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[G.R. No. 96259.

September 3, 1996]

HEIRS OF LUIS J. GONZAGA, namely ROMANA, FERNANDO, PAZ,


LUISA and LUIS ANTONIO, all surnamed GONZAGA, petitioners, vs.
HON. COURT OF APPEALS and SPOUSES JOSE LEELIN and
LILIA SEVILLA, respondents.

[G.R. No. 96274. September 3, 1996]

GUILLERMO Y. MASCARIAS, petitioner, vs. HON. COURT OF APPEALS


and SPOUSES JOSE LEELIN and LILIA SEVILLA, respondents.
DECISION
HERMOSISIMA, JR., J.:
Assailed in these consolidated petitions is the decision [1] of the Court of
Appeals[2] in the exercise of its review jurisdiction over a case for annulment of
Torrens title and/or quieting of title with damages [3] filed before the then Court of
First Instance, now the Regional Trial Court of Caloocan City.[4]
There were two (2) defendants in the said case, namely, Luis J. Gonzaga, now
deceased, and petitioner Guillermo Y. Mascarias. The latters appeal from the herein
assailed decision was docketed as G.R. No. 96274, while the former was substituted
by his heirs whose appeal from the same decision was docketed as G.R. No. 96259.
Considering that the two appeals raised the same questions and issues and involved
the same private respondents, we ordered them consolidated upon petitioner
Mascarias motion.[5]
The irreconcilable conflict between petitioners and private respondents centers
on two parcels of land which they each claim in full exclusive ownership.
We gather from the records that one Jose Eugenio had once been the registered
owner of lot nos. 3619 and 3620 of the Cadastral Survey of Caloocan under Transfer
Certificate of Title (TCT) No. 17519. Sometime in 1960, Eugenio sold the two lots to

deceased defendant Luis J. Gonzaga. [6] Consequently, Eugenios TCT No. 17519 was
cancelled, and the Registry of Deeds for the Province ofRizal issued on November
29, 1960, TCT No. 81338[7] in the name of Gonzaga. On September 28, 1981,
Gonzaga sold the two lots to petitioner Mascarias. [8] Following the conveyance,
Gonzagas TCT No. 81338 was cancelled, and issued in the name of Mascarias was
TCT No. 48078[9] covering the same two lots.
Equally borne out by the records, however, is the fact that another
subsisting Torrens title covers the same two lots subject of the sale between Eugenio
and Gonzaga and that between Gonzaga and petitioner Mascarias. This other title is
TCT No. C-26086[10]in the name of private respondent Lilia Sevilla, married to Jose
Seelin, issued on August 2, 1979 by the Registry of Deeds for Metro Manila, District
III. TCT No. C-26086 covers a number of lots, among them, lot nos. 65 and 66
which are identical with lot nos. 3619 and 3620 embraced by the titles issued in the
names of Eugenio, Gonzaga and petitioner Mascarias.
We note on the face of TCT No. C-26086 that the same is a transfer from
Original Certificate of Title (OCT) No. 994 which was registered on April 19,
1917 pursuant to Decree No. 36455. The court a quo made the following findings of
fact as regards the circumstances of that transfer, as follows:
x x x plaintiff [private respondent] purchased the two lots described as Lots No. 65
and 66 from Felicidad Rivera, Benito Rivera and Victoria Rivera, the legal heirs of
Bartolome Rivera, as evidenced by a deed of absolute sale x x x which was
registered on August 2, 1979, under Transfer Certificate of Title No. 26086 x x x
xxx
Bartolome Rivera and his co-plaintiffs in Civil Case No. C-424 are the successorsin-interests of Maria de la Concepcion Vidal, and in a Decision, dated December 29,
1965, rendered by the Court of First Instance of Rizal in Civil Case No. C-424, an
action for partition and accounting x x x it ordered the partition for the plaintiffs of
the properties described under Original Certificates of Titles Nos. 982, 983, 984,
985 and 994.[emphasis supplied]
In Civil Case No. 4557, the then Court of First Instance of Rizal, under Presiding
Judge Cecilia Muoz-Palma, ordered the Register of Deeds of Rizal to cancel the
name of Maria de la Concepcion Vidal from Original Certificate of Title NO. 994
and substitute in lieu thereof the name of Bartolome Rivera and his co-plaintiffs.
Evidently, Bartolome Rivera, the predecessor-in-interest of herein plaintiffs appears
as co-owner in the Original Certificate of Title No. 994 x x x.[11]

The present controversy arose when private respondents filed on October 14,
1981, a complaint for annulment of Gonzagas Torrens title insofar as it embraced lot
nos. 3619 and 3620 which are identical with those described in private respondents
own title as lot nos. 65 and 66. Before the court a quo, Gonzaga interposed an
answer asserting that since he had already sold and conveyed the subject lots
on September 28, 1981 to petitioner Mascarias, private respondents no longer have
any cause of action against him. Consequently, private respondents filed an amended
complaint to include petitioner Mascarias as party-defendant.

in the two Decisions rendered in Civil Case No. C-424 and in Civil Case No. C-1796
by the Court of First Instance of Rizal x x x

Both the court a quo and the respondent appellate court recognize that the two
conflicting TCTs were derived from one common OCT, viz., OCT No. 994.
However, while both the court a quo and the respondent appellate court found that
OCT No. 994 was registered on May 3, 1917, we find that on the one hand,
petitioners titles indicate original registration to have been made on May 3, 1917, but
on the other hand, private respondents title indicates original registration to have
been made on April 19, 1917.

Thus, in said Decision x x x dated December 29, 1965, it ordered a partition of the
subject properties among the plaintiffs being the successors-in-interest of Maria
Concepcion Vidal.

The court a quo resolved the conflicting claims in favor of private respondents.
It ratiocinated in this wise:

x x x This undivided share of Maria de la Concepcion Vidal, consisting of 1189/1000 per cent of the properties described in Original Certificates of Title Nos.
982, 983, 984, 985 and 994, has never been sold or disposed of by said Maria de la
Concepcion Vidal, and therefore, her said share now belongs to the herein plaintiffs
who are the surviving heirs of the said Maria de la Concepcion Vidal and entitled to
said undivided share in the following proportions: Bartolome Rivera, 1/3 of 1189/1000 per cent x x x These plaintiffs, therefore, are now co-owners of the parcels
of land described in Original Certificates of Title Nos. 982, 983, 984, 985 and 994,
in the aforestated proportions and entitled to demand the partition of said
properties. (emphasis supplied)

As matters stand, the Court is once more called upon to determine which of the
conflicting titles is valid.
Let us examine the hard facts.
A deepening scrutiny over the evidence in record bares a relevant distinction
between plaintiffs [private respondents] and defendants [petitioners] titles as to
their origin. As may be seen, defendants [petitioners] titles were registered under
Cadastral Proceedings in Cadastral Case No. 34, Cadastral Record No. 1606,
Cadastral Survey of Caloocan.
Whereas, as the Court finds, plaintiffs [private respondents] title was derived from
the Original Certificate of Title No. 994, issued in Land Registration Case No. 4429,
pursuant to Decree 36455 in 1917.
As indubitably shown in a Deed of Absolute Sale dated January 14, 1977 x x x
plaintiffs [private respondents] acquired the two properties in question, together
with other several parcels of land, from Felicidad Rivera, Benito Rivera and Victoria
Rivera, the legal heirs of one Bartolome Rivera.
Bartolome Rivera and other co-plaintiffs are the successors-in-interests to the
undivided share of Maria Concepcion Vidal in several parcels of land under
Original Certificates of Titles Nos. 982, 983, 984, 985, and 994, as duly established

As may be seen, Maria Concepcion Vidal was one of the original co-owners of the
properties registered under the Original Certificate of Title No. 994, issued by the
Land Registration Court in Land Registration Case No. 4429, pursuant to Decree
NO. 36455 x x x

It bears emphasis that in said Decision of December 29, 1965 x x x it states, in part,
to wit:

Evidently, the sale of the property by Jose Eugenio to defendant Luis Gonzaga on
November 29, 1960 has no valid basis.
In final focus is the Court Order issued by the Court of First Instance of Rizal x x x
in Civil Case No. C-1796 ordering the issuance of a transfer certificate of title in
favor of plaintiffs [private respondents] over several parcels of land including the
two lots in question.
xxx
Considering the findings and the dispositive portion of the Decision of the then
Court of First Instance x x x to the effect that there being no valid ground why the
torrens title should not be issued to the petitioners x x x[private respondents],
considering the deed of sale executed by Victoria, Benito and Felicidad all surnamed
Rivera x x x in favor of petitioners [private respondents] were duly acknowledged

before a notary public and the same found to be regular and in due form, thereby
divesting the land in fee simple form, the registered owner Bartolome Rivera or his
heirs in favor of petitioners x x x [private respondents] their corresponding
technical descriptions having been approved and verified by the Bureau of Lands,
this Court finds plaintiffs [private respondents] rights and title over the properties
in question indubitably established.
True, it is that defendants [petitioners] title was issued by a Cadastral Court in
Cadastral Case No. 34, G.L.R.O. Cadastral Record No. 1106, which was undeniably
subsequent to the Land Registration Case No. 4429 of 1917 x x x but well-settled in
a catenna [sic] of cases is the doctrine that in a cadastral case the Court has no
jurisdiction to decree again the registration of land already decreed in an earlier
land registration case and a second decree for the same land is NULL and VOID. [12]
Accordingly, the court a quo rendered judgment declaring private respondents
TCT No. C-26086 as valid and legal and ordering the Register of Deeds of Caloocan
City to cancel Gonzagas TCT No. 81338 and petitioner Mascarias TCT No. 48079,
the same being null and void.
Petitioners appealed that decision to the respondent court. Petitioners reiterated
specific errors allegedly committed by the court a quo, especially as regards
appreciation of the document denominated as Report and Recommendation issued by
the Land Registration Commission (LRC). Said document was formally offered by
petitioner Mascarias[13] but had been apparently ignored by the court a quo and
considered of little probative value by respondent court for being a mere xerox copy.
In that Report and Recommendation, the LRC concluded that all titles emanating
from Bartolome Rivera under OCT No. 994 have been issued through fraud and
misrepresentation essentially because Maria de la Concepcion Vidal, indicated on the
LRC records to have died at the age of only nine (9) years old, could not have
possibly borne children, among them, Severo who is said to be the ascendant of
Bartolome Rivera from whose heirs, in turn, private respondents purchased the
subject lots.
Likewise rebuffed by the respondent court, petitioners filed a motion for
reconsideration, which was however denied in a resolution[14] dated November 13,
1990.
The respondent Court of Appeals, in affirming the findings and ruling of the
court a quo, gave nary a significance to the aforecited LRC Report and
Recommendation. It ruled:
While We agree with appellants [petitioners] thesis that their respective titles are
valid, the same observation must likewise be extended as regards
appellee [private respondent] Sevillas title, the contrary view not having been

adequately substantiated through relevant and competent evidence. This benefit of


the doubt stands notwithstanding the xeroxed copy of the Land Registration
Commissions purported Report and Recommendation x x x the appended [sic] copy
purportedly to be that of the Commissions report was merely a xerox copy and never
a certified true copy thereof as expressly mandated by Sections 25 and 26, Rule 132,
of the Revised Rules of Court as reiterated in Section 7, Rule 130, of the Revised
Rules of Evidence. Moreover, worth noting is the fact that said xerox copy bore no
signatures of the supposed officials who executed the same x x x No wonder the court
a quo did not bother to lend any weight to this piece of evidence, notwithstanding the
failure of Sevilla to interpose a timely objection thereto. The lack of objection may
make any incompetent evidence admissible x x x But admissibility of evidence should
not be equated with weight of evidence x x x Failure to object to the presentation of
incompetent evidence does not give probative value to the evidence x x x
Granting arguendo, that the Land Registration Commission issued such a report on
February 2, 1981, We believe that the same suffers from a congenital infirmity as it
could not have possibly overruled the final decisions of the various branches of the
then Court of First Instance of Rizal in Civil Case No. C-424, enjoining Bartolome
Rivera and his co-heirs to partition the properties described under OCT Nos. 982,
983, 984, 985, and 994 x x x Civil Case No. 4557, ordering the cancellation of the
name of Maria de la Concepcion Vidal from OCT No. 994 and substitute in lieu
thereof the name of Bartolome Rivera and his co-heirs; and in Land Registration
Case No. 1796, in which the subject realty was ordered to be registered in the name
of herein appellee [private respondent] x x x. Incidentally, LRC No. 1796, dealt
with a Land Registration case which is a proceeding in rem, dealing with a tangible
res, and may be instituted and carried to judgment without personal service upon the
claimants within the state or notice by mail to those outside of it x x x. Jurisdiction is
secured by the power of the court over the res x x x Accordingly, in a registration
proceeding, such as LRC-1796, instituted with or without opposition, the judgment
of the court confirming the title of the applicant x x x [private respondent] and
ordering its registration in his [sic] name constitutes, when final, res judicata
against the whole world (Grey Alba vs. De la Cruz, 17 Phil. 49), herein
appellants [petitioners]included.[15]
Petitioners now come before us seeking a reversal of the aforecited decisions of
the trial court and the respondent appellate court on the basis of the following issues:
(1) Whether or not the trial court may invalidate transfer certificate of title
which have [sic] been previously cancelled.
(2) Whether or not there is a cause of action against Luis Gonzaga.

(3) Whether or not the respondent court should rule on Mascarias motion to
hold in abeyance.
(4) Whether or not Sevillas petition to order the City Register of Deeds of
Caloocan City to issue Transfer Certificate of Title in the Name of
the Petitioner in case #C-1796 in CFI Rizal Branch 32 Caloocan
City is a proceeding in rem.
(5) Whether or not Luis Gonzaga was barred from questioning the title of
Sevilla for his failure to file a petition for review within one year
from the decree of registration issued in favor of Sevilla.[16]
Unfortunately neither can we accord petitioners the relief they seek. In fact, we
must affirm the decisions assailed in this petition, for we are confronted with facts
that are exactly the same as those that we have passed and ruled upon in the case of
Metropolitan Waterworks and Sewerage Systems (MWSS) vs. Court of Appeals.[17]
The antecedent facts of that case are as follows:
Jose B. Dimson was the registered owner of a parcel of land situated in Balintawak,
Kalookan City x x x and covered by TCT No. C-15167 which was registered on June
8, 1978. Said parcel of land was originally Lot 28 of the Maysilo Estate (LRC 5268)
covered by Original Certificate of Title (OCT) No. 994 which was registered on April
19, 1917 pursuant to Decree No. 36455 issued in Land Registration Case No. 4429.
It appears that one of the original owners of OCT No. 994 was the late Maria
Concepcion Vidal married to Pioquinto Rivera. Among the four children was Severo
Rivera y Vidal who died in 1907 leaving Bartolome Rivera as the sole surviving heir.
Bartolome Rivera executed a Deed of Transfer and Conveyance in favor of Jose B.
Dimson whereby he agreed to transfer twenty-five percent (25%) of whatever land he
is entitled in Lot 28 and Lots 25, 26, 27 and 29, all of which are covered by OCT No.
994.
In an action for partition and accounting docketed as Civil Case No. C-424 filed by
Bartolome Rivera and his co-heirs, the then Court of First Instance of Rizal rendered
a decision dated December 29, 1965 ordering the partition of the properties
described in OCT Nos. 994, 983, 984 and 985 among Bartolome Rivera and his coheirs being co-owners and successors-in-interest of the late Maria Concepcion
Vidal.

In an Order dated June 13, 1966, the then Court of First Instance of Rizal approved
the Deed of Transfer and Conveyance executed by Bartolome Rivera in favor of Jose
B. Dimson over Lot 28 and directed the Register of Deeds of Rizal to cancel the
name of Maria Concepcion Vidal from OCT No. 994 and to substitute the names of
Bartolome Rivera and his co-heirs.
In a verified petition docketed as Special Proceedings No. 732 filed by Jose B.
Dimson, the validity of the court Order dated June 13, 1966 was confirmed x x x.
xxx
On the other hand, Metropolitan Waterworks and Sewerage System (MWSS, for
brevity) claimed that it is the registered owner of Lots 2693 and 2695, both with an
area of 599 square meters covered by TCT No. 41028 issued by the Register of
Deeds of Kalookan City on July 29, 1940 and based on the Cadastral Survey of
Kalookan City, Cadastral Case No. 34. It appeared that both lots covered or
included the parcels of land owned by Jose B. Dimson x x x It further appeared on
the face of TCT No. 41028 that it was a transfer from TCT No. 36957 which was
derived from OCT No. 994 dated May 3, 1917.[18]
In the present controversy, judicial adjudication hinges on the question as to
who, between petitioners and private respondents, have the legal and valid title to the
two lots. In resolving this question, we are bound by our ruling in the aforecited
earlier case of MWSS, not only because the latter involved the same OCT No. 994
and the same Cadastral Survey of Kaloocan City under Cadastral Case No. 34, but
also because we squarely dealt with and ruled upon this same issue in the case of
MWSS. In that case we had ruled:
The main issue to be resolved is: In case of overlapping titles, which titles should
prevail.
It is the contention of petitioner MWSS that since its TCT No. 41028 was issued in
1940 while the TCT No. 15167 of private respondents was issued only in 1978,
petitioners title prevails over that of private respondents in point of priority of
issuance.
We do not agree.
Although petitioners title was issued in 1940, it will be noted that petitioners title
over Lots 2693 and 2695 both with an area of 599 square meters was based on the
Cadastral Survey of Kaloocan City, Cadastral Case No. 34, while private

respondents title was derived from OCT No. 994 issued on April 19, 1917. In the
case of Pamintuan vs. San Agustin, this Court ruled that in a cadastral case the
court has no jurisdiction in an earlier land registration case and a second decree for
the same land is null and void.
It must be observed that the title of petitioner MWSS was a transfer from TCT No.
36957 which was derived from OCT No. 994 registered on May 3, 1917. Upon the
other hand, private respondents title was derived from the same OCT No. 994 but
dated April 19, 1917. Where two certificates (of title) purport to include the same
land, the earlier in date prevails x x x. In successive registrations, where more than
one certificate is issued in respect of a particular estate or interest in land, the
person claiming under the prior certificate is entitled to the estate or interest; and
the person is deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who was the holder of
the earliest certificate issued in respect thereof. Hence, in point of priority of
issuance, private respondents title prevails over that of petitioner MWSS.
Lastly, 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 is in
existence. Since the land in question has already been registered under OCT No. 994
dated April 19, 1917, the subsequent registration of the same land on May 3, 1917 is
null and void.[19]
We empathize with petitioner Mascarias who may be a purchaser for value and
in good faith, but whose title, which is only a derivative of the void OCT No. 994
dated May 3, 1917, could not possibly be of force and effect more than its parent
title. Certainly the spring cannot rise higher than its source.
WHEREFORE, the consolidated petitions are hereby DISMISSED. Costs
against petitioners.
SO ORDERED.

G.R. No. L-67451 September 28, 1987


REALTY SALES ENTERPRISE, INC. and MACONDRAY FARMS,
INC., petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Special Third Civil Cases Division),
HON. RIZALINA BONIFACIO VERA, as Judge, Court of First Instance of
Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON CITY DEVELOPMENT
AND FINANCING CORPORATION, and COMMISSIONER OF LAND
REGISTRATION,respondents.

CORTES, J.:
The litigation over the ownership of the parcels of land which are the subject of this
petition started in 1927 when an application for their registration under the Torrens
System was first filed. In the present petition for review Realty Sales Enterprise, Inc.
(hereafter referred to as Realty) and Macondray Farms, Inc. (hereafter referred to as
Macondray) seek a reversal of the Resolution of May 2, 1984 of the Intermediate
Appellate Court, and an affirmance of the Court of Appeals Decision of December
29, 1982.
Two (2) adjacent parcels of land located in Almanza, Las Pias, Metro Manila,
having an aggregate area of 373,868 sq. m., situated in the vicinity of the Ayala
Alabang Project and BF Homes Paraaque are covered by three (3) distinct sets of
Torrens titles to wit:
1) TCT No. 20408 issued on May 29, 1975 in the name of Realty
Sales Enterprise, Inc., which was derived from OCT No. 1609,
issued on May 21, 1958, pursuant to Decree No. N-63394 in LRC
Cases Nos. 657, 758 and 976, GLRO Record Nos. N-29882, N33721 and N-43516, respectively.
2) TCT No. 303961 issued on October 13, 1970 in the name of
Morris G. Carpo, which was derived from OCT No. 8629, issued
on October 13, 1970 pursuant to decree No. N-131349 in LRC
Case No. N-11-M (N-6217), GLRO Record No. N-32166.

3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the
name of Quezon City Development and Financing Corporation,
derived from OCT No. 8931 which was issued on July 27, 1971
pursuant to LRC Case No. P-206 GLRO Record No. N-31777.
On December 29, 1977, Morris Carpo filed a complaint with the Court of First
Instance of Rizal, Branch XXIII, presided over by Judge Rizalina Bonifacio Vera
(hereafter referred to as Vera Court), for "declaration of nullity of Decree No. N63394 and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc.,
Macondray Farms, Inc. and the Commissioner of Land Registration. Subsequently,
however, Carpo withdrew his complaint as against the last named defendant, and the
answer filed on behalf of said government official was ordered stricken off the
record. The complaint alleged that TCT No. 20408 as well as OCT No. 1609 from
which it was derived, is a nullity as the CFI of Rizal, Branch VI, then presided over
by Judge Andres Reyes (hereafter referred to as the Reyes Court) which issued the
order dated May 21, 1958 directing the issuance of a decree of registration, was not
sitting as a land registration court, but as a court of ordinary jurisdiction. It was
further alleged that the original records of LRC Case No. 657, GLRO Record No.
29882 which was the basis for the issuance of said order of May 21, 1958, were lost
and/or destroyed during World War II and were still pending reconstitution; hence,
the Reyes Court had no authority to order the issuance of a certificate of title.
Realty and Macondray alleged in their answer that the Reyes Court was acting as a
court of land registration and in issuing the order of May 21, 1958, was actually
performing a purely ministerial duty for the registration court in Case No. 657,
GLRO Record No. 29882 (and the two other cases, Cases Nos. 758 and 976, with
which said case had been jointly tried and decided) which on August 19, 1935 had
rendered a decision adjudicating the two (2) lots in question to Estanislao Mayuga
(father of Dominador Mayuga, predecessor-in-interest of Realty and Macondray),
which decision was upheld by the Court of Appeals. It was alleged that it is the title
of Carpo which is null and void, having been issued over a parcel of land previously
registered under the Torrens System in favor of another.
With leave of court, Realty and Macondray filed a third-party complaint against the
Quezon City Development and Financing Corporation (hereafter referred to as
QCDFC) and the Commissioner of Land Registration alleging that TCTs Nos.
333982 and 333985 in the name of QCDFC also covered the same parcels of land
subject of the dispute between Carpo and the two corporations, Realty and
Macondray. They thus prayed that Decree No. N-135938 issued on July 22, 1971,
OCT No. 8931 issued on July 27, 1971, as well as TCTs Nos. 333982 and 333985
derived from OCT No. 8931 be declared null and void.

In its answer to the third-party complaint, QCDFC asserted the validity of its own
title alleging that it is the title in the name of Realty which is null and void. QCDFC
also filed a fourth-party complaint against Carmelino Alvendia, Esperanza Alvendia,
Felicisimo Alvendia, Josefina Alvendia, Jacinto G. Miranda, Rosa G. Miranda, Isabel
G. Miranda, and Feliciano G. Miranda, alleging that it bought said parcels of land
from them. It prayed that in the event of an unfavorable judgment against it, fourthparty defendants be ordered to reimburse the purchase price which the corporation
paid to them. However, QCDFC failed to prosecute its case, and the fourth-party
complaint was dismissed for lack of interest.

On May 2, 1984, the IAC, through its Special Third Civil Cases Division, with
Justice Zosa as ponente; concurred in by Justices Camilon and Bidin, promulgated
its Resolution granting Carpo's motion for reconsideration, reversing and setting
aside the decision of December 29, 1982, and affirming the decision of the trial
court. Hence, this petition docketed as G.R. No. 67451.

After hearing, the Vera Court rendered judgment on January 20, 1981, sustaining the
title of Morris G. Carpo to the two (2) lots in question and declaring the titles of
Realty Sales Enterprise, Inc. and QCDFC null and void.

The SPECIAL THIRD CIVIL CASES DIVISION of the


Intermediate Appellate Court (for brevity, referred to herein as
SPECIAL DIVISION) which promulgated the disputed
RESOLUTION of May 2, 1984 had no legal standing under the
provisions of Batas Pambansa Bldg. 129 and, as such, not vested
with jurisdiction and adjudicatory power to pronounce any
decision of final resolution for the Court.

On March 20, 1981, Realty filed a Petition for certiorari with this Court docketed as
G.R. No. L-56471 questioning the decision of the lower court. It also asked that it be
allowed to appear directly to this Court as it was raising only questions of law. After
respondents filed their comments to said petition, this Court passed a resolution
dated October 19, 1981 referring the case to the Court of Appeals "in aid of its
appellate jurisdiction for proper determination on the merits of the appeal."
In its decision dated December 29, 1982, the Court of Appeals, through its Ninth
Division, with Justice Patajo asponente, concurred in by Justices Gopengco and
Kapunan, set aside the decision of the trial court and rendered a new one upholding
the validity of the title in the name of Realty Sales Enterprise, Inc. and declaring null
and void the titles in the name of Carpo and QCDFC.
Carpo filed a motion for reconsideration with the appellate court. In the meantime,
by virtue and pursuant to Batas Pambansa Bldg. 129, or the Judiciary Reorganization
Act of 1980, the Court of Appeals was reorganized into the Intermediate Appellate
Court (IAC). As a consequence, there was a re-raffling of cases and the case was
assigned to the Second Special Cases Division which, however, returned the records
of the case for another re-raffling to the Civil Cases Divisions as it deemed itself
without authority to act on a civil case in view of the allocation of cases to the
different divisions of the IAC under Section 8 of BP 129. The case was then assigned
to the Third Civil Cases Division, composed of Justices de la Fuente, Coquia, Zosa
and Bartolome.
Justices Coquia and Bartolome inhibited themselves, and Justices Camilon and Bidin
were assigned to the Third Civil Cases Division.

