G.R. No. L-63046 June 21, 1990 MARIANO TORRES Y CHAVARRIA, petitioner, vs.

THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE FERNANDEZ, ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the NATIONAL TREASURER, as Custodian of the Assurance Fund,respondents. Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for petitioner. Albon, Serrano & Associates for private respondents. T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J.: This is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 62248-R entitled "Mariano Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.," which reversed the decision of the then Court of First Instance of Manila, Branch 7, by holding that it is the respondent Rosario Mota who is legally entitled to the disputed realties, being an innocent mortgagee and later the highest bidder when the properties were supposedly foreclosed, and not the petitioner Mariano Torres, the defrauded owner thereof; and of the resolution of that Court denying Torres' motion for reconsideration. The parcel of land located at the comer of Quezon Boulevard and Raon Street (now Gonzalo Street), and the building erected thereon known as "M. Torres Building" is owned by Mariano Torres, the herein petitioner, as evidenced by Transfer Certificate of Title No. 53628-Manila issued in his name. As far as the records show, Torres was and still is in possession of the realties, holding safely to his owner's duplicate certificate of title, and, at least until 1971, paying the real estate taxes due thereon, and collecting rentals from his tenants occupying the building. Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with the Court of First Instance of Manila, docketed as LRC GLRO Cad. Rec. No. 133, where he, misrepresenting to be the attorney-in-fact of Torres and falsely alleging that the a duplicate copy of TCT No. 53628 was lost, succeeded in obtaining a court order for the issuance of another copy of the certificate. Once in possession thereof, Fernandez forged a simulated deed of sale of the realties in his favor. Whereupon TCT No. 53628 in the name of Torres was canceled and TCT No. 86018 was issued in Fernandez' name. On various dates from December, 1966 to November, 1967 Fernandez mortgaged the realties to Rosario Mota, wife of Ernesto Cue, and also to Angela Fermin, who later assigned her credit to the spouses Cue. The mortgages were annotated at the back of TCT No. 86018 and so was the deed of assignment. Torres, who up to this time still had possession of his owner's duplicate certificate of title and who was still collecting rentals from the occupants of the subject building, upon Teaming of the fraud committed by Fernandez, caused, on March 18, 1968, the annotation on the latter's TCT a notice of adverse claim.

On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT No. 86018 as well as the proceedings in LRC GLRO Cad. Rec. No. 133. On April 2, 1968, a notice of lis pendens was annotated at the back of Fernandez' TCT. In the meantime, Fernandez failed to pay his various loans which prompted the Cues to institute an extrajudicial foreclosure of the mortgage. On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue for the annulment of the mortgage with preliminary injunction. After the foreclosure was enjoined, the parties entered into an amicable settlement, approved by the court whereby it was stipulated that Fernandez acknowledged and promised to pay his debt to the Cues for Five Hundred Sixty-Two Thousand Nine Hundred Fifty-Five and 28/100 (P562,955.28) Pesos on or before, March 30, 1970, while the spouses bound themselves to execute and deliver, within ten (10) days from receipt of the sum mentioned such documents as are necessary to release the mortgages in favor of defendants on plaintiffs' property. Before Fernandez could pay his obligation under the settlement agreement, a decision was rendered in Civil Case No. 72494 where it was declared that the proceedings held in LRC GLRO Cad. Rec, No. 133 was void and that TCT No. 86018, issued in the name of Fernandez, is without force and effect as TCT No. 53628 in the name of Torres is the true and legal evidence of ownership of the subject immovables. Fernandez appealed from this decision to the Court of Appeals where it was docketed as CA-G.R. No. 46386-R. The Court of Appeals, on April 20, 1979, affirmed the decision of the trial court. There being nothing on the records that would indicate that the judgment of the appellate court was elevated here, it would appear that it had become final and executory. But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez failed to comply with his obligation under the amicable settlement and whereupon the Cues applied for and were granted a writ of execution. The subject realties were then levied upon and sold at public auction where Rosario Mota was the highest bidder. On August 31, 1971, the redemption period for the subject immovables having lapsed without Fernandez nor Torres redeeming the properties, Rosario Mota was issued the Sheriffs Deed of Sale. Thereafter, TCT No. 86018 was canceled and TCT No. 105953 was issued in her name. On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M. Torres Building" that she is the new owner thereof and henceforth, payment of their rentals should be made to her. On December 17, 1971 Torres filed a complaint, which later gave rise to this petition, with the Court of First Instance of Manila, docketed as Civil Case No. 85753, against Fernandez and his spouse and the Cues to restrain the latter from collecting rentals and for the declaration as void TCT No. 105953. The Cues in turn filed a cross-claim against Fernandez spouses and a third party complaint against the National Treasurer as the custodian of the Assurance Fund. During the proceeding, Mariano Torres, having died sometime in 1974, was substituted by his widow. On June 3, 1977, the trial court rendered its decision declaring TCT No. 105953 in the name of Rosario Mota nun and void as it upheld the validity of TCT No. 53628 in the name of Torres as the true evidence of title to the disputed realties, and at the same time dismissing the Cue's third party complaint and cross claim.

The decision was reviewed by the respondent court at the instance of the Cues which, as aforementioned, reversed the trial court in its decision dated July 30, 1982 and the Resolution of January 14, 1983. Hence, this petition. There is nothing on the records which shows that Torres performed any act or omission which could have jeopardized his peaceful dominion over his realties. The decision under review, however, in considering Mota an innocent mortgagee protected under Section 55 of the Land Registration Law, held that Torres was bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the highest bidder, also bound Torres and concluded that the certificate of title issued in the name of Mota prevails over that of Torres'. As correctly pointed out by Torres, however, his properties were sold on execution, and not on foreclosure sale, and hence, the purchaser thereof was bound by his notice of adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the appellate court that a forged instrument may become the root of a valid title, cannot be applied where the owner still holds a valid and existing certificate of title covering the same interest in a realty. The doctrine would apply rather when, as in the cases for example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951, February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru insidious means obtains the owner's duplicate certificate of title, converts it in his name, and subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a case the new certificate is binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and existing certificate of title, his would be indefeasible as against the whole world, and not that of the innocent holder's. "Prior tempore potior jure"as We have said in Register of Deeds v. Philippine National Bank, No. L-17641, January 30, 1965, 13 SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil. 590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546,Reyes v. Borbon, 50 Phil. 791. in C.N. Hodges v. Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid down the doctrine that: The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist. The respondent had a valid title ... It never parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer certificate of title, it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely. If the petitioner's contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property. Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the Torrens system. Veronica Bareza perpetrated the fraud by making false representations in her petition and the title issued to her being the product of fraud could not vest in her valid and legal title to the parcel of land in litigation. As she had no title to the parcel of land, in the same way that a thief does not own or have title to the stolen goods, she could not transmit title which she did not have nor possess. We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra, where We noted that said ruling is "a mere affirmation of the recognized principle that a certificate is not conclusive evidence of title if it is shown that the same land had already been registered and an earlier certificate for the same land is in existence." Again in the case of Baltazar v. Court of Appeals, G.R. No. 78728, December 8, 1988, 168 SCRA 354, We held that as between two persons both of whom are in good faith and both innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the transfer of a vendor bereft of any transmissible rights.

In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was an innocent mortgagee would be futile because, as above shown, no certificate of title covering the subject realties in derogation of Torres' certificate of title may validly be issued. Then it becomes evident that the remaining possible remedies of the Cues are to go against Fernandez or the Assurance Fund, as they in fact had done in the lower court by filing a cross claim and third party complaint. The lower court dismissed the Cues' cross-claim against Fernandez reasoning out that their remedy is to cause the final judgment (compromise agreement) in Civil Case No. 75643 executed. This, of course, is correct since the rights and obligations of both parties had been determined in that case. The trial court also dismissed the Cues' third party complaint against the Treasurer of the Philippines as custodian of the Assurance Fund after finding them negligent in protecting their interest. The trial court recognized the principle that a person dealing with registered lands need not go beyond the certificate of title but nevertheless pointed out that there are circumstances in this case which should have put the Cues on guard and prompted them to investigate the property being mortgaged to them, thus: The property in question is a very valuable property, in fact accepted by defendants Mota and Medina Cue as collateral for more than half a million pesos in loans granted by them to Fernandez. Its value lies principally in its income potential, in the form of substantial monthly rentals. Certainly, the registered title does not yield any information as to the amount of rentals due from the building, much less on who is collecting them, or who is recognized by the tenants as their landlord. Any prospective buyer or mortgagee of such a property, if prudent and in good faith, is normally expected to inquire into all these and related facts and circumstances. Besides, by the course of visible dimensions of the M. Torres Building, it should be readily obvious to any one that the area of the two lots ... covered by TCT No. 86018 cannot accommodate the building, as in fact it also rests upon a lot covered by TCT No. 56387, and partly upon a lot leased by (Torres) from the City of Manila. Had (the Cues) known of this fact would they have accepted the mortgage alone over TCT No. 86018? The answer is obvious. And yet, to all indications, they never bothered to look into this fact about the M. Torres Building. xxx xxx xxx Another thing that defendants Mota and Medina Cue must have investigated, as any prudent buyer or mortgagee should before consummating any transaction on real property, in the matter of payment of taxes on the property. After all, the big value of the property in question necessarily means that even real estate taxes on it alone would involve big amounts of money, and if there are tax arrearages, any buyer or subsequent owner of the property wig have to come face to face with the tax hen attaching to the property wherever its owner may be. ... (P. 257, Record on Appeal) We likewise take note of the manifestation of the Office of the Solicitor General that the Cues failed to contest the ruling of the trial court negating the liability of the Assurance Fund. For these reasons, We hold that the Cues' remedy merely is to go against Francisco Fernandez or rather his estate since record shows that he died sometime in 1983. ACCORDINGLY, the decision and resolution under review are REVERSED and the decision of the then Court of First Instance, Branch 7, Manila in Civil Case No. 85753 is REINSTATED.

SO ORDERED. Narvasa (Chairman), Cruz and Gancayco, JJ., concur. Grio-Aquino, J., took no part. G.R. No. 188471 April 20, 2010

FRANCISCO ALONSO, substituted by MERCEDES V. ALONSO, TOMAS V. ALONSO and ASUNCION V. ALONSO, Petitioners, vs. CEBU COUNTRY CLUB, INC., Respondent, REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE SOLICITOR GENERAL, Public Respondent. DECISION BERSAMIN, J.: By petition for review on certiorari, the petitioners appeal the order dated December 28, 2007 of the Regional Trial Court (RTC), Branch 20, in Cebu City, denying the motion for issuance of writ of execution of the Office of the Solicitor General (OSG) in behalf of the Government, and the order dated April 24, 2009, denying their motion for reconsideration filed against the first order. Antecedents The antecedent facts are those established in Alonso v. Cebu Country Club,1 which follow. Petitioner Francisco M. Alonso (Francisco) was the only son and sole heir of the late spouses Tomas N. Alonso and Asuncion Medalle. Francisco died during the pendency of this case, and was substituted by his legal heirs, namely: his surviving spouse, Mercedes V. Alonso, his son Tomas V. Alonso (Tomas) and his daughter Asuncion V. Alonso.2 In 1992, Francisco discovered documents showing that his father Tomas N. Alonso had acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government in or about the year 1911; that the original vendee of Lot No. 727 had assigned his sales certificate to Tomas N. Alonso, who had been consequently issued Patent No. 14353; and that on March 27, 1926, the Director of Lands had executed a final deed of sale in favor of Tomas N. Alonso, but the final deed of sale had not been registered with the Register of Deeds because of lack of requirements, like the approval of the final deed of sale by the Secretary of Agriculture and Natural Resources, as required by law.3 Francisco subsequently found that the certificate of title covering Lot No. 727-D-2 of the Banilad Friar Lands Estate had been "administratively reconstituted from the owners duplicate" of Transfer Certificate of Title (TCT) No. RT-1310 in the name of United Service Country Club, Inc., the predecessor of respondent Cebu Country Club, Inc (Cebu Country Club); and that upon the order of the court that had heard the petition for reconstitution of the TCT, the name of the registered owner in TCT No. RT-1310 had been changed to that of Cebu Country Club; and that the TCT stated that the reconstituted title was a transfer from TCT No. 1021.4

It is relevant to mention at this point that the current TCT covering Lot 727-D-2 in the name of Cebu Country Club is TCT No. 94905, which was entered in the land records of Cebu City on August 8, 1985.5 With his discoveries, Francisco formally demanded upon Cebu Country Club to restore the ownership and possession of Lot 727-D-2 to him. However, Cebu Country Club denied Franciscos demand and claim of ownership, and refused to deliver the possession to him.6 On September 25, 1992, Francisco commenced against Cebu Country Club in the RTC in Cebu City an action for the declaration of nullity and non-existence of deed/title, the cancellation of certificates of title, and the recovery of property. On November 5, 1992, Cebu Country Club filed its answer with counterclaim.7 On May 7, 1993, the RTC decided in favor of Cebu Country Club. Both parties appealed to the Court of Appeals (CA), which ultimately affirmed the RTC on March 31, 1997. Thus, Francisco filed a motion for reconsideration, which was denied on October 2, 1997.8 Nothing daunted, Francisco appealed to this Court (G.R. No. 130876). On January 31, 2002, this Court decided G.R. No. 130876, decreeing: WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision of the Court of Appeals and that of the Regional Trial Court, Cebu City, Branch 08. IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil Cases No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and 253 legally belongs to the Government of the Philippines. 9 The petitioners sought a reconsideration. On December 5, 2003, however, the Court denied their motion for reconsideration.10 Hence, the decision in G.R. No. 130876 became final and executory. In late 2004, the Government, through the OSG, filed in the RTC a motion for the issuance of a writ of execution.11Cebu Country Club opposed the motion for the issuance of a writ of execution in due course. Later on, the proceedings on the OSGs motion for the issuance of a writ of execution at the instance of Cebu Country Club in deference to the on-going hearings being conducted by the Committee on Natural Resources of the House of Representatives on a proposed bill to confirm the TCTs and reconstituted titles covering the Banilad Friar Lands Estate in Cebu City.12 The Congress ultimately enacted a law to validate the TCTs and reconstituted titles covering the Banilad Friar Lands Estate in Cebu City. This was Republic Act No. 9443,13 effective on July 27, 2007. Thereafter, both Cebu Country Club and the OSG brought the passage of R.A. No. 9443 to the attention of the RTC for its consideration in resolving the OSGs motion for the issuance of a writ of execution.14 On December 28, 2007, therefore, the RTC denied the OSGs motion for the issuance of a writ of execution through the first appealed order.15 The petitioners filed a motion for reconsideration dated February 1, 2008, questioning the denial of the OSGs motion for the issuance of a writ of execution.16

Upon being directed by the RTC to comment on the petitioners motion for reconsideration, the OSG manifested in writing that the Government was no longer seeking the execution of the decision in G.R. No. 130876, subject to its reservation to contest any other titles within the Banilad Friar Lands Estate should clear evidence show such titles as having been obtained through fraud.17 After the filing of the OSGs comment, the RTC issued the second appealed order, denying the petitioners motion for reconsideration, giving the following reasons: 1. The party who had a direct interest in the execution of the decision and the reconsideration of the denial of the motion for execution was the Government, represented only by the OSG; hence, the petitioners had no legal standing to file the motion for reconsideration, especially that they were not authorized by the OSG for that purpose; 2. R.A. No. 9443 "confirms and declares as valid" all "existing" TCTs and reconstituted titles; thereby, the State in effect waived and divested itself of whatever title or ownership over the Banilad Friar Lands Estate in favor of the registered owners thereof, including Lot 727 D-2; and 3. The situation of the parties had materially changed, rendering the enforcement of the final and executory judgment unjust, inequitable, and impossible, because Cebu Country Club was now recognized by the State itself as the absolute owner of Lot 727 D-2.18 Hence, the petitioners appeal by petition for review on certiorari. Contentions of the Petitioners The petitioners challenge the orders dated December 28, 2007 and April 29, 2009, because: 1. R.A. No. 9443 did not improve Cebu Country Clubs plight, inasmuch as R.A. No. 9443 presupposed first a sales certificate that lacked the required signature, but Cebu Country Club did not have such sales certificate. Moreover, the titleholders were in fact the owners of the lands covered by their respective titles, which was not true with Cebu Country Club due to its being already adjudged with finality to be not the owner of Lot 727-D-2. Lastly, Cebu Country Clubs title was hopelessly defective, as found by the Supreme Court itself; 2. The doctrine of law of the case barred the application of R.A. No. 9443 to Cebu Country Club; 3. The RTCs declaration that R.A. No. 9443 confirmed Cebu Country Club as the absolute owner of Lot 727-D-2 despite the prior and final judgment of the Supreme Court that Cebu Country Club was not the owner was unconstitutional, because it virtually allowed the legislative review of the Supreme Courts decision rendered against Cebu Country Club; 4. The use of R.A. No. 9443 as a waiver on the part of the Government vis--vis Cebu Country Club was not only misplaced but downrightly repugnant to Act 1120, the law governing the legal disposition and alienation of Friar Lands; and 5. The petitioners had the requisite standing to question the patent errors of the RTC, especially in the face of the unholy conspiracy between the OSG and Cebu Country Club, on the one hand, and, on the other hand, the passage of R.A. No. 9443 and DENR

Memorandum No. 16, both of which in fact made their predecessor Tomas N. Alonsos sales certificate and patent valid.19 Issues The Court confronts and resolves the following issues, to wit: 1. Whether or not the petitioners were the real parties-in-interest to question the denial by the RTC of the OSGs motion for the issuance of a writ of execution; 2. Whether or not R.A. No. 9443 gave the petitioners a legal interest to assail the RTCs orders; and 3. Whether or not the petitioners can appeal by petition for review on certiorari in behalf of the OSG. Ruling The petition for review is denied due course. A. Preliminary Considerations: Petitioners contravene the hierarchy of courts, and the petition is fatally defective Before delving on the stated issues, the Court notes that the petitioners are guilty of two violations that warrant the immediate dismissal of the petition for review on certiorari. The first refers to the petitioners breach of the hierarchy of courts by coming directly to the Court to appeal the assailed issuances of the RTC via petition for review on certiorari. They should not have done so, bypassing a review by the Court of Appeals (CA), because the hierarchy of courts is essential to the efficient functioning of the courts and to the orderly administration of justice. Their non-observance of the hierarchy of courts has forthwith enlarged the docket of the Court by one more case, which, though it may not seem burdensome to the layman, is one case too much to the Court, which has to devote time and effort in poring over the papers submitted herein, only to discover in the end that a review should have first been made by the CA. The time and effort could have been dedicated to other cases of importance and impact on the lives and rights of others. The hierarchy of courts is not to be lightly regarded by litigants. The CA stands between the RTC and the Court, and its establishment has been precisely to take over much of the work that used to be done by the Court. Historically, the CA has been of the greatest help to the Court in synthesizing the facts, issues, and rulings in an orderly and intelligible manner and in identifying errors that ordinarily might escape detection. The Court has thus been freed to better discharge its constitutional duties and perform its most important work, which, in the words of Dean Vicente G. Sinco,20 "is less concerned with the decision of cases that begin and end with the transient rights and obligations of particular individuals but is more intertwined with the direction of national policies, momentous economic and social problems, the delimitation of governmental authority and its impact upon fundamental rights."21 The need to elevate the matter first to the CA is also underscored by the reality that determining whether the petitioners were real parties in interest entitled to bring this appeal against the denial by the RTC of the OSGsmotion for the issuance of a writ of execution was a mixed question of fact and

law. As such, the CA was in the better position to review and to determine. In that regard, the petitioners violate Section 1, Rule 45 of the 1997 Rules of Civil Procedure, which demands that an appeal by petition for review on certiorari be limited to questions of law.22 The second violation concerns the omission of a sworn certification against forum shopping from the petition for review on certiorari. Section 4, Rule 45 of the 1997 Rules of Civil Procedure requires that the petition for review should contain, among others, the sworn certification on the undertakings provided in the last paragraph of Section 2, Rule 42 of the 1997 Rules of Civil Procedure, viz: Section 2. xxx The petitioner shall also submit together with the petition a certification under oath that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days therefrom. (n) Only petitioner Tomas V. Alonso has executed and signed the sworn certification against forum shopping attached to the petition. Although neither of his co-petitioners Mercedes V. Alonso and Asuncion V. Alonso has joined the certification, Tomas did not present any written express authorization in his favor authorizing him to sign the certification in their behalf. The signing of the certification by only one of the petitioners could not be presumed to reflect the personal knowledge by his co-petitioners of the filing or non-filing of any similar action or claim.23Hence, the failure of Mercedes and Asuncion to sign and execute the certification along with Tomas warranted the dismissal of their petition.24 B. Petitioners are not proper parties to appeal and assail the order of the RTC The petitioners are relentless in insisting that their claim to Lot No. 727-D-2 of the Banilad Friar Lands Estate should be preferred to that of Cebu Country Club, despite the final judgment in G.R. No. 130876 being adverse to their claim. Their insistence raises the need to resolve once and for all whether or not the petitioners retained any legal right to assert over Lot No. 727-D-2 following the Governments manifest desistance from the execution of the judgment in G.R. No. 130876 against Cebu Country Club. The above-noted defects of the petition for review notwithstanding, therefore, the Court has now to address and resolve the stated issues on the sole basis of the results the Court earlier reached in G.R. No. 130876. In this regard, whether or not the petitioners are the proper parties to bring this appeal is decisive. After careful consideration, the Court finds that the cause of the petitioners instantly fails. In G.R. No. 130876, the Court found that the petitioners did not validly acquire ownership of Lot No. 727-D-2, and declared that Lot No. 727 D-2 legally belonged to the Government, thus: The second issue is whether the Court of Appeals erred in ruling that the Cebu Country Club, Inc. is owner of Lot No. 727.

Admittedly, neither petitioners nor their predecessor had any title to the land in question. The most that petitioners could claim was that the Director of Lands issued a sales patent in the name of Tomas N. Alonso. The sales patent, however, and even the corresponding deed of sale were not registered with the Register of Deeds and no title was ever issued in the name of the latter. This is because there were basic requirements not complied with, the most important of which was that the deed of sale executed by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources. Hence, the deed of sale was void. "Approval by the Secretary of Agriculture and Commerce is indispensable for the validity of the sale." Moreover, Cebu Country Club, Inc. was in possession of the land since 1931, and had been paying the real estate taxes thereon based on tax declarations in its name with the title number indicated thereon. Tax receipts and declarations of ownership for taxation purposes are strong evidence of ownership. This Court has ruled that although tax declarations or realty tax payments are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind will be paying taxes for a property that is not in his actual or constructive possession. Notwithstanding this fatal defect, the Court of Appeals ruled that "there was substantial compliance with the requirement of Act No. 1120 to validly convey title to said lot to Tomas N. Alonso." On this point, the Court of Appeals erred. Under Act No. 1120, which governs the administration and disposition of friar lands, the purchase by an actual and bona fide settler or occupant of any portion of friar land shall be "agreed upon between the purchaser and the Director of Lands, subject to the approval of the Secretary of Agriculture and Natural Resources (mutatis mutandis)." In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both instruments do not bear the signature of the Director of Lands and the Secretary of the Interior. They also do not bear the approval of the Secretary of Agriculture and Natural Resources. Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled categorically that approval by the Secretary of Agriculture and Commerce of the sale of friar lands is indispensable for its validity, hence, the absence of such approval made the sale null and void abinitio. Necessarily, there can be no valid titles issued on the basis of such sale or assignment. Consequently, petitioner Franciscos father did not have any registerable title to the land in question. Having none, he could not transmit anything to his sole heir, petitioner Francisco Alonso or the latters heirs. In a vain attempt at showing that he had succeeded to the estate of his father, on May 4, 1991, petitioner Francisco Alonso executed an affidavit adjudicating the entire estate to himself (Exh. "Q"), duly published in a newspaper of general circulation in the province and city of Cebu (Exh. "Q1"). Such affidavit of self-adjudication is inoperative, if not void, not only because there was nothing to adjudicate, but equally important because petitioner Francisco did not show proof of payment of the estate tax and submit a certificate of clearance from the Commissioner of Internal Revenue. Obviously, petitioner Francisco has not paid the estate taxes. Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso or the latters heirs are the lawful owners of Lot No. 727 in dispute. xxx.25

The pronouncement in G.R. No. 130876 renders beyond dispute that the non-execution of the judgment would not adversely affect the petitioners, who now hold no right whatsoever in Lot No. 727-D-2. Otherwise put, they are not the proper parties to assail the questioned orders of the RTC, because they stand to derive nothing from the execution of the judgment against Cebu Country Club. Every action must be prosecuted or defended in the name of the real party in interest, unless otherwise authorized by law or the rules.26 A real party in interest is one who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.27 "Interest" within the meaning of the rule means material interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. The rule refers to a real or present substantial interest, as distinguished from a mere expectancy; or from a future, contingent, subordinate, or consequential interest.28 One having no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff in an action.29 Thus, an appeal, like this one, is an action to be prosecuted by a party in interest before a higher court. In order for the appeal to prosper, the litigant must of necessity continue to hold a real or present substantial interest that entitles him to the avails of the suit on appeal. If he does not, the appeal, as to him, is an exercise in futility. So it is with the petitioners! In contrast, the Government, being the legal owner of Lot No. 727-D-2, is the only party adversely affected by the denial, and is the proper party entitled to assail the denial.30 However, its manifest desistance from the execution of the decision effectively barred any challenge against the denial, for its non-appeal rendered the denial final and immutable. C. R.A. No. 9443 gives petitioners no legal interest to assail the denial of the motion for execution Section 1 of R.A. No. 9443 provides: Section 1. All existing Transfer Certificates of Title and Reconstituted Certificates of Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any portion of the Banilad Friar Lands Estate, notwithstanding the lack of signatures and/or approval of the then Secretary of Interior (later Secretary of Agriculture and Natural Resources) and/or the then Chief of the Bureau of Public Lands (later Director of Public Lands) in the copies of the duly executed Sale Certificates and Assignments of Sale Certificates, as the case may be, now on file with the Community Environment and Natural Resources Office (CENRO), Cebu City, are hereby declared as valid titles and the registered owners recognized as absolute owners thereof. The law expressly declares as valid "(a)ll existing Transfer Certificates of Title and Reconstituted Certificates of Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any portion of the Banilad Friar Lands Estate," and recognizes the registered owners as absolute owners. To benefit from R.A. No. 9443, therefore, a person must hold as a condition precedent a duly issued Transfer Certificate of Title or a Reconstituted Certificate of Title. Although Lot 727-D-2 was earlier declared to be owned by the Government in G.R. No. 130876, R.A. No. 9443 later validated Cebu Country Clubs registered ownership due to its holding of TCT No. RT-1310 (T-11351) in its own name. As the OSG explained in its manifestation in lieu of comment31 (filed in the RTC vis--vis the petitioners motion for reconsideration against the RTCs denial of the OSGs motion for issuance of a writ of execution), the enactment of R.A. No. 9443 had "mooted the final and executory Decision of the Supreme Court in "Alonso v. Cebu Country Club, Inc.," docketed as G.R. No. 130876, which declared the Government as the owner of Lot 727-D-2

based on the absence of signature and approval of the then Secretary of Interior;" and that the decision in G.R. No. 130876 had "ceased to have any practical effect" as the result of the enactment of R.A. No. 9443, and had thereby become "academic."32 On the other hand, the petitioners could not benefit from R.A. No. 9443 because of their noncompliance with the express condition of holding any Transfer Certificate of Title or Reconstituted Certificate of Title respecting Lot 727-D-2 or any portion thereof.
1awph!1

The appropriate recourse for the petitioners, if they persist in the belief that the TCT of Cebu Country Club should be nullified, is to compel the OSG through the special civil action for mandamus to commence the action to annul on the ground that Cebu Country Club had obtained its title to Lot 7217-D-2 through fraud. Yet, that recourse is no longer availing, for the decision in G.R. No. 130876 explicitly found and declared that the reconstituted title of Cebu Country Club had not been obtained through fraud. Said the Court: On the question that TCT No. RT-1310 (T-11351) bears the same number as another title to another land, we agree with the Court of Appeals that there is nothing fraudulent with the fact that Cebu Country Club, Inc.s reconstituted title bears the same number as the title of another parcel of land. This came about because under General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947, and Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were in force at the time the title was reconstituted on July 26, 1948, the titles issued before the inauguration of the Philippine Republic were numbered consecutively and the titles issued after the inauguration were numbered also consecutively starting with No. 1, so that eventually, the titles issued before the inauguration were duplicated by titles issued after the inauguration of the Philippine Republic. xxx. xxx Petitioners next argue that the reconstituted title of Cebu Country Club, Inc. had no lawful source to speak of; it was reconstituted through extrinsic and intrinsic fraud in the absence of a deed of conveyance in its favor. In truth, however, reconstitution was based on the owners duplicate of the title, hence, there was no need for the covering deed of sale or other modes of conveyance. Cebu Country Club, Inc. was admittedly in possession of the land since long before the Second World War, or since 1931. In fact, the original title (TCT No. 11351) was issued to the United Service Country Club, Inc. on November 19, 1931 as a transfer from Transfer Certificate of Title No. 1021. More importantly, Cebu Country Club, Inc. paid the realty taxes on the land even before the war, and tax declarations covering the property showed the number of the TCT of the land. Cebu Country Club, Inc. produced receipts showing real estate tax payments since 1949. On the other hand, petitioner failed to produce a single receipt of real estate tax payment ever made by his father since the sales patent was issued to his father on March 24, 1926. Worse, admittedly petitioner could not show any [T]orrens title ever issued to Tomas N. Alonso, because, as said, the deed of sale executed on March 27, 1926 by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources and could not be registered. "Under the law, it is the act of registration of the deed of conveyance that serves as the operative act to convey the land registered under the Torrens system. The act of registration creates constructive notice to the whole world of the fact of such conveyance." On this point,petitioner alleges that Cebu Country Club, Inc. obtained its title by fraud in connivance with personnel of the Register of Deeds in 1941 or in 1948, when the title was administratively reconstituted.Imputations of fraud must be proved by clear and convincing evidence. Petitioner failed to adduce evidence of fraud. In an action for reconveyance based on fraud, he who charges fraud must prove such fraud in obtaining a title. "In this jurisdiction, fraud is never presumed." The strongest suspicion cannot sway judgment or

overcome the presumption of regularity. "The sea of suspicion has no shore, and the court that embarks upon it is without rudder or compass." Worse, the imputation of fraud was so tardily brought, some forty-four (44) years or sixty-one (61) years after its supposed occurrence, that is, from the administrative reconstitution of title on July 26, 1948, or from the issuance of the original title on November 19, 1931, that verification is rendered extremely difficult, if not impossible, especially due to the supervening event of the second world war during which practically all public records were lost or destroyed, or no longer available.33 IN VIEW OF THE FOREGOING, the petition for review on certiorari is denied for lack of merit. The Court declares that Cebu Country Club, Inc. is the exclusive owner of Lot No.727-D-2 of the Banilad Friar Lands Estate, as confirmed by Republic Act No. 9443. Costs of suit to be paid by the petitioners. SO ORDERED.
[G.R. No. 127941. January 28, 1999] BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners, vs. COURT OF APPEALS and CANDELARIO DAMALERIO Respondents. DECISION MARTINEZ, J.: The Court of Appeals (CA), in a decision penned by then Justice Ricardo J. Francisco,[1 categorically declared private respondent as the absolute owner of the land subject of this case. That decision was affirmed by this Court, became final and executory and was remanded to the lower court for execution. But the Register of Deeds frustrated private respondents judicially determined right as it refused to issue Certificates of Title in his name on the ground that the matter should be referred en consulta to the Register of Deeds before petitioners title can be cancelled and a new one issued in the name of the winning party herein private respondent. So, for the third time, this simple redemption case which commenced in the 1980s is again before this Court. Here is a summary of the facts, over which there is no dispute: In an action for redemption filed by petitioner Banaga, the trial court declared that she had lost her right to redeem her property earlier foreclosed and which was subsequently sold at public auction to private respondent.[2 Certificates of Title covering the said property were issued to private respondent over which petitioner Banaga annotated on March 3, 1983 a notice of lis pendens.[3 On appeal by petitioner Banaga, the CA reversed the decision of the trial court and allowed the former to redeem the property within a certain period.[4 Private respondents petition to this Court was dismissed[5 and the decision became final. On June 11, 1992, petitioner Banaga tried to redeem the property by depositing with the trial court the amount of redemption which was financed by her co-petitioner Tan. Private respondent opposed the redemption arguing that it was made beyond the time given to her by the court in the earlier case. However, the lower court issued an order on August 7, 1992 upholding the redemption and ordered the Register of Deeds to cancel private respondents Certificates of Title and issue new titles in the name of petitioner Banaga.[6 When his motion for reconsideration was denied by the trial court in an order dated January 4, 1993, private respondent filed a petition forcertiorari with the CA which was docketed as CA-G.R. No. 29869. On January 11, 1993, private respondent caused the annotation of said petition as another notice of lis pendens on the Certificates of Title. Three days later, the CA

issued a temporary restraining order to enjoin the execution of the August 7, 1992 and January 4, 1993 orders. Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to petitioner Tan with the deed of absolute sale mentioning private respondents certificate of title which was not yet cancelled. Notwithstanding the notice of lis pendens, petitioner Tan subdivided the property in question under a subdivision plan, which she made not in her name but in the name of private respondent. There being no preliminary injunction issued and with the expiration of the TRO, petitioner Tan asked the Register of Deeds to issue new titles in her name. On March 24, 1993, such titles were issued in petitioner Tans name but it still carried the annotations of the two notices of lis pendens. Upon learning of the new title of petitioner Tan, private respondent impleaded the former in his petition in CA-G.R. No. 29869. On October 28, 1993, the CA set aside the August 7, 1992 and January 4, 1993 orders of the trial court and declared private respondent absolute owner of the subject property. The CA disposed of the petition as follows: WHERFORE, in view of the foregoing considerations, the instant petition is hereby GRANTED. The orders issued by public respondent judge dated August 7, 1992 and January 4, 1993 are hereby ordered SET ASIDE and a new one is hereby entered declaring petitioner as the absolute owner of the parcels of land subject of redemption for failure of private respondent to exercise the right of redemption within the thirty (30) day period previously granted her by this court.[7 That decision became final and executory after petitioner Banagas petition for review was dismissed by this Court for lack of merit.[8Upon motion of private respondent, the trial court issued a writ of execution on December 27, 1994 ordering the Register of Deeds to reinstate the Certificates of Title in the name of the movant herein private respondent. In its order which petitioners did not contest, the court a quo said that: Although there is no specific pronouncement in the decision of the Court of Appeals that reverts the titles to the land subjects of redemption to the defendant, the fact that it declared the petitioner (Damalerio) as the absolute owner of the lands entitles him to writ of execution issuing from this court directing the Register of Deeds to reinstate his titles to his name. As it is implied from the decision declaring him the absolute owner of the lands that the titles to the land be reverted to him (See Uy v. Capulong, 221 SCRA 87). Let therefore a writ of execution issue in this case to enforce the decision of the Court of Appeals. In this connection, the Register of Deeds of the Registry of Deeds for General Santos City is hereby ordered to reinstate the titles of Candelario B. Damalerio - Transfer Certificates of Title No. T- 19570 and T-19571, both of the Registry of Deeds from General Santos City.[9 But the Register of Deeds refused to comply with the writ of execution alleging that the Certificates of Title issued to petitioner Tan must first be surrendered. Accordingly, private respondent moved to cite the Register of Deeds in contempt of court which was denied, as the trial court ruled on January 11, 1995 that the formers remedy is by consulta to the Commissioner of Land Registration.[10 In another order (dated March 29, 1996), the trial court likewise denied private respondents motion for the issuance of a writ of possession ruling that the latters remedy is a separate action to declare petitioner Tans Certificates of Title void. Aggrieved, private respondent again elevated the case to the CA via a petition for certiorari and mandamus[11 assailing the above-mentioned two orders of the court a quonaming as respondents the trial court judge, the Register of Deeds and the petitioners. On November 7, 1996, the CA rendered a decision granting the petition and, among others, set aside the assailed orders of the trial court. The dispositive portion of the CA decision reads: WHEREFORE, in view of all the foregoing considerations, the petition is GRANTED. Judgment is hereby rendered:

