College did not inquire with Gabutan, et al. the nature of their stay on the property.74 Under Section 1, paragraph 2, Rule 74 of the Rules of Court, the publication of the Extrajudicial Settlement with Sale was also without prejudice to claims of other persons who had no notice or participation thereof.75 Finally, Gabutan, et al. argue that they cannot be ejected from the property because there is no evidence to show that their stay was by mere tolerance, and that Melecia was a builder in good faith.76chanrobleslaw Considering that the petitions assail the same CA Decision and involve

I. The petition for certiorari of Nacalaban, et al. is a wrong remedy Pursuant to Section 1, Rule 45 of the Rules of Court,78 the proper remedy to obtain a reversal of judgment on the merits, final order or resolution is an appeal. The Resolution dated August 17, 2010 of the CA, which affirmed its Decision dated December 11, 2008, was a final resolution that disposed of the appeal by Nacalaban, et al. and left nothing more to be done by the CA in respect to the said case. Thus, Nacalaban, et al. should have filed an appeal in the form of a petition

for review on certiorari and not a petition for certiorari under Rule 65,

petition of Nacalaban, et al. as one under Rule 45. We have the

which is a special civil action.

discretion to treat a Rule 65 petition for certiorari as a Rule 45 petition for review on certiorari if (1) the petition is filed within the

Rule 65 is a limited form of review and is a remedy of last recourse.

reglementary period for filing a petition for review; (2) when errors of

This extraordinary action lies only where there is no appeal nor plain,

judgment are averred; and (3) when there is sufficient reason to

speedy and adequate remedy in the ordinary course of

justify the relaxation of the rules.86 The first and third requisites are

law.79 InMalayang Manggagawa ng Stayfast Phils., Inc. v. National

absent in this case. To reiterate, the petition was filed beyond the 15-

Labor Relations Comission,

80

we held that appeal would still be the

proper remedy from a judgment on the merits, final order or resolution

day reglementary period of filing a petition for review on certiorari. As will be discussed, we also find no compelling reason to relax the rules.

even if the error ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the exercise of power in

II. The action for reconveyance

excess thereof, or grave abuse of discretion in the findings of fact or of

filed by Gabutan, et al.

law set out in the decision, order or resolution. The existence and

is proper

availability of the right of appeal prohibits the resort to certiorari because one of the requirements for the latter remedy is that there should be no appeal.

81

We have always declared that a

petition for certiorari is not a substitute for an appeal where the latter

a.

An implied resulting trust was created between Melecia and Godofredo

remedy is available but was lost through fault or negligence.82chanrobleslaw We stress at the outset that the question of existence of an implied Here, Nacalaban, et al. received the assailed Resolution dated August

trust is factual, hence, ordinarily outside the purview of Rule 45.87 The

17, 2010 on September 7, 2010.83 Under the Rules of Court, they had

resolution of factual issues is the function of the lower courts whose

15 days or until September 22, 2010 to file an appeal before us.

findings, when aptly supported by evidence, bind us. This is especially

Nacalaban, et al. allowed this period to lapse without doing so and,

true when the CA affirms the lower court's findings, as in this case.

instead, filed a petition for certiorari on November 5, 2010.84 Being the

While we, under established exceptional circumstances, had deviated

wrong remedy, the petition of Nacalaban, et al. is, therefore,

from this rule, we do not find this case to be under any of the

dismissible. Although there are exceptions

85

to this general rule, none

exceptions.88 Even if we were to disregard these established doctrinal

applies in this case.

rules, we would still affirm the assailed CA rulings.

In spite of the consolidation we have ordered, we cannot treat the

Article 1448 of the Civil Code provides in part that there is an implied

trust when property is sold, and the legal estate is granted to one

properties. The plans, however, always fell through.97chanrobleslaw

party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the

Both the RTC and CA found credence on these pieces of testimonial

latter is the beneficiary. The trust created here, which is also referred

evidence that an implied resulting trust exists. Reliance on these

to as a purchase money resulting trust,

89

occurs when there is (1) an

testimonies will not violate the parol evidence rule, as Nacalaban, et

actual payment of money, property or services, or an equivalent,

al. once raised. In Tong v. Go Tiat Kun,98 we ruled that since an

constituting valuable consideration; (2) and such consideration must

implied trust is neither dependent upon an express agreement nor

be furnished by the alleged beneficiary of a resulting trust.

90

These two

elements are present here.

required to be evidenced by writing, Article 1457 of our Civil Code authorizes the admission of parol evidence to prove their existence. What is crucial is the intention to create a trust.99We cautioned,

Gabutan, et al., through the testimonies of Felisia, Crisanta, and

however, that the parol evidence that is required to establish the

Trifonia, established that Melecia's money was used in buying the

existence of an implied trust necessarily has to be trustworthy and it

property, but its title was placed in Godofredo's name. She purchased

cannot rest on loose, equivocal or indefinite declarations.100 The

the property because Felisia wanted to build a pharmacy on it.91 On

testimonies of Felisia, Crisanta, and Trifonia satisfy these

one occasion in Melecia's house, and when the entire family was

requirements. They are consistent and agree in all material points in

present, Melecia gave Godofredo the money to purchase the

reference to the circumstances behind the arrangement between

92

property. Melecia entrusted the money to Godofredo because he was

Melecia and Godofredo. We agree with the RTC when it said that this

in Cagayan de Oro, and per Melecia's instruction, the deed of sale

arrangement among family members is not unusual, especially in the

covering the property was placed in his name.93 It was allegedly her

1950s.101chanrobleslaw

practice to buy properties and place them in her children's name, but it was understood that she and her children co-own the 94

properties. chanrobleslaw

Nacalaban, et al., on the other hand, denied the arrangement between Melecia and Godofredo, and maintained that it was really the latter who purchased the property from its original owners, as evidenced by

Melecia built a residential building on the property, where her daughter Crisanta and some of her grandchildren resided.

95

Godofredo also

their possession of the Deed of Conditional Sale and the title being in Godofredo's name.102 It is telling, however, that Nacalaban, et al.

thereafter built a house on the property. Twice, he also mortgaged the

failed to provide the details of the sale, specifically with regard to how

property to secure loans. Melecia allowed him to do so because she

Godofredo could have been able to afford the purchase price himself,

trusted him.

96

After Godofredo's death, and when Baldomera fell ill,

which would have directly refuted the allegation that Melecia's money

there were family discussions to transfer the title in Melecia's name so

was used in the purchase. As the RTC aptly observed, if Godofredo

Melecia's children can divide it together with the rest of Melecia's

really bought the property with his own money, it was surprising that

Baldomera did not transfer the title of the property to her name when

incontrovertible and is not being questioned. What is being sought is

Godofredo died in 1974. Baldomera did not do so until her death in

the transfer of the property wrongfully or erroneously registered in

1994 despite being pressed by her siblings to partition the property.

another's name to its rightful owner or to the one with a better right.

The RTC correctly deduced that this only meant that Baldomera

If the registration of the land is fraudulent, the person in whose name

acknowledged that the property belongs to Melecia.

103

chanrobleslaw

the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of the

Having established the creation of an implied resulting trust, the action

property.107chanroblesvirtuallawlibrary

for reconveyance filed by Gabutan, et al., the heirs of Melecia in whose benefit the trust was created, is proper. An action for reconveyance is

The fact that the property was already titled in Godofredo's name, and

a legal and equitable remedy granted to the rightful landowner, whose

later transferred to the College, is not a hindrance to an action for

land was wrongfully or erroneously registered in the name of another,

reconveyance based on an implied trust. The title did not operate to

to compel the registered owner to transfer or reconvey the land to

vest ownership upon the property in favor of the College. As held

him.

104

It will not amount to a collateral attack on the title, contrary to

in Naval v. Court of Appeals:108chanrobleslaw

the allegation of Nacalaban, et al.105 We explained in Hortiznela v. Tagufa:106chanrobleslaw

xxx 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

x x x As a matter of fact, an action for reconveyance is a recognized

certificate of title is merely an evidence of ownership or title over the

remedy, an action in personam, available to a person whose property

particular property described therein. It cannot be used to protect a

has been wrongfully registered under the Torrens system in another's

usurper from the true owner; nor can it be used as a shield for the

name. In an action for reconveyance, the decree is not sought to be

commission of fraud; neither does it permit one to enrich himself at

set aside. It does not seek to set aside the decree but, respecting it as

the expense of others. Its issuance in favor of a particular person does

incontrovertible and no longer open to review, seeks to transfer or

not foreclose the possibility that the real property may be co-owned

reconvey the land from the registered owner to the rightful owner.

with persons not named in the certificate, or that it may be held in

Reconveyance is always available as long as the property has not

trust for another person by the registered owner.109

passed to an innocent third person for value. Moreover, the body of the Complaint filed by Gabutan, et al. shows There is no quibble that a certificate of title, like in the case at bench,

that it is not only for the reconveyance of the property but also for the

can only be questioned through a direct proceeding. The MCTC and the

annulment of TCT No. T-111846 issued in the name of the

CA, however, failed to take into account that in a complaint for

College.110 Gabutan, et al. questioned the validity of the sale to the

reconveyance, the decree of registration is respected as

College and claimed co-ownership over the property. Thus, we can rule

on the validity of TCT No. T-111846 since the Complaint is a direct attack on the title of the College.

III.The property shall be reconveyed to the estate of Melecia The Extrajudicial Settlement with Sale executed

b.