Petitioners assign the following errors:


I

II
On the assumption that the SPECIAL DIVISION is legally vested
with jurisdiction and adjudicatory powers under the provisions of
BP 129, it decided questions of substance contrary to law and the
applicable decisions of the Supreme Court because:
(a) The SPECIAL DIVISION'S Resolution of
May 2, 1984 amounted to a denial to the
Petitioners of their right to appeal and judicial
review over fundamental issues of law duly
raised by them in their Petition for Review on
certiorari (G.R. No. 56471), as authorized by the
Constitution (Art. X, sec. 5 (2) (e), the provisions
of the Judiciary Act of 1948 and Rule 42, Sec. 2
of the Rules of Court; and
(b) By its RESOLUTION of May 2, 1984, it
ruled that the decision of the Court of Appeals
could not have gained the nature of a proper and
valid judgment as the latter had no power to pass
upon the appealed judgment of the Court of First
Instance of Rizal (the Vera Court), as appeal and
not certiorari was the proper remedy;

Furthermore, the said SPECIAL DIVISION grossly departed from


the accepted and usual course of judicial proceedings by giving a
perverted and obviously unjustified and illogical interpretation of
the RESOLUTION of July 25, 1983, of the Ninth Division of the
Court of Appeals, holding and declaring that "it has in effect erased
or cancelled the validity of (the DECISION of December 29,
1982), when the said RESOLUTION merely "RESOLVED to
return the records of the case ... for re-raffling and reassignment ...
in view of the allocation of cases to the different Divisions of the
Intermediate Appellate Court under Section 8 of BP 129.
III
The SPECIAL DIVISION by confirming the appealed judgment of
the lower court in effect sanctioned the contemptible disregard of
law and jurisprudence committed by Judge Vera, which call for an
exercise of the power of supervision;
IV
The SPECIAL DIVISION did state in its RESOLUTION of May
2, 1984 a deliberate falsehood, namely, that Morris G. Carpo is a
purchaser in good faith and for value when there is absolutely no
evidence, whether written or testimonial, that was presented by
Carpo, or by anyone else that he was, in fact, a purchaser for value
and in good faith a material matter which was neither alleged
nor referred to in the complaint and in all the pleadings, nor
covered by any of the exhibits presented by all of the parties herein
and solely on the bases of which the case at bar was submitted by
the parties for consideration and decision.
1. To support their contention that the Special Third Civil Cases Division of the
Intermediate Appellate Court which promulgated the Resolution of May 2, 1984 had
no legal standing under the provisions of BP 129 and, as such, not vested with
jurisdiction and adjudicatory power, petitioners cite Sections 4 and 8 of BP 129, to
wit:
Sec. 4. Exercise of powers and functions.The Intermediate
Appellate Court shall exercise its powers, functions and duties,
through ten (10) divisions, each composed of five members. The
Court may sit en banc only for the purpose of exercise
administrative, ceremonial or other non-adjudicatory functions.

Sec. 8. Grouping of Divisions.Of the ten (10) divisions, of the


Court, four (4) divisions, to be known as Civil case Divisions, shall
take cognizance of appeals in civil cases originating from the
Regional Trial Court; two (2) divisions, to be known as Criminal
Cases Divisions, of appeals in cases originating from the Regional
Trial Courts; and four (4) divisions, to be known as Special Cases
Divisions, of original actions or petitions, petitions for review, and
appeals in all other cases, including those from administrative
agencies, except as provided in Section 9 hereof.
Except with respect to the Presiding Appellate Justice, the
appointment of a member of the court should specifically indicate
whether it is for the Civil Cases Divisions, the Criminal Cases
Divisions, or the Special Cases Divisions of the Court. No member
of the Court appointed to any of the three classes of conclusions
shall be assigned to any of the other classes of division except
when authorized by the Supreme Court, upon recommendation of
the Intermediate Appellate Court en banc, if the exigencies of the
service so require. . . . (emphasis supplied)
As officially constituted, the Third Civil Cases Division was composed of Justice
B.S. de la Fuente, as Chairman, Justices Jorge Coquia, Mariano Zosa, and Flores
Bartolome, as Members. In view, however, of the voluntary inhibition of Justices
Coquia and Bartolome from taking part in the case, Justices Bidin and Camilon were
reassigned to the Third Civil Cases Division to form the Special Third Civil Cases
Division.
Petitioners argue that the so-called Special Third Civil Cases Division, not being one
of the ten (10) Divisions of the Court duly vested with jurisdiction, had no
adjudicatory powers. It is also alleged that the reassignment of Justices Bidin and
Camilon is violative of the injunction against appointment of an appellate Justice to a
class of divisions other than that to which he is appointed. (Petition, pp. 21-26.)
This contention has no merit. A reading of the law will readily show that what BP
129 prohibits is appointment from one class of divisions to another class. For
instance, a Justice appointed to the Criminal Cases Divisions cannot be assigned to
the Civil Cases Divisions.
Justice Bidin was reassigned from the Fourth Civil Cases Division, while Justice
Camilon was reassigned from the Second Civil Cases Division. The two therefore
come from the same class of divisions to which they were appointed.

Thus, the reassignment of Justices Bidin and Camilon to form the Special Third Civil
Cases Division in view of the voluntary inhibition of two (2) "regular" members, is
still within legal bounds. Otherwise, a situation would have arisen where a regular
division could not decide a particular case because some members thereof inhibited
themselves from participating in said case.

As stated earlier, Realty originally filed a Petition for certiorari with this Court
docketed as G.R. No. L-56471 questioning the decision of the Vera Court, and asking
that it be allowed to appeal directly to this Court as it was raising only questions of
law. However, this Court referred the case to the Court of Appeals "in aid of its
appellate jurisdiction for proper determination on the merits of the appeal."

2. The second assigned error involves a determination of the correctness of the ruling
of the IAC that the CA Decision of December 29, 1982 could not have gained the
nature of a proper and valid judgment (since appeal and not certiorari was the proper
remedy) and that the Resolution of July 25, 1983 had in effect erased or cancelled the
validity of said Decision.

It may thus be observed that even this Court treated the petition first filed as an
appeal, and not as a special civil action for certiorari. After as, a petition for review
by certiorari is also a form of appeal. (People v. Resuello L-30165, August 22, 1969,
69 SCRA 35).

The IAC said in its Resolution of May 2,1984:


Said resolution of July 25, 1983, to Our view, was effectively an
acknowledgment by the Division that promulgated it that the
earlier Decision dated December 29, 1983 rendered in a Special
Civil Action case for certiorari, CA-G.R. No. SP-13530, was not
appropriate and beyond the authority of the Ninth Division of the
Court of Appeals to promulgate. The said Resolution was actually
a statement that the Ninth Division of the Court of Appeals had
over-stepped its bounds by reviewing in certiorari proceedings a
decision in a purely civil case that should have passed through the
processes of an ordinary appeal. We are not aware of any legal
doctrine that permits an appellate court to treat a petition for
review on certiorari upon purely questions of law, such as that filed
by petitioners herein, as an ordinary appeal. Neither can we find
any legal basis or justification for the election by the appellate
court of the essential requisites then prescribed for the validity of
an appeal, such as the submission of a formal notice of appeal, an
appeal bond and approved record on appeal. Without any of these
mandatory requisites, the appeal could not have been deemed
perfected and ought to have been dismissed outright.
The Court does not agree.
There are two modes by which cases decided by the then Courts of First Instance in
their original jurisdiction may be reviewed: (1) an ordinary appeal either to the
Supreme Court or to the Court of Appeals, or (2) an appeal on certiorari to the
Supreme Court. To the latter category belong cases in which only errors or questions
of law are involved. Each of these modes have different procedural requirements.

This mode of appeal under Rule 42 is in the form and procedure outlined in Rule 45
which, unlike ordinary appeals, does not require a notice of appeal, an appeal bond
and a record on appeal.
Thus it was error for the IAC to hold that the Decision of the Vera Court "cannot be
passed upon anymore in the Court of Appeals decision because appeal and not
certiorari was the proper remedy." Precisely, petitioners brought the case to this
Court on appeal, albeit by way of certiorari.
Respondent Carpo cited authorities holding that certiorari is not a substitute for
appeal. Those cases are not in point. They refer to the special civil action of certiorari
under Rule 65, and not to appeal by way of certiorari under Rule 45.
Similarly, the IAC Special Civil Cases Division erred in interpreting the Resolution
dated July 25, 1983 of the Second Special Cases Division (to which the case was
assigned after the reorganization under BP 129) as having "erased or cancellation"
the validity of the Decision of the Ninth Division. A perusal of said Resolution shows
that it merely made clarification about the nature of the case and why it should be
reassigned to the Civil Cases Division of the IAC. There was not the slightest
implication that it "erased or cancelled" the validity of the Decision of the Ninth
Division.
Even the IAC Special Third Civil Cases Division impliedly admitted the validity of
the Decision of the Ninth Division when it granted Carpo's motion for
reconsideration. It would have been incongruous to grant a motion to reconsider a
decision, reverse and set it aside, if in the first place it did not have any validity. It
would have been necessary only to decide its invalidity.
3. In the third assigned error, Petitioners contend that the Vera Court, and the IAC
Special Third Civil Cases Division, erred in upholding the validity of the title in the

name of Carpo and declaring null and void the titles in the names of Realty and of
QCDFC.
The basis of the complaint fired by Carpo, which was the same basis for the of the
Vera Court and the IAC Special Division, is that the Reyes Court had no authority to
issue the order of May 21, 1958 directing the issuance of a decree of registration in
favor of Mayuga, predecessor-in-interest of Realty, as it was not sitting as a land
registration court and also because the original records of LRC Case No. 657, Record
No. N-29882 were lost and/or destroyed during World War II and were still pending
reconstitution.
Under Act No. 496, Land Registration Act, (1902) as amended by Act No. 2347
(1914), jurisdiction over all applications for registration of title to and was conferred
upon the Courts of First Instance of the respective provinces in which the land
sought to be registered is situated.
Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the
filing in court of the application for registration, and is retained up to the end of the
litigation. The issuance of a decree of registration is but a step in the entire land
registration process; and as such, does not constitute a separate proceeding.
In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador
Mayuga, predecessor-in-interest of Realty, who originally filed on June 24, 1927 a
registration proceeding docketed as LRC Case No. 657, GLRO Record No. N-29882
in the Court of First Instance of Rizal to confirm his title over parcels of land
described as Lots 1, 2 and 3, Plan Psu-47035. (Lots 2 and 3 the subject of the instant
litigation among Carpo, RRealty and QCDFC.) Case No. 657 was jointly tried with
two other cases, LRC Case No. 976, GLRO Record No. 43516 filed by Eduardo
Guico and LRC Case No. 758, GLRO Record No. 33721 filed by Florentino
Baltazar, as the three cases involved Identical parcels of land, and Identical
applicants/oppositors.
On August 19, 1935 the CFI-Rizal acting as a land registration court issued a
consolidated decision on the three cases, the dispositive portion of which reads:
En meritos de to do lo expuesto, se ordena el registro de los lotes,
1, 2 y 3 del plans PSU-47035 a nombre de Estanislao Mayuga,
desist oposicion de Florentino Baltazar y Eduardo Guico con
respects a dichos lotes....

On appeal, the above decision of the CFI was affirmed by the


Court of Appeals in its decision dated November 17, 1939. the
dispositive portion of which reads:
Por todas last consideraciones expuestas confirmamos la decision
apelada en cuanto adjudica a Estanislao Mayuga los lotes, 1, 2 y 3
de such piano y que equivalent a lost lotes, 4, 5 y 6 del plano de
Baltazar y 4 y 5 del plans de Guico.
xxx xxx xxx
Guico filed a petition for review on certiorari before this Court, but the petition was
dismissed and the Court of Appeals decision was affirmed (See Guico v. San
Pedro, 72 Phil. 415 [1941]).
Before he could secure a decree of registration in his name, Estanislao died.
On May 13, 1958 Dominador Mayuga, son of Estanislao, filed a petition with the
Reyes Court docketed as Case No. 2689 alleging that he was the only heir of the
deceased Estanislao Mayuga and praying for the issuance of a decree of registration
over the property adjudicated in favor of Estanislao. At this point, it cannot be
overemphasized that the petition filed by Dominador is NOT a distinct and separate
proceeding from, but a continuation of, the original land registration proceedings
initiated by Estanislao Mayuga, Florentino Baltazar and Eduardo Guico. In the same
vein, the Reyes Court, as Branch VI of the Court of First Instance of Rizal, was
continuing in the exercise of jurisdiction over the case, which jurisdiction was vested
in the CFI-Rizal upon filing of the original applications.
On May 21, 1958 the Reyes Court issued an order granting the petition of
Dominador Mayuga and directing the Commissioner of Land Registration to issue a
decree of registration over Lots 1, 2 and 3 of Plan Psu-47035, substituting therein as
registered owner Dominador Mayuga in liue of Estanislao.
Respondent Carpo, however, contends, that since the records of LRC Case No. 657
were not properly reconstituted, then there was no pending land registration case.
And since the Reyes Court was acting without a pending case, it was acting without
jurisdiction. (Respondent Carpo's Memorandum, pp, 2-8.)
He cites the case of Villegas v. Fernando (L-27347, April 29, 1969, 27 SCRA 1119)
where this Court said that upon failure to reconstitute pursuant to law, "the parties are
deemed to have waived the effects of the decision rendered in their favor and their

10

only alternative is to file an action anew for the registration in their names of the lots
in question," citing the case of Ambat v. Director of Lands, (92) Phil. 567 [1953])
and other cases. The basis of said ruling is Section 29 of Act No. 3110, an Act to
provide an adequate procedure for the reconstitution of the records of pending
judicial proceedings and books, documents, and files of the office of the register of
deeds, destroyed by fire or other public calamities, and for other purposes.
However, the Ambat case, in so far as it ruled on the effect of failure to reconstitute
records on the status of the case in its entirety, was modified in the case of Nacua v.
de Beltran, (93) Phil. 595 [1953]). where this Court said:
(W)e are inclined to modify the ruling (in the Ambat case) in the
sense that Section 29 of Act No. 3110 should be applied only
where the records in the Court of First Instance as well as in the
appellate court were destroyed or lost and were not reconstituted,
but not where the records of the Court of First Instance are intact
and complete, and only the records in the appellate court were lost
or destroyed, and were not reconstituted. One reason for this view
is that section 29 of Act 3110 is found among the sections and
provisions dealing with the reconstitution of records in the Court of
First Instance in pending civil cases, special proceedings, cadastral
cases and criminal cases. A study of Act (No.) 3110 ... who show
that there are separate procedures for the reconstitution of records
in the Justice of the Peace Courts, from Sec. 48 to Sec. 53; for the
reconstitution of records in the Supreme Court, now including the
Court of Appeals, from Sec. 54 to Sec. 74; for the reconstitution of
records in the office of the Register of Deeds, from Sec. 75 to Sec.
90 and for the reconstitution of destroyed records in the Courts of
First Instance, from Sec. 1 to Sec. 47, under which sections, Sec.
29 is obviously comprehended.
The whole theory of reconstitution is to reproduce or replace
records lost or destroyed so that said records may be complete and
court proceedings may continue from the point or stage where said
proceedings stopped due to the loss of the records. The law
contemplates different stages for purposes of reconstitution. . . .
. . . (S)ection 4 covers the stage were a civil case
was pending trial in the Court of First Instance at
the time the record was destroyed or lost; section
6 evidently refers to the stage where the case had
been tried and decided but was still pending in

the Court of First Instance at the time the record


was destroyed or lost; section 6 covers the stage
where the case was pending in the Supreme
Court (or Court of Appeals) at the time the
record was destroyed or lost. *
If the records up to a certain point or stage are lost and they are not
reconstituted, the parties and the court should go back to the next
preceding age where records are available, but not beyond that;
otherwise to ignore and go beyond the stage next preceding would
be voiding and unnecessarily ignoring proceedings which are duly
recorded and documented, to the great prejudice not only of the
parties and their witnesses, but also of the court which must again
perforce admit pleadings, rule upon them and then try the case and
decide it anew,-all of these, when the records up to said point or
stage are intact and complete, and uncontroverted.
xxx xxx xxx
. . . (T)o require the parties to file their action anew and incur the
expenses and (suffer) the annoyance and vexation incident to the
filing of pleadings and the conduct of hearings, aside from the
possibility that some of the witnesses may have died or left the
jurisdiction, and also to require the court to again rule on the
pleadings and hear the witnesses and then decide the case, when an
along and all the time the record of the former pleadings of the trial
and evidence and decision are there and are not disputed, all this
would appear to be not exactly logical or reasonable, or fair and
just to the parties, including the trial court which has not
committed any negligence or fault at all.
The ruling in Nacua is more in keeping with the spirit and intention of the
reconstitution law. As stated therein, "Act 3110 was not promulgated to penalize
people for failure to observe or invoke its provisions. It contains no penal sanction. It
was enacted rather to aid and benefit litigants, so that when court records are
destroyed at any stage of judicial proceedings, instead of instituting a new case and
starting all over again, they may reconstitute the records lost and continue the case. If
they fail to ask for reconstitution, the worst that can happen to them is that they lose
the advantages provided by the reconstitution law" (e.g. having the case at the stage
when the records were destroyed).

11

Applying the doctrine in the Nacua decision to LRC Case No. 657, the parties
thereto did not have to commence a new action but only had to go back to the
preceding stage where records are available. The land registration case itself re.
mained pending and the Court of First Instance of Rizal continued to have
jurisdiction over it.
The records were destroyed at that stage of the case when an that remained to be
done was the ministerial duty of the Land Registration Office to issue a decree of
registration (which would be the basis for the issuance of an Original Certificate of
Title) to implement a judgment which had become final (See Government v. Abural,
39 Phil. 996 [1919] at 1002; Sta. Ana v. Menla, 111 Phil. 947 [1961], 1 SCRA 1294;
Heirs of Cristobal Marcos v. De Banuvar, 134 Phil. 257 [1968], 26 SCRA 316).
There are however authentic copies of the decisions of the CFI and the Court of
Appeals adjudicating Lots 1, 2 and 3 of Plan Psu-47035 to Estanislao Mayuga.
Moreover, there is an official report of the decision of this Court affirming both the
CFI and the CA decisions. A final order of adjudication forms the basis for the
issuance of a decree of registration.
Considering that the Reyes court was actually in the exercise of its jurisdiction as a
land registration court when it issued the order directing the issuance of a decree of
registration, "substituting therein as registered owner Dominador Mayuga, in hue of
the original adjudicates, Estanislao Mayuga, based on the affidavit of selfadjudication, subject to the provisions of Sec. 4, Rule 74 of the Rules of Court,"
which order is in consonance with the ruling of this Court in the Guico decision, and
the decisions of the CFI-Rizal and the CA dated August 19, 1935 and November 17,
1939, respectively, We uphold the validity of said order and rule that Judge Vera was
without jurisdiction to set it aside.
4. In upholding the title of Carpo as against those of Realty and QCDFC, the Special
Division also relied on Carpo's being an innocent purchaser for value.
Whether or not Carpo is an innocent purchaser for value was never raised as an issue
in the trial court. A perusal of the records of the case reveals that no factual basis
exists to support such a conclusion. Even Carpo himself cites no factual proof of his
being an innocent purchaser for value. He merely relies on the presumption of good
faith under Article 527 of the Civil Code.
It is settled that one is considered an innocent purchaser for value only if, relying on
the certificate of title, he bought the property from the registered owner, "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 persons in the property." (Cui v. Henson, 51

Phil. 606 [1928], Fule v. De Legare, 117 Phil. 367 [1963], 7 SCRA 351.) He is not
required to explore farther than what the Torrens title upon its face indicates. (Fule v.
De Legare supra.)
Carpo bought the disputed property from the Baltazars, the original registered
owners, by virtue of a deed executed before Iluminada Figueroa, Notary Public of
Manila dated October 9, 1970. However, it was only later, on October 13, 1970, that
the decree of registration in favor of the Baltazars was transcribed in the Registration
Book for the Province of Rizal and that an Original Certificate of Title was issued. It
was on the same day, October 13, 1970, that the deed evidencing the sale between
the Baltazars and Carpo was inscribed in the Registry of Property, and the Original
Certificate of Title was cancelled as Transfer Certificate of Title No. 303961 in the
name of Carpo was issued. (Exhibit 12, Rollo pp. 270-273.)
Thus, at the time of sale there was as yet no Torrens title which Carpo could have
relied upon so that he may qualify as an innocent purchaser for value. Not being a
purchaser for value and in good faith, he is in no better position than his
predecessors-in-interest.
The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an
oppositor in the original application filed by Estanislao Mayuga in 1927. As stated
earlier, the CFI-Rizal confirmed the title of Estanislao to Lots 1, 2 and 3 of Plan Psu47035 "desestimando oposicion de Florentino Baltazar . . . con respeto a dichos lotes
. . ." As such successors of Florentino, they could not pretend ignorance of the land
registration proceedings over the disputed parcels of land earlier initiated by Eduardo
Guico, Florentino Baltazar and Estanislao Mayuga, as when as the decisions
rendered therein.
Moreover, it is not disputed that the title in the name of Dominador Mayuga, from
whom Realty derived its title, was issued in 1958, or twelve years before the
issuance of the title in the name of the Baltazars in 1970.
In this jurisdiction, it is settled that "(t)he general rule is that in the case of two
certificates of title, purporting to include the same land, the earlier in date
prevails . . . . In successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming under the prior
certificate is entitled to the estate or interest; and that person is deemed to hold under
the prior certificate who is the holder of, or whose claim is derived directly or
indirectly from the person who was the holder of the earliest certificate issued in
respect thereof . . . ." (Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915] at 595-596;
Garcia V. CA, Nos. L-48971 and 49011, January 22, 1980, 95 SCRA 380.)

12

TCT No. 20408 derived from OCT 1609, is therefore superior to TCT No. 303961
derived from OCT 8629.

property. By Resolution of August 29, 1984, this Court denied the motion for
consolidation.

5. For its part, respondent Quezon City Development and Financing Corporation
(QCDFC) alleges that it has been improperly impleaded as thirty-party defendant
inasmuch as Realty's alleged cause of action against it is neither for contribution,
indemnity, subrogation or any other relief in respect of Carpo's claim against Realty.
It likewise alleges that Realty had no cause of action against it since the third party
complaint did not allege that QCDFC violated any legal right of Realty, QCDFC also
assails the Vera Court decision in that it declares QCDFC directly liable to Carpo and
not to Realty.

In this connection, it must be emphasized that the action filed by Carpo against
Realty is in the nature of an action to remove clouds from title to real property. By
asserting its own title to the property in question and asking that Carpo's title be
declared null and void instead, and by filing the third-party complaint against
QCDFC, Realty was similarly asking the court to remove clouds from its own title.
Actions of such nature are governed by Articles 476 to 481, Quieting of Title, Civil
Code (Republic Act No. 386), and Rule 64, Declaratory Relief and Similar
Remedies, Rules of Court.

In the first place, QCDFC did not appeal from the decision of the Vera Court, nor
from the decision of the Court of Appeals dated December 29, 1982, nor from the
resolution of the IAC Special Third Civil Cases Division dated May 2, 1984 all of
which voided QCDFCs title to the disputed property. Hence, said
decisions/resolution have become final and executory as regards QCDFC.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in
personam, but being against the person in respect of the res, these proceedings are
characterized as quasi in rem. (McDaniel v. McElvy, 108 So. 820 [1926].) The
judgment in such proceedings is conclusive only between the parties. (Sandejas v.
Robles, 81 Phil. 421 [1948]).

Moreover, even as this Court agrees with QCDFC that the third-party complaint filed
against it by Realty was procedurally defective in that the relief being sought by the
latter from the former is not in respect of Carpo's claim, policy considerations and
the factual circumstances of the case compel this Court now to rule as well on
QCDFC's claim to the disputed property. ** To rule on QCDFC's claim now is to
avoid multiplicity of suits and to put to rest these conflicting claims over the
property. After an, QCDFC was afforded fun opportunity, and exercised its right, to
prove its claim over the land. It presented documentary as well as testimonial
evidence. It was even permitted to file a fourth-party complaint which, however, was
dismissed since it failed to prosecute its case.

The ruling in this case is therefore without any prejudice to this Court's final
determination of G.R. No. L-46953.
WHEREFORE, the Resolution of May 2,1984 of the Intermediate Appellate Court
and the Decision of January 20, 1981 of the CFI-Rizal Branch XXIII, are SET
ASIDE and the Decision of December 29, 1982 of the Court of Appeals is
AFFIRMED.
SO ORDERED.

QCDFC derived its title from Carmelino Alvendia et. al., the original registered
owners. Original Certificate of Title No. 8931 in the name of Spouses Carmelino
Alvendia, et. al. was issued on July 27, 1971, or thirteen (13) years after the issuance
of Mayuga's title in 1958.
Since Realty is claiming under TCT No. 1609 which was issued earlier than OCT
No. 8931 from which QCDFC's title was derived, Realty's title must prevail over that
of QCDFC.
6. During the pendency of this case, Petitioners filed a manifestation alleging that the
case at bar is closely connected with G.R. No. L-469953, Jose N. Mayuga et. al. v.
The Court of Appeals, Macondray Farms, Inc., Realty Sales Enterprise, inc., et.
al. and moved for consolidation of the two cases involving as they do the same

13

G.R. No. L-43679 October 28, 1980


LEONARDO N. AZARCON and ROSA CAJUCOM AZARCON, plaintiffsappellants,
vs.
LEOPOLDO VALLARTA, LUIS T. VALLARTA, JULIAN T. VALLARTA,
CORAZON VALLARTA and EMILIO LORENZO (Husband), defendantsappellees.