1) setting aside the orders of the respondent judge dated January11, 1995 and March 29, 1996; 2) declaring the title issued to Biblia Toledo-Banaga, Jovita Tan and to those other subsequent transferee or transferees, if any, as null and void; 3) ordering the Register of Deeds of General Santos City to issue new certificates of title to Candelario Damalerio over the parcels of land in question; 4) ordering the respondent court to issue writ of execution for the enforcement of this decision and of the decision in CA-G.R. SP No. 29868 (sic), as well as a writ of possession for the delivery to petitioner Damalerio of the Physical possession of the parcels of land subject matter of this case. SO ORDERED.[12 Upon denial by the CA of their motion for reconsideration, petitioners filed the instant petition for certiorari and mandamus. The Court, however, is puzzled why petitioners, in their petition, would seek to set aside the two orders (January 4, 1995 and March 29, 1996) of respondent judge who was not named in their petition.[13 Assuming this to be a mere lapsus since they also confusingly refer to Banaga and Tan as private respondent and to Damalerio as petitioner,[14 the petition is still utterly without merit. It is petitioners stand (1) that petitioner Tan is a buyer in god faith and (2) that the remedy of private respondent to secure the titles in his name is by consulta to the Land Registration Commissioner and not through contempt. The Court is not convinced of the arguments proffered by petitioners. By arguing that petitioner Tan was a buyer in good faith, petitioners in effect raise once more the issue of ownership of the subject property. But such issue had already been clearly and categorically ruled upon by the CA and affirmed by this Court, wherein private respondent was adjudged the rightful and absolute owner thereof. The decision in that case bars a further repeated consideration of the very same issue that has already been settled with finality. To once again re-open that issue through a different avenue would defeat the existence of our courts as final arbiters of legal controversies. Having attained finality, the decision is beyond review or modification even by this Court.[15 Under the principle of res judicata, the Court and the parties, are bound by such final decision, otherwise, there will be no end to litigation. It is to the interest of the public that there should be an end to litigation by the parties over a subject fully and fairly adjudicated, and an individual should not be vexed twice for the same cause.[16 All the elements of res judicata are present in this case, which are: (a) the former judgment must be final; (b) the court which rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment on the merits; (d) and there must be between the first and second actions identity of parties, subject matter, and cause of action.[17 The judgment in the redemption suit had long become final and executory; there is no question that the court had jurisdiction over the parties and the subject matter; it involves an adjudication on the merits of the case as the court discussed and passed upon petitioner Banagas right of redemption which she did not timely exercise and as a consequence, lost her claim of ownership of the lot. Both

petitioners and private respondent are parties to the earlier cases, disputing the same parcel of land with both opposing parties claiming ownership thereof. Certainly, res judicata had set in. Besides, once a judgment had become final and executory, it can no longer be disturbed no matter how erroneous it may be. In any case, no such error was attributed to in this case. Contrary to petitioners argument, private respondents remedy is not a direct or independent civil action for cancellation of petitioner Tans titles. The facts, circumstances, evidence and arguments invoked in this derailed final and executory decision are the very same matters that will be established assuming such independent suit is legally warranted. It does not matter whether the former case was a redemption suit and the new one will be for cancellation of title because the test of identity of causes of action is not in its form but whether the same evidence would support and establish the former and present causes of action.[18 Petitioners other contention that the execution of the final and executory decision - which is to issue titles in the name of private respondent - cannot be compelled by mandamus because of the formality that the registered owner first surrenders her duplicate Certificates of Title for cancellation per Section 80 of Presidential Decree 1529[19 cited by the Register of Deeds,[20 bears no merit. In effect, they argue that the winning party must wait execution until the losing party has complied with the formality of surrender of the duplicate title. Such preposterous contention borders on the absurd and has no place in our legal system. Precisely, the Supreme Court had already affirmed the CAs judgment that Certificates of Title be issued in private respondents name. To file another action just to compel the registered owner, herein petitioner Tan, to surrender her titles constitute violation of, if not disrespect to, the orders of the highest tribunal. Otherwise, if execution cannot be had just because the losing party will not surrender her titles, the entire proceeding in the courts, not to say the efforts, expenses and time of the parties, would be rendered nugatory. It is revolting to conscience to allow petitioners to further avert the satisfaction of their obligation because of sheer literal adherence to technicality,[21 or formality of surrender of the duplicate titles. The surrender of the duplicate is implied from the executory decision since petitioners themselves were parties thereto. Besides, as part of the execution process, it is a ministerial function of the Register of Deeds to comply with the decision of the court to issue a title and register a property in the name of a certain person, especially when the decision had attained finality, as in this case. In addition, the enforcement of a final and executory judgment is likewise a ministerial function of the courts[22 and does not call for the exercise of discretion. Being a ministerial duty, a writ of mandamus lies to compel its performance.[23 Moreover, it is axiomatic that where a decision on the merits is rendered and the same has become final and executory, as in this case, the action on procedural matters or issues becomes moot and academic.[24 Thus, the so-called consulta to the Commissioner of Land Registration, which is not applicable herein, was only a naive and belated effort resorted to by petitioners in order to delay execution. If petitioners desire to stop the enforcement of a final and executory decision, they should have secured the issuance of a writ of preliminary injunction,[25 but which they did not avail knowing that there exists no legal or even equitable justifications to support it. At any rate, at the time petitioner Banaga sold the property to petitioner Tan, the latter was well aware of the interest of private respondent over the lot. Petitioner Tan furnished the amount used by petitioner Banaga for the attempted redemption. One who redeems in vain a property of another acquires notice that there could be a controversy. It is for the same reason that petitioner Tan was included as party to the case filed in court. Worse, at the time of the sale, petitioner Tan was buying a property not registered in the sellers name. This clear from the deed of absolute sale which even mentioned that the Certificates of Title is still in the name of private respondent. It is settled that a party dealing with a registered land need not go beyond the Certificate of Title to determine the true owner thereof so as to guard or protect her interest. She has only to look and rely on the entries in the Certificate of Title. By looking at the title, however, petitioner Tan cannot feigned ignorance that the property is registered in private respondents name and not in the name of the person selling to her. Such fact alone should have at least prompted, if not impelled her to investigate deeper into the title of her seller - petitioner Banaga, more so when such effort would not have entailed additional hardship, and would have been quite easy, as the titles still carried the two notices of lis pendens.

By virtue of such notices, petitioner Tan is bound by the outcome of the litigation subject of the lis pendens. As a transferee pendente lite, she stands exactly in the shoes of the transferor and must respect any judgment or decree which may be rendered for or against the transferor. Her interest is subject to the incidents or results of the pending suit, and her Certificates of Title will, in that respect, afford her no special protection.[26 To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither the registered owner nor was the former authorized by the latter to sell the same. She knew she was not dealing with the registered owner or a representative of the latter. One who buys property with full knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith[27and cannot claim that he acquired title in good faith as against the owner or of an interest therein.[28 When she nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation.[29 She is bound by the outcome of her indifference with no one to blame except herself if she looses her claim as against one who has a superior right or interest over the property. These are the undeniable and uncontroverted facts found by the CA, which petitioners even quote and cite in their petition. As aptly concluded by the CA that petitioner Tan is indeed a buyer in bad faith on which the Court agrees: Notwithstanding her constructive and actual knowledge that Damalerio was claiming the land, that the land was in his name, and it was involved in pending litigation, Jovita Tan bought it from Banaga on January 7, 1993. The deed of sale recites that the parcels of land sold were covered by Transfer Certificates of Title No. __ (formerly [T-12488] T-530) and TCT No. __ (formerly [T-12488] T-530) (sic) and TCT No. __ (formerly P-1294). (Annex F, Petition). Apart from the fact that Banaga was without any TCT, as above stated, TCT No. T-12488 was petitioners title (Annex C, Petition). Herein private respondent Tan was buying a land not registered in her sellers (Banagas) name, but in that of petitioner Damalerio who had been claiming it as his own. She admitted this fact when she had the land subdivided on February 2, 1993 not in her name but in the name of Candelario Damalerio (Annex Q, Reply). Evidently, she was a purchaser in bad faith because she had full knowledge of the flaws and defects of title of her seller, Banaga. X x x. The notice of lis pendens registered on March 3, 1993 involving the land in question and private respondent Tans actual knowledge of the then pending Civil Case No. 2556, where the question as to whether the redemption of the land which she financed was raised, rendered her a purchaser in bad faith and made the decision therein binding upon her.[30 Being a buyer in bad faith, petitioner Tan cannot acquire a better rights than her predecessor in interest,[31 for she merely stepped into the shoes of the latter. Such finding of bad faith is final and may not be re-opened for the law cannot allow the parties to trifle with the courts.[32 With respect to the issue of possession, such right is a necessary incident of ownership.[33 The adjudication of ownership to private respondent includes the delivery of possession since the defeated parties in this case has not shown by what right to retain possession of the land independently of their claim of ownership which was rejected.[34 Otherwise, it would be unjust if petitioners who has no valid right over the property will retain the same.[35 Thus, the CA correctly disagreed with the trial courts order denying private respondents motion for writ of possession for the following reasons cited in its decision: 1. The order violates the doctrine laid down in Javier vs. Court of Appeals, 224 SCRA 704, which ruled that the issuance of title in favor of a purchaser in bad faith does not exempt the latter from complying with the decision adverse to his predecessor in interest, nor preclude him from being reached by writ of execution; 2. Private respondent Tan was a party respondent in CA-G.R. SP No. 29869, she having been impleaded in a supplemental petition, which this Court gave due course and required the respondents to file their answer. The fact that she did not file any pleading, nor intervene therein did not excuse her from being bound by the decision, otherwise all that a party respondent was to fold his arm to prevent him from being bound by a decision in a case. Her securing titles over the land during the

pendency of said case did not protect her from the effects of said decision. The validity of tile of a purchaser of registered land depends on whether he had knowledge, actual or constructive, of defects in the title of his vendor. If he has such knowledge, he is a purchaser in bad faith and acquires the land subject to such defects (X x x indicates that citations of authorities omitted) The title secured by a purchaser in bad faith is a nullity and gave the latter no right whatsoever, as against the owner (x x x). 3. Private respondent Tans titles and those of her predecessor, Banaga, arose from the void orders of August 7, 1992 and January 4, 1993. Since a void order could not give rise to valid rights, said titles were also necessarily null and void (x x x). 4. Private respondents and respondent Judge executed the questioned orders of August 7, 1993 and January 4, 1993, pending review of said orders in CA-G.R. SP No. 29869. The nullification of said orders by this out imposed upon the private respondents the obligation to return the property to Damalerio and upon respondent Judge, upon motion for execution, to order the cancellation of private respondents titles and the issuance of new titles to him. 5. This Court in its decision in CA-G.R. SP No. 29869 declared petitioner Damalerio absolute owner of the property in question. Private respondents were parties litigants in said case, who did not claim possession of the land separately from their claim of ownership thereof. Such being the case, the delivery of possession is considered included in this Courts decision declaring Damalerio absolute owner of the property (x x x), which can be enforced by writ of possession (x x x). In denying petitioners motion for writ of possession, the trial court violated said doctrines, and 6. Lastly, the effect of respondent Judges order of March 29, 1996 is to re-open the decision in CAG.R. SP No. 29689 for re-litigation and alteration in a separate action. For while this Court already declared that Banagas redemption of the land financed by private respondent Tan was invalid, and as a consequence declared Damalerio absolute owner of the property, which was binding against private respondent Tan, as she was a respondent therein and a purchaser pendente lite and in bad faith, the order of the respondent Court holding that another civil action be filed to annul private respondent Tans titles would be to re-litigate such issues and modify or alter this Courts final decision. The respondent Court has no authority to do so.[36 WHEREFORE, premises considered, the petition is hereby DENIED and the assailed decision of the Court of Appeals is AFFIRMED in totowith costs against petitioners. No further proceeding will be entertained in this case. SO ORDERED. Davide, Jr., C.J., (Chairman), Melo, Kapunan, and Pardo, JJ., concur.

G.R. No. 163118

April 27, 2007

DORIS CHIONGBIAN-OLIVA, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES AND THE REGISTER OF DEEDS OF CEBU CITY, Respondents. DECISION QUISUMBING, J.:

This petition for certiorari assails (1) the Decision1 dated August 7, 2003 of the Court of Appeals in CA-G.R. CV. No. 74409, reversing the Decision2 dated December 13, 2001 of the Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB, and (2) the Resolution3 dated March 17, 2004, denying the motion for reconsideration. The following facts are undisputed. Petitioner Doris Chiongbian-Oliva is the registered owner of a parcel of land in Talamban, Cebu City, as evidenced by Transfer Certificate of Title (TCT) No. 5455.4 This title originated from Original Certificate of Title (OCT) No. 1066 from a free patent granted on September 11, 1969 under Commonwealth Act No. 141,5 as amended. The free patent, OCT No. 1066, and TCT No. 5455 contained the condition that a forty-meter legal easement from the bank of any river or stream shall be preserved as permanent timberland.6 On October 1, 2001, petitioner filed a petition for reduction of legal easement docketed as SP. Proc. No. 10746-CEB before the Regional Trial Court of Cebu City, Branch 12. Petitioner alleged that the property is residential as shown by the tax declaration7 and the Certification8 of the Office of the City Assessor. Thus, the applicable legal easement is only three meters pursuant to Department of Environment and Natural Resources (DENR) Administrative Order No. 99-21,9 and not forty meters, which applies to timberlands and forest lands. Petitioner also alleged that enforcing the forty-meter legal easement would virtually deprive her of the use and enjoyment of the property since it consists only of 1,000 square meters. The DENR countered that the property is inalienable. It also claimed that the applicant agreed on the forty-meter legal easement when the free patent was applied for. The trial court ruled in favor of petitioner. It said that there is no longer any reason for the forty-meter legal easement because the property had been transformed into residential land and the area where it is located has been reclassified as urban. Applying DENR A.O. No. 99-21, the applicable legal easement is only three meters. The decisions decretal portion states: WHEREFORE, premises considered, it is hereby ordered that the legal encumbrance of forty (40) meters for river bank protection annotated on Petitioners Transfer Certificate of Title No. 5455 be reduced to the applicable legal easement of three (3) meters in accordance with law. Accordingly, the Register of Deeds of Cebu City is hereby directed to cancel the above legal encumbrance of forty (40) meters annotated on Petitioners Transfer Certificate of Title No. 5455 and in lieu thereof, annotate the applicable legal encumbrance of three (3) meters for river bank protection. SO ORDERED.10 On appeal, the Court of Appeals reversed the trial courts decision. It upheld the DENRs claim that the property was inalienable. Accordingly, a positive act of the government was necessary to declassify it from forest land to alienable land. Declaration of the property as residential in the tax declaration and reclassification of the area where it is located as urban were insufficient bases to reclassify the property. The fallo of the appellate courts decision reads: WHEREFORE, premises considered, the Decision dated December 13, 2001, of the Regional Trial Court, 7th Judicial Region, Branch 12, Cebu City, in SP. PROC. NO. 10746-CEB, is hereby REVERSED and SET ASIDE. No pronouncement as to costs.

SO ORDERED.11 The appellate court later denied petitioners motion for reconsideration. Petitioner now raises the following issues: I. WHETHER OR NOT PETITIONERS LOT COVERED BY THE LEGAL ENCUMBRANCE IS A PUBLIC LAND/LAND OF THE PUBLIC DOMAIN (AND THUS, CANNOT BE RECLASSIFIED EXCEPT BY THE EXECUTIVE DEPARTMENT) OF THE GOVERNMENT, OR A PRIVATE LAND. II. WHETHER OR NOT THE TRIAL COURT IS CORRECT IN TAKING JUDICIAL NOTICE OF THE FACT THAT PETITIONERS LOT COVERED BY TCT NO. 5455 IS SITUATED IN AN URBAN AREA AND NOT IN A FOREST AREA, AND IN THUS CONCLUDING THAT THE LEGAL EASEMENT APPLICABLE FOR RIVER BANK PROTECTION IS THREE (3) METERS AND NOT FORTY (40) METERS. III. WHETHER OR NOT SECTION 90(i) OF C.A. NO. 141 WHICH PROVIDES FOR A UNIFORM EASEMENT OF FORTY (40) METERS FROM THE BANK ON EACH SIDE OF ANY RIVER, AND WHICH PRESERVES THE SAID 40-METER PORTION AS PERMANENT TIMBERLAND REGARDLESS OF WHETHER IT IS SITUATED IN A FOREST AREA OR AN URBAN AREA, IS STILL APPLICABLE TO LOTS SITUATED IN AN URBAN AREA IN THE LIGHT OF THE PROVISIONS OF SUBSEQUENT LEGISLATION, SPECIFICALLY SECTION 51 OF P.D. NO. 1067.12 Simply stated, the issues are: (1) Is the property public or private land? and (2) Is the applicable legal easement forty or three meters? On the first issue, C.A. No. 141, as amended, provides that lands of the public domain may be classified by the President, upon the recommendation of the Secretary of Environment and Natural Resources, into: (1) alienable or disposable; (2) timber; and (3) mineral lands.13 However, only alienable or disposable lands may be disposed of through any of the forms of concession enumerated in the law.14 A free patent is one of such concessions15and once it is registered and the corresponding certificate of title issued, the land covered by them ceases to be part of the public domain and becomes private property.16 Verily, by the issuance of a free patent on September 11, 1969, and the subsequent issuance of OCT No. 1066 and TCT No. 5455, the property in this case had become private land. It is inconsistent for an alienable land of the public domain to be covered by a free patent and at the same time retain its character as public land. On the second issue, Section 90(i) of C.A. No. 141 requires that a forty-meter legal easement from the bank of any river or stream shall be preserved as permanent timberland. More specifically, it provides:

(i) That the applicant agrees that a strip forty meters wide starting from the bank on each side of any river or stream that may be found on the land applied for, shall be demarcated and preserved as permanent timberland to be planted exclusively to trees of known economic value, and that he shall not make any clearing thereon or utilize the same for ordinary farming purposes even after patent shall have been issued to him or a contract of lease shall have been executed in his favor. (Emphasis supplied.) To implement this, the DENR promulgated A.O. No. 99-21 which provides the guidelines in the processing, verification, and approval of isolated and cadastral surveys. Pertinent to this case are the following provisions: 2.1 Original Surveys: 2.1.a Public Lands: All alienable and disposable (A and D) lands of the public domain shall be surveyed pursuant to Section 1 Par. (1) of R.A. 1273 [C.A. No. 141, Section 90(i)] whereby a strip of forty (40) meters wide starting from the banks on each side of any river or stream that may be found on the land shall be demarcated and preserved as permanent timberland. Likewise, to be demarcated are public lands along the banks of rivers and streams and the shores of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas and forty (40) meters in forest area, along their margins which are subject to the easement for public use in the interest of recreation, navigation, floatage, fishing and salvage. xxxx 2.3 Survey of Titled Lands: 2.3.1 Administratively Titled Lands: The provisions of item 2.1.a and 2.1.b shall be observed as the above. However, when these lands are to be subdivided, consolidated or consolidated-subdivided, the strip of three (3) meters which falls within urban areas shall be demarcated and marked on the plan for easement and bank protection. The purpose of these strips of land shall be noted in the technical description and annotated in the title. xxxx Running in parallel vein is the Water Code of the Philippines17 which provides: Art. 51. The banks of rivers and streams and the shores of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas and forty (40) meters in forest areas, along their margins, are subject to the easement of public use in the interest of recreation, navigation, floatage, fishing and salvage. No person shall be allowed to stay in this zone longer than what is necessary for recreation, navigation, floatage, fishing or salvage or to build structures of any kind.

Since the property in this case was originally alienable land of the public domain, the application for free patent contained the condition that a forty-meter legal easement from the banks on each side of any river or stream found on the land shall be demarcated and preserved as permanent timberland. However, after the property was administratively titled, it underwent several surveys for purposes of subdivision, consolidation, or consolidation-subdivision as evidenced by TCT No. 5455. This title provides that it is a transfer from TCT Nos. 3975 and 436018and describes the property as Lot 2 of the consolidation-subdivision plan Pcs-07-002121, being a portion of Lot 6 and 7 Pcs-07000974.19 Thus, presently only three meters is required to be demarcated and preserved as permanent timberland. In this case, the trial court properly took judicial notice that Talamban, Cebu City is an urban area. Judicial notice is the cognizance of certain facts which judges may properly take and act on without proof because they already know them.20 A municipal jurisdiction, whether designated as chartered city or provincial capital, is considered as urban in its entirety if it has a population density of at least 1,000 persons per square kilometer.21 The City of Cebu was created on October 20, 1934 under Commonwealth Act No. 58.22 It is a highly urbanized city classified as entirely urban.23 Thus, all its barangays, including Talamban, are considered urban. Conformably with the foregoing considerations, the reduction of the legal easement of forty meters on petitioners property covered by TCT No. 5455 to three meters now is in order. WHEREFORE, the instant petition is GRANTED. The assailed Decision dated August 7, 2003 and Resolution dated March 17, 2004 of the Court of Appeals in CA-G.R. CV. No. 74409 are REVERSED, and the Decision dated December 13, 2001 of the Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB is REINSTATED. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice G.R. No. 130389 February 11, 2008

THE PHILIPPINE COTTON CORPORATION, petitioner-appellant, vs. NARAINDAS GAGOOMAL and ENGRACIO ANG, respondents-appellees, CHINA BANKING CORPORATION, intervenor-appellee. DECISION AZCUNA, J.: This is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals (CA) promulgated on August 29, 1997 in CA-G.R. CV No. 50332. The facts of record would indicate that Pacific Mills, Inc. (Pacific Mills) originally owned five parcels of land covered by Transfer Certificates of Title (TCT) Nos. 136640, 136441, 222370 and 134249. These properties were subsequently purchased by respondents on an installment basis from Pacific Mills on July 19, 1979.3

On June 23, 1983, petitioner filed a collection case against Pacific Mills before the Regional Trial Court (RTC) of Pasig, Branch 162 on the ground of alleged failure to fulfill its obligation under a contract of loan. After hearing, the trial court issued a writ of preliminary attachment in favor of petitioner. Thereafter, on August 17, 1983, the writ of preliminary attachment was annotated on TCT Nos. 136640, 136441, 222370 and 134249. On December 27, 1985, the RTC of Pasig rendered a decision ordering Pacific Mills to pay its obligation under the loan agreement plus interest, penalty charges, attorneys fees and costs of suit. On appeal, the CA affirmed the decision of the trial court. Not satisfied with the judgment of the appellate court, Pacific Mills filed a petition for review before this Court. During the pendency of the appeal or on June 11, 1988, the Quezon City Hall was razed by fire thereby destroying the records of the Registry of Deeds of Quezon City, including the TCTs of Pacific Mills. Sometime in 1992, Pacific Mills filed a petition for reconstitution of the burned TCTs through administrative reconstitution, in accordance with Republic Act No. 6732.4 On March 23, 1992, the Registry of Deeds of Quezon City issued to Pacific Mills the reconstituted TCTs, namely: No. RT55702 (for TCT No. 136640), No. RT-55704 (for TCT No. 134249), No. RT-55703 (for TCT No. 136441) and No. RT-55705 (for TCT No. 222370). However, the aforesaid alleged annotations of the preliminary attachment in favor of petitioner were not incorporated in the reconstituted TCTs, but annotated therein was the sale made by Pacific Mills to respondents and their payment in full. On even date, the reconstituted TCTs were cancelled in favor of the respondents. Respondents were given the following clean TCT Nos. 566835 (for RT-55703), 566846 (for RT-55702), 566857 (for RT55704) and 566868(for RT-55705). On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City requesting for the annotation of the notice of levy, and, subsequently, the annotation of a favorable decision of this Court rendered on August 3, 1992, on the new TCTs issued to respondents. On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds, informed respondents that the letter-request for re-annotation of notice of levy had been entered in the Primary Entry Book 574/Volume 24, and asked them to surrender their owners duplicate copies of TCT Nos. 56683 to 56686.9 Immediately upon receipt of the said letter, respondents verified the original copies of titles in the possession of the Registry of Deeds and discovered that the following annotations were included at the back of the titles: "Request for Re-Annotation of Notice of Levy" and "Letter Request for Annotation of Entry of Judgment of Supreme Court." Thereafter, respondents filed on March 3, 1993, a Petition for the Cancellation of Annotations in Land Titles before the RTC of Quezon City, Branch 100, docketed as Civil Case No. Q-6056(93). Later on, petitioner was impleaded as an additional respondent, while China Banking Corporation filed a complaint-in-intervention for being a mortgagee of the real properties, together with all the improvements thereon. On March 29, 1995, the trial court rendered judgment in favor of respondents. The dispositive portion of the decision reads: WHEREFORE, premises above considered, there being no justification for the Quezon City Register of Deeds in making the annotation on petitioners original TCT Nos. 56683 (RT55703), 56684 (RT-55702), 56685 (RT-55748) and 56686 (RT-55705), said respondent is

hereby ordered to DELETE therefrom the said annotation "request for annotation and the annotated Supreme Court decision against the Pacific Mills, Inc." and to desist from its request for petitioners to submit their owners duplicate of titles to annotate such request of the Philippine Cotton Corporation. There being no justiciable issue in the complaint-in-intervention, let the annotations of a mortgage executed by petitioners on December 18, 1992 in favor of intervenor China Banking Corporation remain on petitioners subject TCTs. SO ORDERED.10 The trial court ratiocinated that: Under the circumstances, respondent [the Registry of Deeds of Quezon City] should and could have properly refused such request instead of immediately annotating it. In the same light, "The Register of Deeds may likewise properly refuse registration of an order attachment when it appears that the title involved is not in the name of the defendant and there is no evidence submitted to indicate that the said defendant has any present or future interest in the property covered by the titles." (Gotauco vs. Register of Deeds of Tayabas, 59 Phil. 756, 1934 and Geonanga vs. Hodges, 55 O.G. p. 2891, April 21, 1958). (Underscoring Supplied)11 Unsatisfied with the outcome of the case, petitioner filed a notice of appeal before the CA, contending that: "THE REGISTER OF DEEDS OF QUEZON CITY HAS THE AUTHORITY TO REANNOTATE THE NOTICE OF LEVY AND TO ANNOTATE THE ENTRY OF JUDGMENT OF THE SUPREME COURT ON TRANSFER CERTIFICATES OF TITLE NOS. 56683, 56684, 56685 AND 56686, ALL ISSUED IN THE NAME OF THE PETITIONERSAPPELLEES AS A RESULT OF AN ADMINISTRATIVE RECONSTITUTION OF TITLES." 12 In its August 29, 1997 decision, the appellate court dismissed the appeal because the issue raised by the petitioner was a pure question of law, over which the CA had no jurisdiction. Hence, this petition. Petitioner presents the following assignment of errors: FIRST ERROR THE LOWER COURT ERRED IN NOT SUSTAINING THE AUTHORITY OF THE QUEZON CITY REGISTER OF DEEDS TO VALIDLY RE-ANNOTATE THE INCUMBRANCE/LIENS AND ANNOTATE THE SUPREME COURT DECISION ON THE ADMINISTRATIVELY RECONSTITUTED TRANSFER CERTIFICATES OF TITLES (TCTs) IN FAVOR OF PETITIONER-APPELLANT. SECOND ERROR THE LOWER COURT, IN CONSEQUENCE THEREOF, LIKEWISE ERRED IN ORDERING THE QUEZON CITY REGISTER OF DEEDS TO DELETE THE ANNOTATION THAT READS: "REQUEST FOR ANNOTATION AND THE ANNOTATED SUPREME COURT

DECISION AGAINST PACIFIC MILLS, INC.", FROM PETITIONERS ORIGINAL TCT NOS. 96683 [sic] (RT-55703), 56684 (RT-55702), 56685 (RT-55748) AND 56686 (RT-55705) AND TO DESIST FROM REQUESTING RESPONDENTS/APPELLEES TO SUBMIT THEIR OWNERS DUPLICATE OF TITLES FOR ANNOTATION OF PETITIONER PHILIPPINE COTTON CORPORATIONS REQUEST.13 Petitioner asserts that a cursory reading of Section 71 of Presidential Decree No. 1529 shows that it is the ministerial duty of the Register of Deeds, in the matter of an attachment or other liens in the nature of involuntary dealing in registered land, to "send notice by mail to a registered owner requesting him to produce his duplicate certificate so that a memorandum of attachment or other lien may be made thereon." This provision, according to petitioner, actually applies whenever a writ of attachment has been issued by a court of competent jurisdiction after hearing on the issuance of the said writ. The notice of attachment not having been dissolved, it was ministerial on the part of the Register of Deeds to record the notice on the TCTs he issued. Petitioner would persuade this Court that it is the ministerial duty of the Register of Deeds to record any encumbrance or lien on respondents existing TCTs. It cites, as proof of its supposition, Sections 10 and 71 of the Property Registration Decree (P.D. No. 1529), which are quoted as follows: Section 10. General functions of Registers of Deeds. The office of the Register of Deeds constitutes a public repository of records of instruments affecting registered or unregistered lands and chattel mortgages in the province or city wherein such office is situated. It shall be the duty of the Register of Deeds to immediately register an instrument presented for registration dealing with real or personal property which complies with all the requisites for registration. He shall see to it that said instrument bears the proper documentary and science stamps and that the same are properly cancelled. If the instrument is not registrable, he shall forthwith deny registration thereof and inform the presentor of such denial in writing, stating the ground or reason therefor, and advising him of his right to appeal by consulta in accordance with Section 117 of this Decree. xxx Section 71. Surrender of certificate in involuntary dealings. If an attachment or other lien in the nature of involuntary dealing in registered land is registered, and the duplicate certificate is not presented at the time of registration, the Register of Deeds, shall, within thirty-six hours thereafter, send notice by mail to the registered owner, stating that such paper has been registered, and requesting him to send or produce his duplicate certificate so that a memorandum of the attachment or other lien may be made thereon. If the owner neglects or refuses to comply within a reasonable time, the Register of Deeds shall report the matter to the court, and it shall, after notice, enter an order to the owner to produce his certificate at a time and place named therein, and may enforce the order by suitable process. (Underscoring supplied) The Court is not in accord with the stance of petitioner. Section 10 of P.D. No. 1529 merely involves the general functions of the Register of Deeds, while Section 71 thereof relates to an attachment or lien in a registered land in which the duplicate certificate was not presented at the time of the registration of the said lien or attachment. A special law specifically deals with the procedure for the reconstitution of Torrens certificates of title lost or destroyed. Under Section 4 of Act No. 26:14

Liens and other encumbrances affecting a destroyed or lost certificate of title shall be reconstituted from such of the sources hereunder enumerated as may be available, in the following order: (a) Annotations or memoranda appearing on the owners, co-owners, mortgagees or lessees duplicate; (b) Registered documents on file in the registry of deeds, or authenticated copies thereof showing that the originals thereof had been registered; and (c) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the liens or encumbrances affecting the property covered by the lost or destroyed certificate of title. (Underscoring supplied) Furthermore, Sections 8 and 11 of the same Act provide for the procedure for the notation of an interest that did not appear in the reconstituted certificate of title, mandating that a petition be filed before a court of competent jurisdiction: Section 8. Any person whose right or interest was duly noted in the original of a certificate of title, at the time it was lost or destroyed, but does not appear so noted on the reconstituted certificate of title, which is subject to the reservation provided in the preceding section, may, while such reservation subsists, file a petition with the proper Court of First Instance for the annotation of such right or interest on said reconstituted certificate of title, and the court, after notice and hearing, shall determine the merits of the petition and render such judgment as justice and equity may require. The petition shall state the number of the reconstituted certificate of title and the nature, as well as a description, of the right or interest claimed. (Underscoring supplied) xxx Section 11. Petitions for reconstitution of registered interests, liens and other encumbrances, based on sources enumerated in sections 4(b) and/or 4(c) of this Act, shall be filed, by the interested party, with the proper Court of First Instance. The petition shall be accompanied with the necessary documents and shall state, among other things, the number of the certificate of title and the nature as well as a description of the interest, lien or encumbrance which is to be reconstituted, and the court, after publication, in the manner stated in section nine of this Act, and hearing shall determine the merits of the petition and render such judgment as justice and equity may require. (Underscoring supplied) Clearly, therefore, it is not the ministerial function of the Register of Deeds to record a right or an interest that was not duly noted in the reconstituted certificate of title. As a matter of fact, this task is not even within the ambit of the Register of Deeds job as the responsibility is lodged by law to the proper courts. The foregoing quoted provisions of the law leave no question nor any doubt that it is indeed the duty of the trial court to determine the merits of the petition and render judgment as justice and equity may require. This conclusion is bolstered by Chapter X,15 Section 108 of P.D. No. 1529, which provides: Sec. 108. Amendment and alteration of certificates. No erasure, alteration, or amendment shall be made upon the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of the same by the Register of Deeds, except by order of the proper Court of First Instance. A registered owner

or other person having an interest in registered property, or, in proper cases, the Register of Deeds with the approval of the Commissioner of Land Registration, may apply by petition to the court upon the ground that the registered interests of any description, whether vested, contingent, expectant inchoate appearing on the certificate, have terminated and ceased; or that new interest not appearing upon the certificate have arisen or been created; or that an omission or error was made in entering the certificate or any memorandum thereon, or on any duplicate certificate; or that the name of any person on the certificate has been changed; or that the registered owner has married, or, if registered as married, that the marriage has been terminated and no right or interest of heirs or creditors will thereby be affected, or that a corporation which owned registered land and has been dissolved has not yet conveyed the same within three years after its dissolution; or upon any other reasonable ground; and the court may hear and determine the petition after notice to all parties in interest, and may order the entry or cancellation of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms and conditions, requiring security or bond if necessary, as it may consider proper:Provided, however, That this section shall not be construed to give the court authority to reopen the judgment or decree of registration, and that nothing shall be done or ordered by the court which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith, or his heirs and assigns, without his or their written consent. Where the owners duplicate certificate is not presented, a similar petition may be filed as provided in the preceding section, All petitions or motions filed under this section as well as under any other provision of this Decree after original registration shall be filed and entitled in the original case in which the decree or registration was entered. (Underscoring supplied) The courts intervention in the amendment of the registration book after the entry of a certificate of title or of a memorandum thereon is categorically stated in the Property Registration Decree and cannot be denied by the mere allegations of petitioner. Hence, the contentions that the Register of Deeds may "validly re-annotate the incumbrance/liens and annotate the Supreme Court decision on the administratively reconstituted transfer certificates of titles (TCTs)" have no basis in law and jurisprudence. Petitioner further submits that the issuance of the TCTs to respondents is fraudulent. It suggests that under Sections 69 and 73 of P.D. No. 1529, any person whose interest does not appear on a reconstituted title may file a request directly with the Register of Deeds. As correctly observed by respondents, P.D. No. 1529 principally pertains to the registration of property, while R.A. No. 26 is a special law on the procedure for the reconstitution of Torrens certificates of title that were lost or destroyed. Specifically, Section 6916 of P.D. No. 1529 refers to an attachment that arose after the issuance of a certificate of title; while Section 7117 of the same law pertains to the registration of the order of a court of an attachment that was continued, reduced, dissolved or otherwise affected by a judgment of the court. Undoubtedly, the foregoing provisions find no application in the present case since petitioner insists that its interest was annotated prior to the reconstitution of the disputed certificates of title. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 50332, dated August 29, 1997, and the Decision of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-6056(93),18 are hereby AFFIRMED. No costs.