The action for reconveyance is imprescriptible

between Nacalaban, et al. and the College is void

because the plaintiffs are in possession of

Having established the creation of an implied resulting trust between

the property

Melecia and Godofredo, the law thereby creates the obligation of the trustee to reconvey the property and its title in favor of the true

An action for reconveyance based on an implied or a constructive trust

owner.115 The true owner, Melecia, died in 1997 and was succeeded by

prescribes 10 years from the alleged fraudulent registration or date of

her children and grandchildren. The property, therefore, must be

issuance of the certificate of title over the property. However, an

reconveyed to her estate.

action for reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the person enforcing the trust is in

The execution of the Extrajudicial Settlement with Sale between

possession of the property. In effect, the action for reconveyance is an

Godofredo's heirs and the College will not defeat the legal obligation to

action to quiet the property title, which does not prescribe.111 The

reconvey the property because at the time of its execution in 1996,

reason is that the one who is in actual possession of the land claiming

Melecia was still alive. Hence, Nacalaban, et al. did not have the right

to be its owner may wait until his possession is disturbed or his title is

or authority to sell the property. Nemo dat quod non habet. One can

attacked before taking steps to vindicate his right. His undisturbed

sell only what one owns or is authorized to sell, and the buyer can

possession gives him a continuing right to seek the aid of a court of

acquire no more right than what the seller can transfer

equity to ascertain and determine the nature of the adverse claim of a

legally.116 Nacalaban, et al. cannot find refuge in their argument that

third party and its effect on his own title, which right can be claimed

the property was registered in their father's name and that after his

only by one who is in possession.112chanrobleslaw

death, his rights passed to them as his legal heirs. To repeat, title to property does not vest ownership but is a mere proof that such

The fact of actual possession of Gabutan, et al. of the property, during

property has been registered.117chanrobleslaw

the lifetime of Melecia and even after her death, is an undisputed and established fact. The College has even filed an ejectment case against

The College is a buyer in bad faith

the Heirs of Melecia for this reason.113 Thus, their complaint for reconveyance is imprescriptible. It follows, with more reason, that

Despite the finding that the property was owned by Melecia and upon

Gabutan, et al. cannot be held guilty of laches as the said doctrine,

her death, by her heirs, the lower courts still sustained the ownership

which is one in equity, cannot be set up to resist the enforcement of

of the College of the property on the ground that it is an innocent

an imprescriptible legal right.114chanrobleslaw

purchaser for value.118 The lower courts' findings are grounded on the

following: (i) Gabutan, et al.'s claim was never annotated on

Whether one is a buyer in good faith and whether due diligence and

Godofredo's title; (ii) the Extrajudicial Settlement with Sale was duly

prudence were exercised are questions of fact.125 As we have already

published and the College was able to effect the transfer of the title in

mentioned, only questions of law may be raised in a petition for review

its name; (iii) Baldomera issued a certification in favor of Melecia

on certiorari under Rule 45 of the Rules of Court. We see an exception,

allowing her to occupy a portion of the lot; and (iv) the tax declaration

however, to this general rule relative to the finding that the College is

showed that Melecia owned only the building on the land owned by

a buyer in good faith. We hold that the RTC's finding that the College

Godofredo.

119

chanrobleslaw

is a buyer in good faith, which finding was upheld by the CA, was based on an obvious misapprehension of facts and was clearly not

The RTC reiterated the rule that the buyer of a land registered under

supported by law and jurisprudence.

the Torrens System may rely upon the face of the certificate of title and does not have to look beyond it.120 The CA, on the other hand,

In Bautista v. Silva,126 we reiterated the requisites for one to be

held that when taken together, these facts would reasonably constitute

considered a purchaser in good faith:

enough reason for the College or any buyer to conclude that the property is free from any adverse claim, thereby making any further

chanRoblesvirtualLawlibrary

investigation unnecessary. Absent any showing that the College knew

A buyer for value in good Faith is one who buys property of another,

of the actual arrangement between Godofredo and Melecia, it must be

without notice that some other person has a right to, or interest in,

deemed a buyer in good faith.

121

chanrobleslaw

such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some

Gabutan, et al. alleged that the lower courts erred in ruling that the

other persons in the property. He buys the property with the welt-

College is a buyer in good faith, raising the following: (1)

founded belief that the person from whom he receives the thing had

Nacalaban, et al. are not the registered owners of the property; Godofredo is the registered owner who died on January 7, 1974;

title to the property and capacity to convey it. 122

(2)

not being the registered owners, the College, as buyer, is expected to

To prove good faith, a buyer of registered and titled land need only

examine not only the certificate of title but all factual circumstances

show that he relied on the face of the title to the property. He need

necessary for him to determine if there are any flaws in the title of the

not prove that he made further inquiry for he is not obliged to explore

transferor, or in his capacity to transfer the property;

123

and (3) the

beyond the four corners of the title. Such degree of proof of good

College knew that other persons possessed the property so it should

faith, however, is sufficient only when the following

have first established the capacity of the Nacalaban children to sell the

conditions concur: first, the seller is the registered owner of

property.

124

chanrobleslaw

the land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or

interest of some other person in the property, or of any defect

Where a purchaser buys from one who is not the registered owner

or restriction in the title of the seller or in his capacity to

himself, the law requires a higher degree of prudence even if the land

convey title to the property.

object of the transaction is registered. One who buys from one who is not the registered owner is expected to examine not only the

Absent one or two of the foregoing conditions, then the law itself puts

certificate of title but all factual circumstances necessary for him to

the buyer on notice and obliges the latter to exercise a higher degree

determine if there are any flaws in the title of the transferor, or in his

of diligence by scrutinizing the certificate of title and examining all

capacity to transfer the land.130

factual circumstances in order to determine the seller's title and capacity to transfer any interest in the property. Under such

Secondly, the College was aware that aside from Nacalaban, et al., the

circumstance, it is no longer sufficient for said buyer to merely show

Heirs of Melecia, were also in possession of the property. The College

that he relied on the face of the title; he must now also show that he

cited the tax declaration which bore an annotation that Melecia owned

exercised reasonable precaution by inquiring beyond the title. Failure

a residential building and Godofredo owned the lot.131 Also, apart from

to exercise such degree of precaution makes him a buyer in bad

filing an ejectment case against the Heirs of Melecia, the College

faith.

127

(Emphasis supplied.)

retained part of the purchase price for the demolition of Melecia's building as well.132chanrobleslaw

Thus, the College, which has the burden to prove the status of being a purchaser in good faith, is required to prove the concurrence of the

In Occeña v. Esponilla,133 we held that petitioner-spouses were not

above conditions. This onus probandi cannot be discharged by mere

purchasers in good faith when they merely relied on the representation

invocation of the legal presumption of good faith.128 We find that the

of the seller regarding the nature of possession of the occupants of the

College failed to discharge this burden.

land:

Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al.

chanRoblesvirtualLawlibrary

are not the registered owners of the property, but Godofredo.

In the case at bar, we find that petitioner-spouses failed to prove good

In Bautista v. Court of Appeals,

129

we held:

faith in their purchase and registration of the land, x x x At the trial, Tomas Occena admitted that he found houses built on the land during

chanRoblesvirtualLawlibrary

its ocular inspection prior to his purchase. He relied on the

However, it is important to note that petitioners did not buy the land

representation of vendor Arnold that these houses were owned

from the registered owner, Dionisio Santiago. They bought it from his

by squatters and that he was merely tolerating their presence

heirs, Maria dcla Cruz and Jose Santiago.

on the land. Tomas should have verified from the occupants of the land the nature and authority of their possession instead of

merely relying on the representation of the vendor that they

possession of the property involved, independent of any claim of

were squatters, having seen for himself that the land was

ownership by any of the parties. When the defendant, however, raises

occupied by persons other than the vendor who was not in

the defense of ownership in his pleadings and the question of

possession of the land at that time, x x x

134

(Emphasis supplied.)

possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of

Although the College in its Answer alleged that it made an exhaustive

possession.139 Thus, the ruling on the ejectment case is not conclusive

investigation and verification from all reliable sources and found that

as to the issue of ownership.

the possession of Melecia and her heirs was merely tolerated,

135

140

chanrobleslaw

it

failed to specify who or what these sources were. There is no evidence

WHEREFORE, in view of the foregoing, the petition for certiorari in

that the College did inquire from Melecia or her heirs themselves, who

G.R. Nos. 194314-14 is DENIEDand the petition for review on

were occupying the property, the nature and authority of their

certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the

possession. It is not far-fetched to conclude, therefore, that the

Court of Appeals dated December 11, 2008 and its Resolution dated

College merely relied on the representations of the sellers and the

August 17, 2010 are AFFIRMED with the

documents they presented. In this regard, the College is not a buyer in

following MODIFICATIONS:

good faith. 1.

Cagayan Capitol College is hereby declared a buyer in bad

The "honesty of intention" which constitutes good faith implies

faith, who has no right to possession and ownership of the

a freedom from knowledge of circumstances which ought to put

property;

a person on inquiry.

136

If the land purchased is in the possession of

a person other than the vendor, the purchaser must be wary and must

2.

Nacalaban, et al. are ordered to return the purchase price paid on the property to the College, plus interest at the rate of six

investigate the rights of the actual possessor.137 Without such inquiry,

percent (6%) per annum computed from July 23, 1997141

the purchaser cannot be said to be in good faith and cannot have any

until the date of finality of this judgment. The total amount

right over the property.138chanrobleslaw

shall thereafter earn interest at the rate of six percent (6%) per annum from the finality of judgment until its

We are aware that in the ejectment case, the MTCC and RTC ruled in

satisfaction;142 and

favor of the College. We emphasize, though, that the ruling on the College's better right of possession was without prejudice to the eventual outcome of the reconveyance case where the issue of ownership was fully threshed out. We have held that the sole issue for resolution in an unlawful detainer case is physical or material

3.

The Register of Deeds is ordered to cancel TCT No. T-l 11846 in the name of the College.

4.

The property should be reconveyed to the Estate of the late Melecia Dalondonan with the institution of the proper proceedings for its partition and titling.

SO ORDERED.

Antecedents FIRST DIVISION The property in dispute was a vacant unfenced lot situated in White [G.R. No. 195825, February 27, 2013]

Plains, Quezon City and covered by Transfer Certificate of Title (TCT) No. N-165606 issued in the name of respondent Lilia V. Domingo by

SPOUSES ALFONSO AND MARIA ANGELES CUSI, Petitioners, v. LILIA V. DOMINGO, Respondent.

the Registry of Deeds of Quezon City. It had an area of 658 square meters.3 In July 1999, Domingo learned that construction activities were being undertaken on her property without her consent. She soon

[G.R. NO. 195871]

unearthed the series of anomalous transactions affecting her property.