MELENCIO-HERRERA, J.:,
Appeal certified to this Tribunal in 1976 by the Court of Appeals on a question of
law in that the issue is the construction or interpretation placed upon pleadings and
documentary evidence or the correctness of the conclusions drawn therefrom.
The plaintiffs are the spouses ROSA Cajucom-Azarcon and Leonardo Azarcon,
hereinafter referred to as the appellants Azarcons. The defendants are Leopoldo
Vallarta, Luis T. Vallarta, Julian T. Vallarta, Corazon Vallarta and her husband Emilio
Lorenzo, who shall collectively be called the appellees Vallartas.
The controversy centers around a parcel of irrigated riceland situated at Sitio
Bagnoy, San Juan de Dios, Aliaga, Nueva Ecija, of approximately ten hectares,
previously owned by Dr. Jose V. Cajucom, father of appellant ROSA CajucomAzarcon. It used to be covered by two titles, namely, Original Certificate of Title No.
P-2815 1 in the name of appellants Azarcons, and Original Certificate of Title No. L3093 2 previously in the names of the appellees Vallartas, but now covered by several
Transfer Certificates of Title in their individual names. 3
Evidence for the appellees Vallartas shows that on March .14, 1932, Dr. Jose V.
Cajucom sold to Julian Vallarta Sr., and his first wife Francisca Trinidad, parents of
the Vallartas, a parcel of agricultural land of nine hectares situated in Sitio Bagnoy,
San Juan de Dios, Aliaga, Nueva Ecija. The Vallartas claim that in a resurvey made
on September 6, 1959, their parents discovered that the land sold, believed to be only
nine hectares, was actually nineteen hectares. Consequently, on October 7, 1960, Dr.
Cajucom executed, in favor of Julian Vallarta, Sr., a "Waiver and Quit claim" over
the excess ten hectares, now in dispute, in consideration of the amount of P5,
000.00. 4 The land referred to in said document was that described in Psu-171661, a
survey plan prepared for Dr. Cajucom on November 7, 1958, with an area of 106,632

square meters. A subsequent survey on September 6, 1959 (psu-177178) disclosed an


actual area of 102,704 sq. m. after deducting the areas covered by irrigation canals.
On the other hand, evidence for the appellants Azarcons also show that on October
20, 1959, a year before the aforementioned waiver, Dr. Cajucom executed a "Deed of
Absolut0e Sale" of the same land in favor of the Azarcons, in the amount of
P20,000.00. The document also referred to the same plan Psu-171661 and recited
that the property was unregistered land and that it was the "paraphernal" property of
Dr. Cajucom having been inherited by him from his father Nicolas Sarenas
Cajucom. 5
In 1961, appellant ROSA filed a Free Patent Application over the disputed
property. 6 In support of her application, ROSA presented the affidavits of Antonio
Puno, Antonio de la Cruz, Bruno Santos and Emilio Sanguesa attesting to the actual
occupation and cultivation of the land in dispute since 1934 by herself and/or her
predecessors-in-interest. 7 The Free Patent Application was approved on February 26,
1961 and Free Patent Entry No. 18504 was thereafter issued by the Director of
Lands. 8
On May 8, 1961, the Register of Deeds of Nueva Ecija issued Original Certificate of
Title No. P-2815 in the name of the Azarcons.
Going back to the Vallartas, their evidence further discloses that on May 12, 1964,
Julian Vallarta, Sr. sold his one half portion of the disputed property to his children
by his first wife who died in 1959, namely, Jaime, Julian, Jr., Francisca, Luis,
Corazon, Librada, Cesar, Roberto, Mariano and Leopoldo, all surnamed Vallarta, in
the amount of P10,000.00. 9
Sometime in 1965, the Vallarta heirs, including appellees, filed with the Court of
First Instance, Branch III, Nueva Ecija, an application for registration of the disputed
property (LRC Rec. No. L-26618). The opposition of the Director of Lands and the
Director of Forestry having been withdrawn, decision was rendered on April 18,
1966 affirming the title of the Vallarta heirs and ordering registration in their
names, 10 Conformably thereto, on July 18, 1966, the Register of Deeds of Nueva
Ecija issued Original Certificate of Title No. L-3093 in the name of the
aforementioned Vallarta heirs.
Later, the disputed property was subdivided and the appellees herein secured for
themselves Transfer Certificates of Title in their names as previously mentioned.
Appellees also secured the corresponding Tax Declarations in their names 11 and paid
real estate taxes on the property 12 from 1966-1969, as well as irrigation fees from
1956-1963 fully and partially for the years 1964-1968. 13

14

The resultant situation then is a 10-hectare irrigated riceland sold successively by its
previous owner to the two sets of opposing parties herein, and covered by two
distinct original certificates of title in their respective favor.

III. ... in holding that the defendants are the owners and in actual
possession of the land in question since March 14, 1932, the same
having been sold by Jose V. Cajucom in favor of Julian Vallarta;

The Azarcon letters of demand to vacate, dated March 5 and 22, 1968, having been
ignored by the Vallartas, on March 18, 1969, appellants Azarcons filed a petition
with the Court of First Instance, Branch III, of Nueva Ecija in LRC No. 26618 for
the cancellation of the Vallarta titles. On a motion to dismiss filed by the Vallartas
and without going into the merits of the case, the Court dismissed the same on the
ground that it could not entertain in the same registration proceedings a petition
where its decision had long become final and executory. The dismissal, however, was
without prejudice to the filing of the proper action before the competent Court. 14

IV. ... in considering that the Land Title no. 3093 of the defendants
is superior to the Free Patent Title of the plaintiff-appellants

Thus, on May 6, 1968, the Azarcons filed the instant Complaint for Cancellation and
Annulment of Titles with the Court a quo, which the Vallartas traversed and
controverted, and with each set of litigants asserting the validity, superiority, and
indefeasibility of their respective titles. Without trial and only on the basis of
memoranda and documentary evidence submitted the lower Court rendered a
Decision in favor of the Vallartas on December 27, 1969, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of the
defendants and against the plaintiffs, and declaring plaintiff's Free
Patent No. 167650 and/or OCT No. P-2815 of the Land Records of
Nueva Ecija null and void, and ordering the Register of Deeds of
this Province to cancel the same, at plaintiff's expense.
Dissatisfied with the judgment and with the denial of their Motion for
Reconsideration, the Azarcons elevated the case to the Court of Appeals which
certified the same to this Court.
The Azarcons ascribe the following errors to the lower Court:
1. ... in holding that the land covered by the Free Patent Title of the
plaintiffs-appellants is the private property of Jose V. Cajucom, Sr.
and not a part of the public domain;
II. ... in holding that Free Patent No.16750 issued on May 8, 1961
and registered in the Registry of Deeds of Nueva Ecija on July 18,
1961 under Original Certificate of Title No. P-2815 is under
section 91 of CA 141, ipso facto cancelled is null and void;

V. ... in not considering the counterclaim filed by defendants for


which they paid no docket fee to the clerk of court a collateral
attack to the title of the plaintiffs-appellants.
The foregoing take issue with the following findings of the trial Court:
In view of the existence of two distinct titles over the same
property it is thus clear that the only issue to be resolved by this
Court is: which of the two titles must prevail, is it Free Patent No.
167690 of the plaintiffs or Original Certificate of Title No. L-3093
(now Transfer Certificate of Titles Nos. 67396, 67397, 80934 and
80936) of the defendants?
Upon consideration of the applicable laws and jurisprudence, the
Court decides the foregoing issues in favor of the defendants.
A free patent which purports to convey land to which the
government did not have any title at the time of its issuance does
not vest any title in the patentee as against the true owner (Suva vs.
Ventura, 40 Off. Gaz., pp. 47-48, 4th Supp., Aug. 2341, Ct. App;
Ramoso vs. Obligado, 70 Phil. 86; Director of Lands vs. Reyes, 69
Phil. 497: Vital vs. Anora, G. R. No. L-4176, February 29, 1952).
Plaintiffs were fully aware that on February 26, 1961 when their
application was approved, the land in question was not a part of the
public domain as to be disposable by the Director of Lands,
because as early as October 20, 1959 by virtue of their Exh. 'A'
they knew too well that the land of the private ownership of the
patentees' father Jose V. Cajucom from when they allegedly bought
the same for P 2,000.00. That said land was no longer a part of the
public domain but of the private ownership of Jose V. Cajucom
even before the Second World War is further attested by the fact
that as early as March 14, 1932 the Same owner had disposed of
his private property to defendant's predecessors and reaffirmed by
him on October 7, 1960 (Exh. '3'). Pursuant to the abovecited
cases, where a person, who obtained free patent, knowingly made a

15

false statement of material and essential facts in his application, by


stating that the land applied for was part of the public domain not
occupied or claimed by any other person, when in fact, the same
had formally belonged to another as his private property from
whom he alleged to have acquired it, it was held that in accordance
with Section 91 of Com Act No. 141 his title ipso facto cancelled,
and consequently, rendered null and void.
Another fatal misrepresentation in plaintiffs' application which
legally results in the nullity of their free patent are their statements
that they and their predecessors were in actual possession of the
land since 1926 and that they have paid continuously since July 4,
1926 the real estate tax thereof, both of which are cont contrary to
the evidence adduced in this case. As to possession, the defendants
or their predecessors were in continuous possession of the disputed
land since March 14, 1932. In fact, it was only on March 5, 1968
when plaintiffs attempted, to take over said possession. The same
is true on the matter of payments of the realty tax (Exhs. B-C,
plaintiffs; Exhs. 5 to 18, inclusive, defendant).
On the other hand, the Court finds no defect, fatal or otherwise, in
defendants' titles, much less any legal ground to nullify them. On
the contrary, Original Certificate of Title No. 3093 was obtained by
them in a decision of this Court (Branch III) in L.R.C. Rec. No. L26618 on April 18, 1966, without the plaintiffs opposing the
registration thereof and with no opposition on the part of the
Director of Lands (Exh. '2'). At any rate, said title is now
indefeasible and incontestable. 15
We find the foregoing conclusions drawn by the trial Court from the documentary
evidence submitted by the parties to be in order. The document of sale in favor of he
Azarcons executed on October 20, 1959 explicitly recites that the land sold was the
exclusive property of the vendor, Dr. Jose Cajucom, who had inherited it from his
father. Indeed, if were private property but still public land, he could not have
disposed of it in favor of Julian Vallarta, Sr. as early as 1932. That was obviously the
reason why both the Director of Lands and the Director of Forestry withdrew their
respective oppositions to the application for registration filed by the Vallartas. Not
having been part of the public domain, the Government was bereft of title to convey
to any applicant. Again, ROSA's allegation in support of her application for Free
Patent regarding her possession was, in fact, a misrepresentation, because the
Vallartas had been in possession since the sale in 1932 and had continued in such
occupancy, as shown by the demand by the Azarcons in 1968, reiterated in their
Complaint, that the Vallartas vacate the disputed property.

We are fully cognizant of the well-settled rule that where two certificates of title are
issued to different persons covering the same land in whole or in part, the earlier date
must prevail as between the original parties, and in case of successive registration
where more than one certificate is issued over the land the person holding under the
prior certificate is entitled to the land as against the person who relies on the second
certificate. 16 This presupposes, however, that the prior title is a valid one. Where, as
in the case at bar, it is evident that the prior title of the Azarcons suffers from an
inherent informity, such a rule cannot be invoked in their favor.
Finally, the Azarcons' contention that appellees' counterclaim assailing the Azarcon
title should have been considered by the trial Court as merely a permissive
counterclaim for which they should have been made to pay docketing fees, is
untenable. It is a compulsory counterclaim, which could have been barred if. not set
up. Accordingly, no fees therefor need have been paid. Nor can it be successfully
argued that said counterclaim was a collateral attack on the Azarcon title. On the
contrary the validity of both titles of the opposing parties was directly and squarely
put in issue and formed the crux of the controversy.
We cannot but decry the carelessness of the Bureau of Lands in having issued the
Free Patent in ROSA's favor. Surely, a more diligent search into their records would
have revealed the true character of the disputed property as private land. It should
also be noted that in the voluntary registration proceedings filed by the Vallartas
(LRC Rec. No. L-26618), the Director of Lands, through the Provincial Fiscal who
represented him, should have known of the Free Patent previously issued and should
have informed the Court accordingly. Had more vigilance been exercise by a
government agency entrusted specifically with the task of administering and
disposing of public lands, the present litigation could have been averted.
WHEREFORE, the judgment appealed from, being in conformity with law, is hereby
affirmed.
Costs against plaintiffs-appellants.
SO ORDERED.

16

G.R. No. L-18861

June 30, 1964

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,


vs.
LAZARO MANGAWANG, ET AL., defendants-appellees.
Jesus A. Avancea for plaintiff-appellant.
Pablo Q. Ilaya for defendants-appellees.
BAUTISTA ANGELO, J.:
This is an appeal from a decision of the Court Of First instance of Bataan declaring
the Mangawang brothers owners of Lot No. 1633 of the Balanga cadastre.
It appears that Gavino Amposta applied with the Director of Lands for the issuance
of a homestead patent over a parcel of land situated at Balanga, Bataan. Pending
action on his application, cadastral proceedings were instituted by the government in
said municipality wherein Amposta filed an answer praying for the adjudication of
the same land in his favor which was designated therein as Lot No. 1633. On March
8, 1920, the cadastral court rendered decision awarding the land to Amposta. Since
no advice on this matter was given either to the Bureau of Lands or to the Governor
General, the latter, on November 2, 1920, issued in favor of Amposta Homestead
Patent No. 2388 covering the same land, and on November 29, 1920, Original
Certificate of Title No. 100 was issued to him by the Governor-General.
On December 20, 1922, the cadastral court issued a decree of registration of the land
in favor of Amposta pursuant to the decision rendered in the cadastral case, and or,
July 5, 1924, Original Certificate of Title No. 2668 was issued to him covering the
same property.
On November 24, 1941, Amposta sold the land to Santos Camacho surrendering to
him Original Certificate of Title No. 100, and because of this transfer said title was
cancelled and transfer Certificate of Title No. 5506 was issued in the name of
Camacho. On November 18, 1946, Santos-Camacho sold the land to Bonifacio
Camacho as a result of which Transfer Certificate of Title No. 248 was issued to the
latter. On April 28, 1948, Bonifacio Camacho mortgaged the land to the
Rehabilitation Finance Corporation (now Development Bank of the Philippines), and
having failed to pay the loan as agreed upon the land was sold at public auction to
said bank as the highest bidder. The period of redemption having elapsed without
Camacho being able to redeem the property, a final deed of sale was executed in

favor of the bank, and Transfer Certificate of Title No. 6961 was issued in its name
on June 29, 1957.
Meanwhile, or on June 11, 1947, Gavino Amposta again sold the same property to
Lazaro and Arsenio Mangawang for the sum of P2,000.00, the vendees executing a
mortgage on the land to secure the payment of the balance. On March 17, 1948, the
vendees paid the balance of the purchase price, and an absolute deed of sale was
executed in their favor. In connection with this transaction, Amposta surrendered to
the vendees the title that was issued to him in the cadastral case, which was later
substituted by Transfer Certificate of Title No. 1098 issued in the name of the
vendees.1wph1.t
As a consequence of their purchase of the land, the Mangawang brothers took
possession thereof, and upon learning of this transfer, the Development Bank of the
Philippines, which as already stated became the owner of the property, commenced
the present action against them in the Court of First Instance of Bataan to recover its
possession and damages. In this case, the parties submitted a stipulation of facts, and
on the strength thereof, the court a quo rendered decision awarding the land to the
Mangawang brothers. Seasonably, the bank appealed to this Court.
Appellees contend that their right over the property in litigation should be restored
because the certificate of title they are holding is derived from that issued pursuant to
a decision rendered by a cadastral court, while the title being held by appellant was
merely based on the title issued in an administrative proceeding, upon the theory that
a judicial title is deemed preferred to one issued administratively. They further
contend that since the decision which gave rise to their title was rendered on March
8, 1920, which became final thirty days thereafter, their right over the land must be
deemed vested on said date, whereas the title of appellant is merely a deprivation of
the one issued to Amposta on November 29, 1920, or seven months after the decision
rendered in the cadastral case.
There is no doubt that if the two original certificates of title were issued on different
occasions to two different persons the contention of appellees would be correct it
being in line with the several decisions rendered by this Court. 1 But the case at bar is
different. Here two certificates of title were issued to Gavino Amposta over the same
parcel of land, one under the Homestead Law and another under the Cadastral Act.
Said titles were regularly issued and on their face both appear to be valid, and under
such predicament it behooves Amposta to choose which of them he would prefer, as
he could not validly make use of both of them. But this Amposta did not do. On the
contrary, he took advantage of the situation by selling the land to two different
persons surrendering to each purchaser the pertinent certificate of title. The question

17

then that arises is: Who of the two buyers should be considered as the rightful owner
of the land?
On this score, it is important to consider the facts that led to the sale of the land to
the parties herein. Note that Amposta first sold the land to Santos Camacho on
November 24, 1941, who registered it in his name on the same date. And seven years
thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang
brother, who also registered it in their name on the same date. Since both purchasers
apparently have acted in good faith, as there is nothing in the evidence to show that
they did otherwise, we cannot but conclude that the sale made by Amposta to Santos
Camacho is the valid one considering that when Amposta sold the same land to the
Mangawang brothers he had nothing more to sell even if the title he surrendered to
them is one issued covering the same property. In legal contemplation, therefore,
Amposta sold a property he no longer owned, and hence the transaction is legally
ineffective.
On the other hand, the case under consideration can also be viewed under a different
angle. It can also be treated as one of double sale, where a person sells the same land
to two different persons who are unaware of the flaw that lies in its title, and where
the law adjudicates the property to the purchaser who first registers the transaction in
his name in the registry of property.2 And applying this principle, we cannot
conclude that the title should likewise be adjudicated to appellant whose
predecessor-in-interest acquired and registered the property much ahead in point of
time than the appellees. Verily, the title acquired by the latter is invalid and
ineffective, contrary to the finding of the court a quo.
WHEREFORE, the decision appealed from is reversed. We hereby declare appellant
owner of Lot No. 1633 of the Balanga cadastre and uphold the validity of Transfer
Certificate of Title No. 6961 issued in its favor. Transfer Certificate of Title No. 1098
issued in the name of appellees is hereby ordered cancelled. No pronouncement as to
costs.
Bengzon, C.J., Padilla, Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal,
JJ.,
concur.
Labrador, Barrera and Dizon, JJ., took no part.

18

G.R. No. L-17955

May 31, 1962

PILAR LAZARO VDA. DE JACINTO, ET AL., petitioners,


vs.
SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., respondents.
----------------------------G.R. No. L-17957

May 31, 1962

IN VIEW OF ALL THE FOREGOING, we find that the errors assigned are
well taken. The decision appealed from, not being in conformity with the
evidence and the law on the matter, should be, as it is hereby reversed and
another entered declaring the plaintiffs-appellants owners of the land
described in their complaint and designated as Lot No. 5, plan S.C. No.
11075 (under TCT No. 5830) of the Register of Deeds of Bulacan, and
ordering the defendants-appellees, upon finality of this decision, to
reconvey the same to said plaintiffs-appellants. We find that appellants'
claim for damages are abandoned by them in their appeal, and that
appellees' counterclaim, is unmeritorious. Costs is taxed against the
defendant-appellees, proportionately.

SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., petitioners,


vs.
PILAR LAZARO VDA. DE JACINTO, ET AL., respondents.

From the above decision both parties appealed by certiorari. The appeal of Pilar
Lazaro and her son is now G.R. No. L-17955, and that Salud del Rosario and
children is G.R. No. L-17957.

Antonio Barredo for petitioners.


Alfredo V. Granados and Edmundo R. Jacinto for respondents.

There is no dispute and the Court of Appeals so found that the land in question
originally belonged to the now deceased spouses Andres Jacinto and Maria C.
Santos, both of whom died intestate survived by their children named Melchor, Sr.,
(husband of Pilar Lazaro and father of Melchor, Jr.,) and Pedro (husband of Salud del
Rosario and father of her co-parties). Melchor, Sr. also died intestate before the estate
of his parents could be partitioned. After the estate was partitioned (Exhibit A), their
surviving son, Pedro, besides receiving his share, continued administering the
property which corresponded to the heirs of his deceased brother. Among them was a
richland located in barrio Sto. Rosario, Paombong, with an area of 11 hectares, 34
ares and 3 centiares, Pedro Jacinto himself, according to Exhibit A, received as part
of his share a richland in the same barrio, but with an area of 3 hectares, 57 ares and
69 centiares only.

DIZON, J.:
The present action filed in the Court of First Instance of Bulacan by Pilar Lazaro
Vda. de Jacinto and her son, Melchor Jacinto, Jr., against Salud del Rosario Vda. de
Jacinto and her children, is for the reconveyance to them of a parcel of land located
in barrio Sto. Rosario, Paombong, Bulacan, with an area of 5.4574 hectares, covered
originally by OCT No. 12515 and at present by TCT No. 5380 issued by the Register
of Deeds of Bulacan in the name of the now deceased Pedro Jacinto.
Their complaint alleged, in substance that the land subject matter thereof was a
portion of a bigger parcel allotted to their predecessor-in-interest, Melchor Jacinto,
Sr., when the estate of the deceased spouses Andres Jacinto and Maria C. Santos was
partitioned, and that Melchor's surviving brother, Pedro, predecessor-in-interest of
the defendants, had succeeded in registering it in his name through fraud and with
breach of trust, to their prejudice.
The defendants denied the allegations of the complaint and further alleged that their
predecessor-in-interest had acquired ownership of the property in litigation by virtue
of the provisions of Act 496 and/or by prescription.
After due trial the action was dismissed. On appeal to the Court of Appeals, however,
the latter reversed the decision and rendered judgment as follows:

In the year 1926 Pedro Jacinto delivered to the widow of his deceased brother the
properties that corresponded to the latter. This delivery, according to the Court of
Appeals, was made only "in paper" because Pedro did not make an actual delivery of
the properties but limited himself to telling his sister-in-law that there were
"kasamas" working for her. One year thereafter, although the properties composing
the estate of his deceased parents had already been surveyed since June 10, 1913, as
shown by Exhibit B, Pedro caused them to be resurveyed, this resulting in the
drawing of Exhibit C. The practical result of the resurvey as found by the Court of
Appeals was that a portion of lot 2 described in Exhibit B, which was
subsequently one of the properties allotted to the heirs of Melchor, was segregated
therefrom and was designated as lot 5 in Exh. C. After the resurvey, Pedro applied to
register, and succeeded in having lot 5 and other properties registered in his name,
for which reason OCT No. 12515 was issued covering three lots numbered 2, 4 and

19

5. Lot 2 was subsequently sold, so the original certificate of title was cancelled and
TCT No. 583 was issued.1wph1.t
From all the evidence of record the Court of Appeals found that Pilar Lazaro and her
son "were always of the belief, until the latter part of 1953, that he (Pedro) delivered
to them all that which were rightfully theirs"; that they discovered the shortage only
when Pilar less than one year before the action was filed decided to sell the
parcel of more than 11 hectares that she was supposed to have received from her
brother-in-law; that it was only then that she realized for the first time that the parcel
delivered to her had only an area of 5.8829 hectares. The Court further found that the
land in question was not the same parcel allotted to Pedro Jacinto, and located in the
same barrio, which had an area of a little over three hectares only.
On the basis of the facts stated above which are now final and beyond review
the Court of Appeals made the following considerations:
It is not also controverted that upon a survey of the property (item No. 1 of
Exhibit "A", which should have an area of 11.3403 hectares), when
appellant Pilar Lazaro Vda. de Jacinto decided to sell four (4) hectares of
the supposed 11.3403 hectares, there was lacking 54,574 square meters
therefrom which incidentally corresponded exactly to Lot No. 5, item No. 2
of TCT No. 5830, in the name of Pedro Jacinto. Appellees claim, however,
that the supposed 11,3403 hectares appearing in Exhibit "A", could have
been short of 54,574 square meters and that the 3.5769 hectares appearing
in the receipt Exhibit "1", item No. 3 thereof, could have been really 5.5474
hectares, which is not the lot in question. The striking coincidence in the
area disputed and that registered in the name of appellees' predecessor-ininterest, more than catches the eye. Under the partition, the appellants were
to receive as one of the properties, 11.3403 hectares of riceland. This being
the case, there are no reasons discernible in the records why, after an actual
survey of the said property, 54,574 meters should be lacking therefrom. It
could not be said that the area was just a product of a calculation. When
Exhibit "A" was executed, the boundaries were plainly indicated thereon.
As a matter of fact, Exhibit "A" designated the number of hectares, ares and
centiares, which is indicative of the preciseness of the area to be delivered
to the respective heirs. The fact that the lacking measurement fits exactly
with Lot No. 5 of Pedro Jacinto under TCT No. 5830, warrants the
conclusion that Pedro Jacinto to had deprived the appellants herein of their
just share. . . .
There are sufficient proofs to show that fraud was practiced by Pedro
Jacinto against the appellants herein. When Pedro supposedly delivered the

property, he did it only in paper, without bringing plaintiff Pilar Lazaro to


the premises, although he told her that there were "kasamas" working for
her. On December 15, 1927, Pedro Jacinto caused that the properties be
resurveyed, which resulted in the drawing of Exhibit "C", which in effect
amended Exhibit "B". Part of Lot 2 was segregated and had been designed
as lot 5 in Exhibits "C". And this Lot 5 has an area exactly equal to the area
which was found lacking in the 11.3403 hectares belonging to the plaintiffsappellants. (pp. 6-7 & 9, decision)
As a result of the foregoing, the Court of Appeals held that Pedro Jacinto must be
deemed to have registered the land in question as a trustee for and in behalf of the
widow and son of his deceased brother. The pertinent portion of its decision reads as
follows:
Implied Trusts have been said to be those which are raised by legal
implication from the facts and circumstances of the case, to effect the
presumed intention of the parties or to satisfy demands of justice or to
protect against fraud (65 C.J. 222), or those enforced by equity because
morality, justice, conscience, and fair dealing demand that the relation be
established (supra). The new Civil Code provides that, "If property is
acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes" (Art. 1456). That there was fraud on the
part of Pedro Jacinto in registering the property in his name to the prejudice
of the appellants is revealed by the records. It will be seen that on Exhibit
"C", the amended survey of the properties which Pedro Jacinto and Melchor
Jacinto, Sr. inherited from their parents, changes were made. This resurvey
was done at the instance of Pedro Jacinto, in spite of the fact that on June
10, 1913, the same, properties were already surveyed, divided and
delineated (Exhibit "B"). The boundaries of Lot 5 as appearing in Exhibit
"G" (the amended plan) are the same as those appearing in Exhibit "B"
minus the designation as Lot 5 and its segregation from the greater mass of
Lot 2. In Exhibit "E" or "I", a receipt of the properties inherited by Pedro
Jacinto from his father Andres, no property coincide in boundaries with the
properties given to Pedro. Under the above set of facts, it is quite evident
that the property in question rightfully belonged to the plaintiffs and that an
implied trust was created between the plaintiffs and the appellees' father
Pedro Jacinto. (pp. 9-10, decision)
The heirs of Pedro Jacinto now contend that the Court of Appeals erred in applying
to this case the law of implied or constructive trusts, and, in holding that, under the
facts of the case, the right of the heirs of Melchor Jacinto to recover the property in
question is imprescriptible. We find these contentions to be without merit.

20

The following findings of fact made by the Court of Appeals cannot now be
questioned: (1) after the partition of the estate of the deceased spouses Andres
Jacinto
and
Maria
C.
Santos,
Pedro
Jacinto,
their
surviving
son,continued administering the properties allotted to the heirs of his deceased
brother; (2) when he delivered the share of the latter, he withheld delivery of the
parcel of more than 11 hectares allotted, among others, to his aforesaid co-heirs; (3)
one year thereafter he caused the portion withheld from co-heirs to be registered in
his name; (4) the widow and son of his deceased brother did not know that the parcel
of land delivered to them by their co-heir was short of 5 hectares, 45 ares and 74
centiares, and said parties "were always of the belief, until the latter part of 1953,
that he (Pedro) delivered to them all that which were rightfully theirs". In view of
these facts, it would be against reason and good conscience not to hold that Pedro
Jacinto committed a breach of trust which enabled him to secure registration of the
land in question to the prejudice of his co-heirs. Therefore, in an lotion like the
present, he may be ordered to make reconveyance of the property to the person
rightfully entitled to it. In fact, it has been held that even in the absence of fraud in
obtaining registration, or even after the lapse of one year after the issuance of a
decree of registration, a co-owner of land who applied for and secured its
adjudication and registration in his name knowing that it had not been allotted to him
in the partition, may be compelled to convey the same to whoever received it in the
apportionment, so long as no innocent third party had acquired rights therein, in the
meantime, for a valuable consideration (Palet vs. Tejedor, 55 Phil. 790-798). Indeed,
any rule to the contrary would sanction one's enrichment at the expense of another.
Public policy demands that a person guilty of fraud or, it least, of breach of trust,
should not be allowed to use a Torrens title as a shield against the consequences of
his wrongdoing (Cabanos vs. Register of Deeds, etc., 40 Phil. 620; Severino vs.
Severino, 41 Phil. 343).

abandoned their claim for damages, presumably because of their failure to make in
their brief in assignment of error to the effect that the Court of First Instance had
erred in not awarding them damages. It is now their contention that having appealed
from the dismissal, they were no longer in duty bound to make a separate specific
assignment of error regarding the court's failure to award damages, because their
right to them was entirely dependent upon the favorable resolution of the assignment
of errors made in their brief assailing the dismissal. This argument loses force upon
consideration of the fact that their right to have the reconveyance was one thing, and
their right to damage, another. There could be reconveyance in their favor, without
this necessarily entitling them to damages, as for instance, if they produced no
evidence to prove them, or that produced does not sufficiently prove the claim. It
seems clear, therefore, that it was their duty as appellants to bring up before the
Court of Appeals, by specific assignment of error, this particular question.
WHEREFORE, the decision appealed from being in accordance with law, the same
is hereby affirmed, with costs.
Padilla, Labrador, Concepcion, Reyes, J.B.L. and Barrera, JJ., concur.
Bautista Angelo and Paredes, JJ., took no part.