SO ORDERED.

FIRST DIVISION REMEGIA Y. FELICIANO,G.R. No. 162593cralaw Substituted by the Heirs of Remegia Y. Feliciano, as represented by NILO Y. cralawcralawPresent:cralaw FELICIANO, Petitioners,PANGANIBAN, C.J., Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, - versus -cralawCALLEJO, SR., and CHICO-NAZARIO, JJ. SPOUSES AURELIO and LUZPromulgated: ZALDIVAR, Respondents.cralawcralaw cralawSeptember 26, 2006 x-----------------------------------------------------------------------------------------x DECISION CALLEJO, SR., J.: Before the Court is the petition for review on certiorari filed by the Heirs of Remegia Y. Feliciano (as represented by Nilo Y. Feliciano) seeking the reversal of the Decision[1] dated July 31, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 66511 which ordered the dismissal of the complaint filed by Remegia Y. Feliciano[2] for declaration of nullity of title and reconveyance of property. The assailed decision of the appellate court reversed and set aside that of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 25 in Civil Case No. 92-423. The factual and procedural antecedents of the present case are as follows: Remegia Y. Feliciano filed against the spouses Aurelio and Luz Zaldivar a complaint for declaration of nullity of Transfer Certificate of Title (TCT) No. T-17993 and reconveyance of the property covered therein consisting of 243 square meters of lot situated in Cagayan de Oro City.The said title is registered in the name of Aurelio Zaldivar. In her complaint, Remegia alleged that she was the registered owner of a parcel of land situated in the District of Lapasan in Cagayan de Oro City with an area of 444 square meters, covered by TCT No. T-8502.Sometime in 1974, Aurelio, allegedly

through fraud, was able to obtain TCT No. T-17993 covering the 243-sq-m portion of Remegia's lot as described in her TCT No. T-8502. According to Remegia, the 243-sq-m portion (subject lot) was originally leased from her by Pio Dalman, Aurelio's father-in-law, for P5.00 a month, later increased to P100.00 a month in 1960. She further alleged that she was going to mortgage the subject lot to Ignacio Gil for P100.00,which, however, did not push through because Gil took back the money without returning the receipt she had signed as evidence of the supposed mortgage contract. Thereafter, in 1974, Aurelio filed with the then Court of First Instance of Misamis Oriental a petition for partial cancellation of TCT No. T-8502.It was allegedly made to appear therein that Aurelio and his spouse Luz acquired the subject lot from Dalman who, in turn, purchased it from Gil.The petition was granted and TCT No. T-17993 was issued in Aurelio's name. Remegia denied that she sold the subject lot either to Gil or Dalman.She likewise impugned as falsified the joint affidavit of confirmation of sale that she and her uncle, Narciso Labuntog, purportedly executed before a notary public, where Remegia appears to have confirmed the sale of the subject property to Gil. She alleged that she never parted with the certificate of title and that it was never lost. As proof that the sale of the subject lot never transpired, Remegia pointed out that the transaction was not annotated on TCT No. T-8502. In their answer, the spouses Zaldivar denied the material allegations in the complaint and raised the affirmative defense that Aurelio is the absolute owner and possessor of the subject lot as evidenced by TCT No. 17993 and Tax Declaration No. 26864 covering the same.Aurelio claimed that he acquired the subject lot by purchase from Dalman who, in turn, bought the same from Gil on April 4, 1951.Gil allegedly purchased the subject lot from Remegia and this sale was allegedly conformed and ratified by the latter and her uncle, Narciso Labuntog, before a notary public on December 3, 1965. After Aurelio obtained a loan from the Government Service Insurance System (GSIS), the spouses Zaldivar constructed their house on the subject lot.They alleged that they and their predecessors-in-interest had been occupying the said property since 1947 openly, publicly, adversely and continuously or for over 41 years already. Aurelio filed a petition for the issuance of a new owner's duplicate copy of TCT No. T-8502 because when he asked Remegia about it, the latter claimed that it had been lost. After due trial, the RTC rendered judgment in favor of Remegia.It declared that TCT No. 17993 in the name of Aurelio was null and void for having been obtained

through misrepresentation, fraud or evident bad faith by claiming in his affidavit that Remegia's title (TCT No. T-8502) had been lost, when in fact it still existed. The court a quo explained that 'the court that orders a title reconstituted when the original is still existing has not acquired jurisdiction over the case.A judgment otherwise final may be annulled not only on extrinsic fraud but also for lack of jurisdiction.[3] Aurelio's use of a false affidavit of loss, according to the court a quo, was similar to the use during trial of a forged document or perjured testimony that prevented the adverse party, Remegia, from presenting her case fully and fairly. The RTC likewise noted that no public instrument was presented in evidence conveyancing or transferring title to the subject lot from Remegia to Dalman, the alleged predecessor-in-interest of the spouses Zaldivar. The only evidence presented by the said spouses was a joint affidavit of confirmation of sale purportedly signed by Remegia and her uncle, the execution of which was denied by the latter's children. The certificate of title of the spouses Zaldivar over the subject property was characterized as irregular because it was issued in a calculated move to deprive Remegia of dominical rights over her own property. Further, the spouses Zaldivar could not set up the defense of indefeasibility of Torrens title since this defense does not extend to a transferor who takes the certificate of title with notice of a flaw therein.Registration, thus, did not vest title in favor of the spouses; neither could they rely on their adverse or continuous possession over the subject lot for over 41 years, as this could not prevail over the title of the registered owner pursuant to Sections 50[4] and 51[5] of Act No. 496, otherwise known as The Land Registration Act.

The dispositive portion of the decision of the court a quo reads: IN THE LIGHT OF THE FOREGOING, and by preponderance of evidence, judgment is hereby rendered canceling TCT T-17993 and reconveyance of 243 square meters the title and possession of the same, by vacating and turning over possession of the 243 square meters of the subject property to the plaintiff [referring to Remegia] which is part of the land absolutely owned by the plaintiff covered by [TCT] T-8502 and to solidarily pay the plaintiff Fifty Thousand Pesos (P50,000.00) as moral damages; Ten Thousand Pesos (P10,000.00) as exemplary damages; Fifty Thousand Pesos (P50,000.00) as attorney's fees and Ten Thousand Pesos (P10,000.00) expenses for litigation to the plaintiff. SO ORDERED.[6]

On appeal, the CA reversed the decision of the RTC and ruled in favor of the spouses Zaldivar. In holding that Remegia sold to Gil a 243 sq m portion of the lot covered by TCT No. T-8502, the appellate court gave credence to Exhibit '5, the deed of sale presented by the spouses Zaldivar to prove the transaction. The CA likewise found that Gil thereafter sold the subject property to Dalman who took actual possession thereof. By way of a document denominated as joint affidavit of confirmation of sale executed before notary public Francisco Velez on December 3, 1965, Remegia and her uncle, Narciso Labuntog, confirmed the sale by Remegia of the subject lot to Gil and its subsequent conveyance to Dalman. Per Exhibit '6, the CA likewise found that Dalman had declared the subject lot for taxation purposes in his name. In 1965, Dalman sold the same to the spouses Zaldivar who, in turn, had it registered in their names for taxation purposes beginning 1974.Also in the same year, Aurelio filed with the then CFI of Misamis Oriental a petition for the issuance of a new owner's duplicate copy of TCT No. T-8502, alleging that the owner's duplicate copy was lost; the CFI granted the petition on March 20, 1974. Shortly, Aurelio filed with the same CFI another petition, this time for the partial cancellation of TCT No. T-8502 and for the issuance of a new certificate of title in Aurelio's name covering the subject lot.The CFI issued an order granting the petition and, on the basis thereof, the Register of Deeds of Cagayan de Oro City issued TCT No. T-17993 covering the subject lot in Aurelio's name. Based on the foregoing factual findings, the appellate court upheld the spouses Zaldivar's ownership of the subject lot. The CA stated that Remegia's claim that she did not sell the same to Gil was belied by Exhibit '5, a deed which showed that she transferred ownership thereof in favor of Gil. The fact that the said transaction was not annotated on Remegia's title was not given significance by the CA since the lack

of annotation would merely affect the rights of persons who are not parties to the said contract. The CA also held that the joint affidavit of confirmation of sale executed by Remegia and Narciso Labuntog before a notary public was a valid instrument, and carried the evidentiary weight conferred upon it with respect to its due execution.[7] Moreover, the CA found that the notary public (Atty. Francisco Velez) who notarized the said document testified not only to its due execution and authenticity but also to the truthfulness of its contents. The contradiction between the testimonies of the children of Narciso Labuntog and the notary public (Atty. Velez), according to the CA, casts doubt on the credibility of the former as it was ostensible that their version of the story was concocted.[8] The CA further accorded in favor of the judge who issued the order for the issuance of the new owner's duplicate copy of TCT No. T-8502 the presumption of regularity in the performance of his official duty. It noted that the same was issued by the CFI after due notice and hearing. Moreover, prescription and laches or estoppel had already set in against Remegia. The appellate court pointed out that TCT No. T-17993 in the name of Aurelio was issued on September 10, 1974, while Remegia's complaint for annulment and reconveyance of property was filed more than 17 years thereafter or on August 10, 1992. Consequently, Remegia's action was barred by prescription because an action for reconveyance must be filed within 10 years from the issuance of the title since such issuance operates as a constructive notice.[9]The CA also noted that the spouses Zaldivar constructed their house on the subject lot some time in 19741975, including a 12-foot firewall made of hollow blocks, and Remegia took no action to prevent the said construction. The dispositive portion of the assailed CA decision reads: WHEREFORE, foregoing premises considered, the December 3, 1999 Decision of the Regional Trial Court of Misamis Oriental, Cagayan de Oro City, in Civil Case No. 92-423, is REVERSED and SET ASIDE and a new one is entered DISMISSING the said civil case. SO ORDERED.[10]chanroblesvirtuallawlibrary When their motion for reconsideration was denied by the CA in the assailed Resolution dated February 4, 2004, the heirs of Remegia (the petitioners) sought recourse to the Court.In their petition for review, they allege that the appellate court gravely erred '

A. IN NOT DISMISSING THE APPEAL OF THE RESPONDENTS (DEFENDANTS-APELLANTS) MOTU PROPIO OR EXPUNGING THE BRIEF FOR DEFENDANTS-APPELLANTS FROM RECORD FOR FAILURE TO FILE THE REQUIRED BRIEF FOR THE DEFENDANTS-APPELLANTS ON TIME BUT BEYOND THE LAST AND FINAL EXTENDED PERIOD WITHIN WHICH TO FILE THE SAID BRIEF IN VIOLATION TO SECTION 7 AND SECTION 12, RULE 44 OF THE REVISED RULES OF COURT AND IN CONTRADICTION TO THE RULING ENUNCIATED IN CATALINA ROXAS, ET AL. VS. COURT OF APPEALS, G.R. NO. L-76549, DECEMBER 10, 1987. B. IN DENYING THE MOTION FOR RECONSIDERATION WHICH WAS FILED WITHIN THE FIFTEEN-DAY REGLEMENTARY PERIOD IN VIOLATION TO THE RULES OF COURT. C. IN RULING THAT THE COURT WHO ORDERED THE ISSUANCE OF NEW CERTIFICATE OF TITLE DESPITE EXISTENCE OF OWNER'S DUPLICATE COPY THAT WAS NEVER LOST HAS JURISDICTION OVER THE CASE. D. IN CONCLUDING THAT PETITIONER'S (PLAINTIFF-APPELLEE) CLAIM OF OWNERSHIP OVER THE SUBJECTLOT WAS BARRED BY ESTOPPEL OR LACHES. E. IN CONCLUDING THAT THE RESPONDENTS (DEFENDANTSAPPELLANTS) ARE THE ABSOLUTE OWNERS OF THE SUBJECT LOT BASED ON TCT NO. 17993 ISSUED TO THEM. F. IN OBVIATING ESSENTIAL AND RELEVANT FACTS, HAD IT BEEN PROPERLY APPRECIATED, WOULD MAINTAIN ABSOLUTE OWNERSHIP OF PETITIONER (PLAINTIFF-APPELLEE) OVER THE SUBJECT LOT AS EVIDENCED BY EXISTING TCT NO. T-8502.[11] The Court finds the petition meritorious. It should be recalled that respondent Aurelio Zaldivar filed with the then CFI of Misamis Oriental a petition for issuance of a new owner's duplicate copy of TCT No.T-8502, alleging that the owner's duplicate copy was lost. In the Order

dated March 20, 1974, the said CFI granted the petition and consequently, a new owner's duplicate copy of TCT No. T-8502 was issued. However, as the trial court correctly held, the CFI which granted respondent Aurelio's petition for the issuance of a new owner's duplicate copy of TCT No. T8502 did not acquire jurisdiction to issue such order. It has been consistently ruled that 'when the owner's duplicate certificate of title has not been lost, but is in fact in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction.Reconstitution can validly be made only in case of loss of the original certificate.[12]In such a case, the decision authorizing the issuance of a new owner's duplicate certificate of title may be attacked any time.[13] The new owner's duplicate TCT No. T-8502 issued by the CFI upon the petition filed by respondent Aurelio is thus void.As Remegia averred during her testimony, the owner's duplicate copy of TCT No. T-8502 was never lost and was in her possession from the time it was issued to her: QA while ago, you said that you were issued a title in 1968, can you tell the Honorable Court who was in possession of the title? AI am the one in possession and I am the one keeping the title. QEven up to the present? AYes, Sir. QWas there any instance that this title was borrowed from you? ANo, Sir. QWas there any instance that this title was lost from your possession? ANo, Sir. QWas there any instance that this title was surrendered to the Register of Deeds of the City of Cagayan de Oro? ANo, Sir. There never was an instance ' There never was an instance that this title was surrendered to the Register of Deeds. QAs there any instance that you petitioned to the Honorable Court for the issuance of a new owner's duplicate copy of this title in lieu of the lost copy of said title? ANo, Sir. There was never an instance because this title was never lost.[14]chanroblesvirtuallawlibrary

Consequently, the court a quo correctly nullified TCT No. T-17993 in Aurelio's name, emanating as it did from the new owner's duplicate TCT No. T-8502, which Aurelio procured through fraud. Respondent Aurelio cannot raise the defense of indefeasibility of title because 'the principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title.The Torrens title does not furnish a shield for fraud.[15] As such, a title issued based on void documents may be annulled.[16] The appellate court's reliance on the joint affidavit of confirmation of sale purportedly executed by Remegia and her uncle, Narciso Labuntog, is not proper.In the first place, respondent Aurelio cannot rely on the joint affidavit of confirmation of sale to prove that they had validly acquired the subject lot because, by itself, an affidavit is not a mode of acquiring ownership.[17] Moreover, the affidavit is written entirely in English in this wise: JOINT AFFIDAVIT OF CONFIRMATION OF SALE[18] We, NARCISO LABUNTOG and REMEGIA YAPE DE FELICIANO, both of legal age, Filipino citizens and residents of Lapasan, Cagayan de Oro City, Philippines, after being duly sworn according to law, depose and say: 1. That the late FRANCISCO LABUNTOG is our common ancestor, the undersigned NARCISO LABUNTOG being one of his sons and the undersigned REMEGIA YAPE DE FELICIANO being the daughter of the late Emiliana Labuntog, sister of Narciso Labuntog; 2. That after his death, the late Francisco Labuntog left behind a parcel of land known as Lot No. 2166 C-2 of the Cagayan Cadastre situated at Lapasan, City of Cagayan de Oro, Philippines which is being administered by the undersigned Narciso Labuntog under Tax Decl. No. 27633; 3. That the entire Cadastral Lot No. 2166 C-2 has been subdivided and apportioned among the heirs of the late Francisco Labuntog, both of the undersigned affiants having participated and shared in the said property, Remegia Yape de Feliciano having inherited the share of her mother Emiliana Labuntog, sister of Narciso Labuntog; 4. That on April 4, 1951, Remegia Yape de Feliciano sold a portion of her share to one Ignacio Gil and which portion is more particularly described and bounded as follows: On the North for 13 ' meters by Agustin Cabaraban; On the South for 13 ' meters by Antonio Babanga;

On the East for 18 meters by Clotilde Yape; and On the West for 18meters by Agustin Cabaraban; 5. That sometime in the year 1960, the said Ignacio Gil conveyed the same portion to Pio Dalman, who is of legal age, Filipino citizen and likewise a resident of Lapasan, Cagayan de Oro City and that since 1960 up to the present, the said Pio Dalman has been in continuous, open, adverse and exclusive possession of the property acquired by him in concept of owner; 6. That we hereby affirm, ratify and confirm the acquisition of the above described portion acquired by Pio Dalman inasmuch as the same is being used by him as his residence and family home and we hereby request the Office of the City Assessor to segregate this portion from our Tax Decl. No. 27633 and that a new tax declaration be issued in the name of PIO DALMAN embracing the area acquired and occupied by him. IN WITNESS WHEREOF, we have hereunto affixed our signatures on this 3rd day of December, 1965 at Cagayan de Oro City, Philippines. (SGD.) Narciso Labuntog(SGD.)Remegia Yape de Feliciano cralawNARCISO LABUNTOGcralawREMEGIA YAPE DE FELICIANO AffiantAffiant SUBSCRIBED & SWORN to before me this 3rd day of December, 1965 at Cagayan de Oro City,Philippines, affiants exhibited their Residence Certificates as follows: NARCISO LABUNTOG, A-1330509 dated Oct. 5, 1965 and REMEGIA YAPE DE FELICIANO, A-1811104 dated Dec. 3, 1965 both issued at Cagayan de Oro City. (SGD.) ILLEGIBLE FRANCISCO X. VELEZ Notary Public However, based on Remegia's testimony, she could not read and understand English: COURT: Can you read English? ANo, I cannot read and understand English. ATTY. LEGASPI: QWhat is your highest educational attainment? AGrade 3. QBut you can read and understand Visayan?

AYes, I can read Visayan, but I cannot understand well idiomatic visayan terms (laglom nga visayan).[19]chanroblesvirtuallawlibrary On this point, Article 1332 of the Civil Code is relevant: ART.1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

The principle that a party is presumed to know the import of a document to which he affixes his signature is modified by the foregoing article.Where a party is unable to read or when the contract is in a language not understood by the party and mistake or fraud is alleged, the obligation to show that the terms of the contract had been fully explained to said party who is unable to read or understand the language of the contract devolves on the party seeking to enforce the contract to show that the other party fully understood the contents of the document.If he fails to discharge this burden, the presumption of mistake, if not, fraud, stands unrebutted and controlling.[20] Applying the foregoing principles, the presumption is that Remegia, considering her limited educational attainment, did not understand the full import of the joint affidavit of confirmation of sale and, consequently, fraud or mistake attended its execution.The burden is on respondents, the spouses Zaldivar, to rebut this presumption. They tried to discharge this onus by presenting Atty. Francisco Velez (later RTC Judge) who notarized the said document.Atty. Velez testified that he 'read and interpreted the document to the affiants and he asked them whether the contents were correct before requiring them to affix their signatures thereon.[21] The bare statement of Atty. Velez that he 'read and interpreted the document to the affiants and that he asked them as to the correctness of its contents does not necessarily establish that Remegia actually comprehended or understood the import of the joint affidavit of confirmation of sale.Nowhere is it stated in the affidavit itself that its contents were fully explained to Remegia in the language that she understood before she signed the same. Thus, to the mind of the Court, the presumption of fraud or mistake attending the execution of the joint affidavit of confirmation of sale was not sufficiently overcome. Moreover, the purported joint affidavit of confirmation of sale failed to state certain important information.For example, it did not mention the

consideration or price for the alleged sale by Remegia of the subject lot to Ignacio Gil.Also, while it stated that the subject lot was conveyed by Ignacio Gil to Pio Dalman, it did not say whether the conveyance was by sale, donation or any other mode of transfer.Finally, it did not also state how the ownership of the subject lot was transferred from Pio Dalman to respondent Aurelio or respondents. Respondents' claim that they had been occupying the subject lot since 1947 openly, publicly, adversely and continuously or for over 41 years is unavailing. In a long line of cases,[22] the Court has consistently ruled that lands covered by a title cannot be acquired by prescription or adverse possession. A claim of acquisitive prescription is baseless when the land involved is a registered land following Article 1126[23] of the Civil Code in relation to Section 46 of Act No. 496 or the Land Registration Act (now Section 47[24] of P.D. No 1529): Appellants' claim of acquisitive prescription is likewise baseless.Under Article 1126 of the Civil Code, prescription of ownership of lands registered under the Land Registration Act shall be governed by special laws.Correlatively, Act No. 496 provides that no title to registered land in derogation of that of the registered owner shall be acquired by adverse possession.Consequently, proof of possession by the defendants is both immaterial and inconsequential.[25] Neither can the respondents spouses Zaldivar rely on the principle of indefeasibility of TCT No. 17793 which was issued on September 10, 1974 in favor of respondent Aurelio.As it is, the subject lot is covered by two different titles: TCT No. T-8502 in Remegia's name covering an area of 444 sq m including therein the subject lot, and TCT No. 17793 in the name of respondent Aurelio covering the subject lot.Aurelio's title over the subject lot has not become indefeasible, by virtue of the fact that TCT No. T-8502 in the name of Remegia has remained valid.The following disquisition is apropos: The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist.The respondent had a valid title x x x It never parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer certificate of title; it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely.If the petitioner's contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property.Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had

endowed with indefeasibility theTorrens system.[26]

land

titles

issued

under

Remegia's TCT No. T-8502, thus, prevails over respondent Aurelio's TCT No. 17793, especially considering that, as earlier opined, the latter was correctly nullified by the RTC as it emanated from the new owner's duplicate TCT No. T-8502, which in turn, respondent Aurelio was able to procure through fraudulent means. Contrary to the appellate court's holding, laches has not set in against Remegia.She merely tolerated the occupation by the respondents of the subject lot: QYou also stated in the direct that the defendants in this case, Mr. and Mrs. Zaldivar, were issued a title over a portion of this land which you described a while ago? AWe knew about that only recently. QWhen was that when you knew that the defendants were issued title over a portion of the land you described a while ago? AIn June, 1992. QIn what way did you discover that a portion of the land was titled in the name of the defendants? AI discovered that my property was titled by Mr. and Mrs. Zaldivar when I went to the Register of Deeds for the purpose of partitioning my property among my children. QAnd you were surprised why it is titled in their names? AYes. QIs it not a fact that the defendants have constructed their house on a portion of the land you described a while ago? AYes. I knew that the Zaldivars built a house on the property I described a while ago, but I did not bother because I know that I can get that property because I own that property. QAnd the defendants constructed that house in 1974-75, am I correct? AYes. QAnd as a matter of fact, you have also a house very near to the house that was constructed by the defendants in this case? AYes. QCan you tell us what is the distance between your house and the house constructed by the defendants in 1974? AThey are very near because they constructed their house in my lot. QHow many meters, more or less?

AIt is very near, very close. QWhen they constructed their house, meaning the defendants, did you not stop the defendants from the construction? AI did not bother in stopping the Zaldivars in constructing the house because I am certain that I can get the land because I own the land. QAside from not protesting to the construction, did you not bring this matter to the attention of the barangay captain or to the police authorities? ANo, because I did not bring this matter to the barangay captain nor to the police authorities.It is only now that we discovered that it is already titled. QWhen you said now, it is in 1992? AYes. QIs it not a fact that after the house was finished the defendants and their family resided in that house which they constructed? AYes, after the house was finished, they resided in that house. QAs a matter of fact, from that time on up to the present, the defendants are still residing in that house which they constructed in 1974 or 1975, am I correct? AYes. QAs a matter of fact also the defendants fenced the lot in which their house was constructed with hollow blocks, am I correct? AYes, the house of the Zaldivars was fenced by them with hollow blocks and I did not stop them to avoid trouble. QAs a matter of fact, the boundary between your house and the house of Zaldivar, there was constructed a firewall made of hollow blocks about twelve feet in height, am I correct? AYes. QSuch that you cannot see their house and also the Zaldivars cannot see your house because of that high firewall, am I correct? AWe can still see each other because the firewall serves as the wall of their house. QWhen did the Zaldivars construct that hollow blocks fence? After the house was finished? AI cannot remember. QBut it could be long time ago? ATTY. VEDAD:

QThat would be repetitious.She answered she could not remember. ATTY. LEGASPI: QIt could be many years ago? AI cannot remember when they constructed the fence. QDid you [file] any protest or complaint when the Zaldivarsconstructed the hollow blocks fence? ANo. QNeither did you bring any action in court or with the barangay captain or the police authorities when the Zaldivars constructed that hollow blocks fence? ANo, I did not complain the fencing by the Zaldivars.Only now that we know that we bring this matter to the barangay captain. QAnd in the [office of the] barangay captain, you were able to meet the defendants, am I correct? ANo. When we went to the barangay captain, the Zaldivars did not appear there; therefore, we hired a lawyer and filed this case.[27]

Case law teaches that if the claimant's possession of the land is merely tolerated by its lawful owner, the latter's right to recover possession is never barred by laches: As registered owners of the lots in question, the private respondents have a right to eject any person illegally occupying their property.This right is imprescriptible.Even if it be supposed that they were aware of the petitioner's occupation of the property, and regardless of the length of that possession, the lawful owners have a right to demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all.This right is never barred by laches.[28]

Nonetheless, the Court is not unmindful of the fact that respondents had built their house on the subject lot and, despite knowledge thereof, Remegia did not lift a finger to prevent it.Article 453 of the Civil Code is applicable to their case: ART. 453.If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.
cralawUnder

the circumstances, respondents and Remegia are in mutual bad faith and, as such, would entitle the former to the application of Article 448 of the Civil Code governing builders in good faith: ART. 448.The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546[29] and 548,[30] or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees.In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after the proper indemnity.The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Following the above provision, the owner of the land on which anything has been built, sown or planted in good faith shall have the right to appropriate as his own the building, planting or sowing, after payment to the builder, planter or sower of the necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure.[31] The owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the land.If the owner chooses to sell his land, the builder, planter or sower must purchase the land, otherwise the owner may remove the improvements thereon. The builder, planter, or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing.In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. [32]

The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner of the land,[33] Remegia, in this case, who is now substituted by petitioners as her heirs. Consequently, the petitioners are obliged to exercise either of the following options: (1) to appropriate the improvements, including the house, built by the respondents on the subject lot by paying the indemnity required by law, or (2) sell the subject lot to the respondents.Petitioners cannot refuse to exercise either option and compel respondents to remove their house from the land.[34]In case petitioners choose to exercise the second option, respondents are not obliged to purchase the subject lot if its value is considerably more than the improvements thereon and in which case, respondents must pay rent to petitioners.If they are unable to agree on the terms of the lease, the court shall fix the terms thereof. In light of the foregoing disquisition, the Court finds it unnecessary to resolve the procedural issues raised by petitioners. WHEREFORE, the petition is GRANTED.The Decision dated July 31, 2003 and Resolution dated February 4, 2004 of the Court of Appeals in CA-G.R. CV No. 66511 are REVERSED and SET ASIDE. The Decision

dated December 3, 1999 of the Regional Trial Court of Cagayan de Oro City, Branch 25 in Civil Case No. 92-423 isREINSTATED with the MODIFICATION that petitioners are likewise ordered to exercise the option under Article 448 of the Civil Code. SO ORDERED.