RAMONA LIZA L. DE VERA, Petitioner, v. LILIA V. DOMINGO AND SPOUSES RADELIA AND ALFRED SY, Respondents.

owner of the property, petitioned the RTC for the issuance of a new owner’s copy of Domingo’s TCT No. N-165606, appending to her

DECISION

petition a deed of absolute sale dated July 14, 1997 purportedly BERSAMIN, J.:

Under the Torrens system of land registration, the registered owner of realty cannot be deprived of her property through fraud, unless a transferee acquires the property as an innocent purchaser for value. A transferee who acquires the property covered by a reissued owner’s copy of the certificate of title without taking the ordinary precautions of honest persons in doing business and examining the records of the proper Registry of Deeds, or who fails to pay the full market value of the property is not considered an innocent purchaser for value. Under review in these consolidated appeals is the Decision promulgated on July 16, 2010,1 whereby the Court of Appeals (CA) in CA-G.R. CV No. 90452 affirmed the revised decision rendered on March 1, 2007 by the Regional Trial Court in Quezon City (RTC) against the petitioners and their seller.2

On July 18, 1997, one Radelia Sy (Sy),4 representing herself as the

executed in her favor by Domingo;5 and an affidavit of loss dated July 17, 1997,6 whereby she claimed that her bag containing the owner’s copy of TCT No. N-165606 had been snatched from her on July 13, 1997 while she was at the SM City in North EDSA, Quezon City. The RTC granted Sy’s petition on August 26, 1997.7 The Registry of Deeds of Quezon City then issued a new owner’s duplicate copy of TCT No. N165606, which was later cancelled by virtue of the deed of absolute sale dated July 14, 1997, and in its stead the Registry of Deeds of Quezon City issued TCT No. 186142 in Sy’s name.8 Sy subsequently subdivided the property into two, and sold each half by way of contract to sell to Spouses Edgardo and Ramona Liza De Vera and to Spouses Alfonso and Maria Angeles Cusi. The existence of the individual contracts to sell was annotated on the dorsal portion of Sy’s TCT No. 186142 as Entry No. PE-8907/N-186142,9 stating that the consideration of the sale was P1,000,000.00 for each set of

buyers, or for a total of P2,000,000.00 for the entire property that had

WHEREFORE, in view of all the foregoing judgment is hereby rendered:

an actual worth of not less than P14,000,000.00. TCT No. 186142 in the name of Sy was then cancelled by virtue of the deeds of sale

(a) declaring the sale between Lilia V. Domingo and Radella Sy void

executed between Sy and Spouses De Vera, and between Sy and

and of (sic) effect; 10

Spouses Cusi, to whom were respectively issued TCT No. 189568 and TCT No. 189569.11 All the while, the transactions between Sy and the

(b) declaring the Sps. Edgardo and Ramona Liza De Vera and Sps.

De Veras, and between Sy and the Cusis were unknown to Domingo,

Alfonso and Maria Angeles Cusi to be purchasers in good faith and for

whose TCT No. N-165606 remained in her undisturbed possession.

12

It turned out that the construction activities taking place on the

value; (c) lifting the writ of preliminary injunction;

property that Domingo learned about were upon the initiative of the De Veras in the exercise of their dominical and possessory rights.

(d) finding defendant Radella Sy liable to the plaintiff Lilia Domingo liable (sic) for damages, as follows:

Domingo commenced this action against Sy and her spouse, the De

1. Fourteen Million Pesos (P14,000,000.00) representing the value of

Veras and the Cusis in the RTC, the complaint being docketed as Civil

the property covered by TCT No. 165606 plus legal rate of interest

Case No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses Radelia

until fully paid;

and Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo M. and Ramona Liza L. De Vera, BPI Family Savings Bank and

2. One Million Pesos (P1,000,000.00) representing moral damages;

The Register of Deeds of Quezon City, seeking the annulment or cancellation of titles, injunction and damages. Domingo applied for the

3. Five Hundred Thousand Pesos (P500,000.00) representing

issuance of a writ of preliminary prohibitory and mandatory injunction,

exemplary damages;

and a temporary restraining order (TRO).

13

The RTC granted

Domingo’s application for the TRO enjoining the defendants from

4. Five Hundred Thousand Pesos (P500,000.00) representing

proceeding with the construction activities on the property. The RTC

attorney’s fees;

later granted her application for the writ of preliminary injunction. 5. Two Hundred Thousand Pesos (P200,000.00) representing litigation Ruling of the RTC On September 30, 2003, the RTC rendered a decision,14 disposing:

expenses; and 6. Costs of Suit. IT IS SO ORDERED.

1. One Million Pesos (P1,000,000.00) representing moral damages; Acting on the motions for reconsideration separately filed by Sy and Domingo,15 the RTC reconsidered and set aside its September 30,

2. Five Hundred Thousand Pesos (P500,000.00) representing

2003 decision, and allowed the presentation of rebuttal and sur-

exemplary damages;

rebuttal evidence. 3. Five Hundred Thousand Pesos (P500,000.00) representing On March 1, 2007, the RTC rendered a new decision,

16

ruling:

WHEREFORE, in view of the foregoing, Judgment is hereby rendered:

attorney’s fees; 4. Two Hundred Thousand Pesos (P200,000.00) representing litigation expenses; and,

(a) Declaring the sale between Lilia Domingo and Radelia Sy void and of no effect;

5. Costs of suit.

(b) Declaring the Sps. Edgardo and Ramona Liza De Vera and Sps.

This Decision is without prejudice to whatever civil action for recovery

Alfonso and Maria Angeles Cusi not purchasers in good faith and for

and damages, the defendants Sps. De Vera and Sps. Cusi may have

value;

against defendant Spouses Radelia and Alfred Sy.

(c) TCT Nos. 189568 and 189569 are hereby cancelled and declared

SO ORDERED.

Null and Void Ab Initio; Ruling of the CA (d) Directing the Register of Deeds of Quezon City to annotate this Order on TCT No. 189568 and 189569;

On appeal, the assignment of errors each set of appellants made was as follows:

(e) TCT No. 165606 in the name of Lilia Domingo is hereby revalidated; and,

Spouses Cusi a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FINDING THAT

(f) Finding defendant Radelia Sy liable to the plaintiff Lilia V. Domingo

DEFENDANTS SPOUSES ALFONSO AND MARIA ANGELES CUSI ARE

liable (sic) for damages, as follows:

NOT PURCHASERS IN GOOD FAITH AND FOR VALUE. b) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FAILING TO RESOLVE THE ISSUE OF WHETHER OR NOT CO-DEFENDANTS

SPOUSES RADELIA SY AND ALFRED SY ARE LIABLE FOR SPOUSES CUSI’S CROSS-CLAIM.

As stated, the CA promulgated its decision on July 16, 2010, affirming

c) THE REGIONAL TRIAL COURT ERRED IN FAILING TO AWARD DAMAGES AND ATTORNEY’S FEES TO DEFENDANTS SPOUSES CUSI.

the RTC with modification of the damages to be paid by the Sys to Domingo, viz:

17

Spouses Sy a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT THE SALE

WHEREFORE, premises considered, the instant appeal is denied. Accordingly, the Decision dated March 1, 2007 of the Regional Trial

BETWEEN LILIA DOMINGO AND RADELIA SY VOID AND OF NO

Court is hereby AFFIRMED with the modification on the award of

EFFECT AND WAS PROCURRED (sic) THROUGH FRAUDULENT

damages to be paid by defendants-appellants Spouses Radelia and

MEANS.

Alfred Sy in favor of the plaintiff-appellee Lilia V. Domingo, to wit;

b) THAT THE HONORABLE COURT ERRED IN AWARDING ACTUAL MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY’S FEES AND LITIGATION EXPENSES THE SAME BEING NULL AND VOID FOR BEING CONTRARY TO LAW. c) THAT THE SAID DECISION IS CONTRARY TO LAW AND JURISPRUDENCE AND IS NOT SUPPORTED BY EVIDENCE, AS THE SAME CONTAIN SERIOUS REVERSIBLE ERRORS WHEN THE COURT A QUO DECLARED THAT TCT NOS. 189568 AND 189569 CANCELLED AND DECLARED NULL AND VOID AB INITIO. d) THE INSTANT ASSAILED DECISION OF THE HONORABLE COURT HAVE (sic) DEPRIVED DEFENDANT[S] SPOUSES SY OF THEIR BASIC CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW.18 Spouses De Vera a) THE LOWER COURT ERRED IN HOLDING THAT THE DE VERA SPOUSES ARE NOT PURCHASERS IN GOOD FAITH AND NOT ENTITLED TO THE POSSESSION OF THE PROPERTY COVERED BY TCT NO. N-189568. b) THE LOWER COURT ALSO ERRED IN NOT AWARDING DEFENDANTAPPELLANT DE VERA HER COUNTERCLAIMS AGAINST PLAINTIFFAPPELLEE.19

1.

P500,000.00 by way of moral damages;

2.

P200,000.00 by way of exemplary damages;

3.

P100,000.00 as attorney’s fees and litigation expenses.

SO ORDERED.20 The CA held that the sale of the property from Domingo to Sy was null and void and conveyed no title to the latter for being effected by forging the signature of Domingo; that Sy thereby acquired no right in the property that she could convey to the Cusis and De Veras as her buyers; that although acknowledging that a purchaser could rely on what appeared on the face of the certificate of title, the Cusis and De Veras did not have the status of purchasers in good faith and for value by reason of their being aware of Sy’s TCT No. 186142 being a reconstituted owner’s copy, thereby requiring them to conduct an inquiry or investigation into the status of the title of Sy in the property, and not simply rely on the face of Sy’s TCT No. 186142; and that the Cusis and De Veras were also aware of other facts that should further put them on guard, particularly the several nearly simultaneous

transactions respecting the property, and the undervaluation of the

THEIR CO-DEFENDANTS SPOUSES ALFRED AND RADELIA SY IN

purchase price from P7,000,000.00/half to only P1,000,000.00/half to

ADDITION TO DAMAGES AND ATTORNEY’S FEES.

enable Sy to pay a lesser capital gains tax. In G.R. No. 195871, De Vera asserts that the primordial issue is The CA later on denied the motions for reconsideration.

21

whether or not she was an innocent purchaser for value and in good faith.