Lastly, the claim of the heirs of Pedro Jacinto that the latter had acquired ownership
of the property in litigation by prescription, is likewise untenable. As we have
recently held in Juan, et al. vs. Zuiga, G.R. No. L-17044, April 28, 1962, an action
to enforce a trust is imprescriptible. Consequently, a cohier who, through fraud,
succeeds in obtaining a certificate of title in his name to the prejudice of his co-heirs,
is deemed to hold the land in trust for the latter, and the action by them to recover the
property does not prescribe.
On the other hand, in their appeal Pilar Lazaro and her son contend that the Court of
Appeals erred in holding that they had abandoned their claim for damages. We also
find this to be without merit.
As stated heretofore, the Court of First Instance of Bulacan, after the trial, dismissed
this case and the plaintiffs (Pilar Lazaro Vda. de Jacinto and her son) appealed to the
Court of Appeals. In rendering judgment the latter court held that said appellants had

21

application prayed that said parcel of land be ordered registered in


the name of Widora.

G.R. No. 91797 August 28, 1991


WIDOWS AND ORPHANS ASSOCIATION, INC., petitioner,
vs.
COURT OF APPEALS and ORTIGAS & COMPANY LIMITED
PARTNERSHIP, respondents.
Quijano & Padilla for petitioner.
Santiago & Santiago for private respondent.
Jose Teodorico V. Molina for intervenor-oppositor.

BIDIN, J.:p
From the decision rendered by respondent court dated November 27, 1989, declaring
respondent Ortigas and Company Limited Partnership (Ortigas) as the registered
owner of the disputed parcel of land, petitioner Widows and Orphans Association,
Inc. (Widora), interposes this petition for review seeking ng to annul the aforesaid
judgment and prays that the case be remanded to the trial court and there be tried on
the merits. The facts, as found by respondent court, are as follows:
On August 27, 1974, respondent Widora filed LRC Case No. Q336 before the respondent (trial) court an application for
registration of title of a parcel of land as shown in Plan No. LRC
(SWO)-l5352. Widora alleged that the parcel of land is covered by
Titulo de Propriedad Numero 4136, dated April 25, 1894, issued in
the name of the deceased Mariano San Pedro y Esteban. Later, on
June 14, 1978, Widora filed an amended application for
registration of the said parcel of land. It alleged that the parcel of
land is situated at Malitlit-Uoogong, Quezon City, with an area of
156 hectares, more or less, described in Plan No. LRC (SWO)15352; and that the applicant acquired said property from the heirs
of Don Mariano San Pedro on December 12, 1954. The amended

On August 25, 1978, respondent Dolores Molina filed an


opposition, claiming ownership over 12 to 14 hectares of Lot 8
(LRC) SWO-15352, and praying for a decree of registration over
said portions of Lot 8.
On October 24, 1978, petitioner Ortigas filed a motion to dismiss
the case alleging, among others, that respondent court had no
jurisdiction over the case, the land being applied for having been
already registered under the Torrens System and in the name of
Ortigas under TCT 77652 and TCT 77653.
On April 20, 1979, the respondent (trial) court issued an order
directing the applicant to prove its contention that TCT 77652 and
TCT 77653 are not proper derivatives of the original certificates of
titles from which they were purportedly issued, and setting the case
for hearing on June 28, 1979, at 8:30 a.m.
On June 27, 1979, petitioner Ortigas filed a motion for
reconsideration of said order of April 20, 1979, alleging that a
Torrens title becomes indefeasible after a year and that the same
becomes conclusive upon the entire world; that the Land
Registration Commission itself has advised the court that the 156
hectare property sought to be registered is covered by valid and
subsisting titles in the name of Ortigas; that Courts of First
Instance and the appellate courts in previous cases had sustained
the Ortigas titles over the land in question.
On October 3, 1979, the motion for reconsideration of petitioner
Ortigas was denied by the respondent (trial) court, but the latter set
the motion to dismiss for hearing on October 18 and 19, 1979 at
8:30 a.m., for the purpose of enabling the applicant to prove its
contention that TCT Nos. 77652 and 77653 are not proper
derivatives of the original certificates of title from which they were
purportedly issued.
The parties presented their testimonial and documentary evidence
before the respondent (trial) court in support of their respective
positions.

22

On March 30, 1988, the respondent (trial) court denied the motion
to dismiss of petitioner Ortigas, holding, among others, that TCT
77652 and TCT 77653 on their face show that they were derived
from OCT 337, 19, 336, 334, pursuant to Decree 1425; that if there
was error in the correct number of OCT on said titles, no step or
measure to rectify the same was taken; that Decree No. 1425
shows that it covers a total area of only 17 hectares, more or less,
located in Sta. Ana, Manila, which was four kilometers away from
the land subject of the application for registration which covers an
area of 156 hectares, more or less, described in Plan No. LRC
(SWO)-15352 situated at Malitlit-Uoogong, Quezon City; that the
contention of Ortigas that Decree No. 1425 covers an area in
Manila and also a part of Rizal is not credible, for if this were true
then the area of said Rizal portion should appear on the face of said
decree of registration, which is not the case; that TCT 77652 and
TCT 77653 were not derived from any decree of registration, and
that the said TCTs being null and void, cannot be used as basis to
contest the right of the applicant to apply for registration over the
subject land. The order of March 30, 1988, in its dispositive
portion stated:
"WHEREFORE, premises considered, the
Omnibus Motion dated October 4, 1978 and
Motion to Dismiss, dated, October 23, 1978 filed
by oppositor Ortigas & Company, Limited
Partnership are both DENIED for lack of merit;
while this Court's order of September 15, 1978
directing the City Assessor of Quezon City to
issue a separate tax declaration corresponding to
the 12 or 14 hectares which is an undivided
portion of the land applied for registration and
now belonging to the said Dolores V. Molina;
further, authorizing the City Treasurer of Quezon
City to accept the corresponding realty taxes due
thereon; and further the said Dolores V. Molina
is allowed to intervene in these proceedings, is
hereby affirmed; likewise, the City Treasurer is
directed to accept the whole of the taxes due on
the property subject of the instant petition from
applicants Widows & Orphans Association, Inc.,
as prayed for in its Manifestation with Motion
subject to the right of the oppositor Dolores V.

Molina as contained in this Court's order of


September 15, 1978."
On April 26, 1988, petitioner Ortigas filed a motion for reconsider
consideration of the said order of March 30, 1988, taking exception
to the ruling that TCT Nos. 77652 and 77653 are null and void, and
alleging, among others, that respondent (trial) court had no
jurisdiction to hear an application for registration of a previously
registered land; that the parcels of land applied for are covered by
TCT 77652 and TCT 77653 in the name of Ortigas; that the parcels
of land covered by TCT 77652 and TCT 77653 are within the
parcel of land covered by OCT 351; and that OCT 351 is a copy of
Decree No. 1425 issued on April 26, 1905. The motion for
reconsideration prayed the respondent court to reconsider its order
of March 30, 1988 on the ground that it had no jurisdiction over
the application for registration, the parcels of land subject thereof
being already covered by Torrens Certificates of Title.
On May 19, 1989, the respondent (trial) court issued an order,
denying the motion for reconsideration of Ortigas, and setting the
hearing on the merits on July 26, 1989, ... for the "eventual
presentation of the parties' respective evidence respecting their
alleged ownership of the property subject of this petition." (Rollo,
pp. 24-26)
Not satisfied, respondent Ortigas instituted an action for certiorari, prohibition
and mandamus before respondent court praying for the annulment of the March 30,
1988 and May 19, 1989 orders of the trial court. It also prayed that the trial court be
ordered to dismiss the land registration case.
On November 27, 1989, respondent court rendered the decision sought to be
reviewed, the decretal portion of which reads:
WHEREFORE,
the
petition
for certiorari,
prohibition
and mandamus of petitioner Ortigas & Company Limited
Partnership is GRANTED. The orders of March 30, 1988 and May
19, 1989 of the Regional Trial Court of Quezon City, Branch 83, in
LRC Case No. Q-336, are REVERSED and ANNULLED, and said
LRC Case No. Q-336 is DISMISSED. The injunction issued by the
Court, per Resolution of August 8, 1989, is made permanent.
(Rollo, p. 35)

23

Based on the plan and other evidence submitted by respondent Ortigas at the hearing
of its application for preliminary injunction to enjoin the trial court from proceeding
with the hearing of LRC Case No. Q-336, respondent court held that TCT Nos.
77652 and 77653, albeit reflecting their origins as OCT Nos. 337, 19, 336 and 334,
are actually derivatives of OCT No. 351, the latter having been issued pursuant to
Decree 1425 and that since OCT 351 is allegedly a copy of Decree 1425, the mere
fact that the original copy of Decree 1425, or a certified copy thereof, can no longer
be located or produced, does not mean that Decree 1425 covering the lots embraced
in TCT Nos. 77652 and 77653 was not issued. Concluding, respondent court said:
It may be that TCT 77652 and 77653 do not show on their face
(sic) that they were derived from OCT 351. But the fact remains,
as shown above, that the parcel of land covered by OCT 351
embraced the parcels of land, Lots 7 and 8, of TCT 77652 and
77653. There was, therefore a mistake in the entries in TCT 77652
and 77653 when the same referred to OCTs 337, 19, 336, 337 (sic)
and 334, as their source, for the correct OCT insofar as Lots 7 and
8 are concerned, should be OCT 351. (Rollo, p. 27)

LRC NO. Q-336 SINCE JURISDICTION RESIDES WITH THE


RTC ACTING AS A LAND REGISTRATION COURT.
In essence, it is the contention of petitioner that respondent court's grounds and
reasoning in support of its findings that respondent Ortigas is the registered owner of
the disputed property are baseless in law and fact. Petitioner argues that respondent
court erred in sustaining the validity of TCTs Nos. 77652 and 77653 despite the
absence of a supporting decree of registration and instead utilized secondary
evidence, OCT 351 which is supposedly a copy of Decree 1425. Petitioner maintains
that Decree 1425 is itself existing and available at the Register of Deeds of Manila
and on its face shows that it covers a parcel of land with an area of only 17 hectares
in Sta. Ana, Manila while the parcel of land applied for contains an area of 156
hectares, located at Malitlit-Uoogong Quezon City, four (4) kilometers away from
Sta. Ana, Manila and is certified by the Bureau of Lands and the Bureau of Forestry
as alienable and disposable.

In this petition, petitioner WIDORA avers that the respondent Court of Appeals has
decided questions of substance contrary to law and the applicable decisions of this
Court because:

Respondent Ortigas claims that respondent court committed no error in rectifying the
mistake in the entries in TCT Nos. 77652 and 77653 as regards their sources and/or
origins arguing that the correction was justified by the fact that the plan of OCT 351
coincides with the parcels of land covered by TCT Nos. 77652 and 77653; that OCT
351 was issued pursuant to Decree 1425 and that OCT 351 is a copy of the Decree
itself.

We find the petition impressed with merit.


THE COURT OF APPEALS INSISTED IN UPHOLDING THE
EXISTENCE OR VALIDITY OF TCTs 77652 and 77653
DESPITE THE ABSENCE OF A SUPPORTING DECREE OF
REGISTRATION.

Undoubtedly, the evidence (i.e., plan submitted by respondent Ortigas, testimony of


its surveyor and OCT 351) adduced by private respondent to prove the contents of
Decree 1425 and admitted by respondent court is merely secondary and should not
have been admitted in the first place.

THE QUESTIONED DECISION UTILIZED SECONDARY


EVIDENCE DESPITE THE EXISTENCE AND AVAILABILITY
OF THE ORIGINAL DOCUMENT.

Before secondary evidence may be admitted, there must be 1) proof of the execution
of the original writing and 2) that it has been lost or destroyed or cannot be produced
in court or that it is in the possession of the adverse party who has failed to produce
it after reasonable notice (Michael and Co. v. Enriquez, 33 Phil. 87 [1915]; Republic
v. Court of Appeals, 73 SCRA 146 [1976]). Private respondent has not shown
compliance with the above requisites which would justify the admission of the
secondary evidence used and erroneously relied upon by respondent court.

II

III
THE RESPONDENT COURT HAS NO POWER OR
AUTHORITY TO ENJOIN THE TRIAL ON THE MERITS OF

Furthermore, the unilateral action of respondent court in substituting its own findings
regarding the extent of the coverage of the land included in TCT Nos. 77652 and
77653, ostensibly to correct the error in, and conform with, the technical description
found in OCT 351 based on the plan and other evidence submitted by respondent

24

Ortigas cannot be sustained. That function is properly lodged with the office of the
trial court sitting as a land registration court and only after a full-dress investigation
of the matter on the merits. It is before the land registration court that private
respondent must adduce the proof that the disputed parcels of land is legally
registered in its favor.
In Dioquino v. Intermediate Appellate Court (179 SCRA 163 [1989]), this Court held
that "(w)hile it is true that the Court of Appeals is vested with the 'power to try cases
and conduct hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised ..." (Sec. 9 [3], BP 129), there was not even a request for
evidentiary hearing filed in this case. The Court of Appeals therefore should not have
admitted said evidence without giving the adverse party opportunity to present
counter evidence, if any. Besides, "evidence necessary in regards to factual issues
raised in cases falling within the Appellate Court's original and appellate jurisdiction
contemplates incidental facts which were not touched upon, or fully heard by the
trial or respondent Court. The law could not have intended that the Appellate Court
would hold an original and full trial of a main factual issue in a case, which properly
pertains to trial courts" (citing Lingner & Fisher GMBH v. IAC, 125 SCRA 522
[1983]). In the case at bar, it appears that the parties have yet to fully present their
respective evidence in support of their claims before the trial court. As a matter of
fact, the trial court had set the case for hearing on the merits in its order dated May
19, 1989. What is more, the case involves a vast tract of land consisting of 156
hectares, separately situated in two outlaying localities (i.e., Quezon City and Sta.
Ana, Manila.) The resolution of this controversy calls for a full-blown trial on the
merits if only to afford the contending parties their respective days in court. Further,
a ground for dismissal based on disputed facts, as in this case is not proper in a
motion to dismiss (Spouses Jayme and Solidarios v. Alampay, 62 SCRA 131 [1975]).
In the case at bar, respondent Ortigas alleges that Decree 1425 embraces the lots
covered by its TCT Nos. 77652 and 77653 which are identical to the lots applied for
by petitioner. On the other hand, petitioner maintains that Decree 1425 covers a 17hectare lot located at Sta. Ana, Manila while the lot applied for is alienable and
disposable as certified by the Bureau of Lands and by the Bureau of Forestry and has
an area of 156 hectares located in Quezon City four (4) kilometers away from Sta.
Ana, Manila. Hence, the necessity of a trial on the merits to ascertain the disputed
facts, i.e., whether the lot applied for is covered by Decree No. 1425 or is alienable
and disposable. Under Act 496, it is the decree of registration issued by the Land
Registration Commission which is the basis for the subsequent issuance of the
certificate of title by the corresponding Register of Deeds that quiets the title to and
binds the land (De la Merced v. Court of Appeals, 5 SCRA 240 [1962]).
Consequently, if no decree of registration had been issued covering the parcel of land
applied for, then the certificate of title issued over the said parcel of land does not
quiet the title to nor bind the land and is null and void.

Besides, an order denying a motion to dismiss is merely interlocutory and, unless it


constitutes clearly a grave abuse of discretion or was issued without or in excess of
jurisdiction, the error, if any, should be corrected by appeal in due time, after trial
and judgment on the merits and not by the extraordinary writ of prohibition (Moreno
v. Macadaeg, 7 SCRA 700 [1963]; National Investment and Development
Corporation v. Aquino, 163 SCRA 53 [1988]).
Furthermore, on grounds of pre-maturity, interlocutory orders cannot be decided by
the appellate courts until the lower court shall have decided the merit of the case.
Thus, in Villegas v. Fernando (27 SCRA 1119 [1969]), this Court held:
This first assigned error (assailing the personality of the appellees
to ask for a review of the decision and decree in the registration
case) is actually directed at an earlier order dated 26 April 1961
denying appellants heirs' motion to dismiss the petitions for review
filed by the present appellees. And inasmuch as said order of 26
April 1961 is interlocutory, there being as yet no trial and decision
on the merits of the petition for review, it is premature to raise said
assigned error in appellants heirs' instant appeal. We shall rule
thereon only when the proper time comes, i. e., after the lower
court shall have settled not only the still unresolved status and
rights of the parties, particularly those of petitioners (sic) for
review, now appellees herein, almost all of whom are claiming that
they are not mere homestead or free patent applicants but patent
or title holders, but also whether the original decision should be
maintained or not. For the court below, after receiving and
hearing the parties, may still conclude in favor of appellants
herein. (Emphasis supplied)
But not only that. Respondent court committed a procedural lapse in correcting the
alleged error in the questioned TCTs. A certificate of title cannot be altered, amended
or cancelled except in a direct proceeding in accordance with law (Sec. 48, PD 1529;
Natalia Realty Corp. v. Vallez, 173 SCRA 534 [1989]; Legarda v. Saleeby, 31 Phil.
590 [1915]). Also, no correction of certificate of title shall be made except by order
of the court in a petition filed for the purpose and entitled in the original case in
which the decree of registration was entered (Sec. 112, Act 496; now Sec. 108, PD
1529). While the law fixes no prescriptive period therefor, the court, however, is not
authorized to alter or correct the certificate of title if it would mean the reopening of
the decree of registration beyond the period allowed by law (Rodriguez, v. Tirona, 68
Phil. 264 [1939]).

25

Respondent Ortigas, on the other hand, argues that this Court has already recognized
the fact that the parcel of land under TCT No. 227758 from which TCT Nos. 77652
and 77653 were issued, are covered by, among others, Decree 1425 issued in GLRO
Record No. 917 (Rollo, p. 94).

SCRA 270 [1987]; Goloy v. Court of Appeals (173 SCRA 26 [1989]; and Miranda v.
Court of Appeals (177 SCRA 303 [1989]). As it is in this case, a certificate of title
cannot be considered conclusive evidence of ownership where the certificate itself is
faulty as to its purported origin.

The argument is without merit True this Court declared in Ortigas & Company,
Limited Partnership v. Ruiz (148 SCRA 326 [1987]) that "petitioner is the duly
registered owner of the land * (then) in dispute as evidenced by OCT Nos. 13, 33,
334, and 337 by virtue of Decrees Nos. 240, 1942 and 1925 issued in GLRO Record
Nos. 699, 875 and 917 ..." Nowhere in said decision, however, is a pronouncement
that TCT Nos. 77652 and 77653 were issued from TCT No. 227758. On the contrary,
it is not disputed by the parties that TCT Nos. 77652 and 77653 themselves show
that they were derived from OCT No. 337, 19, 336 and 334 and not from OCT 351
or TCT 227758. If indeed, the real origin thereof is OCT No. 351, what respondent
Ortigas should have done was to file a petition for the correction of the TCTs in
question as stated earlier.

Further, the fact that respondent Ortigas' motion to dismiss was denied does not
mean that it could no longer participate in the resolution of the case and factual
determination of the parties' allegations. As correctly stated by the trial court, "(i)t is
to be stressed, however, that the denial of oppositor Ortigas' instant motion for
reconsideration does not necessarily mean that it is deprived of any participation in
the instant petition. For as already stated, what follows after its denial is the eventual
presentation of all the parties' respective evidence respecting their alleged ownership
of the property subject of this petition." (Rollo, p. 65)

While it may be true, as respondent Ortigas argues, that a land registration court has
no jurisdiction over parcels of land already covered by a certificate of title, it is
nevertheless true that the aforesaid rule only applies where there exists no serious
controversy as to the certificate's authenticity visa vis the land covered therein. In the
case at bar, the claimed origin of the questioned TCTs evidently appear to be
different from what is stated therein. It does not appear indubitable that the disputed
parcels of land are properly reflected in the TCTs relied upon by private respondent.
Off-hand, and as the parties admit, the TCTs do not show that they are actually
derivatives of OCT 351. Such being the case, the rule relied upon cannot therefore
apply. One who relies on a document evidencing his title to the property must prove
not only the genuineness thereof but also the identity of the land therein referred to
(CF. Lasam v. Director of Lands, 65 Phil. 637 [1938]). In the case at bar, private
respondent's TCT Nos. 77652 and 77653 trace their origins from OCT Nos. 337, 19,
336 and 334 and not from OCT 351 as it is now claimed by respondent Ortigas.
The trial court cannot be faulted for not having granted respondent Ortigas' motion to
dismiss simply because the TCTs relied upon by the latter do not accurately reflect
their supposed origin. Thus, in Ledesma v. Municipality of Iloilo (49 Phil. 769
[1926]) this Court held that the "simple possession of a certificate of title, under the
Torrens System, does not make the possessor the true owner of all the property
described therein. If a person obtains a title, under the Torrens System, which
includes by mistake or oversight land which cannot be registered under the Torrens
System, he does not, by virtue of said certificate alone, become the owner of the
lands illegally included (citing Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915])."
TMs pronouncement was reiterated by the Court in Caragay-Layno v. Court of
Appeals (133 SCRA 718 [1984]; Coronel v. Intermediate Appellate Court (155

WHEREFORE, the assailed judgment of respondent court is SET ASIDE and the
orders of the trial court in LRC Case No. Q336 entitled, "In Re-Application for
Registration of Title, WIDOWS and ORPHANS ASSOCIATION, Inc., Applicant,
ORTIGAS & COMPANY LIMITED PARTNERSHIP and DOLORES V. MOLINA,
Oppositors", dated March 30, 1988 and May 19, 1989 are hereby REINSTATED
insofar as the denial of oppositor Ortigas' motion to dismiss and motion for
reconsideration, respectively, are concerned and the case remanded to the trial court
for trial and adjudication on the merits.
SO ORDERED.
Davide, Jr., J., concur.
Fernan, C.J., concur in the majority opinion and in the separate concurring opinion
of Justice Gutierrez.
Feliciano, J., is on leave.

Separate Opinions

GUTIERREZ, JR., J., concurring:

26

Titulo de Propriedad Numero 4136 purports to cover extensive portions of several


provinces and cities in Luzon and Metro Manila from Dingalan Bay in the north to
Tayabas Bay in the south. It is the most fantastic land claim in the history of the
country and has spawned countless land swindles and rackets not to mention tedious
litigation in so many trial courts, the Court of Appeals and this Court.
I fail to understand why the appropriate government authorities do not take
determined efforts to slay the dragon once and for all. Cases involving lots sold or
conveyed by the Mariano San Pedro y Esteban estate, which incidentally claims all
land on which government buildings are constructed in Quezon City including the
sprawling University of the Philippines campus, the Batasan and Commission on
Audit complex, the areas around and including the Quezon Memorial Circle all the
way to and beyond EDSA, etc., are periodically taken to court and just as
periodically disposed of after years of litigation. To avoid having the Government as
an adversary, the Estate has reportedly in a spirit of "magnanimity" waived its rights
to lots on which government buildings are located. I understand that certain Torrens
Title owners have been "awarded" similar assurances in the past. However, squatters
and innocent buyers have been given lease rights or outright deeds of sale over land
possessed and owned by other persons resulting in litigation.
I concur in the decision because the Court has to accord due process to all litigants
and apply basic rules of procedure fairly and evenly. While I have background
knowledge of so many scams arising from the dubious Titulo de Propriedad, we are
bound to act only on evidence found in the records. The association's name of
Widows and Orphans Association, Inc. is a heart tugging appellation. Who are the
members? Are they victims of a scam? Or are they being used by smart operators?
Since Ortigas and Company admits to an error in its title, the extent and import of the
error have to be ascertained. These call for presentation of evidence which will be to
everybody's interest if adduced.
I believe the Department of Justice should look more carefully into the Titulo de
Propriedad situation. Instead of running after individual termites gnawing away in all
directions, the Government should ferret out the mother of the termites and dispose
of it once and for all, if indeed it is a termite and not the legitimate and aggrieved
owner it claims to be.
Fernan, C.J., concurs.

Separate Opinions
GUTIERREZ, JR., J., concurring:
Titulo de Propriedad Numero 4136 purports to cover extensive portions of several
provinces and cities in Luzon and Metro Manila from Dingalan Bay in the north to
Tayabas Bay in the south. It is the most fantastic land claim in the history of the
country and has spawned countless land swindles and rackets not to mention tedious
litigation in so many trial courts, the Court of Appeals and this Court.
I fail to understand why the appropriate government authorities do not take
determined efforts to slay the dragon once and for all. Cases involving lots sold or
conveyed by the Mariano San Pedro y Esteban estate, which incidentally claims all
land on which government buildings are constructed in Quezon City including the
sprawling University of the Philippines campus, the Batasan and Commission on
Audit complex, the areas around and including the Quezon Memorial Circle all the
way to and beyond EDSA, etc., are periodically taken to court and just as
periodically disposed of after years of litigation. To avoid having the Government as
an adversary, the Estate has reportedly in a spirit of "magnanimity" waived its rights
to lots on which government buildings are located. I understand that certain Torrens
Title owners have been "awarded" similar assurances in the past. However, squatters
and innocent buyers have been given lease rights or outright deeds of sale over land
possessed and owned by other persons resulting in litigation.
I concur in the decision because the Court has to accord due process to all litigants
and apply basic rules of procedure fairly and evenly. While I have background
knowledge of so many scams arising from the dubious Titulo de Propriedad, we are
bound to act only on evidence found in the records. The association's name of
Widows and Orphans Association, Inc. is a heart tugging appellation. Who are the
members? Are they victims of a scam? Or are they being used by smart operators?
Since Ortigas and Company admits to an error in its title, the extent and import of the
error have to be ascertained. These call for presentation of evidence which will be to
everybody's interest if adduced.
I believe the Department of Justice should look more carefully into the Titulo de
Propriedad situation. Instead of running after individual termites gnawing away in all
directions, the Government should ferret out the mother of the termites and dispose
of it once and for all, if indeed it is a termite and not the legitimate and aggrieved
owner it claims to be.
Fernan, C.J., concurs.