G.R. No. 162097

February 13, 2008

LOURDES A. PASCUA, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondent. DECISION VELASCO, JR., J.: The instant petition for review under Rule 45 seeks the reversal of the July 22, 2003 Decision1 and February 10, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 74050, affirming the trial courts denial of petitioners action for reconstitution of title covering Lot No. 3209 of the Pagsanjan, Laguna Cadastre in her name. The Facts Petitioner claimed that she is the owner in fee simple of Lot No. 3209, Pagsanjan, Laguna Cadastre, having inherited it from her parents, Guillermo Abinsay and Leoncia Rivera. She and her predecessors-in-interest had allegedly been in open, public, continuous, and peaceful possession of the disputed lot since it was bought from Serafin Limuaco in 1956. On December 4, 1930, the cadastral court awarded the lot to Limuaco, who sold the lot to petitioners parents on December 24, 1956, as evidenced by a Deed of Absolute Sale.[3] Due to the ravages of World War II, however, the owners duplicate certificate of the Torrens title covering Lot No. 3209, its original copy on file with the Laguna Register of Deeds (RD), and other pertinent papers were lost and/or destroyed, and diligent efforts to find them were futile. Thus, on December 8, 1999, petitioner filed a petition for judicial reconstitution of the original certificate of title (OCT) covering Lot No. 3209 with the Sta. Cruz, Laguna, Regional Trial Court (RTC), Branch 27. She alleged that there were no deeds or instruments covering the disputed lot that were presented or pending registration with the RD, and that no co-owners, mortgagees, or lessees duplicate of the OCT was issued by the RD. After complying with the jurisdictional requirements, petitioner was allowed to present evidence exparte. She testified that her parents bought a piece of land from Limuaco and that after her parents death, her siblings partitioned the land and Lot No. 3209 was allocated to her. She learned from the Land Registration Authority (LRA) that Decree No. 412846 was issued in the cadastral case in 1930, but the records, including those in the Laguna RD, were destroyed during the war. She said the lot was declared for tax purposes in her name and she had been paying taxes due on the lot, as evidenced by the Tax Clearance dated March 2, 2000. She stated that the adjoining lot owners were Olivar Pening on the north, Hernan Zaide on the east; and that there is a stream on the south and

west. Petitioner submitted in evidence the tracing cloth plan and technical description of Lot No. 3209. The RTC denied the petition for reconstitution for insufficiency of evidence in its October 30, 2000 Order, ruling as follows: The certification issued by Acting Chief Alberto H. Lingayo of the Ordinary and Cadastral Decree Division (Exh. "F") and another certification of the Chief of the Docket Division of the Land Registration Authority (Exh. "G") speak of Decree No. 412846 issued on December 4, 1930 covering Lot No. 3209. On the other hand, Tax Declaration No. 5471 in the name of spouses Guillermo Abinsay and Leoncia Rivera (Exh. "I") did not indicate any certificate of title number, cadastral lot number or even an assessors lot number while Tax Declaration No. 1376 (Exh. "J") only indicated Assessors Lot No. 19-pt. Petitioner failed to establish that Assessors Lot No. 19-pt and Lot No. 3209 are one and the same. Assuming that Assessors Lot No. 19-pt refers to Lot No. 3209, still, the petition could not be granted because there is no showing that an original certificate of title was actually issued pursuant to Decree No. 412846. The certifications issued by the Land Registration Authority dated October 26, 1999 and September 23, 1998 and the Report of the same office dated May 5, 2000 are bereft of any allusion to the issuance of a title. The documents presented in evidence by petitioner not only failed to prove the issuance of an original certificate of title but also the name of the adjudicatee.4 On appeal to the CA, petitioner argued that Assessors Lot No. 19-pt and Lot No. 3209 are the same; that she is the adjudicatee of the disputed lot; and that an OCT was issued in accordance with Decree No. 412846. For respondent Republic of the Philippines, the Solicitor General contended that what petitioners predecessors-in-interest bought from Limuaco was Assesors Lot No. 19-pt, which was neither designated nor mentioned as Lot No. 3209. Also, the Solicitor General said the property described in the documents presented is still unregistered land of the public domain and there is no evidence that an OCT was actually issued to Lot No. 3209. The Solicitor General added that the trial court did not acquire jurisdiction over the petition since petitioner failed to submit proof of notices to all adjoining lot owners. The July 22, 2003 Decision of the CA affirmed the trial courts order in toto. The CA held that petitioner failed to present the documents enumerated in Section 2, Republic Act No. (RA) 26 entitled An Act Providing a Special Procedure for the Reconstitution of Torrens Certificate of Title Lost or Destroyed, as amended by RA 6732, or any other document that could be a sufficient basis for reconstituting title. Petitioners motion for reconsideration was denied by the CA in its February 10, 2004 Resolution. The Issues Thus, petitioner elevated the matter to us, interposing that: I The CA erred in holding that petitioner failed to present any of the documents enumerated in Sec. 2 of RA 26. II

The CA erred in holding that the certification of the LRA that Decree No. 412846 was issued over Lot 3209 cannot qualify as a proper document for reconstituting the lost or destroyed titled because Lot 3209 is different from Lot 19-pt. III The CA erred in holding that the lot sold by Serafin Limuaco to the Sps. Abinsay and Rivera is not Lot 3209 but Lot 19-pt which are different from each other. IV The CA erred in holding that statements in the Deed of Sale and Deed of Co-owners Partition that the land is not registered under Act 496 are fatal to the instant Petition.5 The Courts Ruling The petition lacks merit. Sec. 2 of RA 26 provides: SEC. 2. Original certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available in the following order: (a) The owners duplicate of the certificate of title; (b) The co-owners, mortgagees, or lessees duplicate of the certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof; (d) An authenticated copy of the decree of registration or patent, as the case may be pursuant to which the original certificate of title was issued; (e) A document, on file in the Registry of Deeds by which the property, the description of which is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing that its original has been registered; and (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. Petitioner asserts that under Sec. 2(f) of RA 26, other documents may be considered by the court as sufficient bases for the reconstitution of a lost or destroyed certificate of title. The pertinent documents she presented before the trial court are as follows: (1) List of lot descriptions from the Bureau of Lands which show that Limuaco is a claimant of Lot No. 3209 covered by Survey No. Cad. 69, Case No. 5 Pagsanjan, Laguna, which is 10,673 sq. m. in area (Exhibit "O"); (2) Certification of the LRA dated October 26, 1999, stating that based on the Record of Book of Decrees kept at the Vault Section, Docket Division of said office, the copy of Decree

No. 412846 issued on December 4, 1930 covering Lot No. 3209 of the Cadastral Survey of Pagsanjan, Laguna under Cadastral Case No. 14, LRC Cadastral Record No. 211 was not among the salvaged decrees on file with said office and that the said copy is presumed lost or destroyed during World War II (Exhibit "F"); (3) Certification from the LRA dated September 23, 1998 that its Record of Book of Cadastral Lots shows that Lot No. 3209 of Pagsanjan Cadastre was issued Decree No. 412846 (Exhibit "G"); (4) Deed of Absolute Sale dated December 24, 1956, showing that Limuaco sold to petitioners parents a parcel of land in Anibong, Pagsanjan, Laguna which consists of 10,673 sq. m. covered by Tax Declaration No. 156 (Exhibit "E"); (5) Tax Declaration No. 5471 in the name of petitioners parents which canceled Tax Declaration No. 156 covering a property bounded by the lot of Timoteo Abaya on the north, a stream on the south and west, acallejon in the east (Exhibit "J"); and (6) Deed of Co-owners Partition dated February 5, 1968 which shows that petitioner and her siblings divided their inheritance after the death of their parents, and that petitioner obtained Lot No. 19-pt covered by Tax Declaration No. 1376 situated in Anibong, Pagsanjan, Laguna consisting of 10,673 sq. m., bounded by Lot No. 15 pt. of Marcelo Aquino on the north, a stream on the south and west, and a callejon in the east (Exhibit "D").6 As held in Republic v. Intermediate Appellate Court,7 when RA 26, Section 2(f) speaks of "any other document," the reference is to similar documents previously enumerated in the section or documents ejusdem generis as the documents earlier referred to. The Deed of Co-owners Partition states that the subject of the instrument is Lot No. 19-pt. The Deed of Absolute Sale between Limuaco and petitioners parents, on the other hand, states that the land was not registered under Act No. 496. Petitioner nevertheless insists that Lot No. 3209 is the subject of a decree of registration according to the records of the LRA, and that between Limuacos statement and the certification from the LRA, the latter must prevail. We are not convinced. RA 26 presupposes that the property whose title is sought to be reconstituted has already been brought under the provisions of the Torrens System, Act No. 496.8 Petitioners evidence itself, the Deed of Sale between Limuaco and her parents, stated that the lot was not registered under Act No. 496 and that the parties agreed to register it under Act No. 3344. Even the Deed of Co-owners Partition stated that the subject lot, Lot No. 19-pt, is not registered. The other piece of evidence, the certifications from the LRA, merely stated that Decree No. 412846 covering Lot No. 3209 was issued on December 4, 1930, but the copy of said decree is not among the salvaged decrees on file with said office. The said copy is presumed lost or destroyed during World War II. The LRA neither stated that a certificate of title was actually issued nor mentioned the number of the OCT. It cannot be determined from any of the evidence submitted by petitioner that the adjudicatee of the purported decree was Limuaco. In Republic v. El Gobierno de las Islas Filipinas, this Court denied the petition for reconstitution of title despite the existence of a decree: We also find insufficient the index of decree showing that Decree No. 365835 was issued for Lot No. 1499, as a basis for reconstitution. We noticed that the name of the applicant as well as the date of the issuance of such decree was illegible. While Decree No. 365835 existed in the Record Book of Cadastral Lots in the Land Registration Authority as stated in the Report

submitted by it, however, the same report did not state the number of the original certificate of title, which is not sufficient evidence in support of the petition for reconstitution. The deed of extrajudicial declaration of heirs with sale executed by Aguinaldo and Restituto Tumulak Perez and respondent on February 12, 1979 did not also mention the number of the original certificate of title but only Tax Declaration No. 00393. As we held in Tahanan Development Corp. vs. Court of Appeals, the absence of any document, private or official, mentioning the number of the certificate of title and the date when the certificate of title was issued, does not warrant the granting of such petition.9 Petitioner argues that since it is incumbent upon the Commissioner of Land Registration to issue a certificate of title pursuant to a court decree, it can be presumed that a certificate of title over Lot No. 3209 was indeed issued when the cadastral court ordered it so on December 4, 1930. Petitioner relied on Rule 131, Sec. 3 of the Rules of Court which states the presumption that official duty has been regularly performed. This presumption, however, is merely disputable. In this case, the LRA certified that (1) a decree covering Lot No. 3209 was issued, but (2) a copy of the said decree cannot be found on the records. If in fact a certificate of title was issued, a title number could have been mentioned by the LRA. Since the LRA itself made no reference to any certificate of title, the conclusion is that none was issued. More importantly, Limuaco himself stated in the Deed of Absolute Sale that the property he was selling was not registered. Petitioners evidence, no less, disproves the presumption she relies upon. What further militates against petitioners arguments is the fact that the Deed of Absolute Sale, Deed of Co-owners Partition, and Tax Declaration Nos. 5471 and 99-19-003-00022 mention Lot No. 19-pt and not Lot No. 3209, which was sold by Limuaco to her parents. "Lot No. 3209" only appears on the Tracing Cloth Plan and the Technical Description. There is no document that refers or designates Lot No. 19-pt as Lot No. 3209. Petitioner points out, however, that both Lot No. 19-pt and Lot No. 3209 have the area of 10,673 sq. m., bounded by a callejon and a stream, and located in Anibong, Pagsanjan, Laguna. Moreover, the Lot Description (Exhibit "O") and Lot Data (Exhibit "P") show that the technical description of Lot No. 19-pt fits the technical description of Lot No. 3209. She also asserts that Lot No. 19-pt, which was mentioned in Tax Declaration No. 99-19-003-00022 issued in her name, was the Assessors Lot Number and not the Cadastral Lot Number.10 The Solicitor General points out, however, that Tax Declaration No. 5471 in the name of petitioners parents did not indicate any certificate of title number or cadastral or assessors lot number. This creates serious doubt as to the exact identity of the two lots. Assuming that Lot Nos. 19-pt and 3209 are the same, we are still constrained to deny the reconstitution of title mainly because there is no proof that a certificate of title was originally issued to both lots. The Solicitor General notes that both lots are still unregistered land of the public domain; thus, no certificate covering such property can be issued under the instant proceeding. In sum, we are not persuaded that petitioners pieces of evidence warrant the reconstitution of title since she failed to prove the existence of the title in the first place. The purpose of reconstitution of title is to have the original title reproduced in the same form it was when it was lost or destroyed.11 In this case, there is no title to be re-issued. The appellate and trial courts were correct in denying Pascuas petition. We emphasize that courts must be cautious in granting reconstitution of lost or destroyed certificates of titles. It is the duty of the trial court to scrutinize and verify carefully all supporting documents, deeds, and certifications. Each and every fact, circumstance, or incident which corroborates or relates to the existence and loss of the title should be examined.12

WHEREFORE, the CAs July 22, 2003 Decision and February 10, 2004 Resolution in CA-G.R. CV No. 74050, affirming the October 30, 2000 Order of the Sta. Cruz, Laguna RTC, Branch 27, are AFFIRMED IN TOTO. Costs against petitioner. SO ORDERED. G.R. No. 171774 February 12, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. APOLINARIO CATARROJA, REYNALDO CATARROJA, and ROSITA CATARROJADISTRITO, Respondents. DECISION ABAD, J.: This is about a petition for reconstitution of a lost original certificate of title in which the respondents have been unable to present evidence that such title had in fact been issued by an appropriate land registration court. The Facts and the Case Respondents Apolinario Catarroja, Reynaldo Catarroja, and Rosita Catarroja-Distrito (the Catarrojas) filed a petition for reconstitution of lost original certificate of title covering two lots in Zapang, Ternate, Cavite, one with an area of 269,695 square meters and the other with an area of 546,239 square meters.1 The Catarrojas alleged that they inherited these lands from their parents, Fermin and Sancha Catarroja, who reportedly applied for their registration with the Court of First Instance of Cavite sometime before the last world war.2 The Land Registration Authority (LRA) issued a certification on August 3, 19983 and a report on February 4, 2002,4 confirming that the land registration court issued Decree 749932 on May 21, 1941 covering the subject lots. A copy of this decree was, however, no longer available in the records of the LRA. The LRA report verified as correct the plans and technical descriptions of the subject lots which had been approved under LRA PR-19042 and LRA PR-19043. The Catarrojas alleged that, pursuant to the decree, the Register of Deeds of Cavite issued an original certificate of title to their parents. But, as it happened, based on a certification issued by the Register of Deeds, the original on file with it was lost in the fire that gutted the old Cavite capitol building on June 7, 1959.5 The Catarrojas also claimed that the owners duplicate copy of the title had been lost while with their parents.6 Since the public prosecutor representing the government did not object to the admission of the evidence of the Catarrojas and since he said that he had no evidence to refute their claims, the case was submitted for decision.7On June 27, 2003 the Regional Trial Court (RTC) of Cavite issued an Order, granting the petition for reconstitution of title.8 On appeal, however, the Court of Appeals (CA) reversed the RTC decision.9 It held that the evidence of the Catarrojas failed to establish any of the sources for reconstitution enumerated in Section 2 of Republic Act (R.A.) 26 (An act providing a special procedure for reconstitution of Torrens certificate of title lost or destroyed). The Catarrojas did not have proof that an original certificate of title had in

fact been issued covering the subject lots. On motion for reconsideration, however, the CA rendered an amended decision dated February 23, 2006, setting aside its decision dated July 12, 2005 and finding sufficient evidence to allow reconstitution of the Catarrojas title.10 Petitioner Republic of the Philippines challenges that decision through this action. The Issue Presented The sole issue presented in this case is whether or not the CA erred in finding sufficient evidence to grant the petition for reconstitution of title. The Courts Ruling R.A. 26 governs the reconstitution of lost or destroyed Torrens certificates of title. Its Section 2 enumerates the following sources for the reconstitution of such titles: (a) The owners duplicate of the certificate of title; (b) The co-owners, mortgagees, or lessees duplicate of the certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof; (d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to which the original certificate of title was issued; (e) A document, on file in the Registry of Deeds, by which the property, the description of which is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing that its original had been registered; and (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. Admittedly, the Catarrojas have been unable to present any of the documents mentioned in paragraphs (a) to (e) above. Their parents allegedly lost the owners duplicate certificate of title. They did not have a certified copy of such certificate of title or a co-owners, a mortgagees, or a lessees duplicate of the same. The LRA itself no longer has a copy of the original decree or an authenticated copy of it. Likewise, the Register of Deeds did not have any document of encumbrance on file that shows the description of the property. The only documentary evidence the Catarrojas could produce as possible sources for the reconstitution of the lost title are those other documents described in paragraph (f). Relying on this, they submitted the following documents: 1. The Microfilm printouts of the Official Gazette dated February 25, 1941, Vol. 39, No. 24, Pages 542-543, showing a notice of hearing in LRC 482, GLRO Record 54798, respecting their parents application for registration and confirmation of their title to the subject lots.11 2. A certification issued by the LRA dated August 3, 1998, stating that, based on official records, GLRO Record 54798, Cavite, had been issued Decree 749932 on May 21, 1941.12

3. A certification from the Register of Deeds of Cavite dated July 3, 1999, stating that it cannot ascertain whether the land covered by Decree 749932 and GLRO Record 54798 had been issued a certificate of title because its titles were arranged numerically and not by lot numbers, location, or names of registered owners. The Register of Deeds also certified that all their records were lost in the June 7, 1959 fire.13 4. The Report of the LRA dated February 4, 2002, stating that based on their record book of decrees, Decree 749932 had been issued on May 21, 1941 covering the subject lots under GLRO Record 54798. The report also verified as correct the plans (Psu-111787 and Psu111788) and technical descriptions of the subject lots and approved under LRA PR-19042 and LRA PR-19043.14 5. An Affidavit of Loss dated December 14, 2001, stating that the duplicate certificate of title covering the subject lots had been lost.15 This Court has, in Republic v. Intermediate Appellate Court,16 applied the principle of ejusdem generis in interpreting Section 2(f) of R.A. 26. "Any other document" refers to reliable documents of the kind described in the preceding enumerations. This Court is not convinced that the above documents of the Catarrojas fall in the same class as those enumerated in paragraphs (a) to (e). None of them proves that a certificate of title had in fact been issued in the name of their parents. In Republic v. Tuastumban,17 the Court ruled that the documents must come from official sources which recognize the ownership of the owner and his predecessors-in-interest. None of the documents presented in this case fit such description. Moreover the Catarrojas failed to show that they exerted efforts to look for and avail of the sources in paragraphs (a) to (e) before availing themselves of the sources in paragraph (f). The Court said in Republic v. Holazo18 that the documents referred to in Sec. 2(f) may be resorted to only in the absence of the preceding documents in the list. Only if the petitioner for reconstitution fails to show that he had, in fact, sought to secure such documents and failed to find them, can the presentation of the "other document" as evidence in substitution be allowed. Further, in Republic v. Tuastumban19 the Court enumerated what needs to be shown before the issuance of an order for reconstitution: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an interest therein; (d) that the certificate of title was in force at the time it was lost or destroyed; and (e) that the description, area and boundaries of the property are substantially the same as those contained in the lost or destroyed certificate of title. The microfilm printouts of the Official Gazette are not proof that a certificate of title was in fact issued in the name of the Catarrojas parents. The publication in the Official Gazette only proved that the couple took the initial step of publishing their claim to the property. There was no showing, however, that the application had been granted and that a certificate of title was issued to them. Although the LRAs certification and its report confirmed the issuance of a decree, these documents do not sufficiently prove that a title had in fact been issued to the parents of the Catarrojas pursuant to such decree. Indeed, it remains uncertain what kind of decree the land registration court issued in the case. Significantly, Act 496 (the 1903 Land Registration Act) which was then in force recognized two kinds of decrees in land registration proceedings: first, a decree issued under Section 37 that dismisses the application and, second, a decree issued under Section 38 confirming title of ownership and its registration.20
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SECTION 37. If in any case without adverse claim the court finds that the applicant has no proper title for registration, a decree shall be entered dismissing the application, and such decree may be ordered to be without prejudice x x x. SECTION 38. If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or adverse claim and proper registration, a decree of confirmation and registration shall be entered x x x. Absent a clear and convincing proof that an original certificate of title had in fact been issued to their parents in due course, the Catarrojas cannot claim that their predecessors succeeded in acquiring title to the subject lots. The nature of reconstitution of a lost or destroyed certificate of title denotes a restoration of the instrument in its original form and condition. That cannot be done without proof that such certificate of title had once existed. The procedures laid down in R.A. 26 for reconstituting a title have to be strictly followed considering that reconstitution, if made easy, could be the source of anomalous titles. It could also be unscrupulously availed of by some as a convenient substitute for the rigid proceedings involved in original registration of title.21 The Court observes that the subject property, supposedly located in Ternate, Cavite, where the naval reservation is found, covers more than 81 hectares of land. It is hardly believable that it has remained untouched by any documented transaction since its supposed titling in May 1941. It is also curious that no photocopy of that title has ever been kept and preserved in some private or public repository. Parenthetically, the Catarrojas did not present any tax declaration covering such vast piece of property. Although a tax declaration is not a proof of ownership, payment of realty tax is an exercise of ownership over the property and is the payers unbroken chain of claim of ownership over it. Furthermore, the Catarrojas procrastination of over five decades before finally seeking reconstitution of title has allowed laches to set in. Once again, courts must be cautious against hasty and reckless grant of petitions for reconstitution, especially when they involve vast properties as in this case.22 WHEREFORE, the Court GRANTS the petition, REVERSES the amended decision of the Court of Appeals dated February 23, 2006, and REINSTATES its decision dated July 12, 2005 in CA-G.R. CV 80401 that denied the petition for reconstitution of title of respondents Apolinario Catarroja, Reynaldo Catarroja, and Rosita Catarroja-Distrito. SO ORDERED. G.R. No. 182980 June 22, 2011

BIENVENIDO CASTILLO, vs. REPUBLIC OF THE PHILIPPINES, Respondent. DECISION CARPIO, J.: The Case

Petitioner Bienvenido Castillo (Bienvenido) filed the present petition for review on certiorari1 of the Decision2dated 23 October 2007 as well as the Resolution3 dated 7 May 2008 of the Court of Appeals (appellate court) in CA-G.R. CV No. 81916. The appellate court reversed the Decision4 dated 3 October 2003 of Branch 22, Regional Trial Court of Malolos, Bulacan (trial court) in P-111-2002. The trial court ordered the reconstitution of the original copy of Transfer Certificate of Title (TCT) No. T-16755 as well as the issuance of another owners duplicate copy, in the name of the registered owner and in the same terms and conditions as the original, in lieu of the lost original copy. The Facts Bienvenido filed on 7 March 2002 a Petition for Reconstitution and Issuance of Second Owners Copy of Transfer Certificate of Title No. T-16755. The petition reads as follows: 1. That petitioner is of legal age, Filipino, widower and with residence and postal address at Poblacion, Pulilan, Bulacan; 2. That petitioner is the registered owner of a parcel of land situated at Paltao, Pulilan, Bulacan covered by Transfer Certificate of Title No. T-16755, a zerox [sic] copy of which is hereto attached as Annex "A"; 3. That the zerox [sic] copy of technical description and subdivision plan of the parcel of land with an area of 50,199 [square meters] (Lot 6-A) are hereto attached as Annexes "B" and "C"; 4. That the original copy of the said certificate of title on file with the Register of Deeds of Bulacan was lost and/or destroyed during the fire on March 7, 1987 in the Office of the Register of Deeds of Bulacan, certification from the said office is hereto attached as Annex "D"; 5. That, the owners copy of the said certificate of title was likewise lost and all efforts to locate the same proved futile and in vain, copy of the the [sic] "Affidavit of Loss" is hereto attached as Annex "E"; 6. That no co-owners copy of duplicate of the same certificate has been issued; 7. The names and addresses of the boundary owners of said lot are the following: a. West - Jorge Peralta b. North - Lorenzo Calderon c. South - Lorenzo Calderon d. East - Melvin & Marlon Reyes with postal address at Poblacion, Pulilan, Bulacan; 8. That said property has been declared for taxation purposes under Tax Declaration No. 9719001-00019, zerox [sic] copy of which is hereto attached as Annex "F";

9. That the real estate tax for the current year has been paid per official receipt no. 0287074, zerox [sic] copy of which is hereto attached as Annex "G"; 10. That said property is free from all liens and encumbrances; 11. That there exist no deeds or instruments affecting the said property which has been presented for and pending registration with the Register of Deeds of Bulacan; WHEREFORE, it is most respectfully prayed of this Honorable Court that after due notice and hearing judgment be rendered: 1. Declaring the Original Owners Duplicate Certificate of Title No. T-16755 that was lost as null and void; 2. Ordering the Register of Deeds of Bulacan to issue second owners duplicate copy of the said certificate of title upon payment of proper fees.5 The trial court furnished the Land Registration Authority (LRA) with a duplicate copy of Bienvenidos petition and its Annexes, with a note stating that "No Tracing Cloth of Plan [sic] and Blue print of plan attached."6 As requested by the LRA in its letter dated 17 April 2002,7 the trial court ordered Bienvenido to submit within 15 days from receipt of the order (a) the original of the technical description of the parcel of land covered by the lost/destroyed certificate of title, certified by the authorized officer of the Land Management Bureau/Land Registration Authority and two duplicate copies thereof, and (b) the sepia film plan of the subject parcel of land prepared by a duly licensed Geodetic Engineer, who shall certify thereon that its preparation was made on the basis of a certified technical description, and two blue print copies thereof.8 Bienvenido complied with the order.9 The trial court, in an order dated 7 August 2002, ordered Bienvenido to supply the names and addresses of the occupants of the subject property.10 Bienvenido manifested that there is no actual occupant in the subject property.11 On 4 October 2002, the trial court issued an order which found Bienvenidos petition sufficient in form and substance and set the same for hearing.12 Copies of the 4 October 2002 order were posted on three bulletin boards: at the Bulacan Provincial Capitol Building, at the Pulilan Municipal Building, and at the Bulacan Regional Trial Court. 13 The 4 October 2002 order was also published twice in the Official Gazette: on 13 January 2003 (Volume 99, Number 2, Pages 237 to 238), and on 20 January 2003 (Volume 99, Number 3, Pages 414 to 415).14 After two cancellations,15 a hearing was conducted on 12 March 2003. During the hearing, the following were marked in evidence for jurisdictional requirements: Exhibit "A" - Order of the Court dated 4 October 2002 Exhibit "A-1" - Second page of the Order of the Court dated 4 October 2002 Exhibit "A-2" - Third page of the Order of the Court dated 4 October 2002 Exhibit "A-3" - Registry return receipt of notice to the Office of the Solicitor General Exhibit "A-4" - Registry return receipt of notice to the Land Registration Authority

Exhibit "A-5" - Registry return receipt of notice to the Register of Deeds Exhibit "A-6" - Registry return receipt of notice to the Public Prosecutor Exhibit "A-7" - Registry return receipt of notice to boundary owner Jorge Peralta Exhibit "A-8" - Registry return receipt of notice to boundary owner Lorenzo Calderon Exhibit "A-9" - Registry return receipt of notice to boundary owners Melvin and Marlon Reyes Exhibit "B" - Certificate of Posting Exhibit "C" - Certificate of Publication from the Director of the National Printing Office Exhibit "D" - Official Gazette, Volume 99, Number 2, 13 January 2003 Exhibit "D-1" - Page 237, Publication of the trial courts Order dated 4 October 2002 Exhibit "D-2" - Page 238, Publication of the trial courts Order dated 4 October 2002 Exhibit "E" - Official Gazette, Volume 99, Number 3, 20 January 2003 Exhibit "E-1" - Page 414, Publication of the trial courts Order dated 4 October 2002 Exhibit "E-2" - Page 415, Publication of the trial courts Order dated 4 October 200216 Fernando Castillo (Fernando), Bienvenidos son and attorney-in-fact, testified on his fathers behalf. During the course of his testimony, Fernando identified the following: Exhibit "F" - Photocopy of TCT No. T-16755 Exhibit "G" - Blueprint of the subject property Exhibit "H" - Technical description of the property Exhibit "I" - Affidavit of Loss executed by Bienvenido Castillo Exhibit "I-1" - Entry of the Affidavit of Loss in the book of the Register of Deeds Exhibit "J" - Certification issued by the Office of the Register of Deeds, Malolos, Bulacan that TCT No. T-16755 was burned in a fire on 7 March 1987 Exhibit "K" - Tax declaration Exhibit "L" - 2002 Real Estate Tax Receipt Upon presentation of the photocopy of TCT No. T-16755, Fernando stated that the title was issued in the names of his parents, Bienvenido Castillo and Felisa Cruz (Felisa), and that his mother died in 1982. Fernando did not mention any sibling. Fernando further testified that on 6 February 2002, Bienvenido executed an Affidavit of Loss which stated that he misplaced the owners copy of the

certificate of title sometime in April 1993 and that all efforts to locate the same proved futile. The title is free from all liens and encumbrances, and there are no other persons claiming interest over the land.17 The LRA submitted a Report dated 25 July 2003, portions of which the trial court quoted in its Decision. The LRA stated that: (2) The plan and technical description of Lot 6-A of the subdivision plan Psd-37482 were verified correct by this Authority to represent the aforesaid lot and the same have been approved under (LRA) PR-03-00321-R pursuant to the provisions of Section 12 of Republic Act No. 26. WHEREFORE, the foregoing information anent the lot in question is respectfully submitted for consideration in the resolution of the instant petition, and if the Honorable Court, after notice and hearing, finds justification pursuant to Section 15 of Republic Act No. 26 to grant the same, the plan and technical description having been approved, may be used as basis for the inscription of the technical description on the reconstituted certificate. Provided, however, that in case the petition is granted, the reconstituted title should be made subject to such encumbrances as may be subsisting; and provided further, that no certificate of title covering the same parcel of land exists in the office of the Register of Deeds concerned.18 The Trial Courts Ruling On 3 October 2003, the trial court promulgated its Decision in favor of Bienvenido. The trial court found valid justifications to grant Bienvenidos petition as the same is in order and meritorious. The dispositive portion reads: WHEREFORE, the Register of Deeds for the province of Bulacan is hereby ordered, upon payment of the prescribed fees, to reconstitute the original copy of Original Certificate of Title No. 16755 and to issue another owners duplicate copy thereof, in the name of the registered owner and in the same terms and conditions as the original thereof, pursuant to the provisions of R.A. No. 26, as amended by P.D. No. 1529, in lieu of the lost original copy. The new original copy shall in all respects be accorded the same validity and legal effect as the lost original copy for all intents and purposes. Provided, that no certificate of title covering the same parcel of land exists in the office of the Register of Deeds concerned. SO ORDERED.19 The Office of the Solicitor General (OSG) filed its Notice of Appeal on 18 November 2003. The OSG stated that it was grave error for the trial court to order reconstitution despite absence of any prayer seeking such relief in the petition and on the basis of a mere photocopy of TCT No. T-16755. Counsel for Bienvenido filed a motion for early resolution on 25 January 2006. The Appellate Courts Ruling On 23 October 2007, the appellate court rendered its Decision which reversed the 3 October 2003 Decision of the trial court. Bienvenidos counsel withdrew from the case on 11 October 2007 and was substituted by Mondragon and Montoya Law Offices. The appellate court ruled that even if Bienvenido failed to specifically include a prayer for the reconstitution of TCT No. T-16755, the petition is captioned as "In re: Petition for Reconstitution and

Issuance of Second Owners Copy of Transfer Certificate of Title No. T-16755, Bienvenido Castillo, Petitioner." The prayer for "such other reliefs and remedies just and proper under the premises" is broad and comprehensive enough to justify the extension of a remedy different from that prayed for. However, the appellate court still ruled that the trial court erred in ordering the reconstitution of the original copy of TCT No. T-16755 and the issuance of another owners duplicate copy thereof in the name of the registered owner. Section 3 of Republic Act No. 26 specified the order of sources from which transfer certificates of title may be reconstituted, and Bienvenido failed to comply with the order. Moreover, the documentary evidences presented before the trial court were insufficient to support reconstitution. The loss of the original copy on file with the Registry of Deeds of Bulacan may be credible, but Bienvenido failed to adequately explain the circumstances which led to the loss of the owners copy. The tax declaration presented is not a conclusive evidence of ownership, but merely indicates possession. The plan and technical description of the property are merely additional documents that must accompany the petition for the LRAs verification and approval. The dispositive portion of the appellate courts Decision reads: WHEREFORE, the instant appeal is GRANTED. The assailed Decision dated October 3, 2003 of Branch 22, RTC of Malolos, Bulacan in P-111-2002 is hereby SET ASIDE and a new judgment is entered dismissing the Petition therein. SO ORDERED.20 On 3 December 2007, Bienvenidos counsel filed a Motion for Reconsideration and/or for New Trial.21 The motion asserted that Bienvenido presented sufficient documents to warrant reconstitution of TCT No. T-16755. Aside from the photocopy of TCT No. T-16755, Fernando presented the plan and technical description approved by the LRA. Moreover, to support the Motion for New Trial, Fernando went through Bienvenidos papers and found the Deed of Absolute Sale22 from the original owner, Elpidio Valencia, to spouses Bienvenido and Felisa. Fernando also found the cancellation of mortgage23 of the property covered by TCT No. T-16755 issued by the Development Bank of the Philippines. Fernando also submitted a copy of the Extra-Judicial Partition24 by and among the heirs of his mother. The property covered by TCT No. T-16755 was partitioned among Bienvenido, Fernando, and Fernandos siblings Emma Castillo Bajet (Emma) and Elpidio Castillo (Elpidio). In Fernandos affidavit attached to the Motion for Reconsideration and/or for New Trial, Fernando stated, but without presenting any proof, that Bienvenido passed away at the age of 91 on 14 February 2006. The Republic, through the OSG, opposed the Motion for Reconsideration and/or for New Trial. Bienvenidos petition failed to satisfy Section 3(f) of R.A. No. 26. The Affidavit of Loss is hearsay because Bienvenido failed to affirm it in court. Therefore, the loss of the owners duplicate copy of TCT No. T-16755 is not established. The plan and technical description approved by the LRA are not independent sources of reconstitution and are mere supporting documents. The documents submitted in support of the Motion for New Trial are not newly discovered, but could have been discovered earlier by exercise of due diligence. In its Resolution25 dated 7 May 2008, the appellate court denied the Motion for Reconsideration and/or for New Trial. Issues The following were assigned as errors of the appellate court:

I. The Honorable Court of Appeals erred in holding that the documentary evidence presented by petitioner in the lower court are insufficient to support the reconstitution prayed for. II. The Honorable Court of Appeals erred in finding that petitioner failed to establish the circumstances which led to the loss of his duplicate owners copy of TCT No. T-16755. III. The Honorable Court of Appeals erred in finding that there is no merit in the motion for new trial filed by petitioner.26 The Courts Ruling The petition must fail. There can be no reconstitution as the trial court never acquired jurisdiction over the present case. Process of Reconstitution of Transfer Certificates of Title under R.A. No. 26 Section 3 of R.A. No. 26 enumerates the sources from which transfer certificates of title shall be reconstituted. Section 3 reads: Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available, in the following order: (a) The owners duplicate of the certificate of title; (b) The co-owners, mortgagees, or lessees duplicate of the certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof; (d) The deed of transfer or other document, on file in the registry of deeds, containing the description of the property, or an authenticated copy thereof, showing that its original had been registered, and pursuant to which the lost or destroyed transfer certificate of title was issued; (e) A document, on file in the registry of deeds, by which the property, the description of which is given in said document, is mortgaged, leased, or encumbered, or an authenticated copy of said document showing that its original had been registered; and (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. Bienvenido already admitted that he cannot comply with Section 3(a) to 3(e), and that 3(f) is his last recourse. Bienvenido, through Fernandos testimony, presented a photocopy of TCT No. T-16755 before the trial court. The owners original duplicate copy was lost, while the original title on file with the Register of Deeds of Malolos, Bulacan was burned in a fire on 7 March 1987. The property was neither mortgaged nor leased at the time of Bienvenidos loss of the owners original duplicate copy. Section 12 of R.A. No. 26 describes the requirements for a petition for reconstitution. Section 12 reads:

Sec. 12. Petitions for reconstitution from sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), and/or 3(f) of this Act, shall be filed with the proper Court of First Instance, by the registered owner, his assigns, or any person having an interest in the property. The petition shall state or contain, among other things, the following: (a) that the owners duplicate of the certificate of title had been lost or destroyed; (b) that no co-owners, mortgagees, or lessees duplicate had been issued, or, if any had been issued, the same had been lost or destroyed; (c) the location and boundaries of the property; (d) the nature and description of the building or improvements, if any, which do not belong to the owner of the land, and the names and addresses of the owners of such buildings or improvements; (e) the names and addresses of the occupants or persons in possession of the property, of the owners of the adjoining properties and of all persons who may have any interest in the property; (f) a detailed description of the encumbrances, if any, affecting the property; and (g) a statement that no deeds or other instruments affecting the property have been presented for registration, or if there be any, the registration thereof has not been accomplished, as yet. All the documents, or authenticated copies thereof, to be introduced in evidence in support to the petition for reconstitution shall be attached thereto and filed with the same: Provided, That in case the reconstitution is to be made exclusively from sources enumerated in Section 2(f) or 3(f) of this Act, the petition shall be further accompanied with a plan and technical description of the property duly approved by the Chief of the General Land Registration office (now Commission of Land Registration) or with a certified copy of the description taken from a prior certificate of title covering the same property. We compared the requirements of Section 12 to the allegations in Bienvenidos petition. Bienvenidos petition complied with items (a), (b), (f) and (g): in paragraph 5 of the petition, he alleged the loss of his copy of TCT No. T-16755; paragraph 6 declared that no co-owners copy of the duplicate title has been issued; paragraph 10 stated that the property covered by the lost TCT is free from liens and encumbrances; and paragraph 11 stated that there are no deeds or instruments presented for or pending registration with the Register of Deeds. There was substantial compliance as to item (c): the location of the property is mentioned in paragraph 2; while the boundaries of the property, although not specified in the petition, refer to an annex attached to the petition. The petition did not mention anything pertaining to item (d). There was a failure to fully comply with item (e). By Fernandos admission, there exist two other co-owners of the property covered by TCT No. T-16755. Fernandos siblings Emma and Elpidio were not mentioned anywhere in the petition. Section 13 of R.A. No. 26 prescribes the requirements for a notice of hearing of the petition: Sec. 13. The court shall cause a notice of the petition, filed under the preceding section, to be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the expense of the petitioner, to every person named therein whose address is known, at least thirty days prior to the date of the hearing. Said notice shall state, among other things, the number of the lost or destroyed certificate of title, if known, the name of the registered owner, the names of the occupants or persons in possession of the property, the owners of the adjoining properties and all other interested parties, the location area and boundaries of the property, and the date on which all persons having any interest therein must appear and file their claim or objections to the petition. The petitioner shall, at the hearing, submit proof of the publication, posting and service of the notice as directed by the court. The trial courts 4 October 2002 Order was indeed posted in the places mentioned in Section 13, and published twice in successive issues of the Official Gazette: Volume 99, Number 2 dated 13 January 2003 and Volume 99, Number 3 dated 20 January 2003. The last issue was released by the National Printing Office on 21 January 2003.27 The notice, however, did not state Felisa as a

registered co-owner. Neither did the notice identify Fernandos siblings Emma and Elpidio as interested parties.
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The non-compliance with the requirements prescribed in Sections 12 and 13 of R.A. No. 26 is fatal. Hence, the trial court did not acquire jurisdiction over the petition for reconstitution. We cannot stress enough that our jurisprudence is replete with rulings regarding the mandatory character of the requirements of R.A. No. 26. As early as 1982, we ruled: Republic Act No. 26 entitled "An act providing a special procedure for the reconstitution of Torrens Certificates of Title lost or destroyed" approved on September 25, 1946 confers jurisdiction or authority to the Court of First Instance to hear and decide petitions for judicial reconstitution. The Act specifically provides the special requirements and mode of procedure that must be followed before the court can properly act, assume and acquire jurisdiction or authority over the petition and grant the reconstitution prayed for. These requirements and procedure are mandatory. The Petition for Reconstitution must allege certain specific jurisdictional facts; the notice of hearing must be published in the Official Gazette and posted in particular places and the same sent or notified to specified persons. Sections 12 and 13 of the Act provide specifically the mandatory requirements and procedure to be followed.28 We cannot simply dismiss these defects as "technical." Liberal construction of the Rules of Court does not apply to land registration cases.29 Indeed, to further underscore the mandatory character of these jurisdictional requirements, the Rules of Court do not apply to land registration cases.30 In all cases where the authority of the courts to proceed is conferred by a statute, and when the manner of obtaining jurisdiction is prescribed by a statute, the mode of proceeding is mandatory, and must be strictly complied with, or the proceeding will be utterly void.31 When the trial court lacks jurisdiction to take cognizance of a case, it lacks authority over the whole case and all its aspects.32 All the proceedings before the trial court, including its order granting the petition for reconstitution, are void for lack of jurisdiction.33 WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23 October 2007 and the Resolution dated 7 May 2008 of the Court of Appeals in CA-G.R. CV No. 81916. SO ORDERED. G.R. No. 133110 March 28, 2007

BARSTOWE PHILIPPINES CORPORATION, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, Respondent. DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking the reversal and setting aside the Decision,2 dated 8 August 1997, and Resolution,3 dated 18 March 1998, of the Court of Appeals in CA-G.R. CV No. 47522, which in turn, reversed and set aside the Decision,4 dated 22 December 1992, of the Quezon City Regional Trial Court (RTC), Branch 80 in Civil Case No. Q-92-11806. Antecedent Facts

This case involves the conflicting titles to the same parcels of land (subject lots) of petitioner Barstowe Philippines Corporation (BPC) and the respondent Republic of the Philippines (Republic). The subject lots have a total area of 111,447 square meters, and are situated along the northeastern perimeter boundary of the National Government Center in Payatas, Quezon City. BPC traces its titles to the subject lots back to Servando Accibal (Servando) who was supposedly issued on 24 July 1974, at 3:20 p.m., Transfer Certificates of Title (TCTs) No. 200629 and 200630 over the subject lots. TCTs No. 200629 and 200630 were purportedly signed by Nestor N. Pena, Deputy Register of Deeds of Quezon City. On 10 June 1988, Servando executed a Deed of Absolute Sale of the subject lots to his son Antonio Accibal (Antonio), with the concurrence of his other heirs. Despite his prior sale of the subject lots to Antonio, Servando, by virtue of a Deed of Conveyance, dated 8 February 1989, transferred/conveyed the subject lots to BPC in exchange for subscription of 51% of the capital stock of BPC, such subscription supposedly amounting toP6,000,000.00.5 About a year after the death of Servando on 3 October 1989, particularly on 10 October 1990, Antonio executed another Deed of Conveyance of the subject lots in favor of BPC in exchange for subscription of 2,450 shares of its capital stock, with an alleged total value of P49,000,000.00.6 Due to the fire that gutted the Office of the Quezon City Register of Deeds on 11 June 1988 and destroyed many certificates of title kept therein, Antonio sought the administrative reconstitution of the original copies and owners duplicate copies of TCTs No. 200629 and 200630 with the Land Registration Authority (LRA). On 12 December 1990, the LRA issued TCTs No.RT-23687 and RT-23688 (reconstituting TCTs No. 200629 and 200630, respectively), which were transmitted to the Quezon City Register of Deeds and signed by Deputy Register of Deeds Edgardo Castro on 19 February 1991. Also on 19 February 1991, TCTs No. RT-23687 and RT-23688 were cancelled and in lieu thereof, TCTs No. 30829, 30830, 30831, and 30832 in the name of BPC were issued. BPC then acquired from the Housing and Land Use Regulatory Board (HLURB) a permit to develop the subject lots into a residential subdivision. Subsequently, BPC entered into Joint Venture Agreements with other corporations for the development of the subject lots into a subdivision called Parthenon Hills. Meanwhile, according to the Republic, prior to 14 November 1979, the subject lots were owned by First Philippine Holdings Corporation (FPHC). As evidence of its title to the subject lots, FPHC was issued TCT No. 257672, on an undetermined date, and TCT No. 275201, on 20 January 1981. Pursuant to a Deed of Sale, dated 14 November 1979, FPHC sold one of the subject lots, covered by TCT No. 257672, to the Republic for P2,757,360.00. Thus, on 22 January 1981, TCT No. 257672 was cancelled and TCT No. 275443 was issued in place thereof in the name of the Republic. FPHC executed another Deed of Sale on 25 March 1982 in which it sold the remainder of the subject lots, covered by TCT No. 275201, to the Republic for P9,575,920.00. On 31 May 1982, TCT No. 275201 was cancelled and was replaced by TCT No. 288417 issued in the name of the Republic. Because of the 11 June 1988 fire which razed the Quezon City Office of the Register of Deeds and destroyed the original copies of TCTs No. 275443 and 288417, the Republic applied for administrative reconstitution of the same with the LRA. It was then that the Republic came to know that another party had applied for reconstitution of TCTs No. 200629 and 200630 which also covered the subject lots. This prompted the Republic to file before the RTC on 26 March 1992 a petition for cancellation of title against Antonio, Servando, and BPC, docketed as Civil Case No. Q-92-11806. Civil Case No. Q-92-11806 Counsel for Antonio and the late Servando filed two successive Motions for extension of time to file the proper pleading, dated 17 June 1992 and 1 July 1992, but despite the grant thereof by the RTC,7 no such responsive pleading on behalf of Antonio and the late Servando was ever filed. Hence, on 31 July 1992, the RTC issued an Order8 declaring Antonio and the late Servando in default.

In another Order,9 also dated 31 July 1992, the RTC, upon the motion of BPC, allowed the latter to continue with the development of the subject lots. It concluded that Considering the plight of [BPC] and the possible irreparable damage that may be caused against the residents in the surrounding developed subdivision, even as said corporation is possessed of a good title, the court in the exercise of its discretion grants the motion. More importantly, consideration of equity demands that the titled owner [BPC] herein must be able to exercise all its dominical right bloosoming [sic] forth from its ownership of the land in suit. WHEREFORE, under cool reflection and prescinding from the foregoing, the motion is hereby granted. [BPC] is hereby permitted and allowed to continue with the improvement and development of the controverted property into a residential subdivision.10 On 12 October 1992, the Republic filed with the Quezon City Register of Deeds a Notice of Lis Pendensrequesting the recording of the pendency of Civil Case No. Q-92-11806 on TCTs No. 30830, 30831, and 30832, all in the name of BPC. While Civil Case No. Q-92-11806 was still pending before the RTC, there were two intervenors. Gloria Accibal Rettoriano (Gloria) filed with the RTC a Motion for Intervention, with a Complaint in Intervention, both dated 1 September 1992. Gloria alleged that she was the only child of Basilia Accibal, Servandos sister; the subject lots were inherited by Basilia, Servando, and their other siblings from their parents Martin and Mauricia Accibal; upon her mothers death, Gloria inherited and came into possession of a portion of the subject lots with an area of about 2.5 hectares; Gloria had been possessing, cultivating and improving her portion of the subject lots for the last 30 years; Servando, through fraudulent means, was able to secure TCTs over all the subject lots, including Glorias portion therein; the inclusion of Glorias portion in the TCTs of Servando and, later, in those of BPC, was done through fraud and gross bad faith; and unless the TCTs of Servando and BPC are declared null and void, Gloria will be deprived of her property without due process and just compensation. BPC opposed Glorias intervention in Civil Case No. Q-92-11806 considering that she had already instituted Civil Case No. Q-91-10933 before the RTC, Quezon City, Branch 76, seeking the annulment of TCTs No. 30830, 30831, and 30832 of BPC based on the very same grounds she raised in her present Complaint in Intervention; on 11 February 1992, Gloria entered into a Compromise Agreement with BPC in which she waived and renounced any and all claims whatsoever which she may have over the titles of BPC in consideration of the payment by the latter ofP2,000,000.00; the RTC, Branch 76, after finding that the said Compromise Agreement was not contrary to law, morals, good customs, public order or public policy, approved the same, thus putting an end to Civil Case No. Q-91-10933;11 Glorias cause of action to intervene in Civil Case No. Q-9211806 was already barred by prior judgment in Civil Case No. Q-91-10933 and Glorias Complaint in Intervention is tantamount to a collateral attack against a TCT. In rejecting Glorias intervention in Civil Case No. Q-92-11806, the RTC found as follows The motion for intervention must be denied and the complaint in intervention therein attached must be rejected. For one thing, herein movant Gloria Accibal Rettoriano, was the plaintiff in the first case (RTC Br. 76 No. Q-91-10933) and with "eyes wide open" she entered into a compromise agreement with [BPC], which was the basis of the 26 February 1992 decision rendered therein and it being based on a compromise agreement, said decision became immediately final and executory. Whether or not the decision rendered in the first case was satisfied is of no moment in the present case, as herein movant intervenor has all the remedies to protect her rights therein.

For another, movant intervenor Gloria Accibal Rettoriano, from her complaint in intervention would ask for the cancellation of the titles issued to their [sic] relative Servando Accibal and those titles duly issued and registered in the name of [BPC]. Certainly, this can not be done, as it constitutes a collateral attack on the questioned titles which the law and settled jurisprudence do not allow. Perforce, a separate action against the questioned titles is the remedy available for intervenor Gloria A. Retoriano [sic]. Accordingly, the Court finds the opposition of [BPC] to be impressed with merit and the motion for intervention does not inspire confidence. WHEREFORE, the subject motion for intervention is denied and the complaint in intervention attached thereto must be rejected.12 Another intervenor in Civil Case No. Q-92-11806 was EL-VI Realty and Development Corporation (ERDC) which filed with the RTC a Motion for Leave to Intervene, dated 1 September 1992. Subsequently, it filed an Answer in Intervention, dated 15 September 1992, in which, it alleged that it acquired interest in the subject lots after having entered into a Joint Venture Agreement dated 16 January 1992, with BPC, for the development of the subject lots into a residential subdivision; the action initiated by the Republic for the cancellation of the TCTs of BPC was already barred by laches and estoppel because of the recognition accorded upon the said TCTs by the instrumentalities of the Republic, particularly the Register of Deeds and the HLURB, on which the ERDC relied in all good faith when it entered into the Joint Venture Agreement with BPC; the Republic is liable to ERDC for moral damages and attorneys fees; should the RTC find the TCTs of BPC infirm, rendering the Joint Venture Agreement between ERDC and BPC of no force and effect, then BPC should be held liable to ERDC, being an innocent third party, for reimbursement of all expenses incurred by the latter in the development of the subject lots; and should the RTC find that the TCTs of BPC are spurious, then it should be declared in bad faith when it entered into the Joint Venture Agreement with ERDC, for which it should be liable for exemplary damages and attorneys fees. In an Order,13 dated 27 October 1992, the RTC granted ERDCs Motion to Intervene and admitted its Answer in Intervention. After all the parties had submitted their respective Pre-Trial Briefs,14 and upon motion by the BPC,15 the RTC decided the case on 22 December 1992 on summary judgment.16 Although it found both the Republic and the BPC as buyers in good faith, it held that the titles of BPC should prevail. It ratiocinated thus 3. To the third issue, we rule that the title of [BPC] must prevail over that of the [Republic]. There is no dispute that the titles of the First Philippine Holdings Corporation, predecessor-in-interest of [Republic] were either issued in the year 1979 and 1981 (Exh. "A" and "B"). On the other hand, there is likewise no dispute that the titles of defaulted defendant Servando Accibal, and predecessorin-interest of [BPC], were both issued and registered much earlier on July 24, 1974 (Exhs. "F" and "G", pp. 210-213, record) and/or a difference of 5 or 6 years in point of time. MORE, Servando Accibal, the predecessor-in-interest of [BPC] has been in the actual and peaceful physical possession of the lots in suit before he sold them to [BPC] on February 08, 1991. Upon registration of the same on February 19, 1991, [BPC], after having subdivided the land into four (4) smaller lots was issued on 19 February TCT Nos. 30829, 30830, 30831, and 30832 (Exhs. 1, 2, 3 and 4). It is true [Republic] acquired the land in suit on November 14, 1979 and for which TCT Nos. 275443 and 288417 were issued in the years 1979 and 1981, but [Republic] never took assertive steps to take actual possession of the land sold to it by the First Philippine Holdings Corporation. It is even of

grave doubt that the latter took actual possession of the land before the land in suit was sold to the [Republic]. So much so, that the area had been occupied by several squatters, one of them is Servando Accibal who by the way, was able to have the land in suit titled in his name as early as July 24, 1974, under TCT Nos. 200629 and 200630 of the land records of Quezon City. Further, [Republic] and its predecessor-in-interest were not able to discover the overlapping of their titles by the titles of Servando Accibal for a period of eighteen (18) long years starting from July 24, 1974 to about June 10, 1992 when the LRA during a reconstitution of the titles of [Republic] was initiated, as evidenced by a report of reconstituting officer Benjamin A. Flestado of that office (Exh. "H", pp. 214258, record). Simply stated, [Republic] may be guilty of LACHES. xxxx Perforce, the claim of [Republic] which was probably originally VALID became a STALE claim as the years went by. Verily, the titles of [Republic] must be cancelled and the titles of [BPC] must be upheld and declared as good and valid titles and [BPC] is entitled to all the rights bloosoming [sic] fourth from its dominical right of ownership. More importantly, the predecessor-in-interest of [BPC] had been long in the actual and physical possession of the lands in suit, while that of the predecessor-in-interest of [Republic] was not in the actual possession of the land before the sale to [Republic]. On the other hand, [BPC] immediately after the sale in its favor took actual, physical and peaceful possession of the land in suit to the exclusion of all others. It has no knowledge, actual or constructive that said parcels of land were sold to the [Republic]. When it registered the sale, there was no inscription in the Land Registry that the same parcels of land were earlier sold to the [Republic]. Hence, there was and is a continuing good faith on the part of [BPC]. (Article 1544, NCC; Cruz vs Cabana, 129 SCRA 656). In the same Decision, the RTC found certain irregularities in TCTs No. 200629 and 200630 in the name of Servando and that the said TCTs should be cancelled, without prejudice to the rights and interests of BPC. The RTC discussed the matter in this wise We shall now dwell on the validity of the titles TCT Nos. 200629 and 200630, issued in the name of Servando Accibal on July 24, 1974 by the Register of Deeds of Quezon City. The LRA report dated 10 June 1992 (Exh. H, pp. 214-258, record) is competent proof that indeed said titles must be cancelled. In short, the LRA found after due investigation that the said titles of Servando Accibal were issued with certain irregularities. It recommended the cancellation therefore, of TCT Nos. 200629 and 200630, to which the court concurs, as said report must be accorded due respect and in the absence of fraud or irregularities that attended the investigation, which the Court finds none, the same must be persuasive, if not conclusive. Moreover, herein defendant Servando Accibal because of his failure to answer, despite extension of time given him, failed to file his answer. Upon motion of [Republics] counsel, he was declared as in default and since then, he never asked the court to lift and set aside the default order. There is no way, his title must be cancelled. For one thing, he was not able to present evidence to controvert the recommendation of LRA to cancel his titles. For another, Servando Accibal is deemed to have impliedly admitted the irregularities that attended the issuance of his aforestated titles. However, the cancellation of the titles of Servando Accibal, would not affect the rights and interests of [BPC] as the latter is declared to be a purchaser in good faith and for value. MORE, under the circumstances of the case, and even when the titles of Servando Accibal are cancelled, the titles of [BPC] are still good and indefeasible titles, as it is settled rule that good titles may be sustained even when the seller has spurious titles.

As for the intervention of ERDC, the RTC addressed the same as follows Finally, we shall next discuss the claim of intervenor EL-VI Realty and Development Corporation. A close reading from the Joint Venture Agreement dated January 16, 1992, shows that in case of litigation, intervenor Realty Corporation shall have the right to suspend all development activities and the development period of 5 years shall automatically be suspended until such time as the said case is finally settled/decided (Exh. "5" and Annex "A" answer in intervention pp. 109-114). Upon the signing of the said agreement the amount of P1,500,000.00 was received by [BPC] as advance payment of the 50-50 sharing basis in the sales proceeds. During the pre-trial conference, herein intervenor tried to enforce a supplemental agreement dated October 15, 1992, by filing a motion for a writ of preliminary injunction with prayer for the issuance of a restraining order. Resolution of the same was held in abeyance to await the decision to be rendered, after [BPC] assured intervenor herein that it will abide by and strictly comply with its commitments arising from the aforesaid agreement, after proper accounting is made therefore. Herein intervenor admits that another financier-developer has entered the area due to the delay of the project caused by the filing of the present case. MORE, due to the filing of the present case, herein intervenor was reluctant to further finance the project because of its big exposure already made. Hence, intervenors works and other activities in the area was suspended in accordance with their Joint Venture Agreement. Perforce, there is compelling necessity for a proper accounting, more particularly its substantial exposure to the project, on a quantum meruit basis, in fairness to all concerned and involved parties in the project, including but not limited to the present contractor-developer of the area. Finally, the RTC concluded that A FORTIORARI, the environmental setting and factual scenario of the case, in relation to its legal ambience will show that the great preponderance of evidence lies in favor of [BPC]. (Section 01, Rule 133, Revised Rules of Court), and the motion for summary judgment is granted. The hearing as to damages, including attorneys fees shall be scheduled soonest possible. WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered as follows: 1. Ordering the Register of Deeds of Quezon City to cancel Transfer Certificates of Title No. 275443 and 288417 issued in the name of the [Republic] covering the lots in suit. However, [Republic] being a purchaser in good faith, and based on considerations of equity and justice Barstowe Philippine[s] Corporation is ordered to re-imburse and pay [Republic], the sum of P12,333,280.00 representing the purchase price from the vendor, First Philippine Holdings Corporation soonest possible; 2. Ordering the Register of Deeds of Quezon City to officially and finally cancel from his records, Transfer Certificates of Title Nos. 200629 and 200630 issued in the name of Servando Accibal, on July 24, 1974, covering the same lots in suit (Exh. "F" and "G", pp. 210-213, record). 3. Declaring herein defendant Barstowe Philippines Corporation as the absolute owner in fee simple title over the lots in suit, as evidenced by Transfer Certificates of Title Nos. 30829, 30830, 30831 and 30832 of the land records of Quezon City, all issued on February 19, 1991 and the said titles are further more declared valid, existing and indefeasible titles of [BPC]

and as such is entitled to all the dominical rights bloosoming [sic] forth from its ownership over the lots in suit. 4. Ordering [BPC] to abide by and strictly comply with the terms and conditions of the supplemental Agreement entered into by it with herein intervenor EL-VI Realty and Development Corporation dated October 15, 1992, after proper accounting is made; 5. Perforce, the Register of Deeds of Quezon City is likewise ordered to cancel any and all encumbrances annotated on said titles of defendant corporation including, but not limited to the lis pendens notice filed by the [Republic], if any; 6. The hearing as to damages, including the claim for attorneys fees shall be scheduled soonest. 7. Considering the admissions and agreements of the parties during the pre-trial conference, which are considered judicial admissions, this decision acquires the nature of one based on a compromise agreement. Perforce, the Court declares this decision to be immediately final and executory. 8. No pronouncement as to costs. Despite the promulgation of the foregoing Decision by the RTC on 22 December 1992, the proceedings in Q-92-11806 were still far from over; significant developments still took place thereafter. ERDC sought the execution of paragraph 4 of the dispositive portion of the RTC Decision dated 22 December 1992. In an Order,17 dated 13 January 1993, the RTC issued a writ of execution in favor of ERDC, and a notice of levy on execution was accordingly made on the subject lots. In a dialogue held between the counsels for BPC and ERDC in the chamber of the RTC Judge on 26 February 1993, an amicable settlement was reached whereby BPC agreed to settle the claim of ERDC in the form of developed subdivision lots in Parthenon Hills, subject to proper accounting.18 BPC offered to ERDC 40 developed subdivision lots in Parthenon Hills, valued at P18,543,000.00, representing 65% of the total claims (prior to proper accounting) of ERDC, which amounted to P28,787,306.32. However, ERDC refused the offer of BPC and demanded that it be paid the total amount of its claims. It also brought to the attention of the RTC that, in violation of their Joint Venture Agreement, BPC contracted another realty developer for the development of Parthenon Hills. Thus, ERDC opposed the lifting of the notice of levy on execution on the subject lots for the protection of its interests. In an Order,19 dated 17 March 1993, the RTC found that BPC already substantially complied with the terms of its agreement with ERDC and that the rights and interests of the latter were well-protected and safeguarded. In the same Order, the RTC lifted and set aside the notice of levy on execution on the subject lots. However, on 20 April 1993, ERDC filed a Motion for Contempt20against BPC and informed the RTC that BPC, fraudulently, maliciously, and in bad faith, already sold 36 of the 40 subdivision lots it earlier offered to ERDC by accepting downpayments thereon of only 30% of the selling price. Upon further investigation, it discovered that of the four remaining lots, two were vacant while the other two were reserved. ERDC subsequently filed two other motions: (1) A Motion,21 dated 29 April 1993, to set for trial the claim of ERDC for damages. Said motion was granted, and the RTC set the hearing on 16 September 1993, at 8:30 a.m.,22 but upon the motion of the counsel for BPC, the hearing was reset to 7 October 1993;23 and (2) A Motion,24 dated 6 September 1993, for the issuance of a partial writ of execution for the undisputed amount ofP18,543,000.00, representing 65% of the total claims of ERDC. Unfortunately, the records no longer show the succeeding incidents concerning these motions.

In a Motion for Leave to Intervene25 dated 8 March 1993, and the attached Complaint in Intervention,26 dated 10 March 1993, Kadakilaan Estate expressed its intent to intervene in Civil Case No. Q-92-11806. It anchored its claims on the contention that the subject lots were already registered as private property under the Spanish Mortgage Law since 18 May 1891, and under the Torrens System of Registration since 31 August 1907, by the predecessors-in-interest of Kadakilaan Estate. The subject lots were supposedly included in a vast track of land covered by Titulo de la Propiedad de Terrenos No. 01-4 in the name of Doa Petra Rodriguez, who transferred the same to her son, Don Gonzalo Yanesa y Rodriguez. Kadakilaan Estate came into ownership and possession of the vast track of land, including the subject lots, by virtue of its successive sales from Don Gonzalo Yanesa yRodriguez to Doa Lourdez Rodriguez Yanesa, and from the latter to Kadakilaan Estate. Kadakilaan Estate further alleged that the Original Certificate of Title (OCT) No. 333, from which the TCTs of both BPC and the Republic were ultimately derived, was null and void ab initio, and that the TCTs of BPC and the Republic were spurious and likewise null and void ab initio, and without any probative value. Kadakilaan Estate prayed for judgment declaring it the owner of the subject lots; directing the other parties to respect its ownership, possession, rights and interests over the subject lots; and ordering the other parties to pay just compensation, damages, and attorneys fees. The RTC, in an Order27 dated 27 April 1993, denied the Motion for Leave to Intervene and rejected the Complaint in Intervention of Kadakilaan Estate for the following reasons New intervenor Kadakilaan Estate alleges that the titles of the [Republic] and [Antonio, Servando, and BPC] are all falsified, spurious in origin and null and void ab initio, as the property in question were already registered as private properties of [Kadakilaan Estates] predecessors-in-interest, under Spanish Mortgage law since May 18, 1891, and under the Torrens System, Act No. 496, as amended, in Titulo dela propriedad de Terrenos No. 01-4. If this is clearly so, then [Kadakilaan Estate] is attacking the validity of the titles of [Republic] and [Antonio, Servando, and BPC] in this case. It is settled rule that titles registered under the Torrens System cannot be the subject of a collateral attack. Perforce, the remedy of [Kadakilaan Estate] is to file a separate action. For, if the intervention is allowed at this late stage of the proceedings, then it will cause unnecessary delay in the soonest termination of this case. MORE, the law and the rules as well as jurisprudence on the matter, will only allow in the courts discretion, intervention, before or during the trial. Certainly NOT after the trial and with more reason intervention may no longer be allowed after the decision has been rendered as in the present case. In the meantime, on 4 January 1993, the Republic filed a Notice of Appeal28 of the RTC Decision, dated 22 December 1992. The RTC, in an Order,29 dated 16 February 1993, denied the same. It reasoned that Considering these judicial dimensions and acquiescence of the [Republic] in open court during the hearings held and during the pre-trial conference, the court in its dispositive portion of the questioned decision, declared it to be a judgment based on a compromise agreement which by operation of law becomes immediately executory. It is unfortunate that despite the above declarations of the court [Republic] failed to ask for a clarification of the said declarations, by way of a motion for reconsideration of the decision based on fraud, mistake or duress mandated by the rules. The notice of appeal must be denied due course. xxxx

WHEREFORE, prescinding from the foregoing, the notice of appeal filed by plaintiff is rejected and denied due course. From the foregoing RTC Order, the Republic filed with the Court of Appeals a Petition for Certiorari and Mandamus (with Urgent Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction), docketed as CA-G.R. SP No. 30647. The Republic primarily questioned the denial of its Notice of Appeal by the RTC in its Order, dated 16 February 1993, on the basis that the RTC Decision of 22 December 1992 constitutes a compromise agreement, and is immediately final and executory. The Court of Appeals issued a writ of preliminary injunction30 enjoining the RTC from implementing and enforcing its Order, dated 16 February 1993, during the pendency of CA-G.R. SP No. 30647 or until otherwise directed by the appellate court. Apparently, from the denial by the RTC of its Motion for Leave to Intervene and the rejection of its Complaint in Intervention in Civil Case No. Q-92-11806, the Kadakilaan Estate again filed a Motion for Leave to Intervene in CA-G.R. SP No. 30647, which in a Resolution,31 dated 13 September 1993, the Court of Appeals also denied on the following grounds We find the stance of [Republic] and [BPC] well-grounded. Not only is [Kadakilaan Estate] precluded by estoppel from filing the present motion, after failing to challenge before this Court or the Supreme Court the trial courts denial of subject motion for intervention, on April 27, 1993; it is too late for [Kadakilaan Estate] to come in at this stage of the present litigation. Furthermore, as aptly put by the [Republic] the alleged rights [Kadakilaan Estate] seeks to protect here can be amply protected in an appropriate action [Kadakilaan Estate] may later bring. In a Decision,32 dated 29 June 1994, the Court of Appeals granted the Republics Petition for Certiorari and Mandamus, ruling in this wise We rule for [Republic]. Respondent Courts conclusion lost sight of the nature of a compromise agreement, and the circumstances under which a judgment based on a compromise may be rendered. xxxx Guided by the aforecited law and jurisprudence in point, it can be safely concluded that neither mere silence or acquiescence by the [Republic] in open court during the hearing nor [Republics] stipulation of facts, marking of exhibits, alleged admission of Exhibit 6 which contains [BPCs] offer of compromise during the pre-trial, be properly considered as a compromise agreement. Had the parties really intended to enter into a compromise to end their case, they could have executed and submitted a compromise agreement for the approval of the trial court. But no such step was taken. xxxx Records readily show that due to lack of an amicable settlement or any compromise agreement, the respondent judge directed the parties to present their documentary exhibits so as to facilitate the trial; no longer for the purpose of settling the case. Evidently, there was no explicit agreement nor any reciprocal concession between the parties with an end in view of terminating the litigation. Absence of these essential elements of a compromise inevitably results in the absence of a valid compromise agreement. (Merced vs. Roman Catholic Archbishop, L-24614, August 17, 1967, 20 SCRA 1077). Consequently, the opinion of respondent Judge that his December 22, 1992 Decision had the nature of a judgment based on compromise, cannot be upheld.