Issues Ruling of the Court Hence, this appeal via petitions for review on certiorari by the Cusis (G.R. No. 195825) and Ramona Liza L. De Vera22 (G.R. No. 195871).

The petitions for review are bereft of merit.

In G.R. No. 195825, the Cusis submit the following issues:23

Firstly, now beyond dispute is the nullity of the transfer of Domingo’s property to Sy because both lower courts united in so finding. The

I

unanimity in findings of both the RTC and the CA on this all-important aspect of the case is now conclusive on the Court in view of their

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN

consistency thereon as well as by reason of such findings being fully

FINDING THAT TRANSFER CERTIFICATE OF TITLE NO. 186142

supported by preponderant evidence. We consider to be significant

REGISTERED IN THE NAME OF RADELIA SY IS A RECONSTITUTED

that the Sys no longer came to the Court for further review, thereby

TITLE.

rendering the judgment of the CA on the issue of nullity final and II

WHETHER OR NOT THE PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE.

immutable as to them. Secondly, the Cusis and De Vera commonly contend that the CA gravely erred in not considering them to be purchasers in good faith and for value. They argue that Sy’s TCT No. 186142 was free of any

III

liens or encumbrances that could have excited their suspicion; and that they nonetheless even went beyond the task of examining the

GRANTING, WITHOUT ADMITTING, THAT THE DECISION OF THE HONORABLE COURT OF APPEALS IS CORRECT WITH RESPECT TO THE SECOND ISSUE, WHETHER OR NOT PETITIONERS ARE ENTITLED TO REIMBURSEMENT OF ALL THE PAYMENTS MADE BY PETITIONERS TO

face of Sy’s TCT No. 186142, recounting every single detail of their quest to ascertain the validity of Sy’s title, but did not find anything by which to doubt her title.

The Court concurs with the finding by the CA that the Cusis and De

The Philippines adopted the Torrens system through Act No.

Vera were not purchasers for value and in good faith. The records

496,27 also known as the Land Registration Act, which was approved

simply do not support their common contention in that respect.

on November 6, 1902 and took effect on February 1, 1903. In this jurisdiction, therefore, ―a person dealing in registered land has the

Under the Torrens system of land registration,

24

the State is required

right to rely on the Torrens certificate of title and to dispense with the

to maintain a register of landholdings that guarantees indefeasible title

need of inquiring further, except when the party has actual knowledge

to those included in the register. The system has been instituted to

of facts and circumstances that would impel a reasonably cautious

combat the problems of uncertainty, complexity and cost associated

man to make such inquiry‖.28

with old title systems that depended upon proof of an unbroken chain of title back to a good root of title. The State issues an official

To obtain a grasp of whether a person has actual knowledge of facts

certificate of title to attest to the fact that the person named is the

and circumstances that would impel a reasonably cautious man to

owner of the property described therein, subject to such liens and

make such inquiry, an internal matter, necessitates an analysis of

encumbrances as thereon noted or what the law warrants or

evidence of a person’s conduct.29 That renders the determination of

reserves.25

intent as a factual issue,30 something that the Court does not normally involve itself in because of its not being a trier of facts. Indeed, as a

One of the guiding tenets underlying the Torrens system is the curtain

rule, the review function of the Court is limited to a review of the law

principle, in that one does not need to go behind the certificate of title

involved.

because it contains all the information about the title of its holder. This principle dispenses with the need of proving ownership by long

But the Court now delves into the facts relating to the issue of

complicated documents kept by the registered owner, which may be

innocence of the petitioners in their purchase of the property,

necessary under a private conveyancing system, and assures that all

considering that the RTC, through its original decision, at first

the necessary information regarding ownership is on the certificate of

regarded them to have been innocent purchasers who were not aware

title. Consequently, the avowed objective of the Torrens system is to

of any flaw or defect in Sy’s title based on the fact that the property

obviate possible conflicts of title by giving the public the right to rely

had been unfenced and vacant. The RTC also regarded the petitioners’

upon the face of the Torrens certificate and, as a rule, to dispense with

making of reasonable verifications as their exercise of the due

the necessity of inquiring further; on the part of the registered owner,

diligence required of an ordinary buyer.31 The RTC later completely

the system gives him complete peace of mind that he would be

turned around through another decision, however, and it was such

secured in his ownership as long as he has not voluntarily disposed of

decision that the CA affirmed subject to the modifications of the

any right over the covered land.

26

damages granted to Domingo.

There is no question that the petitioners exerted some effort as buyers

unwarranted. In doing so, the CA cited the ruling in Barstowe

to determine whether the property did rightfully belong to Sy. For one,

Philippines Corporation v. Republic,32 where the Court, quoting from

they did not find any encumbrance, like a notice of lis pendens, being

precedents, opined that ―[t]he nature of a reconstituted Transfer

annotated on the TCT of Sy. Nonetheless, their observance of a certain

Certificate of Title of registered land is similar to that of a second

degree of diligence within the context of the principles underlying the

Owner’s Duplicate Transfer Certificate of Title,‖ in that ―[b]oth are

Torrens system was not their only barometer under the law and

issued, after the proper proceedings, on the representation of the

jurisprudence by which to gauge the validity of their acquisition of

registered owner that the original of the said TCT or the original of the

title. As the purchasers of the property, they also came under the clear

Owner’s Duplicate TCT, respectively, was lost and could not be located

obligation to purchase the property not only in good faith but also for

or found despite diligent efforts exerted for that purpose;‖33and that

value.

both were ―subsequent copies of the originals thereof,‖ a fact that a ―cursory examination of these subsequent copies would show‖ and

Therein lay the problem. The petitioners were shown to have been

―put on notice of such fact [anyone dealing with such copies who is]

deficient in their vigilance as buyers of the property. It was not enough

thus warned to be extra-careful.‖34

for them to show that the property was unfenced and vacant; otherwise, it would be too easy for any registered owner to lose her

Verily, the Court has treated a reissued duplicate owner’s copy of a

property, including its possession, through illegal occupation. Nor was

TCT as merely a reconstituted certificate of title. In Garcia v. Court of

it safe for them to simply rely on the face of Sy’s TCT No. 186142 in

Appeals,35 a case with striking similarities to this one, an impostor

view of the fact that they were aware that her TCT was derived from a

succeeded in tricking a court of law into granting his petition for the

duplicate owner’s copy reissued by virtue of the loss of the original

issuance of a duplicate owner’s copy of the supposedly lost TCT. The

duplicate owner’s copy. That circumstance should have already alerted

impostor then had the TCT cancelled by presenting a purported deed

them to the need to inquire beyond the face of Sy’s TCT No. 186142.

of sale between him and the registered owners, both of whom had

There were other circumstances, like the almost simultaneous

already been dead for some time, and another TCT was then issued in

transactions affecting the property within a short span of time, as well

the impostor’s own name. This issuance in the impostor’s own name

as the gross undervaluation of the property in the deeds of sale,

was followed by the issuance of yet another TCT in favor of a third

ostensibly at the behest of Sy to minimize her liabilities for the capital

party, supposedly the buyer of the impostor. In turn, the impostor’s

gains tax, that also excited suspicion, and required them to be extra-

transferee (already the registered owner in his own name) mortgaged

cautious in dealing with Sy on the property.

the property to Spouses Miguel and Adela Lazaro, who then caused the annotation of the mortgage on the TCT. All the while,

To the Court, the CA’s treatment of Sy’s TCT No. 186142 as similar to

the original duplicate owner’s copy of the TCT remained in the hands

a reconstituted copy of a Torrens certificate of title was not

of an heir of the deceased registered owners with his co-heirs’

knowledge and consent.

in obtaining a duplicate owner’s copy; and the Cusis and the De Veras were similarly situated as the Spouses Lazaro, the mortgagees

The inevitable litigation ensued, and ultimately ended up with the

in Garcia. The Cusis and the De Veras did not investigate beyond the

Court. The Lazaros, as the mortgagees, claimed good faith, and urged

face of Sy’s TCT No. 186142, despite the certificate derived from the

the Court to find in their favor. But the Court rebuffed their urging,

reissued duplicate owner’s copy being akin to a reconstituted TCT.

holding instead that they did not deal on the property in good faith

Thereby, they denied themselves the innocence and good faith they

because: (a) ―the title of the property mortgaged to the Lazaros was a

supposedly clothed themselves with when they dealt with Sy on the

second owner’s duplicate TCT, which is, in effect a reconstituted title.

property.

This circumstance should have alerted them to make the necessary investigation, but they did not;‖ and (b) their argument, that ―because

The records also show that the forged deed of sale from Domingo to

the TCT of the property on which their mortgage lien was annotated

Sy appeared to be executed on July 14, 1997; that the affidavit of loss

did not contain the annotation: ―Reconstituted title,‖ the treatment of

by which Sy would later on support her petition for the issuance of the

the reissued duplicate owner’s copy of the TCT as akin to a

duplicate owner’s copy of Domingo’s TCT No. 165606 was executed on

reconstituted title did not apply, had no merit considering that: ―The

July 17, 1997, the very same day in which Sy registered the affidavit

nature of a reconstituted Transfer Certificate of Title of registered land

of loss in the Registry of Deeds of Quezon City; that Sy filed the

is similar to that of a second Owner's Duplicate Transfer Certificate of

petition for the issuance of the duplicate owner’s copy of Domingo’s

Title. Both are issued, after the proper proceedings, on the

TCT No. 165606; that the RTC granted her petition on August 26,

representation of the registered owner that the original of the said TCT

1997; and that on October 31, 1997, a real estate mortgage was

or the original of the Owner's Duplicate TCT, respectively, was lost and

executed in favor of one Emma Turingan, with the mortgage being

could not be located or found despite diligent efforts exerted for that

annotated on TCT No. 165606 on November 10, 1997.

purpose. Both, therefore, are subsequent copies of the originals thereof. A cursory examination of these subsequent copies would show

Being the buyers of the registered realty, the Cusis and the De Veras

that they are not the originals. Anyone dealing with such copies are

were aware of the aforementioned several almost simultaneous

put on notice of such fact and thus warned to be extra-careful. This

transactions affecting the property. Their awareness, if it was not

warning the mortgagees Lazaros did not heed, or they just ignored

actual, was at least presumed, and ought to have put them on their

it.‖

36

guard, for, as the CA pointed out, the RTC observed that ―[t]hese almost simultaneous transactions, particularly the date of the alleged

The fraud committed in Garcia paralleled the fraud committed here.

loss of the TCT No. 165606 and the purported Deed of Sale, suffice[d]

The registered owner of the property was Domingo, who remained in

to arouse suspicion on [the part of] any person dealing with the

the custody of her TCT all along; the impostor was Sy, who succeeded

subject property.‖37 Simple prudence would then have impelled them

as honest persons to make deeper inquiries to clear the suspiciousness

neither she nor her late husband had seen fit to rectify the

haunting Sy’s title. But they still went on with their respective

undervaluation. It is notable that the De Veras were contracting

purchase of the property without making the deeper inquiries. In that

parties who appeared to have transacted with full freedom from undue

regard, they were not acting in good faith.

influence from Sy or anyone else.