27

G.R. No. L-18210

December 29, 1966

LAURENTIO ARMENTIA, plaintiff-appellant,


vs.
ERLINDA PATRIARCA, FLORENCIA SOMECIERA JULIANA ARMENTIA
JOSE SOMECIERA and SOFRONIO FLORES in his capacity as The Register
of Deeds for the Province of Iloilo, defendants-appellees.
Cesar T. Martin for plaintiff and appellant.
Benjamin M. Moreno for defendants and appellees.
SANCHEZ, J.:
Plaintiff Laurentio Armentia, and Juliana and Marta Armentia, were brother and
sisters of the full blood. Jose Someciera is the acknowledged natural son of their
deceased mother. Defendant Florencia Someciera is a daughter of Jose Someciera.
Defendant Erlinda Patriarea is a granddaughter of Juliana Armentia. Marta Armentia
was married to Gregorio Bueno who died sometime in 1942.
By notarial document, Annex A of the complaint, dated July 22, 1955, Marta
Armentia did two things: First, she adjudicated to herself a parcel of land (Lot 5482,
Pototan cadastre, [Iloilo]) with the improvements thereon, covered by Transfer
Certificate of Title 21328. and which she inherited from her deceased husband
pursuant to Section 1, Rule 74 of the 1940 Rules of Court; 1 and second, for and in
consideration of P-99.00, which she acknowledged to have received from Erlinda
Patriarca, 13 years of age, single, and Florencia Someciera, 20 years of age, single,
she sold to them the property just mentioned. The foregoing document was, on July
22, 1955, recorded in the registry of deeds. - Whereupon, Torrens title 21323 was
cancelled by Transfer Certificate of Title 18797 in the names of Erlinda Patriarca and
Florencia Someciera.
Marta Armentia died intestate and without forced heirs on May 28, 1960.
On September 17, 1960, Laurentio Armentia commenced suit2 against Erlinda
Patriarca and Florencia Someciera as principal defendants. 3 The complaint, as
amended, and reamended, avers: That the sale made by Marta in favor of Erlinda and
Florencia "is null and void because it is simulated and fictitious and if not null and
void it is voidable because the said defendants were minors at the time the contract
was executed and could not then have given their consent to the sale"; that "the said
sale was fraudulently executed, and after the supposed sale, Marta Armentia

remained in possession of the house and lot, as owner paying the taxes on the land
until she died"; that "even assuming hypothetically that there was consideration in
the supposed sale, the consideration was grossly inadequate"; that "plaintiff only
came to know of the supposed sale in Annex A one week before the suit was filed
that "at the time of the alleged sale in Annex A", the "house was already standing on
the land", and that "after its execution Marta Armentia repaired the house"; and that
"the defendants Erlinda Patriarca, Florencia Someciera, Juliana Armentia and Jose
Someciera are personally possessing the land and the house in question". The
complaint further avers that Marta Armentia also left a "Singer" sewing machine.
Paragraph 8 thereof says that said sewing machine is "now in the possession of
Erlinda Patriarca and Florencia Someciera". However, paragraph 20 of the very same
complaint speaks of said sewing machine as "now in the possession of the
defendants Erlinda Patriarca, Florencia Someciera, Jose Someciera and Juliana
Armentia"4
The complaint winds up with the prayer that the deed of sale be "declared inexistent
or in the alternative annulled"; that plaintiff Laurentio Armentia and defendant
Juliana Armentia, as heir of Marta Armentia, be declared owners of the land in
dispute; that the Register of Deeds be directed to cancel Torrens title 18797 in the
names of Erlinda Patriarca and Florencia Someciera, and, in lieu thereof, to issue a
new title in the names of Laurentio Armentia and Juliana Armentia; that the house
and lot and sewing machine be partitioned and plaintiff's share be delivered to him;
and that should partition not be feasible, said properties be sold and plaintiff given
his share.
The complaint was met by defendant's motion to dismiss upon two grounds: (1) lack
of cause of action and (2) prescription.
On November 21, 1960, over plaintiff's opposition, the lower court dismissed the
case for the reason that plaintiff's action to annul the sale had prescribed. A move to
reconsider was thwarted by the court in its order of December 17, 1960.
The case is now before us on plaintiff's appeal in forma pauperis.
1. Plaintiff's attack is primarily directed at the sale. Plaintiff charges that the contract
therefor was fraudulently executed, but in the same breadth characterizes it, as
simulated and fictitious. These statements and but conclusions of law. Controlling, of
course, is the statement of' ultimate facts.6
Let us then look at the factual recitals. Particularly striking is the fact that plaintiff
does not dispute the self-adjudication made by Marta Armentia in the deed. Plaintiff
does not impugn the genuineness of Marta's signature thereon. He solo puts in issue

28

that portion of the document where the sale appears to have been made to Erlinda
Patriarca and Florencia Someciera.
To drive home his averment of nullity, plaintiff summons to his aid the following
circumstances: At the time of the sale, the vendees were still minors and the
consideration was grossly inadequate; after the sale, Marta Armentia repaired the
house, continued possession of the premises, paid the taxes thereon until her demise.
Hypothetically admitting the truth of these allegations, the conclusion is irresistible
that the sale is merely voidable. Because Marta Armentia executed the document,
and this is not controverted by plaintiff. Besides, the fact that the vendees were
minors, makes the contract, at worst, annullable by them. Then again, inadequacy of
consideration does not imply total want of consideration. Without more, the
purported acts of Marta Armentia after the sale did not indicate that said sale was
void from the beginning.
The sum total of all of these is that, in essence, plaintiff's case is bottomed on fraud,
which renders the contract voidable.
2. May plaintiff annul the sale on the theory of fraud? Plaintiff was but a brother of
the deceased Marta Armentia. True, he is an intestate heir of Marta; but he is not a
forced heir. Upon the other hand, Marta was free to dispose of her properties the way
she liked it. She had neither ascendants nor descendants.
By Article 1397 of the Civil Code, "[t]he action for annulment of contracts may be
instituted by all who are thereby obliged principally or subsidiarily". This must be
construed in conjunction with Article 1311 of the same code providing that "[c]on
tracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law", and that "the heir is not liable
beyond the value of the property he received from the decedent". Plaintiff is not a
forced heir. He is not obliged principally or subsidiarily under the contract. Marta
Armentia did not transmit to him by devise or otherwise any rights to the property,
the subject thereof. On the contrary, Marta voluntarily disposed of it. No creditors
are defrauded; there are none. No legitimes are impaired. Therefore, plaintiff has no
cause of action to annul or to rescind the sale.
In point is Concepcion vs. Sta. Ana, 87 Phil. 787. The facts there may well be
analogized with those of the present. In the Concepcion case, plaintiff Monico
Concepcion was the only surviving legitimate brother of Perpetua Concepcion, who
died without issue and without leaving any will. In her lifetime, or more precisely, on
June 29, 1945, said Perpetua Concepcion, "in connivance with the defendant and

with intent to defraud the plaintiff, sold and conveyed three parcels of land for
a false and fictitious consideration to the defendant, who secured transfer certificate
of title of said lands issued under her name and that the defendant has been in
possession of the properties sold since the death of Perpetua Concepcion, thereby
causing damages to the plaintiff in the amount of not less than two hundred (P200)
pesos".6 On motion to dismiss, the lower court threw the complaint out of court upon
the ground that "the plaintiff is not a party to the deed of sale executed by Perpetua
Concepcion in favor of the defendant"; that even on the assumption "that the
consideration of the contract is fictitious, the plaintiff has no right of action against
the defendant"; that under Article 1302 of the old Civil Code, "the action to annul a
contract may be brought by any person principally bound thereby"; that "plaintiff is
not bound by the deed of sale executed by the d ceased in favor of the defendant";
and that he has "no obligations under the deed."
The following
illuminating:

reproduced in

haec

verba from

the Concepcion opinion

is

(2) As to the appellant's second and last contention, under the law action to
annul a contract entered into with all the requisites mentioned in article
12617 whenever they are tainted with the vice which invalidate them in
accordance with law, may be brought not only by any person principally
bound or who made them, but also by his heir to whom the right and
obligation arising from the contract are transmitted. Hence if no such
rights, actions or obligations have been transmitted to the heir, the latter can
not bring an action to annul the contract in representation of the contracting
party who made it. In Wolfson vs. Estate of Martinez, 20 Phil., 340, this
Supreme Court quoted with approval the judgment of the Supreme Court of
Spain of April 18, 1901, in which it was held that "he who is not a party to a
contract, or an assignee thereunder, or does not represent those who took
part therein, has under Articles 1257 and 1302 8of the Civil Code no legal
capacity to challenge the validity of such contract". And in Irlanda vs.
Pitargue (22 Phil. 383) we held that "the testamentary or legal heir
continues in law as the juridical personality of his predecessor in interest,
who transmit to him from the moment of his death such of his rights,
actions and obligations as are not extinguished thereby".
The question to be resolved is, therefore, whether the deceased Perpetua
Concepcion has transmitted to the plaintiff any right arising from the
contract under consideration in order that he can bring an action to annul the
sale voluntarily made by her to the defendant with a false consideration.

29

We are of the opinion and so hold, that the late Perpetua Concepcion has
not transmitted to the plaintiff any right arising from the contract of
conveyance or sale of her lands to the defendant, and therefore the plaintiff
cannot file an action to annul such contract as representative of the
deceased.
According to the complaint the deceased, in connivance with the defendant
and with intent to defraud the plaintiff, (that is, in order not to leave the
properties above mentioned upon her death to the plaintiff) sold and
conveyed them to the latter, for a false and fictitious consideration. It is,
therefore obvious, that the conveyance or sale of said properties to the
defendant was voluntarily made by the deceased to said defendant. As the
deceased had no forced heir, she was free to dispose of all her properties as
absolute owner thereof, without further limitation than those established by
law, and the right to dispose of a thing involves the light to give or convey it
to another without any consideration. The only limitation established by
law on her right to convey said properties to the defendant without any
consideration is, that she could not dispose of or transfer her property to
another in fraud of her creditors. And this court, in Solis vs. Chua Pua
Hermanos (50 Phil. 636), through Mr. Justice Street, held that a "voluntary
conveyance, without any consideration whatever, is prima facie good as
between the parties, and such an instrument can not be declared fraudulent
as against creditors in the absence of proof, that there was at the time of the
execution of the conveyance a creditor who could be defrauded by the
conveyance, 27 C.J., 4770".
xxx

xxx

Our opinion in Concepcion needs no further elaboration. It would suffice to say that
plaintiff here has no cause of action.
3. But even if a right of action be conceded, plaintiff's case fails just the same. An
action to annul a contract based on fraud must be filed within four (4) years from the
discovery thereof.12 In legal contemplation, discovery must be reckoned to have
taken place from the time the document was registered in the office of the register of
deeds. For, the familiar rule is that registration is notice to the whole world,
including plaintiff.13 As aforestated, the document in question was recorded on July
22, 1955. Action was started only on September 17, 1960. The four-year period has
elapsed. And, plaintiff's cause of action, if any, is time-barred.
4. All that remains is the small item of plaintiff's share in the "Singer" sewing
machine which was not the subject of the sale aforesaid. The Court may well take
judicial notice14 of the fact that such share does not exceed P5,000. 15 Plaintiff's
separate action if any he had to obtain said share, should have been addressed
to the Municipal Court.
Premised on the foregoing considerations, the appealed order of November 21, 1960
dismissing the second amended complaint is, as it should be, affirmed. No cots So
ordered.
Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, JP Zaldivar and Castro,
JJ., concur.

xxx

The reason why a forced heir has the right to institute an action of rescission
is that the right to the legitimeis similar to a credit of a creditor. As the same
Spanish author Manresal correctly states in commenting on article 1291 9 of
the Civil Code: "The rights of a forced heir to the legitime are undoubtedly
similar to a credit of a creditor in so far as the rights to the legitime may be
defeated by fraudulent contracts" and are superior to the will of those bound
to respect them. In its judgment of October 28, 1897, the Supreme Court of
Spain held that the forced heirs instituted as such by their father to the
latter's testament have the undeniable right to institute an action to annul
contracts entered into by the father to their prejudice. As it is seen the action
is called action of nullity, but is rather an action of rescission taking into
account the purpose for which it is instituted and the confusion of ideas that
has prevailed in this matter. The doctrine we shall expound in commenting
on articles 1302 and 1306 10 will confirm what we have just stated'.
(Manresa, Codigo Civil, 4th edition, Vol. 8, pp. 667 and 668.)11

Separate Opinions
REYES, J.B.L., J., concurring:
I concur with the main decision, but can not bring myself to agree to the proposition
that the heirs intestate would have no legal standing to contest the conveyance by the
deceased if the same were made without any consideration, or for a false and
fictitious consideration. For under the Civil Code of the Philippines, Article 1409,
par. 3, contracts with a cause that did not exist at the time of the transaction are
inexistent and void from the beginning. The same is true of contracts stating a false
cause (consideration) unless the persons interested in upholding the contract should
prove that there is another true and lawful consideration therefor (Ibid., Art. 1353).

30

If therefore the contract has no causa or considerations or the causa is false and
fictitious (and no true hiddencausa is proved) the property allegedly conveys never
really leaves the patrimony of the transferor, and upon the latter's death without a
testament, such property would pass to the transferor's heirs intestate and be
recoverable by them or by the Administrator of the transferor's estate, should there be
any. The cause of action of the plaintiffs would not be then on fraud of creditors at
all, but upon the fact that the property in question is still part of the transferor's
estate. In this particular regard, I think Concepcion vs. Sta. Ana, 87 Phil. 787
and Solis vs. Chua Pua Hermanos, 50 Phil. 536, do not correctly state the present
law, and must be clarified.

Of course, in the case at bar, it has not been satisfactorily established that the price is
non-existent, and for that reason the transaction, being onerous and not gratuitous,
must be upheld.

It is unquestionable that the owner of property has the right to convey it to another
person, either for a consideration (onerous contract) or out of sheer liberality
(gratuitous transfer). But it must not be overlooked that while the law does not limit
the lawful consideration as the transferor deems adequate (and he is the primary
judge of its adequacy), gratuitous transfers are by no means equally untrammeled
The law, justifiably or not, looks with suspicion at gratuitous conveyances (perhaps
considering them contrary to man's innate egotism) and subjects their validity to the
observance of specific formalities designed to assure that the nature of the
conveyance is well understood, and that it is not done impulsively, without due
deliberation. It is well known that our law only recognizes two forms of gratuitous
conveyances: inter vivos by way of donation and mortis causa by way of last will
and testament. In either case, the validity of the transfer of ownership is subordinated
to the observance of the formalities prescribed by law. Where Ian or tenements
are conveyed, a donation and its acceptance must appear in a public document, with
the acceptance duly notified to the donor (Civ. Code, Art. 749); in case of movables,
there must be at least a private writing unless the donation is accompanied by
simultaneous delivery of the donated chattel (Art. 748). In last wills and testaments,
the formalities ordained by law must be necessarily observed (Arts. 804, et seq.) and
' in addition, the will must be judicially allowed or probated (Art. 838, Civil Code).
It is a consequence of all the preceding considerations that a purported sale of
property would not vest ownership in the transferee if it is established that the
transfer was really gratuitous, and that the alleged price is non-existent. Such a "sale"
would then either be void for lack of an essential requisite, or else be a 'disguised
donation, that would not be operative unless the formalities prescribed for a valid
donation are observed.1 If they are not, then no title passes to the transferee,
regardless of the voluntary accomplishment of the deed of conveyance by the
transferor, because the naked intent to convey, without the required solemnities, does
not suffice for gratuitous alienations, even as between the parties inter se.

31

G.R. No. 72908 August 11, 1989


EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and
MARILYN SUTERIO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION,
SALUD SUTERIO and PEDRO MATIAS,respondents.

That whereas, the said Felipe Balane and Juana Balane de Suterio
are the only brother and sister respectively and forced heirs of
Perfecta Balane de Cordero who dies intestate on January 21,
1945;
That whereas, the said Perfects Balane de Cordero, deceased, left
property described as follows:
TRANSFER CERTIFICATE OF TITLE NO. 4671.

Agustin A. Ferrer for petitioners.


Province of Tayabas.
Alfredo I. Raya for respondents.

CRUZ, J.:
This is one of those distasteful litigations involving a controversy among close
relatives over properties left by a common ascendant. The petitioners are the widow
and children of the brother of the principal private respondent. She and her brother
appear to be the only remaining issue of the mother who seems to have caused all the
present confusion. The record does not show how close, if at all, the members of this
small family were. What is certain is that there is no affection now among the
protagonists in this case.

A parcel of land (Lot No. 6-A, Plan Psu-12210), with an buildings


and improvements except those herein expressly noted as
belonging to other person, situated in the barrio of Luctol,
Municipality of Macalelon. Bounded on the NE., by Lot No. 6-B;
on the E., by property by Andrea Fernandez, the sapa Luctob and
the sapa Patay; on the SE., by properties of Andrea Fernandez and
Silvestra Mereis on the SW., by properties of Felix Rodriguez,
Dionisio Fornea Placido Abistado and Adriano Abistado and the
mangrove of the government; and on the NW., by properties of
Orilleneda Mariano, Glindro Maxima Orilleneda Placida Forcados
and Basilio Rabe .. .. .. .. .. .. .. containing an area of TWO
HUNDRED EIGHTY FIVE THOUSAND THREE HUNDRED
FIFTY-THREE SQUARE METERS (285,353) more or less.

The mother was Juana Balane de Suterio, who had a brother named Felipe Balane
and a sister named Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter
alia a tract of land consisting of about 28 hectares and covered by TCT No. 4671 in
the Registry of Deeds of Quezon Province. On May 20, 1946, Juana and Felipe
executed a public instrument entitled "Extra-judicial Settlement of the Estate of the
Deceased Perfecta Balane de Cordero." 1 In it they disposed of the said property as
follows:

That whereas, we Felipe Balane and Juana Balane de Suterio, the


only heirs of the property described above left by the deceased
Perfecta Balane de Cordero, do hereby agree in carrying out
the antemortem wish of our beloved deceased sister that in
consideration of love and affection the property described above be
donated to Salud Sutexio de Matias.

EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF


DECEASED PERFECTA BALANE DE CORDERO.

That whereas, the estate left by the said Perfecta Balane de Castro,
deceased, is not free from obligation or debt. It has an incumbrance
of about ONE THOUSAND PESOS (P1,000.00) to the Philippine
National Bank, Tayabas Branch.

This agreement made to 20th day of May, 1946, by and between


Felipe Balane and Juana Balane de Suterio, both of age and
residents of Macalelon, Tayabas, Philippines.
WITNESSETH:

That whereas, Salud Suterio de Matias, to whom this property is


donated extra-judicially as agreed upon by both heirs, shall assume
the said obligation to the Philippine National Bank, Tayabas
Branch.

32

NOW, THEREFORE, we Felipe Balane and Juana Balane de


Suterio have mutually agreed and covenanted to adjudicate, give,
transfer and convey the property described above to Salud Suterio
de Matias heirs, executors, administrators and assign.
And the donee does hereby accept this donation and does hereby
express her gratitutde for the kindness and liberality of the donor.
IN WITNESS WHEREOF, we have hereunto set our hands tills
20th day of May, 1946.

SUTERIO
MATIAS
Donee
Signed in the presence of
(Sgd.) SOFRONIO BALANE
(Sgd.) EUFEMIA P. SUTERIO

(Sgd.) FELIPE BALANE FELIPE BALANE

(Acknowledgment)

(Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO

These instruments were never registered nor was title transferred in Salud's name
although she says she immediately took possession of the land. Meantime, intestate
proceedings were instituted on the estate of Perfecta and the said land was among
those included in the inventory of the properties belonging to the decedent. 3 Salud
interposed no objection to its inclusion nor did she oppose its subsequent
adjudication to her mother Juana in the project of partition. It is not clear if the land
was ever registered in Juana's name. However, there is evidence that Juana
confirmed the earlier donation of the land to Salud but requested that she be allowed
to possess the same and enjoy its fruits, until her death. 4 It has also not been
controverted that Salud paid the P1,000.00 loan for which the land was mortgaged.

(Acknowledgment)
On June 20, 1946, Salud Suterio executed the following public
instrument, 2 petitioner Eufemia Pajarillo was one of the witnesses:
KNOW ALL MEN BY THESE PRESENTS:
That on May 20, 1946, FELIPE BALANE and JUANA BALANE
DE SUTERIO, the only heirs to the properties of the late
PERFECTA BALANE DE CORDERO, executed a DEED OF
DONATION in favor of the undersigned and the said donation was
made, in accordance to the antemortem wish of my late aunt,
Perfecta Balane de Cordero, to the effect that the property
described in the Deed of Donation, be given to me because of her
love and affection for me, being her only niece.
That, I, SALUD SUTERIO, DE MATIAS, the only DONEE, do
hereby receive and accept this donation and further express my
gratitude for the kindness and liberality of the DONORS, FELIPE
BALANE and JUANA BALANE DE SUTERIO.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th
day of June, 1946.
(Sgd.) SALUD SUTERIO DE MATIAS

Salud says that sometime in 1951, acceding to this request, she transferred the
possession of the land to her mother, who was then staying with Claudio and his
family. During the period they were occupying the land, Claudio paid the realty taxes
thereon . 5 On May 25, 1956, Juana executed a deed of absolute sale conveying the
land to Claudio for the declared consideration of P12,000.00. 6 Two years later, on
August 27, 1958, Claudio had the land registered in as name and was issued TCT
No. 32050 in the land records of Quezon Province. 7
Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private
respondents filed a complaint for the reconveyance of the property on the ground that
the deed of sale in favor of Claudio was fictitious and its registration in his name was
null and void . 8
Salud (joined by her husband) alleged that she was unaware until later of the
supposed sale of the land to Claudio. She faulted it as having been procured through
fraud and improper influence on her sick and aged mother. She claimed that no
compensation was actually paid by Claudio and that the transaction was deliberately

33

concealed from her by her brother and the defendants. 9 For their part, the defendants
assailed the donation to Salud as legally inefficacious and defective and contended
that her complaint was barred by prescription, estoppel and res judicata. They also
filed a counterclaim questioning the sale to Salud by her mother of another tract of
land, in which they said they were entitled to share as Juana's heirs. 10
On April 17,1979, Judge Juan M. Montecillo of the Court of First Instance of
Quezon rendered judgment upholding the donation to the plaintiff and annulling the
deed of sale and the registration of the land in favor of Claudio Suterio, Sr. The
defendants were required to reconvey the land to Salud Suterio even as their
counterclaim was dismissed for lack of evidence. 11 On appeal, the decision was
affirmed in toto. 12 The respondent court is now sought to be reversed in this petition
for certiorari under Rule 45 of the Rules of Court.
We hold at the outset that, contrary to the ruling in the challenged decision, the
petitioners have the legal personality to challenge the validity of the donation on
which Salud bases her claim to the property under litigation. As defendants in the
complaint for reconveyance, they had every right to resist the plaintiffs' allegation
that she was the owner of the subject property by virtue of the claimed donation.
Recognition of that donation would topple the props of their own contention that
Juana could dispose of the property as its owner when she sold it to Claudio Suterio
in 1956.
The petitioners also assail the intrinsic validity of the extrajudical settlement and
submit that it is not really a donation as conceptually understood in civil law. Their
argument is that the real donor of the property was Perfecta, the deceased sister, who,
however, could no longer bestow the intended gift. For their part, Felipe and Juana
could not have made, the donation either because they were not moved by the same
sentiments Perfects had for her niece Salud. That feeling would have provided the
required consideration if Perfects herself had made the donation, but not the other
two.
This appears to be too much nitpicking, if not sophistry. Felipe and Juana had
declared themselves the heirs of Perfecta and the owners of the property in question.
As such, they were free to give the land to whomever they pleased and for whatever
reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out
her intentions by donating the land to Salud, there was no legal impediment to their
doing so. In fact, that was not only the legal but also the moral thing to do.
There is no question that Felipe and Juana could have simply disregarded their
sister's sentiments and decided not to donate the property to Salud, keeping the same
for themselves. The fact that they did not do this speaks well indeed of their integrity

and their loyalty as well to their deceased sister. The extrajudicial settlement also
reflects their own affection for Salud which constituted the valid consideration for
their own act of liberality. Notably, in her acceptance of the donation, Salud referred
to 'the donors Felipe Balane and Juana Balane de Suterio," and not Perfecta.
It is also pointed out that the donation is defective in form because of noncompliance with the requirements of the law regarding its acceptance. As it was
executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as
follows:
Art. 633. In order that a donation of real property be valid it must
be made by public instrument in which the property donated must
be specifically described and the amount of the charges to be
assumed by the donee expressed.
The acceptance may be made, in the deed of gift or in a separate
public writing; but it shall produce no effect if not made during the
lifetime of the donor.
If the acceptance is made, by separate public instrument, authentic
notice thereof shall be given the donor, and this proceeding shall
be noted in both instruments.
There is no question that the donation was accepted in a separate public instrument
and that it was duly communicated to the donors. Even the petitioners cannot deny
this. But what they do contend is that such acceptance was not "noted in both
instruments," meaning the extrajudicial partition itself and the instrument of
acceptance, as required by the Civil Code.
That is perfectly true. There is nothing in either of the two instruments showing that
"authentic notice" of the acceptance was made by Salud to Juana and Felipe. And
while the first instrument contains the statement that "the donee does hereby accept
this donation and does hereby express her gratitude for the kindness and liberality of
the donor," the only signatories thereof were Felipe Balane and Juana Balane de
Suterio. That was in fact the reason for the separate instrument of acceptance signed
by Salud a month later.
A strict interpretation of Article 633 can lead to no other conclusion than the
annulment of the donation for being defective in form as urged by the petitioners.
This would be in keeping with the unmistakable language of the above-quoted
provision. However, we find that under the circumstances of the present case, a
literal adherence to the requirement of the law might result not in justice to the