So also, the doctrine relied on by respondents that a compromise agreement constitutes the law between the parties and a judgment based thereon is immediately final, executory and not appealable, is inapplicable under the premises. xxxx WHEREFORE, the petition is GRANTED; the questioned order dated 16 February 1993 is SET ASIDE; and respondent court is hereby ordered to give due course to [Republics] Notice of Appeal in Civil Case No. Q-92-11806. Costs against [BPC]. This Court, in its Resolution, dated 6 February 1995, issued in G.R. No. 117969, in effect, sustained the afore-mentioned Decision of the Court of Appeals. CA-G.R. CV No. 47522 Finally, the Republic was allowed to appeal the RTC Decision, dated 22 December 1992, in Civil Case No. Q-92-11806, to the Court of Appeals, where it was docketed as CA-G.R. CV No. 47522. In a Decision,33 dated 8 August 1997, the Court of Appeals found in favor of the Republic, and disposed thus WHEREFORE, premises considered, plaintiff-appellant Republic of the Philippines appeal is GRANTED. Except for paragraph 2 of the dispositive portion of the decision appealed from declaring TCT Nos. 200629 and 200630 in the name of Servando Accibal null and void and ordering the Register of Deeds of Quezon City to cancel said TCT Nos. 200629 and 200630, the appealed decision is REVERSED and SET ASIDE and a new one entered: (a) declaring and affirming the validity of TCT Nos. 288417 and 275443 of the Registry of Deeds of Quezon City in the name of appellant Republic of the Philippines and that appellant Republic has indefeasible title to the property covered thereby; (b) declaring TCT Nos. 30829, 30830, 30831 and 30832 also of the Registry of Deeds of Quezon City in the name of Barstowe Philippines Corporation null and void and ordering the Register of Deeds of Quezon City to cancel said titles; (c) ordering Barstowe Philippines Corporation to surrender to the Register of Deeds of Quezon City the owners duplicate certificates of title of TCT Nos. 30829, 30830, 30831 and 30832 for cancellation; (d) enjoining defendant-appellee Barstowe Philippines Corporation and intervenor EL-VI Realty Development Corporation from exercising any act of ownership or possession of the land in question; and (e) remanding the case to the court of origin for further proceedings for determination of the crossclaim of intervenor EL-VI Realty and Development Corporation against defendantappellee Barstowe Philippines Corporation. There is no pronouncement as to costs. The Motion for Reconsideration filed by BPC was denied by the Court of Appeals in a Resolution,34 dated 18 March 1998.

G.R. No. 133110 Aggrieved, BPC came before this Court via a Petition for Review on Certiorari35 under Rule 45 of the Rules of Court, dated 28 April 1998, raising the sole issue of who between BPC and the Republic has a better title over the subject lots. BPC prays that this Court rule in its favor, and reverse and set aside the Court of Appeals Decision, dated 8 August 1997, in CA-G.R. CV No. 47522, based on the following grounds THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN NOT CONSIDERING THE GOOD FAITH OF [BPC] THOUGH IT WAS ADMITTED BY [REPUBLIC] DURING THE PRETRIAL CONFERENCE. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING THE VALIDITY OF THE TITLE OF [REPUBLIC] OVER THAT OF [BPC.] THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN ORDERING [BPC] TO SURRENDER ITS TITLE TO THE REGISTER OF DEEDS FOR CANCELLATION[.] THE HONORABLE COURT OF APPEALS ERRED IN ENJOINING [BPC] FROM EXERCISING ACTS OF OWNERSHIP OVER THE SUBJECT PARCEL OF LAND[.] THE HONORABLE COURT OF APPEALES [sic] ERRED IN APPLYING THE CALALANG CASE (231 SCRA 88) AS IT IS NOT APPLICABLE TO THE CASE AT BAR[.] THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING [REPUBLIC] GUILTY OF ESTOPPEL BY LACHES[.] After the Republic filed its Comment, dated 29 October 1998, several parties again sought to intervene in the case. Winnie U. Nicolas (Nicolas), through her sister and attorney-in-fact, Ditas Felicitas Nicolas-Agbulos (Nicolas-Agbulos), and Edgardo Q. Abesamis (Abesamis), filed their respective Petitions for Intervention, dated 22 October 1998 and 9 December 1998, respectively. Nicolas-Agbulos invokes the provisions of the Rules of Court on the joinder of indispensable parties and necessary parties for the complete determination of all possible issues, not only between the parties themselves but also as regards to other persons who may be affected by the judgment. Nicolas-Agbulos contends that she was a buyer in good faith of Lots No. 27 and 28, Block 13, of Parthenon Hills, covered by TCTs No. 76497 and 76498, respectively, of the Quezon City Register of Deeds, derived from TCTs No. 30830, 30831, and 30832 in the name of BPC. Nicolas-Agbulos had already partially paid BPC for Lots No. 27 and 28 in the amount ofP1,500,000.00, and the balance of P800,000.00 was already deposited in a trust account in the name of BPC with the Far East Bank and Trust Company (FEBTC). She bought Lots No. 27 and 28 after relying on the face of the TCTs of BPC which were intact and subsisting in the records of the Quezon City Register of Deeds, and on the authority granted to BPC by several government agencies, such as the HLURB, LRA, and the Register of Deeds, for the subdivision, development, and sale of the subject lots to private individuals. She only came to know, through her sister and attorney-in-fact, Nicolas-Agbulos, that the TCTs of BPC covering the subject lots, which comprised the Parthenon Hills, were being assailed in Civil Case No. Q-92-11806 pending before the RTC. Nicolas inquiry on the matter was answered by BPC with an assurance that despite the "bad publicity," Parthenon Hills was an ongoing project and that she should continue paying her installments. Acting cautiously, NicolasAgbulos decided that instead of paying the balance of the purchase price for Lots No. 27 and 28

directly to BPC, she would open a trust account with FEBTC in the name of BPC where she would deposit Nicolas-Agbulos succeeding installment payments. Nicolas-Agbulos was compelled to intervene in the instant case because BPC made no mention of the fact that it had already sold numerous subdivision lots in Parthenon Hills to innocent purchasers for value, either through absolute or installment sales. She thus sought a ruling upholding the title of BPC, and recognizing and protecting the rights of Nicolas as an innocent purchaser for value of Lots No. 27 and 28.36 Abesamis seeks to intervene in the present case as an indispensable party since no complete and conclusive determination can be had therein, which shall be legally binding and effective on Abesamis, unless he be allowed to intervene. Abesamis claims to have acquired by purchase Lot No. 16, Block 4, of Parthenon Hills, for the purchase price of P720,000.00, and evidenced by a Deed of Absolute Sale dated 9 June 1993. BPC processed and secured TCT No. 92270 covering Lot No. 16 in Abesamis name. He only learned that the subject lots comprising the Parthenon Hills, including his Lot No. 16, was mired in controversy, when he attended an emergency meeting of the Homeowners Association of Parthenon Hills. He asserts that, being a bona fidepurchaser and holder of a legitimate and indefeasible title to Lot No. 16, he had valid and enforceable rights against both BPC and the Republic.37 A third Petition in Intervention, dated 8 February 1999, was filed by spouses Jacinto H. Santiago, Jr. and Arlene C. Santiago (spouses Santiago). The spouses Santiago aver that, doing business as ACS Trading, they entered into a supply agreement with Proven International Development Corporation (PIDC), which had a construction contract with BPC, for the development of Parthenon Hills. The spouses Santiago agreed to accept lots in Parthenon Hills as payment for the construction materials they supplied BPC since the latter showed them clean TCTs to the subject lots, and HLURB licenses and permits to develop Parthenon Hills. In payment for the construction materials delivered, and financial assistance and various other professional services rendered by the spouses Santiago to BPC, the latter initially executed in their favor 15 Deeds of Assignment for 15 subdivision lots in Parthenon Hills. The TCTs for the 15 subdivision lots were transferred in the name of the spouses Santiago free from any lien or encumbrance. The spouses Santiago mortgaged 13 of the subdivision lots with the Planters Development Bank and sold the remaining two to different buyers. Thereafter, BPC again executed in favor of the spouses Santigao 71 Deeds of Assignment over 71 subdivision lots in Parthenon Hills. When the spouses Santiago attempted to transfer the TCTs covering the 71 subdivision lots to their names, they discovered that the TCTs of BPC already bore the annotation of the notice of lis pendens. The Quezon City Register of Deeds cancelled the TCTs of BPC covering the 71 subdivision lots and issued new ones in the names of the spouses Santiago, still bearing the annotation of the notice of lis pendens. The spouses Santiago claim that they were unable to intervene earlier in this case because of the pendency of the case filed by BPC against them, docketed as Civil Case No. 93-18231, with the Quezon City RTC, Branch 84, for the annulment of the last 71 Deeds of Assignment. This case had since been dismissed. The spouses Santiago invoke that they have sufficient interest in the present case which would necessarily be affected by the resolution/decision thereof, and they must necessarily intervene herein to protect their interest. The spouses Santiago pray for this Court to declare the assignment to them by BPC of the subdivision lots as valid, and to direct both BPC and the Republic to recognize and respect their rights and interest.38 BPC supports the intervention in the case by Nicolas-Agbulos and Abesamis. It explains that its failure to mention that it has already practically sold all the subdivision lots in Parthenon Hills was not by design, but by mere oversight.39 However, BPC opposes the intervention of the spouses Santiago claiming that the latter are not indispensable parties to the case; they acquired their TCTs through fraudulent means; and Civil Case No. 93-18231 which it instituted against the spouses Santiago was dismissed by the Quezon City RTC, Branch 84, without prejudice. According to BPC, the supply agreement for construction materials was between the spouses Santiago and PIDC, so that it could not be enforced against BPC. This issue, as well as the validity of the 71 Deeds of Assignment over

71 subdivision lots supposedly executed by BPC in favor of the spouses Santiago, requires the holding of a trial, not a mere intervention.40 The Republic opposed all efforts of other parties to intervene in the case. The legal interests of Nicolas-Agbulos, Abesamis, and the spouses Santiago are totally dependent on the alleged right of ownership of BPC, and the issues they raised are similar to those raised by BPC. The fact that Nicolas-Agbulos and Abesamis are purchasers in good faith will not render their titles valid and indefeasible. The titles of Servando from whom BPC acquired its titles and from whom, in turn, Nicolas-Agbulos and Abesamis, derived their titles, were found to be spurious; and the spring cannot rise higher than its source.41 In the interim, BPC filed its Reply dated 22 January 1999, to the Comment of the Republic. This Court, in a Resolution, dated 22 March 1999, granted the motion of the Republic for the issuance of a temporary restraining order enjoining BPC from selling the remaining unsold portions of the subject lots and from allowing buyers to enter and occupy portions thereof.42 Thereafter, BPC,43 the Republic,44 spouses Santiago,45 Abesamis,46 and Nicolas-Agbulos,47 filed their respective Memoranda. However, even before the case could be submitted for decision, Servandos heirs, namely Virgilio V. Accibal (Virgilio), Virginia A. Macabudbod (Virginia), and Antonio, filed an Urgent Ex Parte Motion to Defer Resolution of the same. Soon after, they filed a Petition for New Trial, dated 23 May 2001.48 Although Servandos heirs concede that the period allowed for the filing of a motion to set aside the judgment and grant a new trial under Rule 37, Section 1 of the Rules of Court, had already lapsed, on grounds of justice and equity, they still move that this Court grant their Petition. Servandos heirs were allegedly prevented from participating in Civil Case No. Q-92-11806 before the RTC by the fraudulent misrepresentations of Rev. Father Antonio O. Ipo (Ipo), BPC President, together with the BPC counsel, who convinced the nave Antonio that there was no need to worry about the case filed by the Republic against them and to hire another counsel as the BPC counsel shall represent all of them. Unknown to Servandos heirs, the BPC counsel neither represented them nor included them in the Answer he filed on behalf of BPC, thus, Servandos heirs were declared in default by the RTC. Because of the extrinsic fraud perpetrated upon them and their excusable negligence, Servandos heirs should be granted a new trial, otherwise, they would be deprived of their constitutional right to due process of law. According to Servandos heirs, neither BPC nor the Republic was a purchaser in good faith who acquired clean titles to the subject lots. The BPC President Ipo, hoodwinked Antonio into agreeing to convey the subject lots to BPC in exchange for 51% of its capital stock. However, despite acquiring titles to the subject lots, BPC failed to transfer the promised 51% of its capital stock. On the other hand, the TCTs of FPHC, the Republics predecessor-in-interest, were of doubtful origin; and the Republics acquisition of the subject lots from FPHC was anomalous in the sense that it purchased the said property through ordinary sale when it could have easily expropriated the same. Without formally intervening in the case at bar, Sariling Sikap Pabahay (SSP), through its President, Elias V. Esraita, submitted to this Court a letter,49 dated 26 August 2002, together with other documents to disprove the validity of the titles of Servando and his heirs to the subject lots. SSP is a cooperative formed by the urban poor to help secure for its members award from the government of titles to the portions of the subject lots which they are presently occupying. It presented the affidavit of a certain Edith C. Mantaring,50 who attests that the Accibals are still misrepresenting themselves as owners of the subject lots and fraudulently selling portions thereof to unsuspecting buyers. This Courts Ruling

Ultimately, this Court is called upon to determine which party now has superior title to the subject lots: the Republic, BPC, the intervenors Abesamis, Nicolas-Agbulos, and spouses Santiago, or Servandos heirs? BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses Santiago, and Servandos heirs derived their title to the subject lots from Servandos TCTs No. 200629 and 200630. This Court then is compelled to look into the validity, authenticity, and existence of these two TCTs. It is alleged by BPC and Servandos heirs that Servando was issued TCTs No. 200629 and 200630 on 24 July 1974. However, there is an absolute dearth of information and proof as to how Servando acquired ownership and came into possession of the subject lots. An investigation conducted by the LRA revealed even more irregularities which raised serious doubts as to the validity and authenticity of TCTs No. 200629 and 200630. The LRA Report, dated 10 June 1992, submitted by Investigator Benjamin A. Flestado (Flestado), found the said certificates of titles spurious after a very detailed and exhaustive analysis of the evidence available. First, it should be noted that despite letters sent by Investigator Flestado to BPC President Ipo, Servando, and Antonio, requesting copies of documents to support the issuance of TCTs No. 200629 and 200630, they failed to file a reply and furnish him with the documents requested. A certain Atty. Justino Z. Benito (Atty. Benito) appeared before Investigator Flestado claiming to be the counsel for BPC and promising to contact Servandos heirs. Yet, even by the time the LRA Report was finalized on 10 June 1992, Atty. Benito still failed to submit the documents requested. Instead, he wrote letters insisting that TCTs No. 200629 and 200630 be returned to the Quezon City Register of Deeds since these certificates "were detached and transferred to [your LRA central] office for no cogent reason or purpose;" and his client, BPC, "is a transferee in good faith and for value, and its titles unchallenged." Second, although the 109-D forms on which TCTs No. 200629 and 200630 were printed appeared to be genuine, and determined to have been issued to the Quezon City Register of Deeds on 5 July 1974, the signature therein of the Quezon City Register of Deeds Atty. Nestor N. Pea (Atty. Pea) was forged. No less than Atty. Pea himself refuted that the signatures on TCTs No. 200629 and 200630 were his. In his sworn statement, he noted A. At a glance, I am definitely sure that the signatures appearing here are not mine. My attention is invited on the loop, on the starting point of the signature. The loop should be sharp on the last portion of my signature. The portion going-up starts from a point and is also sharp because that represents hypen [sic] on letter n. I notice in these titles my surname is typed as PENA and not PEA. If ever there is no in the typewriter, I used to add hypen [sic] over the letter n. Besides, my position here is indicated as Deputy Register of Deeds. I never signed titles as Deputy Register of Deeds, during my time; and if ever a title was presented indicating my position as Deputy Register of Deeds, I would erase the word Deputy. Moreso, the pen used here was a sign-pen. I never used a signpen, as shown in the other 5 titles I identified earlier. His employment records revealed that Atty. Pea was appointed as the Quezon City Register of Deeds on 27 May 1968, and served as such until his retirement in August of 1980, so that at the time when he supposedly signed TCTs No. 200629 and 200630 on 24 July 1974, he was the Quezon City Register of Deeds, not the Deputy Register of Deeds. Third, even the then incumbent Quezon City Register of Deeds Samuel Cleofe (RD Cleofe) and Deputy Register of Deeds Edgardo Castro (DRD Castro) believed that TCTs No. 200629 and 200630 were spurious. According to RD Cleofe, the size of the area covered by the TCTs made him

highly suspicious of the same. In Quezon City, only a few people own big tracts of land, namely, the Aranetas, Tuazons, etc. Commonly, ordinary individuals own only 300 to 2,000 square meters of land. Both RD Cleofe and DRD Castro identified differences in the signatures and designation of Atty. Pea appearing on the questionable TCTs No. 200629 and 200630 compared to those on five other admittedly authentic TCTs.51. Fourth, the National Bureau of Investigation (NBI), upon request of Investigator Flestado, conducted an examination and issued Questioned Documents Report No. 636-991, dated 31 March 1992, wherein it noted significant differences in the handwriting characteristics between the standard/sample signatures of Atty. Pea and those appearing on TCTs No. 200629 and 200630, i.e., in the manner of execution, direction/movement of strokes, and other identifying details. The NBI concluded that "[t]he questioned and the standard/sample signatures of [N]estor N. Pea were NOT WRITTEN by one and the same person." Finally, Investigator Flestado made inquiries with the Land Management Bureau (LMB) regarding the consolidation-subdivision plan Pcs-2480 and plan Psu-32606 of Lots 34 and 40 (the subject lots) as described in TCTs No. 200629 and 200630. LMB Geodetic Surveys Division Chief Privadi J.G. Dalire, in a letter, dated 29 November 1991, informed Investigator Flestado that LMB had no records of Pcs-2480, while the original copy of Psu-32606 is no longer available as it had been badly damaged. Thus, there was no record in the LMB that Lots 34 and 40, Psu-32606, were in fact consolidated and then subdivided into Lots 3, 4, 5, and 6 pursuant to plan Pcs-2480, as mentioned in TCTs No. 200629 and 200630. To rebut the foregoing findings of LRA Investigator Flestado, BPC presented, in support of the authenticity and validity of TCTs No. 200629 and 200630, the LRA Resolution,52 dated 4 November 1991, in Consulta No. 1957, and NBI Questioned Documents Report No. 585-891,53 dated 2 September 1991. A careful study of the said documents does little to support the position of BPC. The LRA Resolution in Consulta No. 1957 merely allowed the registration of the rescission of a Joint Venture Agreement on TCTs No. 200629 and 200630 despite the initial adverse finding that the said certificates were of doubtful authenticity. It did not make any categorical finding as to the authenticity or validity of the TCTs. In fact, the last paragraph of the said Resolution elucidated that This resolution, however, should be understood to be limited to the issue of registrability of the instrument sought to be registered and is without prejudice to any action, if warranted, that may be filed in court assailing the validity or authenticity of the certificate of titles. (Emphasis supplied.) The NBI Questioned Documents Report No. 585-891 was even in accordance with the finding in the LRA Report that the 109-D forms on which TCTs No. 200629 and 200630 were printed seemed to be genuine. The NBI concluded that the words "109-D" and the serial numbers printed on the forms were not altered. The NBI did a very limited examination of the genuineness of the forms on which TCTs No. 200629 and 200630 were printed, but it did not look into the authenticity of Atty. Peas signature (which was the subject of NBI Questioned Documents Report No. 636-991, dated 31 March 1992, mentioned in the LRA Report) or the accuracy of the entries made therein. The LRA Report, dated 10 June 1992, of Investigator Flestado was submitted as evidence before the RTC. It must be emphasized that the LRA Report was extensive and thorough. Its findings are sufficiently supported by independent and reliable proof. The BPC failed to present evidence to refute the same. The LRA Report deserves great weight sufficient to overcome the presumption that TCTs No. 200629 and 200630 were genuine, authentic, and indefeasible.54

It having been established that TCTs No. 200629 and 200630 were forged and spurious, their reconstitution was also attended with grave irregularities. Once more, this Court relies on the findings in the LRA Report, dated 10 June 1992, of Investigator Flestado. Quezon City RD Cleofe; the unnamed Chief of the LRA Micrographics and Computer Division; and Records Officer Viterbo Cahilig of the Quezon City Register of Deeds, all confirmed that there were no records of any applications for reconstitution of TCTs No. 200629 and 200630 in the name of Servando. It would seem that an LRA employee, Cartographer Rovil Ruiz (Ruiz), made it appear that there were applications for reconstitution of TCTs No. 200629 and 200630 filed, and which were included in Folder 1614. When Folder 1614 was inspected, TCTs No. 200629 and 200630 were not included in its table of contents; and although the said folder did have 44 missing pages, the missing pages pertain to the supporting documents of other TCTs, and there was no showing that TCTs No. 200629 and 200630 and the applications for reconstitution thereof were among these missing pages. Ruiz undertook by himself the computation of the tie-lines of the subject lots as described in TCTs No. 200629 and 200630, the plotting, and examination of the titles. The LRA Report thus recommended that Ruiz be administratively charged for grave misconduct, it appearing that he was the one who facilitated the administrative reconstitution of TCTs No. 200629 and 200630. In contrast, the Republic was able to supply Investigator Flestado with the documents supporting the transfer of the titles to the subject lots from FPHC to the Republic, among which were the TCTs of FPHC, the Deeds of Sale executed by FPHC to the Republic, notice to the real property owners within 300-meter radius from the area, receipts for payment of registration fees, and payment order for the documentary stamp tax on the sales. TCTs No. 275443 and 288417 in the name of the Republic were included in LRA Folder No. 1976-B, together with other certificates of title in the name of the Republic. One of the applications filed by the Republic was docketed as Application for Reconstitution No. 41869. The Chief of the LRA Micrographics and Computer Division confirmed that the applications for reconstitution of TCTs No. 275443 and 288417 by the Republic were recorded in the computerized Administrative Reconstitution System. BPC was unable to attack the authenticity and validity of the titles of the Republic to the subject lots, and could only interpose the defense that it was a buyer in good faith. Only Servandos heirs, in their Petition for New Trial, attempted to raise doubts as to the titles of the Republic to the subject lots by averring that the transfer thereof from FPHC to the Republic was highly irregular because the latter could have acquired the property by expropriation. Such an averment is totally baseless. Expropriation as the means by which the State can acquire private property is always the remedy of last resort. Expropriation lies only when it is made necessary by the opposition of the owner of the property to the sale or by the lack of any agreement as to the price.55 There being, in the present case, valid and subsisting contracts between the FPHC, the previous owner, and the Republic, the buyer, for the purchase of the subject lots at an agreed price, there was no reason for the expropriation. In consideration of all the foregoing findings, it is indubitable that TCTs No. 275443 and 288417 of the Republic covering the subject lots are authentic and valid, while TCTs No. 200629 and 200630 of Servando covering the same property are not. However, BPC maintains that it was a purchaser in good faith, for value and without any inkling about any flaw from Servandos titles. It points out that it purchased the subject lots from Servando on 8 February 1989 and registered the same on 19 February 1991, way before the titles of Servando were declared null by the RTC on 22 December 1992. BPC relies on this Courts ruling in TenioObsequio v. Court of Appeals,56 to wit Under Section 55 of the Land Registration Act, as amended by Section 53 of Presidential Decree No. 1529, an original owner of registered land may seek the annulment of a transfer thereof on the

ground of fraud. However, such a remedy is without prejudice to the rights of any innocent holder for value with a certificate of title. A purchaser in good faith and for value is one who buys the property of another, without notice that some other person has a right to or interest in such property, and pays a 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 other person in the property. In consonance with this accepted legal definition, petitioner Consorcia TenioObsequio is a purchaser in good faith. There is no showing whatsoever nor even an allegation that herein petitioner had any participation, voluntarily or otherwise, in the alleged forgery. xxxx The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that should impel a reasonable cautious man to make such further inquiry. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. xxxx It has been consistently ruled that a forged deed can legally be the root of a valid title when an innocent purchaser for value intervenes. A deed of sale executed by an impostor without the authority of the owner of the land sold is a nullity, and registration will not validate what otherwise is an invalid document. However, where the certificate of title was already transferred from the name of the true owner to the forger and, while it remained that way, the land was subsequently sold to an innocent purchaser, the vendee had the right to rely upon what appeared in the certificate and, in the absence of anything to excite suspicion, was under no obligation to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. Now the question is whether BPC qualifies as an innocent purchaser for value which acquired valid titles to the subject lots, despite the fact that the titles of its predecessor-in-interest were found to be forged and spurious. This Court finds in the negative. Foremost is the fact that there seem to be two documents by which titles to the subject lots were transferred from the Accibals to BPC: (1) A Deed of Conveyance, dated 8 February 1989, executed by Servando in favor of BPC, transferring to the latter titles to the subject lots in exchange for 51% of its capital stock; and (2) A Deed of Conveyance, dated 10 October 1990, executed by Antonio in favor of BPC, transferring to the latter the very same property in exchange for 2,450 shares in BPC. It should be noted that even prior to these Deeds of Conveyance, Servando already transferred the subject lots by way of a Deed of Absolute Sale, dated 10 June 1988, in favor of his son Antonio, with the concurrence of his other heirs. Thus, by the time Servando executed the Deed of Conveyance over the subject lots in favor of BPC on 8 February 1989, he no longer had any right to the said property, having sold the same to Antonio. It was probably to rectify this mistake that a second Deed

of Conveyance was executed by Antonio on 10 October 1990. Comparing all these transfer documents, the LRA Report, dated 10 June 1992, prepared by Investigator Flestado noted that Servandos Tax Account Number (TAN) in the Deed of Conveyance, dated 8 February 1989, which he executed over the subject lots in favor of BPC, was "A2140-M1746-A-1;" while in the Deed of Sale, dated 10 June 1988, which he executed over the subject lots in favor of Antonio, his TAN was "4110-241-R." Moreover, despite being executed a year apart, Servando had the same residence certificate (No. 5901393, issued at Quezon City, on 6 April 1988) appearing in both documents. Furthermore, BPC cannot really claim that it was a purchaser in good faith which relied upon the face of Servandos titles. It should be recalled that the Quezon City Register of Deeds caught fire on 11 June 1988. Presumably, the original copies of TCTs No. 200629 and 200630 were burnt in the said fire. Servandos heirs sought the administrative reconstitution of of TCTs No. 200629 and 200630 only in December 1990. The two Deeds of Conveyance over the subject lots were executed in favor of BPC by Servando and Antonio on 8 February 1989 and 10 October 1990, respectively, both prior to the administrative reconstitution of TCTs No. 200629 and 200630. If BPC bought the subject lots after TCTs No. 200629 and 200630 were destroyed when the Quezon City Register of Deeds burned down, but before the said certificates were reconstituted, then on the face of what titles did BPC rely on before deciding to proceed with the purchase of the subject lots? There was no showing that there were surviving owners duplicate copies of TCTs No. 200629 and 200630, or even if there were, without the original copies of the said TCTs which were stored in the Quezon City Register of Deeds and purportedly destroyed in the fire, there would have been no way for BPC to have verified the owners duplicate copies. In addition, without the original copies and owners duplicate copies of TCTs No. 200629 and 200630, BPC had to rely on the reconstituted certificates, issued on 12 December 1990, bearing the following numbers: TCTs No. RT-23687 (for TCT No. 200629) and RT-23688 (for TCT No. 200630). Under section 7 of Republic Act No. 26,57"Reconstituted titles shall have the same validity and legal effect as the originals thereof" unless the reconstitution was made extrajudicially.58 In this case, TCTs No. 200629 and 200630 were reconstituted administratively, hence, extrajudicially. In contrast to the judicial reconstitution of a lost certificate of title which is in rem, the administrative reconstitution is essentially ex-parte and without notice.59 The reconstituted certificates of title do not share the same indefeasible character of the original certificates of title for the following reason x x x The nature of a reconstituted Transfer Certificate Of Title of registered land is similar to that of a second Owner's Duplicate Transfer Certificate Of Title. Both are issued, after the proper proceedings, on the representation of the registered owner that the original of the said TCT or the original of the Owner's Duplicate TCT, respectively, was lost and could not be located or found despite diligent efforts exerted for that purpose. Both, therefore, are subsequent copies of the originals thereof. A cursory examination of these subsequent copies would show that they are not the originals. Anyone dealing with such copies are put on notice of such fact and thus warned to be extra-careful. x x x.60 The fact that the TCTs were reconstituted should have alerted BPC and its officers to conduct an inquiry or investigation as might be necessary to acquaint themselves with the defects in the titles of Servando.61 What is more, BPC again invokes LRA Resolution, dated 4 November 1991, in Consulta No. 1957, and NBI Questioned Documents Report No. 585-891, dated 2 September 1991 as proof that it did inquire or investigate into the validity and authenticity of Servandos titles. But again, it should be noted that these documents were issued after BPC already acquired the subject lots from Servando and Antonio.

Lastly, there are serious doubts that BPC acquired the subject lots for value. The Republic bought the subject lots from FPHC for the combined price of P12,333,280.00. BPC, on the other hand, supposedly acquired the subject lots from Servando on 8 February 1989 in exchange for 51% of the capital stock of BPC, with a subscription value of P6,000,000.00. In the LRA Report, dated 10 June 1992, Investigator Flestado pointed out that in the Articles of Incorporation, dated 16 January 1989, of BPC, submitted to the Securities and Exchange Commission (SEC) on 20 January 1989, BPC had an authorized capital stock of only P1,000,000.00, which was divided into 10,000 shares, with a par value of P100.00 each; and the amount of capital stock actually subscribed was P250,000.00. Therefore, in 1989, fifty-one percent of the capital stock of BPC would be 5,100 shares, with an aggregate value of only P510,000.00. BPC is not saved by the second Deed of Conveyance, executed more than a year later by Antonio, again transferring to BPC the subject lots in exchange for 2,450 shares in the latter, with the alleged value of P49,000.000.00. Unless BPC is able to present proof that it applied for, and the SEC approved, a substantial increase in its capital stock, then this Court can only assume that its capital stock remained the same as the year before, 2,450 shares in BPC, with a par value of P100.00 each, amount only to P245,000.00. This Court cannot find a plausible explanation for the discrepancy in the value of 2,450 shares of BPC between theP245,000.00 it has hereby computed and the P49,000,000.00 claimed by BPC. For the above-stated reasons, this Court cannot declare BPC an innocent purchaser for value, and it acquired no better titles to the subject lots than its predecessors-in-interest, Servando and Antonio. At this point, it would seem that the Republic does hold better titles to the subject lots. Nonetheless, another level of transactions involving the subject lots was brought by intervenors to the attention of this Court. From the reconstituted TCTs No. RT-23687 (200629) and RT- 23688 (200630) in the name of Servando, BPC derived and was issued by the Quezon City Register of Deeds new certificates, TCTs No. 30829, 30830, 30831 and 30832, in its own name. It was able to secure the necessary licenses and permits from the appropriate government agencies to subdivide, develop, and sell the subject lots as Parthenon Hills. The Parthenon Hills project was openly advertised and marketed, and a substantial portion of the subject lots was already sold by BPC to the public. Except for the spouses Santiago, BPC recognizes that the intervenors, Nicolas-Agbulos and Abesamis, together with other legitimate homeowners in Parthenon Hills, acquired from BPC titles to their respective subdivided lots in good faith and for value. Even the Republic could not refute that the individuals who acquired lots in Parthenon Hills from BPC were purchasers in good faith and for value. It insists, however, that these buyers could not acquire better titles to the property than its predecessors-in-interest BPC, Servando, and Antonio since the spring cannot rise higher than its source. The law must protect and prefer the lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights.62 It is true that the general rule is that a forged deed is a nullity and conveys no title.63 A forged deed may be defined as an instrument which purports to have been executed by the person or persons whose signatures appear thereon, but which, in fact, was not executed, and the signatures thereon had been merely imitated so as to give them the deceptive appearance of genuineness.64 In the case at bar, it was not any of the deeds of transfer or conveyance of the subject lots which was forged, but TCTs No. 200629 and 200630 themselves. The forged TCTs, nevertheless, just as a forged deed, can make it appear that one had title, right, or interest to the land, when in truth, he had none, to the deprivation of the rightful owner. It has been recognized that while a forged instrument is null and void and of no effect as between the parties, it may nevertheless be the root of a good title; so that the title of a registered owner who has taken it bona fide and for value, is not affected by reason

of his claiming through someone, that the registration was void because it had been procured by the presentation of a forged instrument.65 The forged TCTs No. 200629 and 200630 were later administratively reconstituted, and although an investigation would show that their reconstitution was also attended with irregularities, TCTs No. RT23687 (200629) and RT-23688 (200630) appear, on either face, to have been duly approved by the LRA and issued by the Quezon City Register of Deeds. With the cancellation of the reconstituted TCTs and the issuance of new ones, TCTs No. 30829, 30830, 30831, and 30832, in the name of BPC, any trace of forgery or irregularity as to BPCs titles was eliminated. TCTs No. 30829, 30830, 30831, and 30832 were clean, at least, until the annotation therein of the notice of lis pendens of the Republic on 21 October 1992. It is a settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the certificates of title. He is charged with notice only of such burdens and claims as are annotated on the certificates.66 Herein intervenors, Nicolas-Agbulos and Abesamis, before purchasing subdivision lots in Parthenon Hills, looked into the TCTs of BPC and found nothing on the face thereof to raise doubts or suspicions as to their validity and authenticity. Besides, BPC was the holder of licenses and permits to subdivide, develop, and sell the subject lots as Parthenon Hills, issued by the appropriate government agencies, primarily HLURB. This is definitely a situation which constitutes an exception to the general rule that estoppel cannot lie against the government. The Republic v. Court of Appeals,67 provides an illuminating discourse on when such an exception applies, thus Is the immunity of the government from laches and estoppel absolute? May it still recover the ownership of lots sold in good faith by a private developer to innocent purchasers for value, notwithstanding its approval of the subdivision plan and its issuance of separate individual certificates of title thereto? xxxx The general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or agents. However, like all general rules, this is also subject to exceptions, viz: "Estoppels against the public are little favored. They should not be invoked except in rare and unusual circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy adopted to protect the public. They must be applied with circumspection and should be applied only in those special cases where the interests of justice clearly require it. Nevertheless, the government must not be allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and subject to limitations x x x the doctrine of equitable estoppel may be invoked against public authorities as well as against private individuals." xxxx Significantly, the other private respondents Spouses Santos, Spouses Calaguian, Dela Fuente and Madaya bought such "expanded" lots in good faith, relying on the clean certificates of St. Jude, which had no notice of any flaw in them either. It is only fair and reasonable to apply the equitable principle of estoppel by laches against the government to avoid an injustice to the innocent purchasers for value. Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the certificate of title, acquire rights over the property, courts cannot disregard such rights and order

the cancellation of the certificate. Such cancellation would impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly issued or not. This would be contrary to the very purpose of the law, which is to stabilize land titles. Verily, all persons dealing with registered land may safely rely on the correctness of the certificate of title issued therefor, and the law or the courts do not oblige, them to go behind the certificate in order to investigate again the true condition of the property. They are only charged with notice of the lions and encumbrances on the property that are noted on the certificate. When private respondents-purchasers bought their lots from St. Jude, they did not have to go behind the titles thereto to verify their contents or search for hidden defects or inchoate rights that could defeat their rights to said lots. Although they were bound by liens and encumbrances annotated on the titles, private respondents purchasers could not have had notice of defects that only an inquiry beyond the face of the titles could have satisfied. The rationale for this presumption has been stated thus: "The main purpose of the Torrens System is to avoid possible conflicts of title to real estate and to facilitate transactions, relative thereto by giving the public the right to rely upon the face of a Torrens Certificate of Title and to dispense with the need of inquiring further, except when the party concerned had actual knowledge of facts and circumstances that should impel a reasonably cautious man to make such further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus, where innocent third persons relying on the correctness of the certificate thus issued, acquire rights over the property, the court cannot disregard such rights (Director of Land v. Abache, et al., 73 Phil. 606)." In another case, this Court further said: "The Torrens System was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all. This would not only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership. The further consequence would be that land conflicts could be even more abrasive, if not even violent. The Government, recognizing the worthy purposes of the Torrens System, should be the first to accept the validity of titles issued thereunder once the conditions laid down by the law are satisfied. [Italics supplied.] Petitioner never presented proof that the private respondents who had bought their lots from St. Jude were buyers in bad faith. Consequently, their claim of good faith prevails. A purchaser good faith and for value is one who buys the property of another without notice that some other person has a right to or an interest in such property; and who pays a full and fair price for the same at the time of such purchase or before he or she has notice of the claims or interest of some other person. Good faith is the honest intention to abstain from taking any unconscientious advantage of another. It also bears to emphasize that the subject lots covered by TCTs No. 30829, 30830, 30831, and 30832 were already subdivided, and new TCTs were issued in the names of the buyers of each subdivision lot. To order the cancellation of all these derivative titles and the return of the subdivision lots to the Republic shall irrefragably be unjust to the innocent purchasers for value and shall wreak havoc on the Torrens System.