Another circumstance indicating that the Cusis and the De Veras were

Although the petitioners argue that the actual consideration of the sale

not innocent purchasers for value was the gross undervaluation of the

was nearly P7,000,000.00 for each half of the property, the Court

property in the deeds of sale at the measly price of P1,000,000.00 for

rejects their argument as devoid of factual basis, for they did not

each half when the true market value was then in the aggregate of at

adduce evidence of the actual payment of that amount to Sy.

least P14,000,000.00 for the entire property. Even if the

Accordingly, the recitals of the deeds of sale were controlling on the

undervaluation was to accommodate the request of Sy to enable her to

consideration of the sales.

minimize her liabilities for the capital gains tax, their acquiescence to the fraud perpetrated against the Government, no less, still rendered

Good faith is the honest intention to abstain from taking

them as parties to the wrongdoing. They were not any less guilty at

unconscientious advantage of another. It means the ―freedom from

all. In the ultimate analysis, their supposed passivity respecting the

knowledge and circumstances which ought to put a person on

arrangement to perpetrate the fraud was not even plausible, because

inquiry.‖

38

they knew as the buyers that they were not personally liable for the capital gains taxes and thus had nothing to gain by their acquiescence.

Given this notion of good faith, therefore, a purchaser in good faith is

There was simply no acceptable reason for them to have acquiesced to

one who buys the property of another without notice that some other

the fraud, or for them not to have rightfully insisted on the declaration

person has a right to, or interest in, such property and pays full and

of the full value of the realty in their deeds of sale. By letting their

fair price for the same.39 As an examination of the records shows, the

respective deeds of sale reflect the grossly inadequate price, they

petitioners were not innocent purchasers in good faith and for

should suffer the consequences, including the inference of their bad

value. Their failure to investigate Sy’s title despite the nearly

faith in transacting the sales in their favor.

simultaneous transactions on the property that ought to have put them on inquiry manifested their awareness of the flaw in Sy’s

De Vera particularly insists that she and her late husband did not have

title. That they did not also appear to have paid the full price for their

any hand in the undervaluation; and that Sy, having prepared the

share of the property evinced their not having paid true value.40

deed of sale, should alone be held responsible for the undervaluation that had inured only to her benefit as the seller. However, such

Resultantly, the Court affirms the lower courts, and restores to

insistence was rendered of no consequence herein by the fact that

Domingo her rights of dominion over the property.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated on July 16, 2010; and ORDERS the petitioners to pay the costs of suit. SO ORDERED.

THIRD DIVISION

In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the petitioner, being the owner of several parcels of land situated in

G.R. No. 192669, April 21, 2014

Quezon City, constituting the subdivision known as Capitol Homes Subdivision Nos. I and II. On July 25, 1972, MRCI entered into a

RAUL SABERON, JOAN F. SABERON AND JACQUELINE SABERON, Petitioners, v. OSCAR VENTANILLA, JR., AND CARMEN GLORIA D. VENTANILLA, Respondents.

including sales commission and management fee, the latter was to thereof; execute contracts to sell to lot buyers; and issue official

MENDOZA, J.: For resolution of the Court is a motion for reconsideration of the Court’s January 19, 2011 Resolution1which denied the petition of Raul F. Saberon, Jr., Joan F. Saberon and Jacqueline F. Saberon (Saberons). In effect, it affirmed the March 12, 2010 Decision2 and the June 18, 2010 Resolution3 of the Court of Appeals (CA) in CA–G.R. CV No. 85520, holding that the June 21, 2005 Decision of the Regional Trial Court, Branch 80, Quezon City (RTC) in Civil Case No. 96–26486, was correct in, among others, ordering the cancellation of Transfer Certificate of Title (TCT) Nos. 55396 and 55397 in the name of the Saberons and Samuel Marquez (Marquez). This case is an offshoot of two (2) cases involving the same property, docketed as G.R. No. 82978 and G.R. No. 107282, which had been decided by the Court with finality on November 22, 1990 and March

Antecedent Facts

Land Development and Sales Contract,‖ whereby for a consideration, develop the aforesaid subdivision with authority to manage the sales

RESOLUTION

16, 1994, respectively.

contract with A.U. Valencia & Co. Inc. (AUVC)entitled ―Confirmation of

receipts.

At that time, the president of AUVC, was Artemio U.

Valencia (Valencia). On March 3, 1970, MRCI and AUVC executed two (2) contracts to sell covering Lots 1 and 2 of Block 17, in favor of Oscar C. Ventanilla, Jr. and Carmen Gloria D. Ventanilla (Ventanillas), for the combined contract price of P66,571.00 payable monthly for ten (10) years. The Ventanillas paid the down payment as stipulated in the two (2) contracts. On March 13, 1970, Valencia, holding out himself as president of MRCI, and without the knowledge of the Ventanillas, resold the same property to Carlos Crisostomo (Crisostomo), without any consideration. Valencia transmitted the fictitious contract with Crisostomo to MRCI while he kept the contracts to sell with the Ventanillas in his private office files. All the amounts paid by the latter were deposited in Valencia’s bank account and remitted to MRCI as payments of Crisostomo. The Ventanillas continued to pay the monthly installment.

Thereafter, MRCI terminated its business relationship with AUVC on account of irregularities discovered in its collection and

Aggrieved, the Ventanillas commenced an action for specific

remittances. Consequently, Valencia was removed as president by the

performance, annulment of deeds and damages against MRCI, AUVC,

Board of Directors of MRCI. He then stopped transmitting the

and Crisostomo with the Court of First Instance, Branch 17–B, Quezon

Ventanillas’ monthly installments which at that time, already

City (CFI Quezon City) docketed as Civil Case No. 26411, where

amounted to P17,925.40 for Lot 1 and P18,141.95 for Lot 2 (appearing

Crisostomo was declared in default for his failure to file an answer.

in MRCI’s records as credited under the name of Crisostomo). On November 17, 1980, the CFI Quezon City rendered a decision On June 8, 1973, AUVC sued MRCI to impugn the abrogation of their

declaring the contracts to sell in favor of the Ventanillas as valid and

agency agreement before the Court of First Instance, Branch 19,

subsisting, and annulling the contract to sell in favor of Crisostomo. It

Manila (CFI Manila), which eventually ordered all lot buyers to deposit

ordered the MRCI to execute an absolute deed of sale in favor

their monthly amortizations with the court. On July 17, 1973, AUVC

of the Ventanillas, free from all liens and encumbrances.

informed the Ventanillas that it was still authorized by the trial court to

Damages and attorney’s fees in the total amount of P210,000.00 were

collect the monthly amortizations and requested them to continue

also awarded to the Ventanillas for which the MRCI, AUVC, and

remitting their payment, with the assurance that said payments would

Crisostomo were held solidarily liable. The CFI Quezon City ruled

be deposited later in court.

further that if for any reason the transfer of the lots could not be effected, MRCI, AUVC and Crisostomo would be solidarily liable to the

For AUVC’s failure to forward its collections to the trial court as

Ventanillas for the reimbursement of the sum of P73,122.35,

ordered, MRCI caused the publication of a notice cancelling the

representing the amount they paid for the two (2) lots, and the legal

contracts to sell of some lot buyers including those of Crisostomo in

interest thereon from March 1970, plus the decreed damages and

whose name the payments of the Ventanillas had been credited.

attorney’s fees. Valencia was also held liable to MRCI for moral and exemplary damages and attorney’s fees.

It was not until March 1978 when the Ventanillas discovered Valencia’s deception. Believing that they had already remitted the total amount

On separate appeals filed by AUVC and MRCI, the CA sustained the CFI

of P73,122.35 for the two lots, the Ventanillas offered to pay the

Quezon City’s decision in toto.

balance to MRCI. To their shock, their names as lot buyers did not appear in MRCI’s records. Instead, MRCI showed them a copy of the

The 1990 Case

contract to sell signed by Valencia, in favor of Crisostomo. MRCI refused the Ventanillas’ offer to pay for the remainder of the contract

MRCI then filed before this Court a petition for certiorari docketed as

price.

G.R. No. 82978, to review the decision of the CA upholding the

solidary liability of MRCI, AUVC and Crisostomo for the payment of

only upon the deposit to the Court of the amount of P500,000.00 in

moral and exemplary damages and attorney’s fees to the Ventanillas.

cash.