34

parties but conversely a distortion of their intentions. It is also a policy of the Court
to avoid such an intepretation.
The purpose of the formal requirement is to insure that the acceptance of the
donation is duly communicated to the donor. In the case at bar, it is not even
suggested that Juana was unaware of the acceptance for she in fact confirmed it later
and requested that the donated land be not registered during her lifetime by
Salud. 13 Given this significant evidence, the Court cannot in conscience declare the
donation ineffective because there is no notation in the extrajudicial settlement of the
donee's acceptance. That would be placing too much stress on mere form over
substance. It would also disregard the clear reality of the acceptance of the donation
as manifested in the separate instrument dated June 20,1946, and as later
acknowledged by Juana.
The cases cited by the parties in their respective memoranda are not really in point.
In Legasto v. Verzosa, 14there was no evidence whatsoever that the claimed donations
had been accepted, as stressed by Justice Villa-Real. The same observation is made
of Santos v. Robledo, 15 where Justice Torres noted that the acceptance of the
donation did not appear in the deed of donation or in any other instrument.
The petitioners would also fault the private respondents for laches and argue that
Salud's inaction in protection of her rights should bar her from asserting them at this
late hour. Specifically, it is pointed out that she failed to register the deed of donation
and its acceptance in 1946; did not oppose the inclusion of the subject land in the
inventory of Perfecta's properties submitted in the intestate proceedings in 1946; did
not object to the adjudication of the land to Juana in the project of partition in 1951;
did not protest the sale of the land to Claudio Suterio in 1956; and did not question
its registration in his name in 1958. It is contended that all these acts constitute
laches, which has been described by this Court thus:
An estoppel by laches arises from the 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. 16
The problem with the petitioners' theory is that it would regard Juana and Salud as
strangers when they are in fact mother and daughter. One may expect a person to be
vigilant of his rights when dealing with an acquaintance or associate, or even with a
friend, but not when the other person is a close relative, as in the case at bar. To
begin with, the land came from Juana herself. Secondly, she requested her daughter
not to register the land as long as she was still alive so she could enjoy its fruits until
her death. To Salud, it was not difficult to comply with this request, coming as it did
from her own mother. There was no reason to disobey her. She did not have to

protect herself against her own mother. Indeed, what would have been unseemly was
her registering the land against her mother's request as if she had no confidence in
her. Salud did no less than what any dutiful daughter would have done under the
circumstances.
If Salud did not protest the inclusion of the land in the inventory of Perfecta's
properties and its subsequent adjudication to Juana in the intestate proceedings, it
was because she did not feel threatened by these acts. She did not distrust her mother.
Moreover, Juana had herself acknowledged the donation when she was asked in
whose name the property would be registered following the intestate proceedings.
Salud felt safe because she had the extrajudicial settlement to rely on to prove that
her mother and her uncle had donated the subject land to her.
There is nothing in this instrument to suggest that the donation was to take effect
upon the death of the donors as to make it a donation mortis causa, as urged by the
petitioners. The donation became effective upon acceptance by Salud except that, in
obedience to her mother's request, she chose not to register the land in the meantime
and to allow her mother to enjoy its fruits. What was deferred was not its effectivity
but only its enjoyment by Salud. Registration was not necessary to make the
donation a binding commitment insofar as the donors and the donee were
concerned. 17
As for her inaction against the deed of sale in favor of her brother Claudio, it should
be noted in the first place that she was not aware of it when it was executed in 1956.
Her mother, who was already 76 years old at the time, never informed her about it,
nor did her brother or any of the defendants, for reasons of their own. It was only
later, when the sale was registered in 1958 and a new title to the land was issued to
Claudio, that she started asking questions. Even then, being a sister to Claudio, she
did not immediatey take legal steps.
It is natural, even among non-relatives, to seek a non-judicial settlement through
extra-legal measures before going to court. It is more so in the case of relatives, who
should avoid as much as possible the asperity and bitterness of litigation. That is
what Salud did when she repeatedly asked the petitioners for the return of the
property albeit to no avail. It was only when it became clear that amicable persuasion
was not possible that she decided to sue the wife and children of her departed
brother.
The petitioners stress that it took Salud all of seven years from the registration of the
land in Claudios's name before she filed the complaint for reconveyance against
them. That is true. But if one remembers that her brother died only in 1961 and her
own mother only in 1963, at the age of 83, it will be easy to understand the reason

35

for the delay, which would otherwise have been unjustified. Suits among brothers
and sisters are especially painful to their parents. Salud must have thought many
times about filing her complaint against her brother Claudio while her old mother
was still alive. In fact, Salud hesitated still even after her mother's death and took two
more years before she finally filed her complaint against Claudio's wife and children.
It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio
because she was no longer its owner, having previously donated it to her daughter
Salud. Juana herself was holding the land merely as a trustee of Salud, who had
transferred possession to her mother at the old woman's request. The deed of sale
was itself vitiated by bad faith as Claudio is presumed to have known of the previous
donation to his sister Salud, whose acceptance of the donation was formally
witnessed by hiw own wife, the herein principal petitioner. 18When Claudio
registered the land in his name knowing there was a flaw in his title, an implied trust
was created in favor of Salud as the real owner of the property in accordance with
Article 1456 of the Civil Code, reading as follows:
If the property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes.
As trustor, Salud had every right to sue for the recovery of the land in the action for
reconveyance against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de
Jacinto, et al. ... 19

While actions to enforce a constructive trust prescribe in 10 years from registration


of the property, private respondents' right commenced from actual discovery of
petitioner's act of defraudation. 22
The record shows that while the land was registered in the name of Claudio Suterio,
Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or
still within the ten-year prescriptive period.
The last issue raised by the petitioners, viz., the validity of the deed of sale executed
by Juana Balane de Suterio on January 29,1950, in favor of Salud Suterio, 23 need not
detain us too long. The trial court sustained the contract for lack of sufficient
evidence to invalidate it and was upheld by the respondent court. We see no reason to
disturb their factual finding, absent a showing that it was reached arbitrarily.
Interestingly, it occurred to the petitioners to question the transaction only when they
were sued by the private respondents, after ten years from the date of the sale. This is
an even longer period than the nine years during which the petitioners say Salud
Suterio was sleeping on her rights following the sale of her land to Claudio Suterio.
WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so
ordered.
Narvasa, Gancayco, Gri;o-Aquino and Medialdea, JJ., concur.

Public policy demands that a person guilty of fraud or at least, of breach of trust,
should not be allowed to use a Torrens title as a shield against the consequences of
his own wrongdoing.
The petitioners do not insist on prescription as a bar to the action for reconveyance,
and understandably so. The legal principle is that if the registration of the land is
fraudulent and the person in whose name the land is registered thus holds it as a mere
trustee, the real owner is entitled to file an action for reconveyance of the property
within a period of ten years. As we have held in many cases:
Where the action is one for reconveyance based on constructive trust, a ten-year
period is allowed. 20
An action for reconveyance of realty, based upon a constructive or implied trust
resulting from fraud, may be barred by prescription. The prescriptive period is
reckoned from the issuance of the title which operates as a constructive notice. 21

36

G.R. No. L-46001 March 25, 1982


LUZ CARO, petitioner,
vs.
HONORABLE COURT OF APPEALS and BASILIA LAHORRA VDA. DE
BENITO, AS ADMINISTRATRIX OF THE INTESTATE ESTATE OF MARIO
BENITO, respondents.

GUERRERO, J.:
This is a petition for certiorari under Rule 45 of the Revised Rules of Court seeking a
review of the decision of the Court of Appeals, 1 promulgated on February 11, 1977,
in CA-G.R. No. 52570-R entitled "Basilia Lahorra Vda. de Benito, as Administratrix
of the Intestate Estate of Mario Benito vs. Luz Caro", as well as the resolution of the
respondent Court, dated May 13, 1977, denying petitioner's Motion for
Reconsideration.
The facts of the case are as follows:
Alfredo Benito, Mario Benito and Benjamin Benito were the original co-owners of
two parcels of land covered by Transfer Certificates of Title Nos. T-609 and T-610 of
the Registry of Deeds of Sorsogon. Mario died sometime in January, 1957. His
surviving wife, Basilia Lahorra and his father, Saturnino Benito, were subsequently
appointed in Special Proceeding No. 508 of the Court of First Instance of Sorsogon
as joint administrators of Mario's estate.
On August 26, 1959, one of the co-owners, Benjamin Benito, executed a deed of
absolute sale of his one-third undivided portion over said parcels of land in favor of
herein petitioner, Luz Caro, for the sum of P10,000.00. This was registered on
September 29, 1959. Subsequently, with the consent of Saturnino Benito and Alfredo
Benito as shown in their affidavits both dated September 15, 1960, Exhibits G and F
respectively, a subdivision title was issued to petitioner Luz Caro over Lot I-C, under
T.C.T. No. T-4978.
Sometime in the month of May, 1966, private respondent Basilia Lahorra Vda. de
Benito learned from an allegation in a pleading presented by petitioner in Special
Proceeding No. 508 that the latter acquired by purchase from Benjamin Benito the
aforesaid one-third undivided share in each of the two parcels of land. After further

verification, she sent to petitioner thru her counsel, a written offer to redeem the said
one-third undivided share dated August 25, 1966. Inasmuch as petitioner ignored
said offer, private respondent sought to intervene in Civil Case No. 2105 entitled
"Rosa Amador Vda. de Benito vs. Luz Caro" for annulment of sale and mortgage and
cancellation of the annotation of the sale and mortgage involving the same parcels of
land, but did not succeed as the principal case was dismissed on a technicality, that
is, for failure to prosecute and the proposed intervenor failed to pay the docketing
fees. Private respondent, thus, filed the present case as an independent one and in the
trial sought to prove that as a joint administrator of the estate of Mario Benito, she
had not been notified of the sale as required by Article 1620 in connection with
Article 1623 of the New Civil Code.
On the other hand, petitioner presented during the hearing of the case secondary
evidence of the service of written notice of the intended sale to possible
redemptioners in as much as the best thereof, the written notices itself sent to and
Saturnino Benito, could not be presented for the reason that said notices were sent to
persons who were already dead when the complaint for legal redemption was
brought. Instead, the affidavit of Benjamin Benito, executed ante litem
motam, attesting to the fact that the possible redemptioners were formally notified in
writing of his intention to sell his undivided share, was presented in evidence. The
deposition of Saturnino's widow was likewise taken and introduced in evidence,
wherein she testified that she received and gave to her husband the written notice of
the intended sale but that the latter expressed disinterest in buying the property.
After hearing the evidence, the trial judge dismissed the complaint on the grounds
that: (a) private respondent, as administratrix of the intestate estate of Mario Benito,
does not have the power to exercise the right of legal redemption, and (b) Benjamin
Benito substantially complied with his obligation of furnishing written notice of the
sale of his one-third undivided portion to possible redemptioners.
Private respondent's Motion for Reconsideration of the trial court's decision having
been denied, she appealed to the respondent Court of Appeals contending that the
trial Judge erred in
I. . . not inhibiting himself from trying and deciding the case
because his son is an associate or member of the law office of Atty.
Rodolfo A. Madrid, the attorney of record of defendant-appellee in
the instant case;
II. . contending that Benjamin Benito complied with the provisions
of Article 1623 of the Revised Civil Code that before a co-owner
could sell his share of the property owned in common with the

37

other co-heirs, he must first give written notice of his desire to his
co-heirs; (p. 49, R.A.)
III. concluding that the fact that one of the administrators who was
actively managing the estate was furnished a written notice by the
co-owner of his desire to sell his share was enough compliance of
the provisions of Article 1623 of the Civil Code for the reason that
the intention of the law is only to give a chance to the new coowner to buy the share intended to be sold if he desires to buy the
same; (p. 50, R.A.)
IV. . refusing to allow plaintiff to redeem the subject property upon
authority of Butte vs. Manuel Uy & Sons, L-15499, Feb. 28, 1962
(p. 51, R.A.) and in consequently dismissing the complaint (p. 52,
R.A.).
In disposing of the aforesaid errors, the Court of Appeals finding for plaintiff (herein
private respondent) held:
1. That it is not clear that Atty. Arcangel, son of the trial Judge, was legally
associated as practitioner with counsel for Luz Caro; that it is not shown at any rate
that plaintiff had asked for Judge Arcangel's disqualification and that at any rate also,
in such factual situation, an optional ground for disqualification is addressed to his
sound discretion with which it would not be correct for appellate court to interfere or
overrule.
2. That since the right of the co-owner to redeem in case his share be sold to a
stranger arose after the death of Mario Benito, such right did not form part of the
hereditary estate of Mario but instead was the personal right of the heirs, one of
whom is Mario's widow. Thus, it behooved either the vendor, Benjamin, or his
vendee, Luz Caro, to have made a written notice of the intended or consummated
sale under Article 1620 of the Civil Code.
3. That the recital in the deed of sale that the vendor notified his co-owners of his
desire to dispose of his share, who all declined to buy, was but a unilateral statement
and could not be proof of the notice required by the law.

Benito and Saturnino Benito, the latter in his capacity as administrator of the estate
of Mario Benito, as well as the sworn statement of Saturnino Benito's widow dated
November 18, 1968 confirming that her husband received the written notice of the
sale referred to in Benjamin Benito's affidavit of notice would not satisfy that there
was clear notice in writing of the specific term of the intended sale. Worse, Saturnino
was only a co-administrator and hence, his unilateral act could not bind the principal
because there was no less than a renunciation of a right pertaining to the heirs, under
Article 1818, NCC, apart from the fact that the right of redemption is not within their
administration.
6. That the further claim of defendant that offer to redeem was filed out of time and
that there was no actual tender loses all importance, there being no date from which
to count the 30-day period to redeem because there was no notice given.
The dispositive part of the decision of the Court of Appeals reads as follows:
IN VIEW THEREOF, this Court is constrained to reverse, as it
now reverses, judgment appealed from, upon payment by plaintiff
or deposit in Court, within 30 days after this judgment should have
become final, of the sum of P10,000.00, defendant is ordered to
execute a deed of redemption over the one-third share of
BENJAMIN BENITO in favor of plaintiff for herself and as
representative of the children of Mario Benito and therefrom, to
deliver said one-third share of BENJAMIN BENITO, costs against
defendant-appellee.
SO ORDERED.
Upon denial of the motion for reconsideration, petitioner brought this petition for
review raising the following errors:
1. Respondent Court erred in allowing the exercise of the right of legal redemption
with respect to the lots in question.
2. Respondent Court erred when it made the finding that there was no notice in law
from which to count the tolling of the period of redemption and that the sale was not
made known at all to private respondent.

4. That the registration of the deed of sale did not erase that right.
5. That the affidavit of notice executed on January 20, 1960 of Benjamin Benito
declaring that written notices of the sale as required by law were duly sent to Alfredo

The alleged first error of respondent Court is premised on the fact that the lot in
question sought to be redeemed is no longer owned in common. Petitioner contends
that the right sought to be exercised by private respondent in the case assumes that

38

the land in question is under co-ownership, the action being based on Article 1620 of
the New Civil Code which provides:
A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or any of them, are sold to a
third person. If the price of alienation is grossly excessive, the
petitioner shall pay only a reasonable price.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share they
may respectively have in the thing owned in common.
However, the fact is that as early as 1960, co-ownership of the parcels of land
covered by Transfer Certificates of Title Nos. T-609 and T-610 was terminated when
Alfredo Benito, Luz Caro and the Intestate Estate of Mario Benito, represented by
administrators Saturnino Benito, as trustee and representative of the heirs of Mario
Benito, agreed to subdivide the property.
An agreement of partition, though oral, is valid and consequently
binding upon the parties. (Hernandez vs. Andal, et al., 78 Phil.
196)
A petition for subdivision was then filed for the purpose. This was accompanied by
the affidavits of Alfredo Benito and Saturnino Benito, both dated September 15,
1960 to the effect that they agree to the segregation of the land formerly owned in
common by Mario Benito, Alfredo Benito and Benjamin Benito. A subdivision plan
was made and by common agreement Lot I-C thereof, with an area of 163 hectares,
more or less, was ceded to petitioner. Thereafter, the co-owners took actual and
exclusive possession of the specific portions respectively assigned to them. A
subdivision title was subsequently issued on the lot assigned to petitioner, to wit,
Transfer Certificate of Title No. T-4978.
In Caram, et al. vs. Court of Appeals, et al., 101 Phil. 315, a case squarely in point,
this Court held:
Inasmuch as the purpose of the law in establishing the right of
legal redemption between co-owners is to reduce the number of
participants until the community is done away with (Viola vs.
Tecson, 49 Phil. 808), once the property is subdivided and
distributed among the co-owners, the community has terminated
and there is no reason to sustain any right of legal redemption.

Although the foregoing pronouncement has reference to the sale made after
partition, this Court therein saw no difference with respect to a conveyance which
took place before the partition agreement and approval by the court. Thus, it held:
Nevertheless, the result is the same, because We held in Saturnino
vs. Paulino, 97 Phil. 50, that the right of redemption under Article
1067 may be exercised only before partition. In this case the right
was asserted not only after partition but after the property
inherited had actually been subdivided into several parcels which
were assigned by lot to the several heirs.
In refutation, private respondent argues that petitioner Luz Caro acted in bad faith
and in fraud of the rights of the heirs of a deceased Mario Benito in obtaining a
subdivision title over a one-third portion of the land in question which she brought
from Benjamin Benito, and for this reason, she is deemed to hold said property in
trust for said heirs. The rule, however, is it fraud in securing the registration of titles
to the land should be supported by clear and convincing evidence. (Jaramil vs. Court
of Appeals, 78 SCRA 420). As private respondent has not shown and proved the
circumstances constituting fraud, it cannot be held to exist in this case.
As aforesaid, a subdivision title has been issued in the name petitioner on the lot
ceded to her. Upon the expiration of the term of one year from the date of the entry
of the subdivision title, the Certificate of Title shall be incontrovertible (Section 38,
Act 496). Since the title of petitioner is now indefeasible, private respondent cannot,
by means of the present action, directly attack the validity thereof.
Even on the assumption that there still is co-ownership here and that therefore, the
right of legal redemption exists, private respondent as administratrix, has no
personality to exercise said right for and in behalf of the intestate estate of Mario
Benito. She is on the same footing as co-administrator Saturnino Benito. Hence, if
Saturnino's consent to the sale of the one-third portion to petitioner cannot bind the
intestate estate of Mario Benito on the ground that the right of redemption was not
within the powers of administration, in the same manner, private respondent as coadministrator has no power exercise the right of redemption the very power which
the Court of Appeals ruled to be not within the powers of administration.
While under Sec. 3, Rule 85, Rules of Court, the administrator has
the right to the possession of the real and personal estate of the
deceased, so far as needed for the payment of the expenses of
administration, and the administrator may bring and defend action
for the recovery or protection of the property or right of the
deceased (Sec. 2, Rule 88), such right of possession and

39

administration do not include the right of legal redemption of the


undivided share sold to a stranger by one of the co-owners after the
death of another, because in such case, the right of legal
redemption only came into existence when the sale to the stranger
was perfected and formed no part of the estate of the deceased coowner; hence, that right cannot be transmitted to the heir of the
deceased co-owner. (Butte vs. Manuel Uy and Sons, Inc., 4 SCRA
526).

as of the evidence presented that Saturnino Benito, the admittedly active


administrator until 1966, duly received a written notice of the intended sale of
Benjamin Benito's share. Said evidence consists of the affidavit of the vendor stating
that the required notice had been duly given to possible redemptioners, the statement
in the deed of sale itself and the deposition of Saturnino Benito's widow with respect
to her receipt of the written notice. Finally, petitioner points to the records which
disclose that private respondent knew of the subdivision (t.s.n., p. 25) and hence,
rationalized that private respondent should have known also of the previous sale.

Private respondent cannot be considered to have brought this action in her behalf and
in behalf of the heirs of Mario Benito because the jurisdictional allegations of the
complaint specifically stated that she brought the action in her capacity as
administratrix of the intestate estate of Mario Benito.

Since We have ruled that the right of legal redemption does not exist nor apply in this
case because admittedly a subdivision title (T.C.T. No. T-4978) has already been
issued in the name of the petitioner on Lot I-C sold to her, it becomes moot and
academic, if not unnecessary to decide whether private respondent complied with the
notice requirements for the exercise of the right of legal redemption under Article
1623 of the New Civil Code.

It is petitioner's contention that, assuming that private respondent may exercise the
right of redemption, there was no compliance with the conditions precedent for the
valid exercise thereof.
In Conejero et al. vs. Court of Appeals, et al., 16 SCRA 775, this Court explained the
nature of the right of redemption in this wise:

WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the Court of


Appeals is hereby REVERSED and SET ASIDE, and judgment is hereby rendered
DISMISSING the complaint.
SO ORDERED.

While the co-owner's right of legal redemption is a substantive


right, it is exceptional in nature, limited in its duration and subject
to strict compliance with the legal requirements. One of these is
that the redemptioner should tender payment of the redemption
money within thirty (30) days from written notice of the sale by
the co-owner.
It has been held that this thirty-day period is peremptory because the policy of the
law is not to leave the purchaser's title in uncertainty beyond the established 30-day
period. (Butte vs. Manuel Uy and Sons, Inc., 4 SCRA 526). It is not a prescriptive
period but is more a requisite or condition precedent to the exercise of the right of
legal redemption.
In the case at bar, private respondent alleged in her complaint that she learned of the
sale sometime in May, 1966 upon receipt of a pleading in Special Proceeding No.
508 of the Court of First Instance of Sorsogon. She likewise alleged that she gave a
letter informing petitioner of her desire to redeem the land on August 25, 1966.
Clearly, three months have elapsed since the notice of the sale. Hence, petitioner
claims that the thirty-day period of redemption has already expired. In addition,
petitioner makes capital of the admission of private respondent that she already knew
of the said transaction even before receipt of the said pleading (t.s.n., p. 16) as well

40

G.R. No. 107112 February 24, 1994


NAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M.
MAGGAY, petitioners,
vs.
THE COURT OF APPEALS AND CAMARINES SUR II ELECTRIC
COOPERATIVE, INC. (CASURECO II),respondents.

intention to hold their contemplation, it would be doing violence to


that intention to hold the obligor still responsible. 2
In other words, fair and square consideration underscores the legal precept therein.
Naga Telephone Co., Inc. remonstrates mainly against the application by the Court of
Appeals of Article 1267 in favor of Camarines Sur II Electric Cooperative, Inc. in the
case before us. Stated differently, the former insists that the complaint should have
been dismissed for failure to state a cause of action.

Ernesto P. Pangalangan for petitioners.


The antecedent facts, as narrated by respondent Court of Appeals are, as follows:
Luis General, Jr. for private respondent.
Petitioner Naga Telephone Co., Inc. (NATELCO) is a telephone company rendering
local as well as long distance telephone service in Naga City while private
respondent Camarines Sur II Electric Cooperative, Inc. (CASURECO II) is a private
corporation established for the purpose of operating an electric power service in the
same city.

NOCON, J.:
The case of Reyes v. Caltex (Philippines), Inc. 1 enunciated the doctrine that where a
person by his contract charges himself with an obligation possible to be performed,
he must perform it, unless its performance is rendered impossible by the act of God,
by the law, or by the other party, it being the rule that in case the party desires to be
excused from performance in the event of contingencies arising thereto, it is his duty
to provide the basis therefor in his contract.
With the enactment of the New Civil Code, a new provision was included therein,
namely, Article 1267 which provides:
When the service has become so difficult as to be manifestly
beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
In the report of the Code Commission, the rationale behind this innovation was
explained, thus:
The general rule is that impossibility of performance releases the
obligor. However, it is submitted that when the service has become
so difficult as to be manifestly beyond the contemplation of the
parties, the court should be authorized to release the obligor in
whole or in part. The intention of the parties should govern and if it
appears that the service turns out to be so difficult as to have been
beyond their contemplation, it would be doing violence to that

On November 1, 1977, the parties entered into a contract (Exh. "A") for the use by
petitioners in the operation of its telephone service the electric light posts of private
respondent in Naga City. In consideration therefor, petitioners agreed to install, free
of charge, ten (10) telephone connections for the use by private respondent in the
following places:
(a) 3 units The Main Office of (private respondent);
(b) 2 Units The Warehouse of (private respondent);
(c) 1 Unit The Sub-Station of (private respondent) at
Concepcion Pequea;
(d) 1 Unit The Residence of (private respondent's) President;
(e) 1 Unit The Residence of (private respondent's) Acting
General Manager; &
(f) 2 Units To be determined by the General Manager. 3
Said contract also provided:

41

(a) That the term or period of this contract shall be as long as the
party of the first part has need for the electric light posts of the
party of the second part it being understood that this contract shall
terminate when for any reason whatsoever, the party of the second
part is forced to stop, abandoned [sic] its operation as a public
service and it becomes necessary to remove the electric lightpost;
(sic)4
It was prepared by or with the assistance of the other petitioner, Atty. Luciano M.
Maggay, then a member of the Board of Directors of private respondent and at the
same time the legal counsel of petitioner.
After the contract had been enforced for over ten (10) years, private respondent filed
on January 2, 1989 with the Regional Trial Court of Naga City (Br. 28) C.C. No. 891642 against petitioners for reformation of the contract with damages, on the ground
that it is too one-sided in favor of petitioners; that it is not in conformity with the
guidelines of the National Electrification Administration (NEA) which direct that the
reasonable compensation for the use of the posts is P10.00 per post, per month; that
after eleven (11) years of petitioners' use of the posts, the telephone cables strung by
them thereon have become much heavier with the increase in the volume of their
subscribers, worsened by the fact that their linemen bore holes through the posts at
which points those posts were broken during typhoons; that a post now costs as
much as P2,630.00; so that justice and equity demand that the contract be reformed
to abolish the inequities thereon.
As second cause of action, private respondent alleged that starting with the year
1981, petitioners have used 319 posts in the towns of Pili, Canaman, Magarao and
Milaor, Camarines Sur, all outside Naga City, without any contract with it; that at the
rate of P10.00 per post, petitioners should pay private respondent for the use thereof
the total amount of P267,960.00 from 1981 up to the filing of its complaint; and that
petitioners had refused to pay private respondent said amount despite demands.
And as third cause of action, private respondent complained about the poor servicing
by petitioners of the ten (10) telephone units which had caused it great inconvenience
and damages to the tune of not less than P100,000.00
In petitioners' answer to the first cause of action, they averred that it should be
dismissed because (1) it does not sufficiently state a cause of action for reformation
of contract; (2) it is barred by prescription, the same having been filed more than ten
(10) years after the execution of the contract; and (3) it is barred by estoppel, since
private respondent seeks to enforce the contract in the same action. Petitioners
further alleged that their utilization of private respondent's posts could not have

caused their deterioration because they have already been in use for eleven (11)
years; and that the value of their expenses for the ten (10) telephone lines long
enjoyed by private respondent free of charge are far in excess of the amounts claimed
by the latter for the use of the posts, so that if there was any inequity, it was suffered
by them.
Regarding the second cause of action, petitioners claimed that private respondent had
asked for telephone lines in areas outside Naga City for which its posts were used by
them; and that if petitioners had refused to comply with private respondent's
demands for payment for the use of the posts outside Naga City, it was probably
because what is due to them from private respondent is more than its claim against
them.
And with respect to the third cause of action, petitioners claimed, inter alia, that their
telephone service had been categorized by the National Telecommunication
Corporation (NTC) as "very high" and of "superior quality."
During the trial, private respondent presented the following witnesses:
(1) Dioscoro Ragragio, one of the two officials who signed the contract in its behalf,
declared that it was petitioner Maggay who prepared the contract; that the
understanding between private respondent and petitioners was that the latter would
only use the posts in Naga City because at that time, petitioners' capability was very
limited and they had no expectation of expansion because of legal squabbles within
the company; that private respondent agreed to allow petitioners to use its posts in
Naga City because there were many subscribers therein who could not be served by
them because of lack of facilities; and that while the telephone lines strung to the
posts were very light in 1977, said posts have become heavily loaded in 1989.
(2) Engr. Antonio Borja, Chief of private respondent's Line Operation and
Maintenance Department, declared that the posts being used by petitioners totalled
1,403 as of April 17, 1989, 192 of which were in the towns of Pili, Canaman, and
Magarao, all outside Naga City (Exhs. "B" and "B-1"); that petitioners' cables strung
to the posts in 1989 are much bigger than those in November, 1977; that in 1987,
almost 100 posts were destroyed by typhoon Sisang: around 20 posts were located
between Naga City and the town of Pili while the posts in barangay Concepcion,
Naga City were broken at the middle which had been bored by petitioner's linemen
to enable them to string bigger telephone lines; that while the cost per post in 1977
was only from P700.00 to P1,000.00, their costs in 1989 went up from P1,500.00 to
P2,000.00, depending on the size; that some lines that were strung to the posts did
not follow the minimum vertical clearance required by the National Building Code,
so that there were cases in 1988 where, because of the low clearance of the cables,

42

passing trucks would accidentally touch said cables causing the posts to fall and
resulting in brown-outs until the electric lines were repaired.