Anyway, the Republic is not without recourse. It can claim damages from BPC, found herein not to be a buyer of the subject lots in good faith. For its loss of portions of the subdivision lots to innocent purchasers from BPC, the Republic may recover from BPC the purchase price it paid to FPHC corresponding to such subdivision lots, with interest at 6% per annum from 26 March 1992 (the date when the Republic instituted its petition for the cancellation of the TCTs of Servando, Antonio, and BPC) until finality of this Decision, and 12% per annum thereafter until fully paid.68 Although this Court allowed in the case at bar the intervention of Nicolas-Agbulos and Abesamis, and recognized their title to their respective subdivision lots in Parthenon Hills as purchasers in good faith and for value from BPC, it could not do the same for the spouses Santiago, for the reason that BPC contested their claim that they had acquired titles to the subdivision lots in Parthenon Hills in good faith and for value, and further asserted that the spouses Santiago acquired the said subdivision lots by fraudulent means. The allegations by the spouses Santiago of good faith, on one hand, and by BPC of fraud, on the other, in the acquisition by the spouses Santiago of the subdivision lots in question, are factual matters, best proven and established before the RTC, which could receive evidence in support of each partys position during trial. Should the RTC find that the spouses Santiago have indeed acquired the subdivision lots in good faith and for value, then their titles thereto shall, likewise, be valid and indefeasible even against that of the Republic. However, in a contrary case, should the RTC find that the spouses Santiago acquired the subdivision lots by fraud, then titles thereto return to BPC. Though estoppel by laches may lie against the Republic when titles to the subdivision lots are already in the names of the respective innocent purchasers for value from BPC, it may not be used by BPC to defeat the titles of the Republic as regards the subdivision lots which remain unsold and the titles to which are still in the name of BPC. It must be recalled that BPC is not a purchaser in good faith. Estoppel, being an equitable principle, may only be invoked by one who comes to court with clean hands.69 Pertinent provisions of the New Civil Code concerning builders in bad faith provide that ART. 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. ART. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. ART. 451. In cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower. ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land. Hence, as far as the subdivision lots still in the name of BPC are concerned, the Republic has the option to either (1) recover the said lots and demand that BPC demolish whatever improvements it has made therein, to return the lots to their former condition, at the expense of BPC; or (2) compel BPC to pay the price of the land. The choice can only be made by the Republic, as the rightful owner of the said subject lots. Should the Republic choose the first option, BPC is under the obligation to return the possession of the subdivision lots to the Republic and surrender its corresponding TCTs for cancellation and issuance of new ones in the name of the Republic. Should the Republic select the second option, then BPC shall pay the Republic the purchase price that the latter had paid to

FPHC corresponding to such subdivision lots, with interest at 6% per annum from 26 March 1992 until finality of this Decision, and 12% per annum thereafter until fully paid. In either option, the Republic may claim damages from BPC, while BPC cannot seek indemnity from the Republic for any improvements made on the subdivision lots, except if these constitute as necessary expenses for the preservation of the land, for which it shall still be entitled to reimbursement. As for the Petition for New Trial filed by Servandos heirs, this Court dismisses the same for lack of legal basis. Section 1, Rule 37 of the Rules of Court reads SECTION 1. Grounds of and period for filing motion for new trial or reconsideration. Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of the said party: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or (b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result. Servandos heirs themselves admit that the period allowed for the filing of a motion to set aside the judgment and grant a new trial under the afore-quoted provision had already lapsed, but they still pray that this Court give due course to their Petition on the grounds of justice and equity. In Malipol v. Lim Tan,70 this Court ruled that It is within the sound discretion of the court to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. In the motions for reconsideration of an order of default, the moving parry has the burden of showing such diligence as would justify his being excused from not filing the answer within the reglementary period as provided by the Rules of Court, otherwise these guidelines for an orderly and expeditious procedure would be rendered meaningless. Unless it is shown clearly that a party has justifiable reason for the delay, the court will not ordinarily exercise its discretion in his favor. In the present case, the late Servando and Antonio were already declared in default by the RTC on 31 July 1992, after their supposed counsel failed to file an answer to the Republics petition for cancellation of title. Nothing was heard from Servandos heirs even after the promulgation of the RTC Decision on 22 December 1992, and the Court of Appeals Decision, dated 8 August 1997, until they filed their Petition for New Trial, dated 23 May 2001, before this Court, or nine years from the date they were declared in default. According to Servandos heirs, due to the extrinsic fraud committed by the President and counsel of BPC, they were prevented from participating in the proceedings before the trial court. They allegedly relied on the assurance of the President and counsel of BPC that the latter shall also represent them and their interests in the subject lots in the case. This allegation of fraud by Servandos heirs has no leg to stand on. It should be recalled that the late Servando and Antonio were represented by a counsel at the beginning of the proceedings before the

RTC. Their counsel even submitted two consecutive motions for extension of time to file the appropriate pleadings. There was no explanation provided as to why, despite the grant of said motions, the counsel still failed to file an answer to the Republics petition for cancellation of title. It is also contrary to common human experience that Servandos heirs, by the mere assurance of the President and counsel of BPC, adopted a totally hands-off attitude in a case where they supposedly have substantial interest. There is no showing during the nine years when they were not participating in the court proceedings, that they, at least, inquired into or followed-up on the status of the case with BPC. Such blind trust in the President and counsel of BPC is surely difficult to comprehend, especially if this Court takes into account the contention of Servandos heirs that BPC failed to deliver the shares of stock in exchange for the subject lots. What is apparent to this Court is not the alleged fraud committed by BPC but, rather, the inexcusable negligence of Servandos heirs when it came to protecting their titles, rights, and interests to the subject lots, if indeed, there were still any. Worth reproducing herein, is the conclusion71 made by the Court of Appeals on Servandos titles On the strength of the LRA report, Exhibit H (Record, pp. 214-258), the court a quo found TCT Nos. 200629 and 200630, in the name of Servando Accibal and from which the titles of defendantappellee Barstowe Philippines Corporation were derived, spurious, and ordered the Register of Deeds of Quezon City "to officially and finally cancel (said titles) from his records" (Par. 2, dispositive portion, Decision, p. 16; Rollo, p. 71). As explained by the court a quo: "We shall now dwell on the validity of the titles, TCT Nos. 200629 and 200630, issued in the name of Servando Accibal on July 24, 2974 by the Register of Deeds of Quezon City. The LRA Report dated 10 June 1992 (Exh. H, pp. 214-258, record) is competent proof that indeed said titles must be cancelled. In short, the LRA found after due investigation that the said titles of Servando Accibal were issued with certain irregularties (sic). It recommended the cancellation therefore, of TCT Nos. 200629 and 200630, to which the court concurs, as said report must be accorded due respect and in the absence of fraud or irregularties (sic) that attended the investigation, which the Court finds none, the same must be persuasive, if not conclusive. Moreover, herein defendant Servando Accibal because of his failure to answer, despite extension of time given him, plaintiffs counsel, he was declared as in default since then, he never asked the court to lift and set aside the default order. There is no way, his title may be cancelled. For one thing, he was not able to present evidence to controvert the recommendation of the LRA to cancel his titles. For another, Servando Accibal is deemed to have impliedly admitted the irregularties (sic) that attended the issuance of his aforestated titles." (Decision, pp. 14-15; Rollo, pp. 69-70) This portion of the decision ordering the cancellation of TCT Nos. 200629 and 200630 in the name of Servando Accibal was not appealed nor assigned as a counter-assigment of error in the brief of Barstowe Philippines Corporation; hence, is now final. Thus, the findings of this Court as to the rights of the parties involved in the present case are summarized as follows (1) The certificates of title acquired by Servando over the subject lots were forged and spurious, and such finding made by both the RTC and Court of Appeals is already final and binding on Servandos heirs; (2) BPC did not acquire the subject lots in good faith and for value, and its certificates of title cannot defeat those of the Republics; (3) As between BPC and the Republic, the latter has better titles to the subject lots being the purchaser thereof in good faith and for value from FPHC;

(4) However, considering that the subject lots had already been subdivided and the certificates of title had been issued for each subdivision lot, which were derived from the certificates of title of BPC, it is more practical, convenient, and in consonance with the stability of the Torrens System that the certificates of title of BPC and its derivative certificates be maintained, while those of the Republics be cancelled; (5) Estoppel lies against the Republic for granting BPC governmental permits and licenses to subdivide, develop, and sell to the public the subject lots as Parthenon Hills. Relying on the face of the certificates of title of BPC and the licenses and permits issued to BPC by government agencies, innocent individuals, including intervenors Nicolas-Agbulos and Abesamis, purchased subdivision lots in good faith and for value; (6) The claims of the intervenor spouses Santiago that they acquired portions of the subject lots in good faith and for value still need to be proven during trial before the court a quo. Unlike the claims of intervenors Nicolas-Agbulos and Abesamis, which BPC admitted, the claims of the spouses Santiago were opposed by BPC on the ground of fraud; (7) Certificates of title over portions of the subject lots, acquired by purchasers in good faith and for value, from BPC, are valid and indefeasible, even as against the certificates of title of the Republic. The Republic, however, is entitled to recover from BPC the purchase price the Republic paid to FPHC for the said portions, plus appropriate interests; and (8) As portions of the subject lots are still unsold and their corresponding certificates of title remain in the name of BPC, the Republic may exercise two options: (a) It may recover the said portions and demand that BPC demolish whatever improvements it has made therein, so as to return the said portions to their former condition, at the expense of BPC. In such a case, certificates of title of BPC over the said portions shall be cancelled and new ones issued in the name of the Republic; or (b) It may surrender the said portions to BPC and just compel BPC to reimburse the Republic for the purchase price the Republic paid to FPHC for the said portions, plus appropriate interest. WHEREFORE, premises considered, the instant Petition is hereby PARTLY GRANTED. The Decision, dated 8 August 1997, of the Court of Appeals in CA-G.R. CV No. 47522 is hereby REVERSED and SET ASIDE and a new one is hereby entered, as follows: (1) In view of the finding that the Transfer Certificates of Title No. 200629 and 200630 in the name of Servando Accibal are forged and spurious, the Quezon City Register of Deeds is ORDERED to officially and finally cancel the same from his records; (2) In view of the finding that the respondent Republic of the Philippines was a purchaser in good faith of the subject lots from Philippine First Holdings Corporation, but also taking into consideration the functioning and stability of the Torrens System, as well as the superior rights of subsequent purchasers in good faith and for value of portions of the subject lots subdivided, developed, and sold as Parthenon Hills from petitioner Barstowe Philippines Corporation (a) The Quezon City Register of Deeds is ORDERED to cancel Transfer Certificates of Title No. 275443 and 288417 in the name of respondent Republic of the Philippines;

(b) The respondent Republic of the Philippines is ORDERED to respect and recognize the certificates of title to the subject portions of land in the name of purchasers of good faith and for value from petitioner Republic of the Philippines; (c) Petitioner Barstowe Philippines Corporation is ORDERED to pay respondent Republic of the Philippines for the purchase price the latter paid to First Philippine Holdings Corporation corresponding to the portions of the subject lots which are already covered by certificates of title in the name of purchasers in good faith and for value from petitioner Barstowe Philippines Corporation, plus appropriate interest; (d) The respondent Republic of the Philippines is ORDERED to choose one of the options available to it as regards the portions of the subject lots which remain unsold and covered by certificates of title in the name of petitioner Barstowe Philippines Corporation, either (i) To recover the said portions and demand that petitioner Barstowe Philippines Corporation demolish whatever improvements it has made therein, so as to return the said portions to their former condition, at the expense of the latter, or (ii) To surrender the said portions to petitioner Barstowe Philippines Corporation and compel the latter to reimburse the respondent Republic of the Philippines for the purchase price it had paid to First Philippine Holdings Corporation for the said portions, plus appropriate interest. Regardless of the option chosen by the respondent Republic of the Philippines, it is ORDERED to reimburse petitioner Barstowe Philippines Corporation for any necessary expenses incurred by the latter for the said portions; (2) In view of the finding that petitioner Barstowe Philippines Corporation is not a purchaser and builder in good faith, and depending on the option chosen by respondent Republic of the Philippines concerning the portions of the subject lots which remain unsold and covered by certificates of title in the name of petitioner Barstowe Philippines Corporation, as enumerated in paragraph 2(d) hereof (a) In case the respondent Republic of the Philippines chooses the option under paragraph 2(d)(i) hereof, petitioner Barstowe Philippines Corporation is ORDERED to demolish whatever improvements it has made on the said portions, so as to return the same to their former condition, at its own expense. The Quezon City Register of Deeds is also ORDERED to cancel the certificates of title of petitioner Barstowe Philippines Corporation over the said portions and to issue in lieu thereof certificates of title in the name of respondent Republic of the Philippines; (b) In case the respondent Republic of the Philippines chooses the option under paragraph 2(d)(ii) hereof, petitioner Barstowe Philippines Corporation is ORDERED to reimburse the petitioner Republic of the Philippines for the purchase price it had paid to First Philippine Holdings Corporation for the said portions, plus appropriate interest; (c) Petitioner Barstowe Philippines Corporaton is ORDERED to pay appropriate damages to respondent Republic of the Philippines as may be determined by the trial court; (3) In view of the finding that intervenors Winnie U. Nicolas-Agbulos and Edgardo Q. Abesamis are purchasers in good faith and for value of portions of the subject lots subdivided, developed, and sold as Parthenon Hills from petitioner Barstowe Philippines Corporation, it is DECLARED that their certificates of title are valid and indefeasible as to all parties;

(4) In view of the finding that the Petition for New Trial filed by the heirs of Servando Accibal, namely, Virgilio V. Accibal, Virginia A. Macabudbud, and Antonio V. Accibal, lacks merit, the said Petition is DISMISSED; and (5) The case is REMANDED to the court of origin for determination of the following (a) The validity of the claims, and identification of the purchasers, in good faith and for value, of portions of the subject lots from petitioner Barstowe Philippines Corporation, other than intervenors Winnie U. Nicolas-Agbulos and Edgardo Q. Abesamis, whose titles are to be declared valid and indefeasible; (b) The identification of the portions of the subject lots in the possession and names of purchasers in good faith and for value and those which remain with petitioner Barstowe Philippines Corporation; (c) The computation of the amount of the purchase price which respondent Republic of the Philippines may recover from petitioner Barstowe Philippines Corporation in consideration of the preceding paragraphs hereof; (d) The types and computation of the damages recoverable by the parties; and (e) The computation and award of the cross-claim of EL-VI Realty and Development Corporation against petitioner Barstowe Philippines Corporation. SO ORDERED G.R. No. 151821 April 14, 2004

BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI Investment Corporation, petitioner, vs. ALS MANAGEMENT & DEVELOPMENT CORP., respondent. DECISION PANGANIBAN, J.: Factual findings of the lower courts are entitled to great respect, but may be reviewed if they do not conform to law and to the evidence on record. In the case at bar, a meticulous review of the facts compels us to modify the award granted by the Court of Appeals. The Case Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to set aside the November 24, 2000 Decision2 and the January 9, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 25781. The assailed Decision disposed as follows: "WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED in toto and the instant appeal DISMISSED."4

The assailed Resolution denied reconsideration. The Facts The facts of the case are narrated by the appellate court as follows: "On July 29, 1985, [petitioner] BPI Investment Corporation filed a complaint for a Sum of Money against ALS Management and Development Corporation, alleging inter alia that on July 22, 1983, [petitioner] and [respondent] executed at Makati, Metro Manila a Deed of Sale for one (1) unfurnished condominium unit of the Twin Towers Condominium located at Ayala Avenue, corner Apartment Ridge Street, Makati, Metro Manila designated as Unit E-4A comprising of 271 squares [sic] meters more or less, together with parking stalls identified as G022 and G-63. The Condominium Certificate of Title No. 4800 of the Registry of Deeds for Makati, Metro Manila was issued after the execution of the said Deed of Sale. [Petitioner] advanced the amount of P26,300.45 for the expenses in causing the issuance and registration of the Condominium Certificate of Title. Under the penultimate paragraph of the Deed of Sale, it is stipulated that the VENDEE [respondent] shall pay all the expenses for the preparation and registration of this Deed of Sale and such other documents as may be necessary for the issuance of the corresponding Condominium Certificate of Title. After the [petitioner] complied with its obligations under the said Deed of Sale, [respondent], notwithstanding demands made by [petitioner], failed and refused to pay [petitioner] its legitimate advances for the expenses mentioned above without any valid, legal or justifiable reason. "In its Answer with Compulsory Counterclaim, [respondent] averred among others that it has just and valid reasons for refusing to pay [petitioners] legal claims. In clear and direct contravention of Section 25 of Presidential Decree No. 957 which provides that No fee except those required for the registration of the deed of sale in the Registry of Deeds shall be collected for the issuance of such title, the [petitioner] has jacked-up or increased the amount of its alleged advances for the issuance and registration of the Condominium Certificate of Title in the name of the [respondent], by including therein charges which should not be collected from buyers of condominium units. [Petitioner] made and disseminated brochures and other sales propaganda in and before May 1980, which made warranties as to the facilities, improvements, infrastructures or other forms of development of the condominium units (known as The Twin Towers) it was offering for sale to the public, which included the following: The Twin Towers is destined to reflect condominium living at its very best. While the twin tower design and its unusual height will make the project the only one of its kind in the Philippines, the human scale and proportion [are] carefully maintained. To be sure, modern conveniences are available as in the installation of an intercom system and a closed-circuit TV monitor through which residents from their apartments can see their guests down at the lobby call station. Some of the features of each typical apartment unit are: x x x A bar x x x Three toilets with baths x x x. The penthouse units are privileged with the provision of an all-around balcony. x x x

"[Respondent] further averred that [petitioner] represented to the [respondent] that the condominium unit will be delivered completed and ready for occupancy not later than December 31, 1981. [Respondent] relied solely upon the descriptions and warranties contained in the aforementioned brochures and other sales propaganda materials when [respondent] agreed to buy Unit E-4A of the Twin Tower(s) for the hefty sum ofP2,048,900.00 considering that the Twin Towers was then yet to be built. In contravention of [petitioners] warranties and of good engineering practices, the condominium unit purchased by [respondent] suffered from the following defects and/or deficiencies: 1. The clearance in the walkway at the balcony is not sufficient for passage; 2. The anodized aluminum used in the door and windows were damaged; 3. The kitchen counter tops/splashboard suffered from cracks and were mis-cut and misaligned; 4. The partition between living and masters bedroom was unpainted and it had no access for maintenance due to aluminum fixed glass cover; 5. The varifold divider, including the bar and counter top cabinet were not installed; 6. The toilets had no tiles; 7. No closed circuit TV was installed; 8. Rainwater leaks inside or into the condominium unit."5 Respondents Answer prayed that "judgment be rendered ordering [petitioner] to correct such defects/deficiencies in the condominium unit,"6 and that the following reliefs be granted: "1. The sum of P40,000.00 plus legal interest thereon from the date of extra-judicial demand, representing the amount spent by the defendant for the completion works it had undertaken on the premises. "2. The sum of U.S.$6,678.65 (or its equivalent in the Philippine currency) representing the unearned rental of the premises which the defendant did not realize by reason of the late delivery to him of the condominium unit; "3. Twenty-four percent (24%) interest per annum on the agreed one (1) year advance rental and one (1) month deposit (totaling U.S.$15,785.00) corresponding to the period January 1, 1982 to June 17, 1982, which [petitioner] would have earned had he deposited the said amount in a bank; "4. The sum of U.S.$1,214.30 per month, commencing from May 1, 1985, which the [respondent] no longer earns as rental on the premises because the lessee vacated the same by reason of defects and/or deficiencies; "5. The sum of P50,000.00 plus appearance fees of P300.00 per court hearing, as attorneys fees; "6. Litigation expenses and costs of suit."7

On February 6, 1990, the trial court issued this judgment: "1. Ordering the [respondent] to pay [petitioner] the sum of P26,300.45, with legal interest from the filing of the complaint up to full payment thereof, representing the amount spent for the registration of the title to the condominium unit in [respondents] name; "2. Ordering [petitioner] to deliver, replace or correct at [petitioners] exclusive expense/cost or appoint a licensed qualified contractor to do the same on its behalf, the following defects/deficiencies in the condominium unit owned by the [respondent]: a) KITCHEN i) The sides of the kitchen sink covered with sealants as well as miscut marble installed as filler at the right side of the sink; ii) Miscut marble installed on both sides of the side wall above the gas range; b) FOYERS Water marks at the parquet flooring, near the main water supply room; c) MAIDS ROOM Ceiling cut off about one (1) square foot in size and left unfinished d) DINING ROOM i) Water damaged parquet up to about one (1) meter from the wall underneath the open shelves and directly behind the plant box; ii) Plant box directly behind the dining room; iii) The water damaged parquet flooring near the door of the dining room to the passage way e) MASTERS BEDROOM i) Falling off paint layers at the bathroom wall behind the bathtub/faucet along the passageway of the masters bedroom; ii) Falling off water-damaged plywood ceiling in the masters bedroom bathroom; iii) Grinders mark damage at the bathtub; f) BALCONY WALKWAY i) PVC pipes installed two (2) inches above floor level causing water to accumulate;

ii) Cracks on level of wash out flooring; iii) 14-inches passageway going to the open terrace not sufficient as passageway; iv) PVC pipe installed on the plant box water drained directly on the balcony floor; g) BALCONY (OPEN) TERRACE i) Two (2) concrete cement measuring about 6 x 4 inches with protruding live wires, purportedly lamp posts which were not installed; h) BOYS BEDROOM i) Water mark on the parquet flooring due to water seepage; ii) Asphalt plastered at the exterior wall/floor joints to prevent water seepage; i) ANALOC FINISH of the aluminum frames of doors and windows all around the condominium were painted with dark gray paint to cover dents and scratches; j) LIVING ROOM Intercom equipment installed without the TV monitor; k) STORAGE FACILITIES at the ground floor "3. Ordering [petitioner] to pay [respondent] the following: a) The sum of P40,000.00 representing reimbursement for expenses incurred for the materials/labor in installing walls/floor titles in 2 bathrooms and bar counter cabinet. b) The sum of P136,608.75, representing unearned income for the five-month period that the defendant had to suspend a lease contract over the premises. c) The sum of P27,321.75 per month for a period of twenty-one (21) months (from May 1985 to January 1987), representing unearned income when defendants lessee had to vacate the premises and condominium unit remained vacant, all with legal interest from the filing of the counterclaim until the same are fully paid."8 Ruling of the Court of Appeals On appeal, after "a thorough review and examination of the evidence on record,"9 the CA found "no basis for disbelieving what the trial court found and arrived at."10 The appellate court sustained the trial courts finding that "while [petitioner] succeeded in proving its claim against the [respondent] for expenses incurred in the registration of [the latters] title to the condominium unit purchased, x x x for its part [respondent] in turn succeeded in establishing an even bigger claim under its counterclaim."11

Hence, this Petition.12 The Issues Petitioner raises the following issues for our consideration: "I. Whether or not the Honorable Court of Appeals erred in not holding that the trial court had no jurisdiction over the respondents counterclaims. "II. Whether or not the decision of the Court of Appeals is based on misapprehension of facts and/or manifestly mistaken warranting a review by this Honorable Court of the factual findings therein. "III. Whether or not the award of damages by the Honorable Court of Appeals is conjectural warranting a review by this Honorable Court of the factual findings therein."13 The Courts Ruling The Petition is partly meritorious. First Issue: Jurisdiction Contending that it was the Housing and Land Use Regulatory Board (HLURB) -- not the RTC -- that had jurisdiction over respondents counterclaim, petitioner seeks to nullify the award of the trial court. Promulgated on July 12, 1976, PD No. 957 -- otherwise known as "The Subdivision and Condominium Buyers Protective Decree" -- provides that the National Housing Authority (NHA) shall have "exclusive authority to regulate the real estate trade and business."14 Promulgated later on April 2, 1978, was PD No. 1344 entitled "Empowering the National Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under Presidential Decree No. 957." It expanded the jurisdiction of the NHA as follows: "SECTION 1. In the exercise of its function to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature: A. Unsound real estate business practices; B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, broker or salesman." (Italics ours.) On February 7, 1981, by virtue of Executive Order No. 648, the regulatory functions of the NHA were transferred to the Human Settlements Regulatory Commission (HSRC). Section 8 thereof provides:

"SECTION 8. Transfer of Functions. - The regulatory functions of the National Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Commission (Human Settlements Regulatory Commission). x x x. Among these regulatory functions are: 1) Regulation of the real estate trade and business; x x x 11) Hear and decide cases of unsound real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers, or salesmen; and cases of specific performance." Pursuant to Executive Order No. 90 dated December 17, 1986, the functions of the HSRC were transferred to the HLURB. As mandated by PD No. 957, the jurisdiction of the HLURB is encompassing. Hence, we said in Estate Developers and Investors Corporation v. Sarte:15 "x x x. While PD 957 was designed to meet the need basically to protect lot buyers from the fraudulent manipulations of unscrupulous subdivision owners, sellers and operators, the exclusive jurisdiction vested in the NHA is broad and general -to regulate the real estate trade and business in accordance with the provisions of said law." Furthermore, the jurisdiction of the HLURB over cases enumerated in Section 1 of PD No. 1344 is exclusive. Thus, we have ruled that the board has sole jurisdiction in a complaint of specific performance for the delivery of a certificate of title to a buyer of a subdivision lot;16 for claims of refund regardless of whether the sale is perfected or not;17 and for determining whether there is a perfected contract of sale.18 In Solid Homes v. Payawal,19 we declared that the NHA had the competence to award damages as part of the exclusive power conferred upon it -- the power to hear and decide "claims involving refund and any other claimsfiled by subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker or salesman."20 Clearly then, respondents counterclaim -- being one for specific performance (correction of defects/deficiencies in the condominium unit) and damages -- falls under the jurisdiction of the HLURB as provided by Section 1 of PD No. 1344. The Applicability of Estoppel The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court.21 Indeed, the question of jurisdiction may be raised at any time, provided that such action would not result in the mockery of the tenets of fair play.22 As an exception to the rule, the issue may not be raised if the party is barred by estoppel.23 In the present case, petitioner proceeded with the trial, and only after a judgment unfavorable to it did it raise the issue of jurisdiction. Thus, it may no longer deny the trial courts jurisdiction, for estoppel bars it from doing so. This Court cannot countenance the inconsistent postures petitioner has adopted by attacking the jurisdiction of the regular court to which it has voluntarily submitted.24 The Court frowns upon the undesirable practice of submitting ones case for decision, and then accepting the judgment only if favorable, but attacking it for lack of jurisdiction if it is not.25 We also find petitioner guilty of estoppel by laches for failing to raise the question of jurisdiction earlier. From the time that respondent filed its counterclaim on November 8, 1985, the former could

have raised such issue, but failed or neglected to do so. It was only upon filing its appellants brief26 with the CA on May 27, 1991, that petitioner raised the issue of jurisdiction for the first time. In Tijam v. Sibonghanoy,27 we declared that the failure to raise the question of jurisdiction at an earlier stage barred the party from questioning it later. Applying the rule on estoppel by laches, we explained as follows: "A party may be estopped or barred from raising a question in different ways and for different reasons. Thus, we speak of estoppel in pais, of estoppe[l] by deed or by record, and of estoppel by laches. "Laches, in general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. "The doctrine of laches or of stale demands is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted."28 Thus, we struck down the defense of lack of jurisdiction, since the appellant therein failed to raise the question at an earlier stage. It did so only after an adverse decision had been rendered. We further declared that if we were to sanction the said appellants conduct, "we would in effect be declaring as useless all the proceedings had in the present case since it was commenced x x x and compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but revolting."29 Applicable herein is our ruling in Gonzaga v. Court of Appeals,30 in which we said: "Public policy dictates that this Court must strongly condemn any double-dealing by parties who are disposed to trifle with the courts by deliberately taking inconsistent positions, in utter disregard of the elementary principles of justice and good faith. There is no denying that, in this case, petitioners never raised the issue of jurisdiction throughout the entire proceedings in the trial court. Instead, they voluntarily and willingly submitted themselves to the jurisdiction of said court. It is now too late in the day for them to repudiate the jurisdiction they were invoking all along."31 Second and Third Issues: Appreciation of Facts It is readily apparent that petitioner is raising issues of fact that have been ruled upon by the RTC and sustained by the CA. The factual findings of lower courts are generally binding upon this Court and will not be disturbed on appeal, especially when both sets of findings are the same.32 Nevertheless, this rule has certain exceptions,33 as when those findings are not supported by the evidence on record. We have carefully scrutinized the records of this case and found reason to modify the award to conform to law and the evidence. We thus address the arguments of petitioner seriatim.

Warranties and Representations in the Brochure The brochure that was disseminated indicated features that would be provided each condominium unit; and that, under Section 19 of PD No. 957, would form part of the sales warranties of petitioner.34 Respondent relied on the brochure in its decision to purchase a unit.35 Since the former failed to deliver certain items stated therein, then there was a clear violation of its warranties and representations. The brochure says that "[t]he particulars stated x x x as well as the details and visuals shown x x x are intended to give a general idea of the project to be undertaken, and as such, are not to be relied [upon] as statements or representations of fact."36 This general disclaimer should apply only to the general concept of the project that petitioner aptly characterizes thus: "x x x [D]estined to reflect condominium living at its very best and its design x x x will make the project the only one of its kind in the Philippines."37 This disclaimer, however, should not apply to the features and the amenities that the brochure promised to provide each condominium unit. Petitioner was thus in breach when it failed to deliver a "closed-circuit TV monitor through which residents from their apartments can see their guests x x x."38 Storage Facilities The trial court erred, though, in requiring petitioner to provide storage facilities on the ground floor, as the non-delivery had not been alleged in respondents Answer with Counterclaim.39 It is elementary that a judgment must conform to and be supported by both the pleadings and the evidence, and that it be in accordance with the theory of the action on which the pleadings were framed and the case was tried.40Indeed, issues in each case are limited to those presented in the pleadings.41 We are aware that issues not alleged in the pleadings may still be decided upon, if tried with the parties express or implied consent.42 Trial courts are not precluded from granting reliefs not specifically claimed in the pleadings -- notwithstanding the absence of their amendment -- upon the condition that evidence has been presented properly, with full opportunity on the part of the opposing parties to support their respective contentions and to refute each others evidence.43 This exception is not present in the case at bar. Moreover, a cursory reading of the brochure shows that there is no promise to provide individual storage facilities on the ground floor for each condominium unit. The brochure reads: "Storage facilities in the apartment units and the ground floor."44 Apparent from the letter of petitioner dated June 18, 1982,45 was its compliance with its promise of storage facilities on the ground floor. In that letter, respondent was also informed that it may course a reservation of those facilities through the building superintendent. Damages for Delay in Delivery It is undisputed that petitioner sent respondent a "Contract to Sell"46 declaring that the construction would be finished on or before December 31, 1981.47 The former delivered the condominium unit only in June 1982;48 thus, the latter claims that there was a delay in the delivery.