On November 22, 1990, this Court affirmed the decision of the CA and

MRCI then moved for reconsideration praying that it be ordered to

declared the judgment of the CFI Quezon City immediately executory.

reimburse the Ventanillas in the amount of P263,074.10 and that the garnishment of its bank deposit be lifted. This plea was denied twice

Encouraged by the seeming triumph of their cause, the Ventanillas

by the trial court prompting MRCI to file another petition

moved for the issuance of a writ of execution in Civil Case No. 26411.

for certiorari with the CA, which ruled that the contract to sell in favor

The writ was issued on May 3, 1991, and served upon MRCI on May 9,

of Marquez did not constitute a legal impediment to the immediate

1991. A notice of levy was annotated in the titles of MRCI on

execution of the judgment. Furthermore, it held that the cash bond

May 31, 1991.

fixed by the trial court for the lifting of the garnishment was fair and reasonable because the value of the lot in question had considerably

In a manifestation and motion, however, MRCI alleged that the subject

increased.

properties could not longer be delivered to the Ventanillas because they had already been sold to Samuel Marquez (Marquez) on February

The 1994 Case

7, 1990, while its petition was pending before this Court. Nevertheless, MRCI offered to reimburse the amount paid by the Ventanillas,

From the CA, the case was elevated to this Court as G.R. No. 107282

including legal interest plus damages. MRCI also prayed that its tender

where MRCI argued that the sale of the properties to Marquez was

of payment be accepted and that all garnishments on their accounts

valid because at the time of the sale, the issue of the validity of the

lifted.

sale to the Ventanillas had not yet been resolved. Further, there was no specific injunction against it re–selling the property. As a buyer in

The Ventanillas accepted the amount of P210,000.00 as damages and

good faith, Marquez had a right to rely on the recitals in the certificate

attorney’s fees but rejected the reimbursement offered by MRCI in lieu

of title. The subject matter of the controversy having been passed to

of the execution of the absolute deed of sale. They contended that the

an innocent purchaser for value, the execution of the absolute deed of

alleged sale to Marquez was void, fraudulent, and in contempt of court

sale in favor of the Ventanillas could not be ordered by the trial court.

and that no claim of ownership over the properties in question had ever been made by Marquez.

The Ventanillas countered that the validity of the sale to them had already been established even while the previous petition was still

On July 19, 1991, the CFI Quezon City ordered that the garnishment

awaiting resolution. The petition only questioned the solidary liability

made by the Sheriff upon the bank account of MRCI could be lifted

of MRCI to the Ventanillas. Hence, the portion of the decision ordering

MRCI to execute an absolute deed of sale in their favor had already

filed by the private respondents. It disclosed the contract only after

become final and executory when MRCI failed to appeal it to the Court.

the writ of execution had been served upon it.

Thus, an order enjoining MRCI from reselling the property in litigation was unnecessary. Besides, the unusual lack of interest, on the part of

Third, in its manifestation and motion dated December 21, 1990, the

Marquez, to protect and assert his right over the disputed property

petitioner said it was ready to deliver the titles to the Ventanillas

was, to the Ventanillas, a clear indication that the alleged sale to him

provided that their counterclaims against private respondents were

was merely a ploy of MRCI to evade the execution of the absolute

paid or offset first. There was no mention of the contract to sell with

deed of sale in their favor.

Marquez on February 7, 1990.

On March 16, 1994, the Court settled the controversy in this

Fourth, Marquez has not intervened in any of these proceedings to

wise:chanRoblesvirtualLawlibrary

assert and protect his rights to the subject property as an alleged purchaser in good faith.

The validity of the contract to sell in favor of the Ventanilla spouses is not disputed by the parties. Even in the previous petition, the

At any rate, even if it be assumed that the contract to sell in

recognition of that contract was not assigned as error of either the trial

favor of Marquez is valid, it cannot prevail over the final and

court or appellate court. The fact that the MRCI did not question the

executory judgment ordering MRCI to execute an absolute

legality of the award for damages to the Ventanillas also shows that it

deed of sale in favor of the Ventanillas. No less importantly, the

even then already acknowledged the validity of the contract to sell in

records do not show that Marquez has already paid the supposed

favor of the private respondents.

balance amounting to ?616,000.00 of the original price of over P800,000.00. (Emphasis supplied)

On top of all this, there are other circumstances that cast suspicion on the validity, not to say the very existence, of the contract with

As it turned out, the execution of the judgment in favor of the

Marquez.

Ventanillas was yet far from fruition. Samuel Cleofe, Register of Deeds for Quezon City (ROD Cleofe) revealed to them, that on March 11,

First, the contract to sell in favor of Marquez was entered into after the

1992, MRCI registered a deed of absolute sale to Marquez who

lapse of almost ten years from the rendition of the judgment of the

eventually sold the same property to the Saberons, which conveyance

trial court upholding the sale to the Ventanillas.

was registered in July 1992. ROD Cleofe opined that a judicial order for the cancellation of the titles in the name of the Saberons was essential

Second, the petitioner did not invoke the contract with Marquez during

before he complied with the writ of execution in Civil Case No. 26411.

the hearing on the motion for the issuance of the writ of execution

Apparently, the notice of levy, through inadvertence, was not carried

over to the title issued to Marquez, the same being a junior encumbrance which was entered after the contract to sell to Marquez

(2) Ordering defendant MRCI to receive payment of the balance of the

had already been annotated.

purchase price to be paid by the plaintiffs and to execute a Deed of Absolute Sale in favour of the plaintiffs, and in case of failure thereof,

Civil Case No. Q–96–26486

ordering plaintiffs to consign the amount with this Court;

Once again, the Ventanillas were constrained to go to court to seek the

(3) Ordering the Register of Deeds to cancel the titles in the name of

annulment of the deed of sale executed between MRCI and Marquez as

Marquez and the Saberons, and to issue new certificates of title in the

well as the deed of sale between Marquez and the Saberons, as the

name of the spouses Ventanillas upon registration of the Deed of

fruits of void conveyances. The case was docketed as Civil Case No.

Absolute Sale in favour of the plaintiffs or proof of their consignment;

Q–96–26486 with the Regional Trial Court, Branch 80, Quezon City (RTC).

(4) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay plaintiffs, jointly and severally, the sums of:

During the trial, all the defendants, including Edgar Krohn Jr. (Krohn) as President of MRCI, and Bede

a.

P100,000.00, as moral damages; and

Tabalingcos (Tabalingcos) as its legal counsel, filed their respective

b.

P50,000.00, as attorney’s fees.

answers, except Marquez who was declared in default. (5) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay On June 21, 2005, the RTC rendered its decision, the dispositive

defendants Saberon, jointly and severally, the sum of P7,118,155.88

portion of which reads:chanRoblesvirtualLawlibrary

representing the value of the properties in dispute and the value of the improvements introduced by defendants Saberon; and

Wherefore, premises considered, judgment is hereby rendered in favour of plaintiffs, the spouses Oscar and Carmen Ventanilla, and

(6) Ordering the defendants to pay the costs of the suit.

against defendants MRCI, Krohn, Tabalingcos, Marquez and Saberon, as follows:chanRoblesvirtualLawlibrary

Defendants’ counterclaims are hereby dismissed for lack of merit.

(1) Declaring the Transfer Certificated of Title Nos. 55396 and 55397

Separate appeals were instituted by MRCI and Tabalingcos, on one

in the name of Samuel Marquez, and Transfer Certificates of Title Nos.

hand, and the Saberons, on the other. The former contended that no

63140 and 63141 in the names of Raul, Jr., Joan and Jacqueline

fraudulent act could be attributed to them for the sale of the property

Saberon as null and void;

to the title of Marquez, considering that ROD Cleofe was the one who

inadvertently omitted the carrying over of the notice of levy to

faith for selling the lots to Marquez at a time when litigation as to the

Marquez who consequently secured a clean title to the lot. MRCI

validity of the first sale to the Ventanillas was still pending. In other

Tabalingcos further claimed that the sale to Marquez was effected

words, MRCI was sufficiently aware of the Court decision confirming its

while the previous case was still pending, at a time when they had

failure to supervise and control the affairs of its authorized agent,

every liberty to believe in the legality of their position.

AUVC, which led to the explicit pronouncement that the first sale to the Ventanillas was valid. This should have served as a warning to

Meanwhile, the Saberons relied on one central argument—that they

MRCI that it could no longer deal with the property in deference to the

were purchasers in good faith, having relied on the correctness of the

Court’s ruling and affirmation of the trial court’s order to execute the

certificates of title covering the lots in question; and therefore, holders

deed of sale in favor of the Ventanillas. Obviously, MRCI took no heed

of a valid and indefeasible title.

of this caveat. The titles had been transferred yet again to the Saberons, who claimed to be purchasers in good faith. Unfortunately,

In the assailed decision, the CA made its conclusion hinged on the

there was an exception to the general rule. The CA cited AFP Mutual

following findings:chanRoblesvirtualLawlibrary

Benefit Association Inc. v. Santiago,

4

where the Court ruled that with

respect to involuntary liens, an entry of a notice of levy and When MRCI executed a Contract to Sell in favor of Marquez in

attachment in the primary entry or day book of the Registry of Deeds

February 1990, it was in the throes of an appeal from the Decision in

was considered as sufficient notice to all persons that the land was

Civil Case No. 26411 where its very first Contracts to Sell to the

already subject to attachment. Resultantly, attachment was duly

Ventanillas were upheld over those of Crisostomo. The Marquez

perfected and bound the land.

Contract to Sell was in fact the third in a row, and registered a year later, on May 21, 1991, appears as the first recorded entry in MRCI’s

The Present Petition

titles. The notice of levy in Civil Case No. 26411 came ten days later, on May 31, 1991. Then, in February 1992, MRCI executed a deed of

Aggrieved by this CA ruling, the Saberons filed the present petition.

absolute sale to Marquez and when the new titles were issued in

They claimed that in 1992, a certain Tiks Bautista offered the lots to

Marquez’ name, the notice of levy was not carried over. A few months

Raul Saberon, who, after being given photocopies of the titles to the

later, these titles were cancelled by virtue of a deed of sale to the

land, inquired with the Registry of Deeds for Quezon City (ROD–QC) to

Saberons and, on the same day, TCT 63140 and 63141 were issued

verify the authenticity of the same. He found no encumbrances or

clean to them.

annotations on the said titles, other than restrictions for construction and negotiation. As agreed upon, he paid Marquez the amount of Two

According to the CA, the arguments espoused by MRCI and

Million One Hundred Thousand Pesos (P2,100,000.00) as purchase

Tabalingcos were untenable. The said parties were found guilty of bad

price for the lots. Upon payment of the real property taxes, a

certification was issued by the Office of the City Treasurer for the

land less than ownership, a brief memorandum of such shall be made

purpose of transferring the title over the property.

by the Register of Deeds on the certificate of title and signed by him. Hence, the ruling in AFP, that an entry of a notice of levy and

Thereafter, Marquez executed the Deed of Absolute Sale in favor of the

attachment in the primary entry or day book of the Registry of Deeds

Saberons. The ROD–QC then issued TCT Nos. 63140 and 63141 in

was sufficient notice to all persons that the land was already subject to

their names.

such attachment, would be rendered as a superfluity in light of the mandatory character of the said provision.