(b) In most cases, only drop wires and not telephone cables have been strung to the
posts, which posts have remained erect up to the present;

(3) Dario Bernardez, Project Supervisor and Acting General Manager of private
respondent and Manager of Region V of NEA, declared that according to NEA
guidelines in 1985 (Exh. "C"), for the use by private telephone systems of electric
cooperatives' posts, they should pay a minimum monthly rental of P4.00 per post,
and considering the escalation of prices since 1985, electric cooperatives have been
charging from P10.00 to P15.00 per post, which is what petitioners should pay for
the use of the posts.

(c) Petitioner's linemen have strung only small messenger wires to many of the posts
and they need only small holes to pass through; and

(4) Engineer Antonio Macandog, Department Head of the Office of Services of


private respondent, testified on the poor service rendered by petitioner's telephone
lines, like the telephone in their Complaints Section which was usually out of order
such that they could not respond to the calls of their customers. In case of disruption
of their telephone lines, it would take two to three hours for petitioners to reactivate
them notwithstanding their calls on the emergency line.

(3) Concerning the second cause of action, the intention of the parties when they
entered into the contract was that the coverage thereof would include the whole area
serviced by petitioners because at that time, they already had subscribers outside
Naga City. Private respondent, in fact, had asked for telephone connections outside
Naga City for its officers and employees residing there in addition to the ten (10)
telephone units mentioned in the contract. Petitioners have not been charging private
respondent for the installation, transfers and re-connections of said telephones so that
naturally, they use the posts for those telephone lines.

(5) Finally, Atty. Luis General, Jr., private respondent's counsel, testified that the
Board of Directors asked him to study the contract sometime during the latter part of
1982 or in 1983, as it had appeared very disadvantageous to private respondent.
Notwithstanding his recommendation for the filing of a court action to reform the
contract, the former general managers of private respondent wanted to adopt a soft
approach with petitioners about the matter until the term of General Manager Henry
Pascual who, after failing to settle the matter amicably with petitioners, finally
agreed for him to file the present action for reformation of contract.
On the other hand, petitioner Maggay testified to the following effect:
(1) It is true that he was a member of the Board of Directors of private respondent
and at the same time the lawyer of petitioner when the contract was executed, but
Atty. Gaudioso Tena, who was also a member of the Board of Directors of private
respondent, was the one who saw to it that the contract was fair to both parties.
(2) With regard to the first cause of action:
(a) Private respondent has the right under the contract to use ten (10) telephone units
of petitioners for as long as it wishes without paying anything therefor except for
long distance calls through PLDT out of which the latter get only 10% of the
charges.

(d) Documents existing in the NTC show that the stringing of petitioners' cables in
Naga City are according to standard and comparable to those of PLDT. The accidents
mentioned by private respondent involved trucks that were either overloaded or had
loads that protruded upwards, causing them to hit the cables.

(4) With respect to the third cause of action, the NTC has found petitioners' cable
installations to be in accordance with engineering standards and practice and
comparable to the best in the country.
On the basis of the foregoing countervailing evidence of the parties, the trial court
found, as regards private respondent's first cause of action, that while the contract
appeared to be fair to both parties when it was entered into by them during the first
year of private respondent's operation and when its Board of Directors did not yet
have any experience in that business, it had become disadvantageous and unfair to
private respondent because of subsequent events and conditions, particularly the
increase in the volume of the subscribers of petitioners for more than ten (10) years
without the corresponding increase in the number of telephone connections to private
respondent free of charge. The trial court concluded that while in an action for
reformation of contract, it cannot make another contract for the parties, it can,
however, for reasons of justice and equity, order that the contract be reformed to
abolish the inequities therein. Thus, said court ruled that the contract should be
reformed by ordering petitioners to pay private respondent compensation for the use
of their posts in Naga City, while private respondent should also be ordered to pay
the monthly bills for the use of the telephones also in Naga City. And taking into
consideration the guidelines of the NEA on the rental of posts by telephone
companies and the increase in the costs of such posts, the trial court opined that a
monthly rental of P10.00 for each post of private respondent used by petitioners is

43

reasonable, which rental it should pay from the filing of the complaint in this case on
January 2, 1989. And in like manner, private respondent should pay petitioners from
the same date its monthly bills for the use and transfers of its telephones in Naga
City at the same rate that the public are paying.
On private respondent's second cause of action, the trial court found that the contract
does not mention anything about the use by petitioners of private respondent's posts
outside Naga City. Therefore, the trial court held that for reason of equity, the
contract should be reformed by including therein the provision that for the use of
private respondent's posts outside Naga City, petitioners should pay a monthly rental
of P10.00 per post, the payment to start on the date this case was filed, or on January
2, 1989, and private respondent should also pay petitioners the monthly dues on its
telephone connections located outside Naga City beginning January, 1989.
And with respect to private respondent's third cause of action, the trial court found
the claim not sufficiently proved.
Thus, the following decretal portion of the trial court's decision dated July 20, 1990:
WHEREFORE, in view of all the foregoing, decision is hereby
rendered ordering the reformation of the agreement (Exh. A);
ordering the defendants to pay plaintiff's electric poles in Naga
City and in the towns of Milaor, Canaman, Magarao and Pili,
Camarines Sur and in other places where defendant NATELCO
uses plaintiff's electric poles, the sum of TEN (P10.00) PESOS per
plaintiff's pole, per month beginning January, 1989 and ordering
also the plaintiff to pay defendant NATELCO the monthly dues of
all its telephones including those installed at the residence of its
officers, namely; Engr. Joventino Cruz, Engr. Antonio Borja, Engr.
Antonio Macandog, Mr. Jesus Opiana and Atty. Luis General, Jr.
beginning January, 1989. Plaintiff's claim for attorney's fees and
expenses of litigation and defendants' counterclaim are both hereby
ordered dismissed. Without pronouncement as to costs.
Disagreeing with the foregoing judgment, petitioners appealed to respondent Court
of Appeals. In the decision dated May 28, 1992, respondent court affirmed the
decision of the trial court, 5 but based on different grounds to wit: (1) that Article
1267 of the New Civil Code is applicable and (2) that the contract was subject to a
potestative condition which rendered said condition void. The motion for
reconsideration was denied in the resolution dated September 10, 1992. 6Hence, the
present petition.

Petitioners assign the following pertinent errors committed by respondent court:


1) in making a contract for the parties by invoking Article 1267 of
the New Civil Code;
2) in ruling that prescription of the action for reformation of the
contract in this case commenced from the time it became
disadvantageous to private respondent; and
3) in ruling that the contract was subject to a potestative condition
in favor of petitioners.
Petitioners assert earnestly that Article 1267 of the New Civil Code is not applicable
primarily because the contract does not involve the rendition of service or a personal
prestation and it is not for future service with future unusual change. Instead, the
ruling in the case of Occea, et al. v. Jabson, etc., et al., 7 which interpreted the
article, should be followed in resolving this case. Besides, said article was never
raised by the parties in their pleadings and was never the subject of trial and
evidence.
In applying Article 1267, respondent court rationalized:
We agree with appellant that in order that an action for reformation
of contract would lie and may prosper, there must be sufficient
allegations as well as proof that the contract in question failed to
express the true intention of the parties due to error or mistake,
accident, or fraud. Indeed, in embodying the equitable remedy of
reformation of instruments in the New Civil Code, the Code
Commission gave its reasons as follows:
Equity dictates the reformation of an instrument
in order that the true intention of the contracting
parties may be expressed. The courts by the
reformation do not attempt to make a new
contract for the parties, but to make the
instrument express their real agreement. The
rationale of the doctrine is that it would be unjust
and inequitable to allow the enforcement of a
written instrument which does not reflect or
disclose the real meeting of the minds of the
parties. The rigor of the legalistic rule that a
written instrument should be the final and

44

inflexible criterion and measure of the rights and


obligations of the contracting parties is thus
tempered to forestall the effects of mistake,
fraud, inequitable conduct, or accident. (pp. 5556, Report of Code Commission)
Thus, Articles 1359, 1361, 1362, 1363 and 1364 of the New Civil
Code provide in essence that where through mistake or accident on
the part of either or both of the parties or mistake or fraud on the
part of the clerk or typist who prepared the instrument, the true
intention of the parties is not expressed therein, then the instrument
may be reformed at the instance of either party if there was mutual
mistake on their part, or by the injured party if only he was
mistaken.
Here, plaintiff-appellee did not allege in its complaint, nor does its
evidence prove, that there was a mistake on its part or mutual
mistake on the part of both parties when they entered into the
agreement Exh. "A", and that because of this mistake, said
agreement failed to express their true intention. Rather, plaintiff's
evidence shows that said agreement was prepared by Atty. Luciano
Maggay, then a member of plaintiff's Board of Directors and its
legal counsel at that time, who was also the legal counsel for
defendant-appellant, so that as legal counsel for both companies
and presumably with the interests of both companies in mind when
he prepared the aforesaid agreement, Atty. Maggay must have
considered the same fair and equitable to both sides, and this was
affirmed by the lower court when it found said contract to have
been fair to both parties at the time of its execution. In fact, there
were no complaints on the part of both sides at the time of and
after the execution of said contract, and according to 73-year old
Justino de Jesus, Vice President and General manager of appellant
at the time who signed the agreement Exh. "A" in its behalf and
who was one of the witnesses for the plaintiff (sic), both parties
complied with said contract "from the very beginning" (p. 5, tsn,
April 17, 1989).
That the aforesaid contract has become inequitous or unfavorable
or disadvantageous to the plaintiff with the expansion of the
business of appellant and the increase in the volume of its
subscribers in Naga City and environs through the years,
necessitating the stringing of more and bigger telephone cable
wires by appellant to plaintiff's electric posts without a

corresponding increase in the ten (10) telephone connections given


by appellant to plaintiff free of charge in the agreement Exh. "A"
as consideration for its use of the latter's electric posts in Naga
City, appear, however, undisputed from the totality of the evidence
on record and the lower court so found. And it was for this reason
that in the later (sic) part of 1982 or 1983 (or five or six years after
the subject agreement was entered into by the parties), plaintiff's
Board of Directors already asked Atty. Luis General who had
become their legal counsel in 1982, to study said agreement which
they believed had become disadvantageous to their company and
to make the proper recommendation, which study Atty. General
did, and thereafter, he already recommended to the Board the filing
of a court action to reform said contract, but no action was taken
on Atty. General's recommendation because the former general
managers of plaintiff wanted to adopt a soft approach in discussing
the matter with appellant, until, during the term of General
Manager Henry Pascual, the latter, after failing to settle the
problem with Atty. Luciano Maggay who had become the president
and general manager of appellant, already agreed for Atty.
General's filing of the present action. The fact that said contract has
become inequitous or disadvantageous to plaintiff as the years
went by did not, however, give plaintiff a cause of action for
reformation of said contract, for the reasons already pointed out
earlier. But this does not mean that plaintiff is completely without a
remedy, for we believe that the allegations of its complaint herein
and the evidence it has presented sufficiently make out a cause of
action under Art. 1267 of the New Civil Code for its release from
the agreement in question.
xxx xxx xxx
The understanding of the parties when they entered into the
Agreement Exh. "A" on November 1, 1977 and the prevailing
circumstances and conditions at the time, were described by
Dioscoro Ragragio, the President of plaintiff in 1977 and one of its
two officials who signed said agreement in its behalf, as follows:
Our understanding at that time is that we will
allow NATELCO to utilize the posts of
CASURECO II only in the City of Naga because
at that time the capability of NATELCO was
very limited, as a matter of fact we do [sic] not
expect to be able to expand because of the legal

45

squabbles going on in the NATELCO. So, even


at that time there were so many subscribers in
Naga City that cannot be served by the
NATELCO, so as a mater of public service we
allowed them to sue (sic) our posts within the
Naga City. (p. 8, tsn April 3, 1989)
Ragragio also declared that while the telephone wires strung to the
electric posts of plaintiff were very light and that very few
telephone lines were attached to the posts of CASURECO II in
1977, said posts have become "heavily loaded" in 1989 (tsn, id.).
In truth, as also correctly found by the lower court, despite the
increase in the volume of appellant's subscribers and the
corresponding increase in the telephone cables and wires strung by
it to plaintiff's electric posts in Naga City for the more 10 years
that the agreement Exh. "A" of the parties has been in effect, there
has been no corresponding increase in the ten (10) telephone units
connected by appellant free of charge to plaintiff's offices and
other places chosen by plaintiff's general manager which was the
only consideration provided for in said agreement for appellant's
use of plaintiffs electric posts. Not only that, appellant even started
using plaintiff's electric posts outside Naga City although this was
not provided for in the agreement Exh. "A" as it extended and
expanded its telephone services to towns outside said city. Hence,
while very few of plaintiff's electric posts were being used by
appellant in 1977 and they were all in the City of Naga, the number
of plaintiff's electric posts that appellant was using in 1989 had
jumped to 1,403,192 of which are outside Naga City (Exh. "B").
Add to this the destruction of some of plaintiff's poles during
typhoons like the strong typhoon Sisang in 1987 because of the
heavy telephone cables attached thereto, and the escalation of the
costs of electric poles from 1977 to 1989, and the conclusion is
indeed ineluctable that the agreement Exh. "A" has already become
too one-sided in favor of appellant to the great disadvantage of
plaintiff, in short, the continued enforcement of said contract has
manifestly gone far beyond the contemplation of plaintiff, so much
so that it should now be released therefrom under Art. 1267 of the
New Civil Code to avoid appellant's unjust enrichment at its
(plaintiff's) expense. As stated by Tolentino in his commentaries on
the Civil Code citing foreign civilist Ruggiero, "equity demands a
certain economic equilibrium between the prestation and the
counter-prestation, and does not permit the unlimited

impoverishment of one party for the benefit of the other by the


excessive rigidity of the principle of the obligatory force of
contracts (IV Tolentino, Civil Code of the Philippines, 1986 ed.,
pp. 247-248).
We therefore, find nothing wrong with the ruling of the trial court,
although based on a different and wrong premise (i.e., reformation
of contract), that from the date of the filing of this case, appellant
must pay for the use of plaintiff's electric posts in Naga City at the
reasonable monthly rental of P10.00 per post, while plaintiff
should pay appellant for the telephones in the same City that it was
formerly using free of charge under the terms of the agreement
Exh. "A" at the same rate being paid by the general public. In
affirming said ruling, we are not making a new contract for the
parties herein, but we find it necessary to do so in order not to
disrupt the basic and essential services being rendered by both
parties herein to the public and to avoid unjust enrichment by
appellant at the expense of plaintiff, said arrangement to continue
only until such time as said parties can re-negotiate another
agreement
over
the
same
subject-matter covered by the agreement Exh. "A". Once said
agreement is reached and executed by the parties, the aforesaid
ruling of the lower court and affirmed by us shall cease to exist and
shall be substituted and superseded by their new agreement. . . .. 8
Article 1267 speaks of "service" which has become so difficult. Taking into
consideration the rationale behind this provision, 9 the term "service" should be
understood as referring to the "performance" of the obligation. In the present case,
the obligation of private respondent consists in allowing petitioners to use its posts in
Naga City, which is the service contemplated in said article. Furthermore, a bare
reading of this article reveals that it is not a requirement thereunder that the contract
be for future service with future unusual change. According to Senator Arturo M.
Tolentino, 10 Article 1267 states in our law the doctrine of unforseen events. This is
said to be based on the discredited theory of rebus sic stantibusin public international
law; under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist the contract also ceases to exist.
Considering practical needs and the demands of equity and good faith, the
disappearance of the basis of a contract gives rise to a right to relief in favor of the
party prejudiced.
In a nutshell, private respondent in the Occea case filed a complaint against
petitioner before the trial court praying for modification of the terms and conditions
of the contract that they entered into by fixing the proper shares that should pertain to

46

them out of the gross proceeds from the sales of subdivided lots. We ordered the
dismissal of the complaint therein for failure to state a sufficient cause of action. We
rationalized that the Court of Appeals misapplied Article 1267 because:
. . . respondent's complaint seeks not release from the subdivision
contract but that the court "render judgment modifying the terms
and conditions of the contract . . . by fixing the proper shares that
should pertain to the herein parties out of the gross proceeds from
the sales of subdivided lots of subject subdivision". The cited
article (Article 1267) does not grant the courts (the) authority to
remake, modify or revise the contract or to fix the division of
shares between the parties as contractually stipulated with the force
of law between the parties, so as to substitute its own terms for
those covenanted by the parties themselves. Respondent's
complaint for modification of contract manifestly has no basis in
law and therefore states no cause of action. Under the particular
allegations of respondent's complaint and the circumstances therein
averred, the courts cannot even in equity grant the relief sought. 11
The ruling in the Occea case is not applicable because we agree with respondent
court that the allegations in private respondent's complaint and the evidence it has
presented sufficiently made out a cause of action under Article 1267. We, therefore,
release the parties from their correlative obligations under the contract. However, our
disposition of the present controversy does not end here. We have to take into
account the possible consequences of merely releasing the parties therefrom:
petitioners will remove the telephone wires/cables in the posts of private respondent,
resulting in disruption of their service to the public; while private respondent, in
consonance with the contract 12 will return all the telephone units to petitioners,
causing prejudice to its business. We shall not allow such eventuality. Rather, we
require, as ordered by the trial court: 1) petitioners to pay private respondent for the
use of its posts in Naga City and in the towns of Milaor, Canaman, Magarao and Pili,
Camarines Sur and in other places where petitioners use private respondent's posts,
the sum of ten (P10.00) pesos per post, per month, beginning January, 1989; and 2)
private respondent to pay petitioner the monthly dues of all its telephones at the same
rate being paid by the public beginning January, 1989. The peculiar circumstances of
the present case, as distinguished further from the Occea case, necessitates exercise
of our equity jurisdiction. 13 By way of emphasis, we reiterate the rationalization of
respondent court that:
. . . In affirming said ruling, we are not making a new contract for
the parties herein, but we find it necessary to do so in order not to
disrupt the basic and essential services being rendered by both

parties herein to the public and to avoid unjust enrichment by


appellant at the expense of plaintiff . . . . 14
Petitioners' assertion that Article 1267 was never raised by the parties in their
pleadings and was never the subject of trial and evidence has been passed upon by
respondent court in its well reasoned resolution, which we hereunder quote as our
own:
First, we do not agree with defendant-appellant that in applying
Art. 1267 of the New Civil Code to this case, we have changed its
theory and decided the same on an issue not invoked by plaintiff in
the lower court. For basically, the main and pivotal issue in this
case is whether the continued enforcement of the contract Exh. "A"
between the parties has, through the years (since 1977), become
too inequitous or disadvantageous to the plaintiff and too one-sided
in favor of defendant-appellant, so that a solution must be found to
relieve plaintiff from the continued operation of said agreement
and to prevent defendant-appellant from further unjustly enriching
itself at plaintiff's expense. It is indeed unfortunate that defendant
had turned deaf ears to plaintiffs requests for renegotiation,
constraining the latter to go to court. But although plaintiff cannot,
as we have held, correctly invoke reformation of contract as a
proper remedy (there having been no showing of a mistake or error
in said contract on the part of any of the parties so as to result in its
failure to express their true intent), this does not mean that plaintiff
is absolutely without a remedy in order to relieve itself from a
contract that has gone far beyond its contemplation and has
become so highly inequitous and disadvantageous to it through the
years because of the expansion of defendant-appellant's business
and the increase in the volume of its subscribers. And as it is the
duty of the Court to administer justice, it must do so in this case in
the best way and manner it can in the light of the proven facts and
the law or laws applicable thereto.
It is settled that when the trial court decides a case in favor of a
party on a certain ground, the appellant court may uphold the
decision below upon some other point which was ignored or
erroneously decided by the trial court (Garcia Valdez v. Tuazon, 40
Phil. 943; Relativo v. Castro, 76 Phil. 563; Carillo v. Salak de Paz,
18 SCRA 467). Furthermore, the appellate court has the discretion
to consider an unassigned error that is closely related to an error
properly assigned (Paterno v. Jao Yan, 1 SCRA 631; Hernandez v.
Andal, 78 Phil. 196). It has also been held that the Supreme Court

47

(and this Court as well) has the authority to review matters, even if
they are not assigned as errors in the appeal, if it is found that their
consideration is necessary in arriving at a just decision of the case
(Saura Import & Export Co., Inc. v. Phil. International Surety Co.
and PNB, 8 SCRA 143). For it is the material allegations of fact in
the complaint, not the legal conclusion made therein or the prayer,
that determines the relief to which the plaintiff is entitled, and the
plaintiff is entitled to as much relief as the facts warrant although
that relief is not specifically prayed for in the complaint (Rosales v.
Reyes and Ordoveza, 25 Phil. 495; Cabigao v. Lim, 50 Phil. 844;
Baguioro v. Barrios, 77 Phil. 120). To quote an old but very
illuminating decision of our Supreme Court through the pen of
American jurist Adam C. Carson:

this case. Defendant-appellant stresses that the applicability of said


provision is a question of fact, and that it should have been given
the opportunity to present evidence on said question. But
defendant-appellant cannot honestly and truthfully claim that it
(did) not (have) the opportunity to present evidence on the issue of
whether the continued operation of the contract Exh. "A" has now
become too one-sided in its favor and too inequitous, unfair, and
disadvantageous to plaintiff. As held in our decision, the abundant
and copious evidence presented by both parties in this case and
summarized in said decision established the following essential
and vital facts which led us to apply Art. 1267 of the New Civil
Code to this case:
xxx xxx xxx 15

"Under our system of pleading it is the duty of


the courts to grant the relief to which the parties
are shown to be entitled by the allegations in
their pleadings and the facts proven at the trial,
and the mere fact that they themselves
misconstrue the legal effect of the facts thus
alleged and proven will not prevent the court
from placing the just construction thereon and
adjudicating the issues accordingly." (Alzua v.
Johnson, 21 Phil. 308)
And in the fairly recent case of Caltex Phil., Inc. v IAC, 176 SCRA
741, the Honorable Supreme Court also held:
We rule that the respondent court did not commit
any error in taking cognizance of the aforesaid
issues, although not raised before the trial court.
The presence of strong consideration of
substantial justice has led this Court to relax the
well-entrenched rule that, except questions on
jurisdiction, no question will be entertained on
appeal unless it has been raised in the court
below and it is within the issues made by the
parties in their pleadings (Cordero v. Cabral, L36789, July 25, 1983, 123 SCRA 532). . . .
We believe that the above authorities suffice to show that this
Court did not err in applying Art. 1267 of the New Civil Code to

On the issue of prescription of private respondent's action for reformation of


contract, petitioners allege that respondent court's ruling that the right of action
"arose only after said contract had already become disadvantageous and unfair to it
due to subsequent events and conditions, which must be sometime during the latter
part of 1982 or in 1983 . . ." 16 is erroneous. In reformation of contracts, what is
reformed is not the contract itself, but the instrument embodying the contract. It
follows that whether the contract is disadvantageous or not is irrelevant to
reformation and therefore, cannot be an element in the determination of the period
for prescription of the action to reform.
Article 1144 of the New Civil Code provides, inter alia, that an action upon a written
contract must be brought within ten (10) years from the time the right of action
accrues. Clearly, the ten (10) year period is to be reckonedfrom the time the right of
action accrues which is not necessarily the date of execution of the contract. As
correctly ruled by respondent court, private respondent's right of action arose
"sometime during the latter part of 1982 or in 1983 when according to Atty. Luis
General, Jr. . . ., he was asked by (private respondent's) Board of Directors to study
said contract as it already appeared disadvantageous to (private respondent) (p. 31,
tsn, May 8, 1989). (Private respondent's) cause of action to ask for reformation of
said contract should thus be considered to have arisen only in 1982 or 1983, and
from 1982 to January 2, 1989 when the complaint in this case was filed, ten (10)
years had not yet elapsed." 17
Regarding the last issue, petitioners allege that there is nothing purely potestative
about the prestations of either party because petitioner's permission for free use of
telephones is not made to depend purely on their will, neither is private respondent's
permission for free use of its posts dependent purely on its will.

48

Apart from applying Article 1267, respondent court cited another legal remedy
available to private respondent under the allegations of its complaint and the
preponderant evidence presented by it:
. . . we believe that the provision in said
agreement
(a) That the term or period of this contract shall
be as long as the party of the first part[herein
appellant] has need for the electric light posts of
the party of the second part [herein plaintiff] it
being understood that this contract shall
terminate when for any reason whatsoever, the
party of the second part is forced to stop,
abandoned [sic] its operation as a public service
and it becomes necessary to remove the electric
light post [sic]"; (Emphasis supplied)
is invalid for being purely potestative on the part of appellant as it
leaves the continued effectivity of the aforesaid agreement to the
latter's sole and exclusive will as long as plaintiff is in operation. A
similar provision in a contract of lease wherein the parties agreed
that the lessee could stay on the leased premises "for as long as the
defendant needed the premises and can meet and pay said
increases" was recently held by the Supreme Court in Lim v. C.A.,
191 SCRA 150, citing the much earlier case of Encarnacion v.
Baldomar, 77 Phil. 470, as invalid for being "a purely potestative
condition because it leaves the effectivity and enjoyment of
leasehold rights to the sole and exclusive will of the lessee."
Further held the High Court in the Lim case:
The continuance, effectivity and fulfillment of a
contract of lease cannot be made to depend
exclusively upon the free and uncontrolled
choice of the lessee between continuing the
payment of the rentals or not, completely
depriving the owner of any say in the matter.
Mutuality does not obtain in such a contract of
lease of no equality exists between the lessor and
the lessee since the life of the contract is dictated
solely by the lessee.

The above can also be said of the agreement Exh. "A" between the
parties in this case. There is no mutuality and equality between
them under the afore-quoted provision thereof since the life and
continuity of said agreement is made to depend as long as
appellant needs plaintiff's electric posts. And this is precisely why,
since 1977 when said agreement was executed and up to 1989
when this case was finally filed by plaintiff, it could do nothing to
be released from or terminate said agreement notwithstanding that
its continued effectivity has become very disadvantageous and
inequitous to it due to the expansion and increase of appellant's
telephone services within Naga City and even outside the same,
without a corresponding increase in the ten (10) telephone units
being used by plaintiff free of charge, as well as the bad and
inefficient service of said telephones to the prejudice and
inconvenience of plaintiff and its customers. . . . 18
Petitioners' allegations must be upheld in this regard. A potestative condition is a
condition, the fulfillment of which depends upon the sole will of the debtor, in which
case, the conditional obligation is void. 19 Based on this definition, respondent court's
finding that the provision in the contract, to wit:
(a) That the term or period of this contract shall be as long as the
party of the first part (petitioner) has need for the electric light
posts of the party of the second part (private respondent) . . ..
is a potestative condition, is correct. However, it must have overlooked the other
conditions in the same provision, to wit:
. . . it being understood that this contract shall terminate when for
any reason whatsoever, the party of the second part (private
respondent) is forced to stop, abandoned (sic) its operation as a
public service and it becomes necessary to remove the electric light
post (sic);
which are casual conditions since they depend on chance, hazard, or the will of a
third person. 20 In sum, the contract is subject to mixed conditions, that is, they
depend partly on the will of the debtor and partly on chance, hazard or the will of a
third person, which do not invalidate the aforementioned provision. 21 Nevertheless,
in view of our discussions under the first and second issues raised by petitioners,
there is no reason to set aside the questioned decision and resolution of respondent
court.