Because of this delay, the trial court ordered petitioner to pay damages of P136,608.75 representing unearned income for the period that respondent had to suspend a lease contract. We find a dearth of evidence to support such award. To recover actual damages, the amount of loss must not only be capable of proof, but also be proven with a reasonable degree of certainty.49 The lone evidence for this award was the self-serving testimony of respondents witness that a lease contract had indeed been intended to commence in January 1982, instead of the actual implementation on June 18, 1982.50 Without any other evidence, we fail to see how the amount of loss was proven with a reasonable degree of certainty. Condominium Defects The rule is that a partys case must be established through a "preponderance of evidence."51 By such term of evidence is meant simply evidence that is of greater weight, or is more convincing than that which is offered in opposition to it.52 Respondent was able to establish through its witness testimony that the condominium unit suffered from defects.53 This testimony was confirmed by an inspection report54 noted and signed by petitioners representative, as well as by a commissioners report55 prepared after an ocular inspection by the clerk of court acting as a commissioner. Furthermore, this conclusion is supported by the circumstances that occurred during the lease period, as evidenced by the complaint and the update letters56 of respondents lessee. Petitioners contention that the claim arising from the alleged defects has already prescribed must fail for being raised for the first time only on appeal.57 Well-settled is the rule that issues not raised below cannot be resolved on review in higher courts.58 We agree, however, that the lower courts erred in finding that there was a defect in a portion of the balcony, which respondent alleges to be a "walkway x x x [that] is not sufficient for passage."59 Petitioner was able to prove, however, that the specifications thereof conformed to the building plan. Respondent contends that this portion should have been 65 to 80 centimeters wide, so that it would be sufficient as a passageway.60 The building plan61 had not specified the width, however. Architect Leo Ramos of W.V. Coscolluela & Associates, the architectural firm that prepared the building plan, testified thus: "Q I am directing your attention xxx to a certain portion in this condominium unit x x x it appears x x x [that] there is no measurement indicated therein, do you know why the measurement of said portion was not indicated in the building plan? A Normally, it is variable. Q What do you mean by variable? A It depends on the actual measurement of the building construction. Q Could you please tell the Court, what x x x the purpose of the said portion of the condominium unit [is]? A It is used for watering the plants and the servicing of some area[s]. Q How much measurement is made to affix the portion of watering the plants?

A Approximately .50 [m]."62 Respondent maintains that this portion should have been .80 meters (or 80 centimeters), similar to another area in the building plan that it offered as Exhibit "2-A."63 But an analysis of this plan reveals that the latter area has a different width from that of the former. It is readily apparent from the foregoing facts that the portion in controversy was not intended to be a walkway. Thus, there was no deviation from the building plan. Because it has not been shown that this section was insufficient to serve the purpose for which it was intended, the lower courts erred in considering it as defective. Reimbursement of P40,000 for Completion Work The lower courts did not err in ordering petitioner to correct the defects in the condominium unit, but in requiring it to reimburse respondent in the amount of P40,000 for completion work done. Petitioner argues that the trial courts Decision encompassed the areas beyond those alleged in respondents Answer.64 This contention is not convincing, because the allegations in the latter were broad enough to cover all the defects in the condominium unit. In fact, respondent prayed that "judgment be rendered ordering [petitioner] to correct such defects x x x in the condominium unit as may be prove[d] during the trial."65 Petitioner further challenges the award of P40,000 as reimbursement for completion work done by respondent, on the ground that this claim was not proven during the trial. The latters evidence partook of a witness testimony66and of a demand letter67 sent to petitioner requesting reimbursement for completion work done. Petitioner argues that respondent should have presented receipts to support the expenses.68 We agree with petitioner. While respondent may have suffered pecuniary losses for completion work done, it failed to establish with reasonable certainty the actual amount spent. The award of actual damages cannot be based on the allegation of a witness without any tangible document, such as receipts or other documentary proofs to support such claim.69 In determining actual damages, courts cannot rely on mere assertions, speculations, conjectures or guesswork, but must depend on competent proof and on the best obtainable evidence of the actual amount of loss.70 Unearned Lease Income Respondent entered into a lease contract with Advanced Micro Device on May 18, 1982, for the period June 18, 1982 to June 17, 1983, with option to renew.71 The lease -- which was for an agreed monthly rental of P17,000 -- was renewed for a period ending May 1, 1985, when Advanced Micro Device vacated the unit.72 On the basis of these facts, the trial court ordered petitioner to pay damages by way of unrealized income for twenty-one months or from May 1, 1985, until January 1987 -- when respondent decided to move into the condominium unit, which was unoccupied by then. Despite the defects of the condominium unit, a lessee stayed there for almost three years.73 The damages claimed by respondent is based on the rent that it might have earned, had Advanced Micro Device chosen to stay and renew the lease. Such claim is highly speculative, considering that respondent failed to adduce evidence that the unit had been offered for lease to others, but that there were no takers because of the defects therein. Speculative damages are too remote to be included in an accurate estimate thereof.74 Absent any credible proof of the amount of actual damage sustained, the Court cannot rely on speculations as to its existence and amount.75

We recognize, however, that respondent suffered damages when its lessee vacated the condominium unit on May 1, 1985, because of the defects therein. Respondents are thus entitled to temperate damages.76 Under the circumstances, the amount equivalent to three monthly rentals of P17,000 -- or a total of P51,000 -- would be reasonable. WHEREFORE, this Petition is PARTLY GRANTED, and the assailed Decision and Resolution of the Court of Appeals MODIFIED, as follows: Hereby DELETED is the requirement on the part of petitioner to (1) deliver storage facilities on the ground floor; (2) pay P136,608.75 for unearned income for the five-month period that the lease contract was allegedly suspended; (3) correct the alleged passageway in the balcony; (4) pay P40,000.00 as reimbursement for completion work done by respondent; (5) pay P27,321.75 per month for a period of twenty-one months for the alleged unearned income during the period when the condominium unit remained vacant. Petitioner, however, is ORDERED to pay P51,000 as temperate damages for the termination of the lease contract because of the defects in the condominium unit. All other awards are AFFIRMED. No pronouncement as to costs. SO ORDERED. G.R. No. 132869 October 18, 2001

GREGORIO DE VERA, JR., petitioner, vs. COURT OF APPEALS, Q. P. SAN DIEGO CONSTRUCTION, INC., ASIATRUST DEVELOPMENT BANK, SECOND LAGUNA DEVELOPMENT BANK, CAPITOL CITY DEVELOPMENT BANK, EXOFFICIO SHERIFF OF QUEZON CITY and/or HIS DEPUTY, respondents. BELLOSILLO, J.: This is a Petition for Review, under Rule 45 of the Revised Rules of Court, of the Decision of the Court of Appeals in CA-G.R. CV No. 37281, "Gregorio de Vera, Jr. v. Court of Appeals, QP San Diego Construction, Inc., Asiatrust Development Bank, Second Laguna Development Bank, Capitol City Development Bank, Ex-Officio Sheriff of Quezon City and/or his Deputy," and of its Resolution of 18 February 1998 denying petitioner's Manifestation with Motion for Reconsideration. Respondent Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land located at 101 Panay Avenue, Quezon City, on which it built Lourdes I Condominium. On 10 June 1983, to finance its construction and development, QPSDCI entered into a Syndicate Loan Agreement1 with respondents Asiatrust Development Bank (ASIATRUST) as lead bank, and Second Laguna Development Bank (LAGUNA) and Capitol City Development Bank (CAPITOL) as participating banks (hereafter collectively known as FUNDERS). QPSDCI mortgaged to the creditor banks as security the herein mentioned Panay Avenue property and the condominium constructed thereon. The mortgage deed was registered with the Register of Deeds of Quezon City and annotated on the individual condominium certificates of title (CCT) of each condominium unit.2 On 23 June 1983 petitioner Gregorio de Vera Jr. and QPSDCI, through its authorized agent FilEstate Realty Corporation (FIL-ESTATE), entered into a Condominium Reservation Agreement3 where petitioner undertook to buy Unit 211-2C of the condominium for P325,000.00 under the following agreed terms of payment: (a) an option money of P5,000.00 payable upon

signing of the agreement to form part of the purchase price; (b) a full downpayment of P175,675.00 broken down into the reservation fee of P5,000.00 and three (3) equal monthly installments payable beginning the month after the signing of the contract; and, (c) the remaining balance of P160,000.00 to be secured through petitioner's Pag-IBIG and Open-Housing Loan. Pending release of the loan, petitioner was to avail of a bridge financing loan with ASIATRUST or any accredited originating bank of the Pag-IBIG program. On 2 June 1983 petitioner paid the reservation fee of P5,000.00, and on 11 July 1983 the balance of the downpayment of P167,000.00, thus completing the downpayment of P175,675.00 well before the due date. As incentive, petitioner was given a full discount on cash payment by QPSDCI to bring the total payment to P184,040.00. Pursuant to their Condominium Reservation Agreement, petitioner submitted through FIL-ESTATE his application for the Pag-IBIG loan. On 28 December 1983 ASIATRUST as originating bank notified FIL-ESTATE that petitioner's Pag-IBIG loan application had been approved.4 In a letter dated 18 January 1984 QPSDCI President Quintin P. San Diego forwarded the letter to petitioner. However, the amount approved was only P139,100.00 and not P160,000.00. Additional charges further reduced the amount to P117,043.33. Petitioner De Vera Jr. approached QPSDCI to have the P12,040.00 discount credited to his additional equity. Since the resultant net loan of P117,043.33 was insufficient to cover the balance of the purchase price, De Vera Jr. negotiated with QPSDCI to defer payment of the P23,916.67 deficiency until the project was completed and the unit was ready for turnover. QPSDCI agreed.5 The condominium project was substantially completed in June 1984 and the unit was turned over to De Vera Jr. the following month. Accordingly, petitioner paid QPSDCI the P23,916.67 shortfall between the balance and the granted loan. On 26 June 1984 ASIATRUST through its Vice-President Pedro V. Lucero and Manager Nicanor T. Villanueva wrote to QPSDCI asking the unit buyers to pay in advance the costs of the transfer of titles and registration of their Pag-IBIG loan mortgages.6 QPSDCI forwarded the letter to De Vera Jr. and requested that he pay the amount to QPSDCI.7 As ASIATRUST indicated that the amount be paid directly to it, De Vera Jr. went to the bank for clarification. On 23 August 1983, after learning that ASIATRUST was in possession of the certificate of title, De Vera Jr. paid the transfer expenses directly to ASIATRUST. On 17 September 1984 ASIATRUST sent another notice of approval8 to QPSDCI and De Vera Jr. with the notation, "additional equity of all accounts have (sic) to be paid directly to the Bank." On 3 October 1984 ASIATRUST wrote another letter9 asking QPSDCI to advise the unit buyers, among others, to pay all additional and remaining equities on 10 October 1984; that their Pag-IBIG loan mortgages would be registered only upon payment of those equities; and, that loan mortgages registered after 31 October 1984 would be subject to the increased Pag-IBIG interest rates. On 12 October 1984 ASIATRUST also wrote a letter to petitioner and signed by its Assistant Manager Leticia R. de la Cruz informing him that his housing loan would only be implemented upon the following conditions: (a) Payment of the remaining equity directly to ASIATRUST Development Bank; and (b) Signing of all Pag-IBIG documents not later than 20 October 1984, so his mortgages could be registered on or before 31 October 1984. Mortgages registered beyond said date shall subject the Pag-IBIG loan to the increased interest rates of the National Home Mortgage Finance Corp. (per Circular #27 dated June 21, 1984).

According to petitioner, the letter came as a total surprise to him; all the while he thought that his loan had already been released to QPSDCI and the titles transferred to his name; he promptly wrote ASIATRUST to seek clarification; ASIATRUST responded by informing De Vera Jr. that the developmental loan agreement between QPSDCI and the three (3) banks, under which the individual titles of the condominium units were mortgaged in favor of the FUNDERS to secure the loan, shall be paid out of the net proceeds of the Pag-IBIG loans of the buyers; that the total amount of loan from the FUNDERS was distributed among all condominium units such that each unit had to bear a certain portion of the total loan, or a "loan value;" that per agreement with QPSDCI, ASIATRUST would only grant the Pag-IBIG-Housing Loan with the release of the mortgage liens, which could not be released unless the buyers fully paid their respective loan values; and that petitioner's equity payments to QPSDCI had not been remitted to the bank. On 30 May 1985 ASIATRUST informed QPSDCI that it could no longer extend the bridge financing loan to some of the buyers, including petitioner, for various reasons,10 among which was that petitioner had already exceeded the age limit, hence, he was disqualified.11 After learning of the disapproval of his loan, petitioner wrote the president of QPSDCI to make arrangements to settle his balance. Since petitioner had already invested a substantial amount in remodelling and improving his unit, rescinding the sale was no longer a viable option. Consequently, he only asked the president of QPSDCI for some assurance that the title would be turned over to him upon full payment. In response, QPSDCI suggested that petitioner deal directly with ASIATRUST for any matter regarding the sale of the unit.12 President San Diego explained that "as far as we are concerned we have sold to you our property at a certain price and we have correspondingly issued to your goodself, thru the Bank, a Deed of Absolute Sale for the unit we sold to you taking into consideration that the Bank has approved your loan per their advice dated December 28, 1983 and presumably credited us for the approved amount of loan." As petitioner failed to obtain the housing loan, he was not able to pay the balance of the purchase price. QPSDCI sent him a letter13 dated 6 August 1987 presenting him with two options: (a) to pay the remaining balance of the purchase price, with interest, which had already ballooned to P263,751.63, on or before 15 August 1987; or, (b) to pay rent for the use of the unit from 28 July 1984 to June 1987. On 20 May 1988 petitioner, upon discovering that the FUNDERS had already published a notice14 of extrajudicial foreclosure of the mortgage, filed a complaint against respondents for damages and injunction with urgent prayer for issuance of a writ of preliminary injunction, annulment of mortgage based on fraud, with urgent prayer for the issuance of a writ of preliminary attachment and specific performance. The complaint was docketed as Civil Case No. Q-53737 and subsequently raffled to Branch 107 of the Regional Trial Court of Quezon City. Meanwhile, QPSDCI failed to pay its obligations to the FUNDERS. On 23 May 1988 ASIATRUST extrajudicially foreclosed the mortgage on twenty-seven (27) condominium units, including that of petitioner De Vera Jr. The units were sold at public auction, with the FUNDERS as the highest bidder. The certificate of sale was issued and annotated on the CCTs. On 3 March 1992 the trial court rendered judgment "directing the defendants (herein respondents) to pay to the plaintiff (herein petitioner) jointly and severally the sum equivalent to the penalties and charges plus whatever amount may be necessary to redeem Unit 211-2C from any lien and encumbrances so that the title may be released and delivered to the plaintiff, free from any lien and encumbrances, subject only to the deduction of his unpaid balance of P139,000.00, which the

plaintiff should pay out of his own funds, plus exemplary damages of P100,000.00 each and to pay plaintiff attorney's fees jointly and severally x x x P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's prayer for moral damages and dismissed defendants' counterclaim against the plaintiff and cross-claims against each other.15 The Court of Appeals affirmed the decision of the trial court with the modification that respondents were ordered solidarily to pay petitioner P50,000.00 as nominal damages, but the award for actual and exemplary damages was deleted. On 9 July 1997 petitioner filed a "Compliance with Manifestation and Motion for Extension of Time to File Motion for Reconsideration" alleging that he received the decision of the Court of Appeals on 4 July 1997 and requesting a thirty (30)-day extension within which to file a motion for reconsideration. The motion was denied by respondent appellate court. On 8 August 1997 petitioner filed a "Manifestation with Motion for Reconsideration," and on 6 February 1998 a "Compliance with Motion to Resolve Manifestation with Motion for Reconsideration," with respondent court. Reckoning the deadline of the period to file a motion for reconsideration at 19 July 1997, the Court of Appeals denied petitioner's Motion for Reconsideration for having been filed out of time. Hence, the instant petition for review on certiorari. Petitioner assails the 18 February 1998 Resolution denying his Motion for Reconsideration, asserting that the Court of Appeals should not have denied his motion on mere technicality. Petitioner claims that his counsel was not notified of the Court of Appeals' decision. The Notice of Judgment16 of the decision of the Court of Appeals shows that the same was served on petitioner Gregorio de Vera himself and not on his counsel. Petitioner asserts that service to a party is allowed only if the party is not represented by counsel. But if he is represented by a counsel, then service shall be made upon his counsel unless service upon the party himself is ordered by the court. Unless so ordered, service on the party himself who is represented by counsel is not notice in law, hence, invalid.17 Furthermore, justice will be better served by entertaining this petition than by dismissing it outright. It is always in the power of this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it.18 The trial court found that petitioner's failure to pay the balance of the price of Unit 211-2C was not his fault. It also found that petitioner was a real party in interest to annul the loan agreement between QPSDCI and the FUNDERS, and that he had priority in right to the unit over the FUNDERS. The trial court rejected QPSDCI's counterclaim against petitioner for rentals and sustained petitioner's claim for damages against private respondents. The Court of Appeals ruled that the regular courts had no jurisdiction over the subject matter of the case, the proper venue being the Housing and Land Use Regulatory Board (HLURB). However, respondents were estopped from questioning jurisdiction because they filed counterclaims in the lower court. As to the issue of who had superior right over the Unit 211-2C, the Court of Appeals ruled in favor of petitioner, holding that the mortgage in favor of ASIATRUST, which was the basis for its title, did not bind petitioner inasmuch as the same was not registered with the National Housing Authority (NHA), contrary to the mandate of Sec. 18 of PD 957, or "The Subdivision and Condominium Buyers' Protective Decree.''19 The appellate court further found that QPSDCI breached its warranties as seller under Art. 1547, and also violated its obligation to deliver to petitioner a clean title as required

by Sec. 4 of PD 957. It declared that delivery of the unit to petitioner operated to transfer ownership to him from QPSDCI. Respondents did not appeal. Petitioner contests the decision of the Court of Appeals only insofar as it deleted the award of actual and exemplary damages and attorney's fees. The only issue to be addressed by this Court therefore is the propriety of the award of damages in favor of petitioner. In finding QPSDCI liable for damages, the trial court held x x x it (QPSDCI) has not exerted any reasonable diligence or effort to procure the issuance of the title to the plaintiff. All that it did was to refer the plaintiff to the Funder(s), alleging that he (plaintiff) should transact business with them as the matter of loan is between the plaintiff and the Funder(s), and they had nothing to do with it. However, it collected the additional equity and never forwarded the same to the Funder(s) nor informed the latter of plaintiff's payment thereof. Thus, to the mind of Asiatrust, plaintiff never paid the additional equity, although per records of the Seller, he already had. All these show negligence on the part of the Seller to perform its obligations under the contract to the detriment of the plaintiff, for which it should be liable for damages under Art. 2201 of the Civil Code, for the natural and probable consequences of the breach of the obligation which the parties, specially the Seller, should have foreseen or could have reasonably foreseen at the time the obligation was contracted. As to respondent ASIATRUST, the trial court held that its failure to notify petitioner of the required steps to be taken after the approval of the loan, of the requirement that additional equity be paid directly to the bank and other important aspects of the bridging loan, made it liable for damages under the general provisions on torts under Art. 2176 of the Civil Code, in relation to Art. 2202. In deleting the award for damages, the respondent Court of Appeals explained As earlier found, QPSDCI failed to comply with its warranties as seller. Unfortunately, plaintiff-appellee posits the propriety of the award of actual damages only in the probable sense: that such award is to the amount of interests, penalties and other charges as plaintiff may stand liable for by reason of the non-payment of the purchase price. In other words, plaintiff-appellee admits not having suffered damages in consequence of non-compliance of seller's warranties. Since actual damages are predicated on such pecuniary loss as duly proved, the award of the lower court therefor is plainly not in order x x x (citations omitted). We agree with the respondent Court of Appeals on this point. Petitioner did not present any proof that he suffered any damage as a result of the breach of seller's warranty. He did not lose possession of his condominium unit, although the same had not yet been registered in his name. In his Consolidated Reply, petitioner came up with this feeble argument for claiming actual damages, a rehash of his motion for reconsideration with the Court of Appeals Petitioner reiterates that the compensatory damages awarded is to the amount of interests, penalties and other charges as (he) may stand liable for by reason of the non-payment of the balance of the purchase price of Unit #211 in consequence of the respondent's fault or negligence as evidenced by Exhs. S and S-1. The compensation is the same amount as whatever the liability may be and therefore merely offsets the liability x x x x The cost of clearing the CCT of liens and encumbrances and transferring it to the name of the petitioner are also part of the actual or compensatory damages and are its own proof.

Article 2199 of the Civil Code provides that one is entitled to adequate compensation only for such pecuniary loss suffered by him as is "duly proved."20 This provision denies the grant of speculative damages, or such damage not actually proved to have existed and to have been caused to the party claiming the same.21 Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages.22 This does not mean however that petitioner is liable to private respondents for penalties, interests and other charges that accrued by reason of non-payment of the balance of the purchase price. Respondent ASIATRUST had made several representations to petitioner that his loan had been approved. The tenor of the letters sent by ASIATRUST would lead a reasonable man to believe that there was nothing left to do but await the release of the loan. ASIATRUST cannot hide behind the pithy excuse that the grant of the bridge financing loan was subject to the release of the Pag-IBIG loan. The essence of bridge financing loans is to obtain funds through an interim loan while the PagIBIG funds are not yet available. To await the release of the Pag-IBIG loan would render any bridge financing nugatory. Thus, we agree with the trial court when it said that "the conclusion is inevitable that although the plaintiff was not able to pay, he was a victim of circumstances and his failure was not due to his own fault." Furthermore, Sec. 25 of PD 957 provides: SECTION 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. From the foregoing it is clear that upon full payment, the seller is duty-bound to deliver the title of the unit to the buyer. Even with a valid mortgage over the lot, the seller is still bound to redeem said mortgage without any cost to the buyer apart from the balance of the purchase price and registration fees. It has been established that respondent QPSDCI had been negligent in failing to remit petitioner's payments to ASIATRUST. If QPSDCI had not been negligent, then even the possibility of charges, liens or penalties would not have arisen. Therefore, as between QPSDCI and petitioner, the former should be held liable for any charge, lien or penalty that may arise. However, it was error for the trial court to remedy the situation in the form of an award for damages because, as discussed earlier, the basis for the same does not appear indubitable. Part of the confusion lies in the deficiency of the trial court's decision. It had found that petitioner had superior right to the unit over the FUNDERS and the mortgage in favor of the FUNDERS was contrary to Condominium laws. Therefore, the proper remedy was to annul the mortgage foreclosure sale and the CCT issued in favor of ASIATRUST, and not merely decree an award for damages. We held in Union Bank of the Philippines v. HLURB23 Clearly, FRDC's act of mortgaging the condominium project to Bancom and FEBTC, without the knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now HLURB) as required by P.D. No. 957, was not only an unsound real estate business practice but also highly prejudicial to the buyer David, (who) has a cause of action for annulment of the mortgage, the mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP and FEBTC as highest bidders of the sale.

These remedies were clearly within those sought for in petitioner's complaint. The trial court should have also ordered QPSDCI to credit petitioner's payments to his outstanding balance and deliver to petitioner a clean CCT upon full payment of the purchase price as mandated by Sec. 25 of PD 957. We note that petitioner, believing that he won, did not appeal the trial court's decision. Petitioner is partly to blame for the difficult situation he is in, having filed his complaint with the regular courts instead of the HLURB. Nevertheless, both trial court and the Court of Appeals found that petitioner had superior rights over the condominium unit, that petitioner was not bound by the mortgage in favor of the FUNDERS and, that QPSDCI violated its contract with petitioner by its failure to remit the latter's payments. Such findings are uncontested before us and provide enough ground to warrant the modification of the ruling, so that full relief may be accorded to petitioner. The general rule that an appellate court may only pass upon errors assigned may be waived, and the appellate court may consider matters not assigned when consideration of which is necessary in arriving at a just decision and complete resolution of the case or serve the interests of justice or to avoid dispensing piecemeal justice.24 WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 37281 is MODIFIED thus (a) The mortgage over Unit 211-2C of Lourdes I Condominium covered by CCT No. 2307 as well as its foreclosure sale is declared NULL and VOID. The Ex-Officio Sheriff of Quezon City is ordered to cancel the certificate of sale in favor of ASIATRUST Development Bank over the aforesaid Unit 2112C and the Register of Deeds of Quezon City to cancel the Annotation of the Real Estate Mortgage (Entry No. 7714) and the Annotation of the Certificate of Sale (Entry No. 8087); and (b) Respondents Q. P. San Diego Construction, Inc., and ASIATRUST are ordered to credit all payments made by petitioner Gregorio de Vera Jr., to his outstanding balance, and to deliver to petitioner the certificate of title over Unit 211-2C, Lourdes I Condominium, upon full payment of the purchase price, free from all penalties, liens, charges, except those accruing after finality of this Decision. The award of nominal damages in favor of petitioner in the amount of P50,000.00 is AFFIRMED. SO ORDERED. G.R. No. 118822 July 28, 1997 G.O.A.L., INC., petitioner, vs. COURT OF APPEALS, OFFICE OF THE PRESIDENT LEGAL AFFAIRS, HOUSING AND LAND USE REGULATORY BOARD, RIZALINO SIMBILLO, WILLIAM ONG, HERMINIA MESINA, SELFA MARTINEZ, FILOMENO TENG, RAFAEL JAVIER, FERNANDO DEL MUNDO, MILDRED PAREJA, REMEDIOS LASQUETE, GEORGE CABIGAN and ARCADIO SAMPANG, respondents.

BELLOSILLO, J.: G.O.A.L., INC., (GOAL), in this petition for review on certiorari, seeks to set aside part of the decision of the Court of Appeals dated 28 September 1994 1 which affirmed the decision of the Office of the President Legal Affairs (OPLA) that earlier

likewise affirmed the decision of the Housing and Land Use Regulatory Board (HLURB). Petitioner confines its petition to the construction of the fifth floor of Gemin I Condominium and all works related thereto, including the issuance of title to private respondent Teng and providing free parking spaces for the condominium units. 2 On 23 May 1983 GOAL and the National Housing Authority (NHA) entered into an agreement whereby NHA extended to GOAL a loan of P4.425 million for the construction of Gemin I Condominium at 941 Gonzales St., Ermita, Manila. Sometime in 1984 a "Contract Agreement" was entered into between GOAL and Matson International Corporation for the construction of the condominium within one (1) year at the cost of P4.2 million. However, in the later part of 1984, the contractor abandoned the project with only 60% of it finished. In 1985 GOAL offered the condominium units for sale with private respondents among its buyers. To remedy the situation brought about by the abandonment of the project by the first contractor, GOAL subsequently pursued the construction of the fifth floor with NHA granting additional funding on the condition that it would hold on to the condominium certificates of title of private respondents. In August 1989 private respondents filed with the Housing and Land Use Regulatory Board (HLURB), Office of Appeals, Adjudication and Legal Affairs (OAALA), a complaint against GOAL. Among the issues raised were the illegal construction of the fifth floor of Gemin I Condominium, the failure to deliver the title of private respondent Filomeno Teng despite his repeated demands, and the failure to provide adequate parking spaces for the unit owners. On 31 March 1989 OAALA rendered its decision ordering GOAL, inter alia, (a) to stop the construction of the fifth floor, (b) to deliver the title of private respondent Teng, and (c) to provide adequate parking space for the unit owners. 3 On appeal to the Office of the President Legal Affairs (OPLA) and subsequently to the Court of Appeals, the decision rendered by the HLURB-OAALA was affirmed in toto. Petitioner's motion for reconsideration was denied. Hence this petition. Petitioner imputes error to the Court of Appeal in not finding the true facts of the case that greatly affected its decision, and its decision being contrary to law. GOAL contends that the Court of Appeals failed to appreciate the fact that the construction of the fifth floor was with the written approval of public respondent HLURB as required by Sec. 22 of P.D. 957 which provides Sec. 22. Alteration of Plans. No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by majority of the lot buyers in the subdivision (emphasis supplied). The above provision is clear. We do not have to tussle with legal hermeneutics in the interpretation of Sec. 22 of P.D. 957. The written approval of the National Housing Authority alone is not sufficient. It must be coupled with the written conformity or consent of the duly organized homeowners association of the majority of the lot buyers. Failing in this, the construction of the fifth floor is violative of the decree invoked. The Court of Appeals simply applied the law, and correctly so.

Petitioner likewise contends that it should not have been faulted for failing to deliver the title to private respondent Teng as the proximate cause thereof was the abandonment of the construction project by the first contractor, hence, due to force majeure. 4 We cannot sustain petitioner. There is no one else to blame but itself. Upon full payment of the agreed price, petitioner is mandated by law to deliver the title of the lot or unit to the buyer. Both the "Contract to Sell" of petitioner and private respondents, and Sec. 25 of P.D. 957 state Sec. III (Contract to Sell). Title and Ownership of Unit. Upon full payment by the vendees of the full amount of the purchase price stipulated under Sec. III hereof, the assessments and expenses under Sec. IV and otherwise upon compliance by the VENDEES of all obligations therein, the VENDOR will convey to the VENDEE all rights and interests of the former and to the Unit, subject hereof together with the interest in the common area in the Condominium Corporation appurtenant to such unit . . . Sec. 25, P.D. 957 Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit . . . In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any paid lot or unit may be secured and delivered to the buyer in accordance herewith. Petitioner also attempts to justify its failure to deliver the certificate of title of private respondent Teng by claiming that it used the title as part collateral for the additional loan NHA had extended for the construction of the fifth floor. The Court observes the frequent allusion of petitioner to its predicament brought about by the abandonment of the project by the first contractor. But such is irrelevant in light of Sec. 25 of P.D. 957 as well as the Contract to Sell of the parties. While we empathize with petitioner in its financial dilemma we cannot make innocent parties suffer the consequences of the former's lack of business acumen. Upon full payment of a unit, petitioner loses all its right and interests to the unit in favor of the buyer. Consequently, it has no right to use the certificate of title of respondent Teng as collateral for a new loan. The title of Teng must be released to him as provided by law. With respect to the second issue, petitioner contends that the decision of the Court of Appeals is contrary to law considering that under Sec. 12-D, No. 2, Rule V of the Implementing Rules of P.D. 957, what should be given for free are only "off-street" parking spaces and not indoor parking areas. Petitioner is wrong. It has for purposes of its own construed "off-street" to mean "not including indoor." On the other hand, the law does not exclude "indoor parking." What it specifically excludes is "street parking." Therefore, parking may be in the basement or, in the absence thereof, in the first floor. Furthermore, at this point, a definition of terms may be necessary. In a condominium, common areas and facilities are "portions of the condominium property not included in the units," whereas, a unit is "a part of the condominium property which is to be subject to private ownership." 5 Inversely, that which is not considered a unit should fall under common areas and facilities. Hence, the parking spaces not being subject to private ownership form part of the common area over which the condominium unit owners hold undivided interest. As such, petitioner cannot invoke Sec. I, Art. III, of the Bill of Rights which provides that "No person shall be deprived of life, liberty or

property without due process of law." Petitioner alone does not own the parking area. The parking space is owned in common by the developer and the unit owners. Private respondents must be allowed to use the parking area. Finally, petitioner contends that the payment of P10,000.00 as moral damages and P5,000.00 as exemplary damages plus P5,000.00 as attorney's fees is too much of a penalty. However, the Court of Appeals upheld these awards holding that In the light of the foregoing premises, we sense no error in the award of attorney's fees, moral and exemplary damages, and administrative fine against petitioner. This is allowed by the provisions of civil law and under Secs. 38 and 39 of P.D. 957: Sec. 38. Administrative Fines The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court.
Sec. 39. Penalties Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or imprisonment of not more than ten years: Provided, that in the case of corporations, partnership, cooperatives, or associations, the President, manager, or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. 6

Petitioner can hardly be excused for its failure to comply with the provisions of P.D. 957 by claiming ignorance of the requirements of the decree and that a "mistake upon a doubtful or difficult question of law may be the basis of good faith." Being engaged in a business affected by P.D. 957, petitioner should be aware of its provisions and its mandates which, as can be readily perceived, are clear, simple and unmistakable. 7 WHEREFORE, finding no error in the Decision sought to be reviewed, the petition is DENIED. Costs against petitioner. SO ORDERED.