Unknown to the Saberons, the former owner of the properties had entered into contracts to sell with the Ventanillas, way back in 1970. It

The Saberons further pointed that the claim of the Ventanillas over the

was only upon receipt of the summons in the case filed by the

subject properties never ripened into ownership as they failed to

Ventanillas with the RTC that they learned of the present controversy.

consign the balance on the purchase price stipulated on the contracts to sell, thus preventing the obligatory force of the contract from taking

With the RTC and the CA rulings against their title over the properties,

effect.

the Saberons now come to the Court with their vehement insistence that they were purchasers in good faith and for value. Before

On October 4, 2010, the Court required the Ventanillas to file their

purchasing the lots, they exercised due diligence and found no

comment to the petition.6 On January 19, 2011, the Court resolved to

encumbrance or annotations on the titles. At the same time, the

deny the Saberons’ petition for failure to sufficiently show any

Ventanillas also failed to rebut the presumption of their good faith as

reversible error in the assailed judgment by the CA.7 In its June 15,

there was no showing that they confederated with MRCI and its

2011 Resolution,8 the Court required the Ventanillas to comment on

officers to deprive the Ventanillas of their right over the subject

the motion for reconsideration filed by the Saberons.

properties. Resolution of the Court According to the Saberons, the CA likewise erred in ruling that there was no constructive notice of the levy made upon the subject lands.

At first glance, it would seem that the case involves convoluted issues

They claimed that the appellate court could not solely rely on AFP

brought about by the number of times the Ventanillas were impelled

5

Mutual Benefit Association Inc. v. Santiago. Instead, they urged the

by circumstances to seek judicial action. Nonetheless, the antecedents

Court to interpret Sections 52 and 42 of Presidential Decree (P.D.) No.

would readily reveal that the essential facts are not disputed: 1) that

1529 which cover the effects of registration and the manner thereof;

the subject properties have indeed been the objects of various

and to examine Section 54 which shows that, in addition to the filing of

transfers effected by MRCI leading to the current controversy between

the instrument creating, transferring or claiming interest in registered

the Saberons and the Ventanillas; and 2) that prior to the sale to the

Saberons, a notice of levy as an encumbrance was already in

certificates of title do not effect a conveyance of or encumbrances on a

existence.

parcel of land. Registration is the operative act that conveys ownership or affects the land insofar as third persons are concerned. By virtue of

Sections 51 and 52 of P.D. No. 1529 explain the purpose and effects of

registration, a constructive notice to the whole world of such voluntary

registering both voluntary and involuntary instruments, to

or involuntary instrument or court writ or processes, is thereby

wit:chanRoblesvirtualLawlibrary

created.

Section 51. Conveyance and other dealings by registered owner. An

The question of utmost relevance to this case, then, is this: whether or

owner of registered land may convey, mortgage, lease, charge or

not the registration of the notice of levy had produced constructive

otherwise deal with the same in accordance with existing laws. He may

notice that would bind third persons despite the failure of the ROD–QC

use such forms of deeds, mortgages, leases or other voluntary

to annotate the same in the certificates of title?

instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect

In answering these questions, the Court is beckoned to rule on two

registered land shall take effect as a conveyance or bind the land, but

conflicting rights over the subject properties: the right of the

shall operate only as a contract between the parties and as evidence of

Ventanillas to acquire the title to the registered land from the moment

authority to the Register of Deeds to make registration.

of inscription of the notice of levy on the day book (or entry book), on one hand; and the right of the Saberons to rely on what appears on

The act of registration shall be the operative act to convey or affect

the certificate of title for purposes of voluntary dealings with the same

the land insofar as third persons are concerned, and in all cases under

parcel of land, on the other.

this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

The Saberons maintain that they had no notice of any defect, irregularity or encumbrance in the titles of the property they

Section 52. Constructive notice upon registration. Every conveyance,

purchased. In its decision, however, the RTC pointed out that their

mortgage, lease, lien, attachment, order, judgment, instrument or

suspicion should have been aroused by the circumstance that

entry affecting registered land shall, if registered, filed or entered in

Marquez, who was not engaged in the buy–and–sell business and had

the office of the Register of Deeds for the province or city where the

the property for only a few months, would offer the same for sale.

land to which it relates lies, be constructive notice to all persons from

Although the RTC found that the Saberons may not be considered as

the time of such registering, filing or entering.

innocent purchasers for value because of this circumstance, it, nonetheless, ruled that they, who might well be unwilling victims of

These provisions encapsulate the rule that documents, like the

the fraudulent scheme employed by MRCI and Marquez, were entitled

to actual and compensatory damages.

solidary liability in the 1990 case and its failure to assign the same as an error in the 1994 case. In the same vein, the issue on Marquez’s

To this latter finding, the Court agrees. The Saberons could not be said

title had already been passed upon and settled in the 1994 case. That

to have authored the entanglement they found themselves in. No fault

he purchased the lots prior to the annotation of the notice of levy in

can be attributed to them for relying on the face of the title presented

MRCI’s title was of no moment. In fact, the Court explicitly declared

by Marquez. This is bolstered by the fact that the RTC decision shows

that MRCI’s transaction with Marquez ―cannot prevail over the final

no categorical finding that the Saberons’ purchase of the lots from

and executory judgment ordering MRCI to execute an absolute deed of

Marquez was tainted with bad faith. That the Saberons should have

sale in favor of the Ventanillas.‖

harbored doubts against Marquez is too high a standard to impose on a buyer of titled land. This is in consonance to the rule that the one

These favorable findings prompted the Ventanillas to register the

who deals with property registered under the Torrens system is

notice of levy on the properties. The records show that on the strength

charged with notice only of such burdens and claims as are annotated

of a final and executory decision by the Court, they successfully

9

on the title. ―All persons dealing with property covered by Torrens

obtained a writ of execution from the RTC and a notice of levy was

certificate of title are not required to explore further than what the

then entered, albeit on the primary entry book only. The contract to

Torrens title upon its face indicates in quest for any hidden defect or

sell to Marquez was registered on May 21, 1991, while the notice of

inchoate right that may subsequently defeat his right thereto.‖

10

These

levy was issued ten (10) days later, or on May 31, 1991. In February

rules remain as essential features of the Torrens system. The present

1992, MRCI executed the Deed of Sale with Marquez, under whose

case does not entail a modification or overturning of these principles.

name the clean titles, sans the notice of levy, were issued. A year later, or on March 11, 1992, MRCI registered the deed of sale to

Be that as it may, no fault can likewise be imputed to the Ventanillas.

Marquez who later sold the same property to the Saberons.

In ultimately ruling for the Ventanillas, the courts a quo focused on the

This complex situation could have been avoided if it were not for the

superiority of their notice of levy and the constructive notice against

failure of ROD Cleofe to carry over the notice of levy to Marquez’s title,

the whole world which it had produced and which effectively bound

serving as a senior encumbrance that might have dissuaded the

third persons including the Saberons.

Saberons from purchasing the properties.

It has already been established in the two previous cases decided by

The Court agrees with the position of the RTC in rejecting ROD Cleofe’s

the Court that the contracts to sell executed in favor of the Ventanillas

theory.

are valid and subsisting. Clearly, it has been acknowledged, even by MRCI, as can be seen in the latter’s own choice to only question their

Distinctions between a contract to sell and a contract of sale are well–

established in jurisprudence. In a contract of sale, the title to the

stated that an attachment shall be discharged upon sale of the

property passes to the vendee upon the delivery of the thing sold; in a

property other than under execution.15

contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase

Additionally, Section 59 of P.D. No. 1529 provides that, ―[i]f, at the

price. Otherwise stated, in a contract of sale, the vendor loses

time of the transfer, subsisting encumbrances or annotations appear in

ownership over the property and cannot recover it until and unless the

the registration book, they shall be carried over and stated in the new

contract is resolved or rescinded; whereas, in a contract to sell, title is

certificate or certificates, except so far as they may be simultaneously

retained by the vendor until full payment of the price. In the latter

released or discharged.‖ This provision undoubtedly speaks of the

contract, payment of the price is a positive suspensive condition,

ministerial duty on the part of the Register of Deeds to carry over

failure of which is not a breach but an event that prevents the

existing encumbrances to the certificates of title.

obligation of the vendor to convey title from becoming effective.11 From the foregoing, ROD Cleofe’s theory that a deed of sale, as a mere It is undeniable, therefore, that no title was transferred to Marquez

conclusion of a contract to sell, turns into a senior encumbrance which

upon the annotation of the contract to sell on MRCI’s title. As correctly

may surpass a notice of levy, has no leg to stand on. It was, in fact,

found by the trial court, the contract to sell cannot be substituted by

properly rejected by the courts a quo. Verily, the controversy at hand

the Deed of Absolute Sale as a ―mere conclusion‖ of the previous

arose not from the Ventanillas’ fault, but from ROD Cleofe’s misplaced

contract since the owners of the properties under the two instruments

understanding of his duty under the law.

are different.

12

Considering that the deed of sale in favor of Marquez

was of later registration, the notice of levy should have been carried

Surely, the Ventanillas had every right to presume that the Register of

over to the title as a senior encumbrance.

Deeds would carry over the notice of levy to subsequent titles covering the subject properties. The notice was registered precisely to bind the

Corollary to this is the rule that a levy of a judgment debtor creates a

properties and to serve as caution to third persons who might

lien, which nothing can subsequently destroy except the very

potentially deal with the property under the custody of the law. In DBP

dissolution of the attachment of the levy itself.

13

Prior registration of

the lien creates a preference, since the act of registration is the operative act to convey and affect the land.

14

Jurisprudence dictates

v. Acting Register of Deeds of Nueva Ecija,16 the Court ruled that entry alone produced the effect of registration, whether the transaction entered was a voluntary or involuntary one, so long as the registrant

that the said lien continues until the debt is paid, or the sale is had

had complied with all that was required of him for purposes of entry

under an execution issued on the judgment or until the judgment is

and annotation, and nothing more remained to be done but a duty

satisfied, or the attachment is discharged or vacated in the same

incumbent solely on the Register of Deeds.

manner provided by law. Under no law, not even P.D. No. 1529, is it

While the Court is not unmindful that a buyer is charged with notice

which was the subject of the notice of levy earlier presented. Unaware

only of such burdens and claims as are annotated on the title, the RTC

of the previous presentation of the notice of levy, the Register of

and the CA are both correct in applying the rule as to the effects of

Deeds issued a certificate of title in the name of the vendee on the

involuntary registration. In cases of voluntary registration of

basis of the deed of sale. The Register of Deeds in AFP immediately

documents, an innocent purchaser for value of registered land

requested the vendee to surrender the documents in light of the

becomes the registered owner, and, in contemplation of law the holder

mistake discovered so that he could take appropriate rectification or

of a certificate of title, the moment he presents and files a duly

correction. Settling the issue on whether the notice of levy could be

notarized and valid deed of sale and the same is entered in the day

annotated in the certificate of title, the Court ruled in the affirmative

book and at the same time he surrenders or presents the owner’s

on the ground that the preference created by the levy on attachment

duplicate certificate of title covering the land sold and pays the

was not diminished by the subsequent registration of the prior sale.

registration fees, because what remains to be done lies not within his

Superiority and preference in rights were given to the registration of

power to perform. The Register of Deeds is duty bound to perform

the levy on attachment; although the notice of attachment had not

it.

17

In cases of involuntary registration, an entry thereof in the day

been noted on the certificate of title, its notation in the book of entry

book is a sufficient notice to all persons even if the owner’s duplicate

of the Register of Deeds produced all the effects which the law gave to

certificate of title is not presented to the register of deeds. Therefore,

its registration or inscription, to wit:chanRoblesvirtualLawlibrary

in the registration of an attachment, levy upon execution, notice of lis pendens, and the like, the entry thereof in the day book is a sufficient

…Under the rule of notice, it is presumed that the purchaser has

notice to all persons of such adverse claim.18

examined every instrument of record affecting the title. Such presumption is irrebuttable. He is charged with notice of every fact

This rule was reiterated in the more recent case of Armed Forces and

shown by the record and is presumed to know every fact shown by the

Police Mutual Benefit Association, Inc., v. Santiago,19 as relied upon by

record and to know every fact which an examination of the record

the CA. In AFP, the Notice of Levy was presented for registration in the

would have disclosed. This presumption cannot be overcome by proof

Registry of Deeds of Pasig City. The Notice was entered in the Primary

of innocence or good faith. Otherwise, the very purpose and object of

Entry Book, but was not annotated on the TCT because the original

the law requiring a record would be destroyed. Such presumption

copy of the said title on file in the Registry of Deeds was not available

cannot be defeated by proof of want of knowledge of what the record

at that time. Six (6) days after the presentation of the Notice of Levy,

contains any more than one may be permitted to show that he was

the Deed of Absolute Sale involving the same parcel of land was

ignorant of the provisions of the law. The rule that all persons must

presented for registration and likewise entered. The deed of sale was

take notice of the facts which the public record contains is a rule of

examined by the same employee who examined the notice of levy, but

law. The rule must be absolute; any variation would lead to endless

she failed to notice that the title subject of the sale was the same title

confusion and useless litigation. For these reasons, a declaration from

the court that respondent was in bad faith is not necessary in order

of the superiority of the Ventanillas’ notice of levy, as discussed.

that the notice of levy on attachment may be annotated on TCT No. PT–94912.

The Court also sees no reason to dwell in the contention that the rights or interests of the Ventanillas in the subject properties never ripened

The fact that the notice of levy on attachment was not annotated on

into ownership. It bears stressing that the previous decisions discussed

the original title on file in the Registry of Deeds, which resulted in its

herein already sealed the validity of the contract to sell issued to the

non–annotation on the title TCT No. PT–94912, should not prejudice

Ventanillas decades ago. As found by the RTC, it was MRCI’s obstinate

petitioner. As long as the requisites required by law in order to effect

refusal to accept their tender of payment, not to mention the devious

attachment are complied with and the appropriate fees duly paid,

transfer of the property, which caused the decade–long delay of the

attachment is duly perfected. The attachment already binds the land.

execution of the deed of sale in their favor. This is a finding that the

This is because what remains to be done lies not within the petitioner’s

Court, which is not a trier of facts, will have to respect.

power to perform but is a duty incumbent solely on the Register of Deeds. (Emphasis supplied)

In the same vein, the attribution of laches against the Ventanillas is flawed. Their failure to learn about the structures being built on the

In the case at bench, the notice of levy covering the subject property

subject lands and the payment of real property taxes by the Saberons

was annotated in the entry book of the ROD QC prior to the issuance

is not sufficient justification to withhold the declaration of their

of a TCT in the name of the Saberons. Clearly, the Ventanillas’ levy

ownership over it. Against a different factual milieu, laches may be

was placed on record prior to the sale. This shows the superiority and

said to have set it but not so in this case. While the Ventanillas may

preference in rights of the Ventanillas over the property as against the

have been unaware that improvements were being erected over the

Saberons. In AFP, the Court upheld the registration of the levy on

lots, this obliviousness can, by no means, be treated as a lack of

attachment in the primary entry book as a senior encumbrance despite

vigilance on their part. It bears stressing that the Ventanillas are now

the mistake of the ROD, the Court must, a fortiori, sustain the notice

of advanced age and retired as university professors. Considering the

of levy registered by the Ventanillas notwithstanding the nonfeasance

length of litigation which they had to endure in order to assert their

of ROD Cleofe. Again, the prevailing rule is that there is effective

right over the property which they have painstakingly paid for decades

registration once the registrant has fulfilled all that is needed of him

ago, to hold now that they have been remiss in the protection of their

for purposes of entry and annotation, so that what is left to be

rights would be the height of impropriety, if not injustice. To exact

accomplished lies solely on the Register of Deeds.20

from them an obligation to visit the land in litigation every so often, lest they be held to have slept on their rights, is iniquitous and

Suffice it to say, no bad faith can be ascribed to the parties alike.

unreasonable. All told, the Ventanillas remain as innocent victims of

Nevertheless, the equal footing of the parties necessarily tilts in favor

deception.

fraudulent employed by defendants MRCI and Marquez, and thus can The Court deems it significant to note that the amount of

rightfully claim damages from the same.23

P7,118,115.88 awarded to the Saberons by the RTC is to be satisfied by MRCI, Krohn, Tabalingcos, and Marquez, who have not been

Consequently, Article 448 in relation to Article 546 of the Civil Code

impleaded as parties to the present petition, thus, rendering the said

will apply. The provisions respectively

award final and executory. The said amount, however, is separate

read:chanRoblesvirtualLawlibrary

and distinct from those provided under Article 448 22

Article 546

21

in relation to

of the Civil Code. In the petition, the Saberons invoked

Article 448. The owner of the land on which anything has been built,

the said provisions, claiming that they are entitled to reimbursement

sow or planted in good faith, shall have the right to appropriate, as his

of all the expenses incurred in the introduction of improvements on the

own the works, sowing, or planting, after payment of the indemnity

subject lands amounting to P23,058,822.79.

provided for in Article 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the

The Court finds the Saberons to be builders in good faith.

proper rent. However, the builder or planter cannot be obliged to buy the land and if its value is considerably more than that of the building

No less than the court a quo observed that ―no actual evidence that

or trees. In such case, he shall pay reasonable rent, if the owner of

the Saberons connived with the MRCI and Marquez to have the titles

the land does not choose to appropriate the building or trees after

registered in their names to the prejudice of the (Ventanillas)‖ and

proper indemnity. The parties shall agree upon the terms of the lease

that what was obvious was that ―the Saberons dealt with clean

and in case disagreement, the court shall fix the terms thereof.

certificates of titles.‖ Also quite telling on this point is the finding that MRCI, Krohn, Tabalingcos, and Marquez are liable to the Saberons.

Article 546. Necessary expenses shall be refunded to every possessor;

The RTC reasoned out in the following

but only the possessor in good faith may retain the thing until he has

wise:chanRoblesvirtualLawlibrary

been reimbursed therefore.

This Court is not convinced, however that defendants Saberon took

Useful expenses shall be refunded only to the possessor in good faith

part in the fraudulent scheme employed by the other defendants

with the same right of retention, the person who has defeated him in

against the plaintiffs. Although they may not be considered as innocent

the possession having the option of refunding the amount of the

purchasers for value shown in the discussion above, this Court is not

expenses or of paying the increase in value which the thing may have

ready to conclude that the Saberons joined the other defendants in

acquired by reason thereof.

their efforts to frustrate plaintiffs’ rights over the disputed properties. On the contrary, they may be considered victims of the same

Thus, the two options available to the Ventanillas: 1) they may

exercise the right to appropriate after payment of indemnity representing the value of the improvements introduced and the necessary and useful expenses defrayed on the subject lots; or 2) they may forego payment of the said indemnity and instead, oblige the Saberons to pay the price of the land. Should the Ventanillas elect to appropriate the improvements, the trial court is ordered to determine the value of the improvements and the necessary and useful expenses after hearing and reception of evidence. Should the Ventanillas, however, pursue the option to oblige the Saberons to pay the ―price of the land,‖ the trial court is ordered to determine said price to be paid to the Ventanillas. WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The appealed March 12, 2010 Decision and the June 18, 2010 Resolution of the Court of Appeals in CA–G.R. CV No. 85520 are AFFIRMED with modification in that the Ventanillas are given a period of sixty (60) days from finality of this Resolution to decide whether to pay the Saberons the value of the improvements and the necessary and useful expenses defrayed on the 2 lots or to oblige the Saberons to pay them the ―price‖ of said lots. Depending on the option exercised by the Ventanillas, the case is hereby remanded to the court of origin for further proceedings as to the determination of reimbursement due to the petitioners or of the ―price‖ of the subject lots due to the Ventanillas. SO ORDERED.

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