49

WHEREFORE, the petition is hereby DENIED. The decision of the Court of


Appeals dated May 28, 1992 and its resolution dated September 10, 1992 are
AFFIRMED.
SO ORDERED.

50

G.R. No. 76148 December 20, 1989


ELISEO CARO, CARLOS CARO, BENITO CARO, CARMEN CARO,
BATAYOLA AND LORENZO CARO,petitioners,
vs.
HON. COURT OF APPEALS, SERAFIN V. RONZALES, JOSE RONZALES,
JR. AND GEMME RONZALES,respondents.
Resurreccion S. Salvilla for petitioners.
Tirol & Tirol for private respondents.

MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in
AC-G.R. CV No. 01016 entitled, "Epifanio Caro, Plaintiff-Appellant v. Serafin V.
Ronsales, et al., Defendants-Appellees," dated January 28, 1986 affirming the
decision of the Court of First Instance (now Regional Trial Court) of Iloilo; and its
resolution dated September 11, 1986 denying the motion for reconsideration.
The subject matter of the present controversy is a 260 square meter parcel of land
which, according to petitioners, is included in the parcel of land purchased by their
predecessor, Epifanio Caro, from Simeon Gallego; but contradicted by the private
respondents by claiming it as their own evidenced by a certificate of title issued in
their favor. We gathered from the records that the questioned land is the eastern
portion allegedly included in the parcel of land purchased from Simeon Gallego. The
trial court ruled in favor of the private respondents on the grounds of estoppel,
absence of fraud in the registration of the questioned land and prescription. This
ruling was affirmed by the respondent court. Likewise, We affirm, based on the first
two grounds but not on the ground of prescription.
The antecedent facts are as follows:
It appears that on May 14, 1946, Simeon Gallego bought a parcel of land from
Loreto Martinez, Presentacion Jereza, Hermenigildo Jereza, Maria Luz Nele Jereza
and Maria Elena Jereza, situated within the poblacion of Jordan, Sub-Province of
Guimaras with an area of 5,031 square meters and bounded on the North by Jordan
River, Joaquin Galve and Custodia Jalandoni; on the East by Roman Catholic

Church and the Municipality of Jordan; on the South by Graciana Martinez; and on
the West by Jordan River. The above-described parcel of land was then declared for
taxation purposes under Tax Declaration No. 6437. This land was later on sold by
Simeon Gallego to Epifanio Caro in 1948. On May 15, 1962, Trinidad Castem,
Rolando Iranaya and Eriberto Iranaya sold a parcel of land which they inherited from
Custodia Jalandoni, situated in the poblacion of Jordan, Sub-Province of Guimaras,
with an area of 1,011 square meters and bounded on the North by Jordan River; on
the East by Roman Catholic Archbishop of Jaro; on the South by Rafael Gaylan; and
on the West by Jordan River, to Epifanio Caro. The land was then declared for
taxation purposes under Tax Declaration No. 4135. In the same year, Epifanio Caro
bought another parcel of land from the heirs of Rafael Gaylan, situated in the
poblacion of Jordan, Sub-Province of Guimaras, with an area of 1,750 square meters
and bounded on the North and East by the heirs of Custodia Jalandoni; on the South
by Simeon Gallego; and on the West by Jordan River, and declared for taxation
purposes under Tax Declaration No. 3638.
In 1963, Epifanio Caro had those three (3) parcels of land surveyed and were then
designated as Lot No. 54. When Blas Gonzales conducted the survey, he prepared a
plan. Epifanio Caro was given a copy of the plan and he just kept it. During that
survey, Epifanio Caro pointed the boundaries of his parcels of land to the survey
team. These parcels of land were relocated in 1968 by the Sirilan Surveying
Company and Plan Psu-207820 was prepared. The parcels of land of Epifanio Caro
were denominated as Lot No. 54 and the land claimed by the private respondents
Serafin V. Ronzales, Jose Ronzales, Jr. and Gemme Ronzales, as Lot No. 55.
Epifanio Caro had the three lots consolidated after the survey into one lot, and Tax
Declaration No. 7688 was issued. During the cadastral proceeding, Epifanio Caro
filed an answer for Lot 54. There is no showing whether or not a title was issued to
him.
On the other hand, the private respondents claim that the questioned land was
formerly owned by Pascuala Lacson and was declared in her name under Tax
Declaration No. 4234. Pascuala Lacson was married to Domingo Ronzales. Long
before World War II, private respondents and their predessors-in-interest had been
living on the questioned land. When Epifanio Caro bought a parcel of land from
Simeon Gallego, Jose Ronzales, Sr., his brother Serafin Ronzales, and sister Gemme
Ronzales children of Domingo Ronzales, and Pascuala Lacson, were already living
in a house of semi-strong materials on the questioned land.
Sometime in 1964, another survey was conducted. The parcels of land claimed by
Epifanio Caro were denominated as Lot No. 54 and the land claimed by the private
respondents was denominated as Lot No. 55. Epifanio Caro filed an answer for Lot
No. 54 and Purificacion Ronzales, mother of private respondent Jose Ronzales, Jr.
filed an answer for Lot No. 55. No other person or persons filed an answer for Lot

51

No. 55. Consequently, Original Certificate of Title No. 0-6836 was issued in the
names of the private respondents, in equal shares of 1/3 portion each on September
17, 1970.
In June 1973, the spouses Epifanio Caro and Paz Caro filed an ejectment case against
Augusta Chavez, Naciso Galila, Timoteo Parreno, Ramon Aranduque and Rafael
Galotera, involving Lot Nos. 56, 59 and 60. In 1974, the spouses filed an ejectment
and illegal detainer case against Ramon Aranduque, Timoteo Parreno and Augusta
Chavez, involving Lot No. 54.
On June 4, 1975, Epifanio Caro flied a complaint before the Court of First Instance
of Iloilo (Civil Case No. 10235) for cancellation of Certificate of Title No. 0-6836,
reconveyance, recovery of possession and damages on the ground of fraud. During
the pendency of the case, Epifanio Caro died, so he was substituted by his heirs,
namely, Eliseo Caro, Carlos Caro, Benito Caro, Carmen Caro Batayola and Lorenzo
Caro.
On November 22, 1982, the trial court dismissed the complaint. On appeal, the
dismissal was affirmed by the respondent Court of Appeals. The motion for
reconsideration was denied. Hence, the present petition for review on certiorari.
The issues may be limited to the following:
1) Whether or not the action in Civil Case No. 10235 has
prescribed;
2) Whether or not fraud attended the issuance of Original
Certificate of Title No. 0-6836; and
3) Whether or not the plaintiff in said civil case was in estoppel.
Petitioners contend that since private respondents do not own the questioned land,
they are mere trustees and this being the case, prescription does not lie in an action
for reconveyance.
In this regard, the trial court held (p. 413, Records):
An action for reconveyance on the ground of fraud prescribes in
four (4) years from the time of the decree of registration, for the
reason that the registration of the decree constitutes constructive
notice to the whole world (Gerona v. de Guzman, G.R. No. L-

19060, May 29, 1964, citing the cases J.M. Tuason and Co. vs.
Magdangal, G.R. No. L-15539, June 30, 1962; Abdon v. Abella,
C.A. G.R. No. L-29846-R, August 31, 1964).
Affirming, the respondent court said (p. 29, Rollo):
... even if a trust relationship had existed, the right to seek
reconveyance prescribed ten (10) years after 1948 when Epifanio
Caro was informed by the wife of Jose Ronzales, that she inherited
the land from her grandmother (de la Cerna vs. de la Cerna, 72
SCRA 515; Alzona vs. Calupitan, 4 SCRA 450; Carantes vs. Court
of Appeals, 76 SCRA 516). Since there is no trust relationship
between the ancestors of and between plaintiffs and defendants, the
same action prescribed in 4 years from the issuance of title on
September 17, 1970, because the complaint was filed only on June
4,1975, as ruled by the lower court (de la Cerna vs. de la Cerna, 72
SCRA 515).
We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran, G.R. No. L33261, September 30, 1987,154 SCRA 396 illuminated what used to be a gray area
on the prescriptive period for an action to reconvey the title to real property and,
corollarily, its point of reference:
... It must be remembered that before August 30,1950, the date of
the effectivity of the new Civil Code, the old Code of Civil
Procedure (Act No. 190) governed prescription. It provided:
SEC. 43. Other civil actions; how limited.- Civil actions other than
for the recovery of real property can only be brought within the
following periods after the right of action accrues:
xxx xxx xxx
3. Within four years: .... An action for relief on the ground of fraud,
but the right of action in such case shall not be deemed to have
accrued until the discovery of the fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just as an
implied or constructive trust is an offspring of the law (Art. 1456,

52

Civil Code), so is the corresponding obligation to reconvey the


property and the title thereto in favor of the true owner. In this
context, and vis-a-vis prescription, Article 1144 of the Civil Code
is applicable.
Article 1144. The following actions must be brought within ten
years from the time the right of action accrues:

In all cases of registration procured by fraud, the owner may


pursue all his legal and equitable remedies against the parties to
such fraud without prejudice, however, to the rights of any
innocent holder of the decree of registration on the original petition
or application, ...
This provision should be read in conjunction with Article 1456 of the Civil Code,
which provides:

(1) Upon a written contract;


(2) Upon an obligation created by law;
(3) Upon a judgment.
xxxxxxxxx
(Emphasis supplied).
An action for reconveyance based on an implied or constructive
trust must perforce prescribe in ten years and not otherwise. A long
line of decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled that an
action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over
the property. The only discordant note, it seems, is Balbin vs.
Medalla which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be
explained by the erroneous reliance on Gerona vs. de Guzman. But
in Gerona, the fraud was discovered on June 25,1948, hence
Section 43(3) of act No. 190, was applied, the new Civil Code not
coming into effect until August 30,1950 as mentioned earlier. It
must be stressed, at this juncture, that article 1144 and article 1456,
are new provisions. They have no counterparts in the old Civil
Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for an
action for reconveyance of title of real property acquired under
false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential
Decree No. 1529, which provides:

Article 1456. If property is acquired through mistake or fraud, the


person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.
The law thereby creates the obligation of the trustee to reconvey the property and the
title thereto in favor of the true owner. Correlating Section 53, paragraph 3 of
Presidential Decree No. 1529 and Article 1456 of the Civil Code with Article
1144(2) of the Civil Code, supra, the prescriptive period for the reconveyance of
fraudulently registered real property is ten (10) years reckoned from the date of the
issuance of the certificate of title. In the present case, therefore, inasmuch as Civil
Case No. 10235 was filed on June 4, 1975, it was well-within the prescriptive period
of ten (10) years from the date of the issuance of Original Certificate of Title No. 06836 on September 17, 1970.
Unfortunately for the petitioners, however, We agree with the respondent court and
the trial court that the private respondents did not employ any fraud in securing title
to the questioned land. A perusal of the pertinent portions of the deposition of
Epifanio Caro supports this finding, to wit:
ATTY. TANEO:
Q Now, at the time you bought this land from Simeon Gallego in
1948, who was residing in that shack?
A There was no more shack, but there was a big house.
Q And who was residing on that big house?
A Jose and his wife and children, and his sister.

53

Q Since according to you at the time you bought this land from
Simeon Gallego there was already that big house occupied by Jose
Ronzales and his wife, their children and sister, did you make any
demand from them to vacate the premises since you have already
purchased the land from Simeon Gallego?
A I informed them that I have already bought the lot from Simeon
Gallego, and I demanded from them rental of the house, because
their house was already there at the time I bought the land.

Q In other words you mean that after they suggested to rent the
land and you agreed, you made several demands from them to pay
the rentals?
A Yes, sir, I demanded from them the rentals. But later when I
demanded from them the payment of the rent, they told me that it
is not my land being occupied by their house, but it is the land of
the municipality.

Q And what was their answer, if any, to your demand?

Q Around how many times did you demand from them for the
payment of the rentals?

A They promised me that they will also pay the rent, or if I wish to
sell the land to them, they will buy the same. But I told them that I
will not sell the land.

A Two times. And on the second time you demanded for the
payment of rentals and they did not still pay, what was their reason,
if any?

Q Now, since you told them that you did not want to sell to them
the portion of the land occupied by their big house, what did they,
if any, suggest to you regarding their occupancy of the land?

ATTY. ALINIO:
Objection, because the witness has already answered the same or
similar questions.

ATTY. ALINIO:
ATTY. TANEO:
We would like now to object to this line of questioning because
this is irrelevant, immaterial, and impertinent, not being raised in
the complaint. Not one of the issues in this case.
ATTY. GRIJALVO:
Subject to the objection, witness may answer.
WITNESS:
A They told me that they will just pay the rent.
ATTY. TANEO:
Q Did you agree?
A I agreed. I consented, but they merely promised and promised to
me, but they did not pay anything.

The witness stated that he made around two demands for the
payment of rentals. When he made the demand later after there was
an agreement that they would just pay the rental, they reasoned out
that the land occupied by their house is a portion of the land of the
municipality. Since the witness stated that there was a second
demand, the purpose now of the pending question is if there was
any other reason stated by them.
ATTY. GRIJALVO:
Subject to the objection, witness may answer.
WITNESS:
A They will not pay, because according to them the land on which
their house stands is a portion of the land owned by the
municipality. But actually it is my own, and the municipality has
nothing to do with it. (pp. 207-212, Records) ...

54

ATTY. TANEO:
Q The last time you stated that you know Lot No. 55. When for the
first time did you know about this Lot 55?
A I know this lot for the first time when I bought this lot from
Simeon Gallego.
Q At that time did you know that this lot already bears Lot No. 55?
A I know it because one Purit told me that she inherited the same
from her grandmother.
Q This Purit you are mentioning, are you referring to Purificacion
Villanueva Ronsales, who is the widow of Jose Ronsales?
A Yes, sir.
Q When was this when this Purit mentioned to you about this Lot
55?
A When I bought said land. (pp. 215-216, Records)
It is clear, therefore, that as early as 1948, Epifanio Caro was already aware of the
adverse claim of the private respondents. He should have been vigilant of his right as
the allegedly new owner of the questioned land. What he did was the reverse, he
slept on his rights for a number of years. In the recent case of Bagtas v. Court of
Appeals, et al., G.R. No. L-50732, August 10, 1989, We held that considerable delay
in asserting one's right before a court of justice is strongly persuasive of the lack of
merit of his claim, since it is human nature for a person to enforce his right when
same is threatened or invaded. Thus, he is estopped by laches from questioning the
ownership of the questioned land. Not only that. There is also estoppel in pais in this
case because Epifanio Caro filed his answer with respect to Lot No. 54 only while
Purificacion Villanueva flied her answer with respect to Lot No. 55 (see Tijam, et al.
v. Sibonghanoy, et al., G.R. No. L-21450, April 15,1968, 23 SCRA 29). In addition,
the trial court observed (pp. 414-415, Records):
The Tax Declaration of the land bought by Epifanio Caro, Exhibit
4, states that its adjacent owner on the east is Pascual (sic) Lacson
who is the grandmother of the defendants. When said land was
declared in the name of Epifanio Caro in 1969, the adjacent owner

on the East is still Pascuala Lacson, Exhibit E. The Tax Declaration


of the land bought by Epifanio Caro from the heirs of Custodia
Jalandoni, Exhibit 8 shows that the land in question is not an
adjacent property. The same is true with the Tax Declaration of the
land bought by Epifano Caro from the heirs of Rafael Gaylan,
Exhibit 9. This clearly shows that Lot No. 55 which originally
belonged to Pascuala Lacson is a different and distinct parcel from
the lands bought by Epifanio Caro from Simeon Gallego, from the
heirs of Custodia Jalandoni and from the heirs of Rafael Gaylan
(sic).
While We commiserate with the petitioners because of Epifanio Caro's lack of formal
education still, his negligence and belated action were undoubtedly the root cause of
the present controversy:
Q Is this the same survey plan which Mr. Gonzales gave you?
A That is the one but I have not read it because I do not understand
English or Spanish because I have never gone to school (p. 217,
Records).
xxx xxx xxx
Q Now, when the cadastral survey was conducted, did you take
occasion to verify also the cadastral survey of your lot?
A I did not bother anymore because I entrusted everything to them
(p. 232, Records).
xxx xxx xxx
Q Now, when you purchased the lot from Simeon Gallego because
you said you could not read English nor Spanish, did you ask the
help of somebody else to explain to you the document?
A I have not asked the help of anybody. In other words you did not
read nor understand the sale in your favor executed by Simeon
Gallego?
A I have confidence in him because it was prepared by the father
of the mayor.

55

Q Did you not inquire from Simeon Gallego of the boundaries of


the church from him?
A Before that I knew that the boundaries of the lot of Loreta
Martinez was the municipal building, a road and a church.
Q Now, before you purchase the property from Simeon Gallego
did you not also ask the help of somebody to examine the tax
declaration in the name of Simeon Gallego?
A No, because I already knew that lot was owned by Martinez.
Q And therefore, I gather from you that you relied on your
knowledge, own knowledge when you purchased the land from
Simeon Gallego about the boundaries of the land?
A I relied on my own knowledge because I know it fully well. "
Q You did not, you said, anymore examine the tax declaration?
A I did not bother because I knew that the lot was owned by
Martinez.
Q Did you inquire also from the Martinezes the boundaries of their
lots?
A I did not bother because I knew fully well because since 1909 I
was aready there in the church (pp. 251-253, Records).
ACCORDINGLY, the petition is hereby DENIED. The decision dated January
28,1986 and the resolution dated September 11, 1986 of the respondent Court of
Appeals are AFFIRMED subject to the MODIFICATION regarding prescription.
SO ORDERED.

56

[8]

The latter tax declaration was then cancelled by T.D. No. 008876 under the same
names effective 1967.[9]
[G.R. No. 156357. February 18, 2005]

ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON


QUA, CARIDAD V. LEYSON and ESPERANZA V. LEYSON,
petitioners, vs. NACIANSINO BONTUYAN and MAURECIA B.
BONTUYAN, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision[1] of the Court of
Appeals (CA), as well as its Resolution in CA-G.R. CV No. 64471 denying the
motion for reconsideration of the said decision.

The Antecedents
Calixto Gabud was the owner of a parcel of land located in Barangay Adlawon,
Mabolo, Cebu City, which was declared for taxation purposes under Tax Declaration
(T.D.) No. 03276-R in 1945[2]with the following boundaries:
North Calixto Gabud East Marcelo Cosido
South Pedro Bontuyan West Asuncion Adulfo.[3]
Because of the construction of a provincial road, the property was divided into
two parcels of land covered by T.D. No. 03276-R and T.D. No. 01979-R. On
February 14, 1948, Gabud executed a Deed of Absolute Sale [4] over the property
covered by T.D. No. 03276-R, as well as the other lot covered by T.D. No. 01979-R,
in favor of Protacio Tabal, married to Leodegaria Bontuyan. On the basis of the said
deed, T.D. No. 03276-R was cancelled by T.D. No. 13615-R in the name of Protacio
Tabal effective 1949.[5] On January 5, 1959, Tabal executed a Deed of Sale [6] over the
property covered by T.D. No. 13615-R in favor of Simeon Noval, married to
Vivencia Bontuyan, daughter of Gregorio Bontuyan, for P800.00. T.D. No. 13615-R
was cancelled by T.D. No. 100356 in the names of the spouses Noval. [7] Gregorio
Bontuyan received a copy of the said tax declaration in behalf of the spouses Noval.

Subsequently, the property was surveyed by Cadastral Land Surveyor Mauro U.


Gabriel on January 22, 1964. The plan survey was approved on September 30, 1966.
[10]
The property covered by T.D. No. 008876 was identified as Lot No. 17150 of
Cebu Cadastre No. 12, while the property covered by T.D. No. 01979-R was
identified as Lot No. 13272. On May 22, 1968, the spouses Noval executed a Deed
of Absolute Sale[11] over the two lots covered by T.D. No. 008876 in favor of Lourdes
V. Leyson for P4,000.00. Lourdes Leyson took possession of the property and had it
fenced. Despite the said sale, T.D. No. 008876 was cancelled by T.D. No. 21267
effective 1974.[12] Thereafter, T.D. No. 21267 was cancelled by T.D. No.
23821[13] which, in turn, was cancelled by T.D. No. 01-17455 effective 1980.[14] In
1989, the latter was cancelled by a new tax declaration, T.D. No. 01-001-00646. All
these tax declarations were in the names of the spouses Noval.[15]
Meanwhile, Lourdes Leyson paid for the realty taxes over the property.
However, the tax declaration issued thereon continued to be under the names of the
spouses Noval.[16]
Despite his knowledge that the property had been purchased by his son-in-law
and daughter, the spouses Noval, Gregorio Bontuyan, who was then 91 years old,
filed an application with the Bureau of Lands for a free patent over Lot No. 17150 on
December 4, 1968. He alleged therein that the property was public land and was
neither claimed nor occupied by any person, [17] and that he first entered upon and
began cultivating the same in 1918. Thus, on November 19, 1971, Free Patent No.
510463 was issued over Lot No. 17150 in his favor, on the basis of which Original
Certificate of Title (OCT) No. 0-1619 was issued to and under his name on March
21, 1974.[18] Another parcel of land, Lot No. 13272, was also registered under the
name of Gregorio Bontuyan under OCT No. 0-1618. He then declared Lot No.
17150 for taxation purposes under T.D. No. 13596 effective 1974. [19] On February
20, 1976, Gregorio Bontuyan executed a Deed of Absolute Sale [20] over Lot No.
17150 in favor of his son, Naciansino Bontuyan.
On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed another
Deed of Absolute Sale[21] over Lot Nos. 13272 and 17150, covered by OCT No. 01618 and OCT No. 0-1619, respectively, in favor of Naciansino Bontuyan
for P3,000.00. On the basis of the said deed, OCT No. 0-1619 was cancelled by TCT
No. 1392 in the name of Naciansino Bontuyan on December 2, 1980. [22] Gregorio
Bontuyan died intestate on April 12, 1981.[23]
On March 30, 1981, the spouses Bontuyan executed a Real Estate Mortgage
over Lot No. 17150 covered by OCT No. 0-1619 in favor of the Development Bank
of the Philippines (DBP) as security for a loan of P11,200.00.[24] Naciansino
Bontuyan had earlier executed an affidavit that the property was not tenanted.

57

Shortly thereafter, the spouses Bontuyan left the Philippines and resided in the
United States. Meanwhile, Lourdes Leyson died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem the
property from DBP only to discover that there were tenants living on the property
installed by Engineer Gabriel Leyson, one of the late Lourdes Leysons children.
Despite being informed that the said spouses owned the property, the tenants refused
to vacate the same. The tenants also refused to deliver to the spouses the produce
from the property. The spouses Bontuyan redeemed the property from DBP on
September 22, 1989.
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico Bontuyan,
Vivencia Noval and Naciansino Bontuyan, the surviving heirs of Gregorio Bontuyan,
executed an Extrajudicial Settlement[25] of the latters estate and adjudicated Lot No.
13272 in favor of Naciansino. Based on the said deed, T.D. No. 01-001-00877 was
issued to and under the name of Naciansino over the said property starting 1994.
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr. Gabriel
Leyson, demanding that he be furnished with all the documents evidencing his
ownership over the two lots, Lots Nos. 17150 and 13272. [26] Engr. Leyson ignored
the letter.
The spouses Bontuyan, thereafter, filed a complaint against Engr. Leyson in the
Regional Trial Court (RTC) of Cebu City for quieting of title and damages. They
alleged that they were the lawful owners of the two lots and when they discovered,
upon their return from the United States, that the property was occupied and
cultivated by the tenants of Engr. Leyson, they demanded the production of
documents evidencing the latters ownership of the property, which was ignored.
The spouses Bontuyan prayed that, after due proceedings, judgment be
rendered in their favor, thus:
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable
Court to render judgment against the defendant and in favor of the plaintiffs, to wit:
(a) Confirming the ownership of the plaintiffs on the lots in question;
(b) Ordering defendant to pay the plaintiffs the amount of Twenty Thousand Pesos
(P20,000.00) as the share of the plaintiffs of the produce of the lots in question;
(c) Ordering defendant to pay plaintiffs the sum of P50,000.00 as reimbursement of
attorneys fees and the further sum of P500.00 as appearance fee every time the case
is called for trial;

(d) Ordering the defendant to pay plaintiffs the sum of P50,000.00 as moral damages
and exemplary damages may be fixed by the court;
(e) Ordering defendant to pay plaintiffs the sum of P5,000.00 as actual expenses for
the preparation and filing of the complaint;
(f) Ordering defendant to pay the costs; and
(g) Granting to plaintiffs such other reliefs and remedies just and equitable in the
premises.[27]
In his answer to the complaint, Engr. Leyson averred, by way of affirmative
defenses, that the two lots were but portions of a parcel of land owned by Calixto
Gabud, covered by T.D. No. 03276-R, and was subdivided into two parcels of land
because of the construction of a provincial road on the property; Gabud later sold the
two lots to Protacio Tabal, who sold the same to Simeon Noval, married to Vivencia
Bontuyan, one of the children of Gregorio Bontuyan; Simeon Noval later sold the
property to Lourdes Leyson on May 22, 1968 who, forthwith, took possession
thereof as owner; and Gregorio Bontuyan was issued a free patent over the property
through fraud. Engr. Leyson concluded that the said patent, as well as OCT No. 01619 and TCT No. 1392, were null and void and that the plaintiffs acquired no title
over the property.
Engr. Leyson interposed a counterclaim against the spouses Bontuyan and
repleaded as an integral part thereof all the material allegations in his affirmative
defense. He prayed that, after due proceedings, judgment be rendered in his favor,
thus:
a) Dismissing Plaintiffs complaint for failure to include indispensable parties;
b) Declaring the Defendant and his four (4) sisters, namely, Dr. Josefina L. Poblete,
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
in the name of Naciansino Bontuyan null and void and to order the Register of Deeds
to cancel the same and issue new ones in favor of the Defendant Gabriel V. Leyson
and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza
V. Leyson and Caridad V. Leyson;
d) And on the Counterclaim, to order Plaintiffs to pay the Defendant the following
sums:

58

d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00


per hearing;
d-2) P500,000.00 as moral damages;
d-3) P20,000.00 as exemplary damages;
d-4) P10,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the premises.[28]
In due course, the other children of Lourdes Leyson, namely, Dr. Josefina L.
Poblete, Fe Leyson Qua, Caridad V. Leyson and Esperanza V. Leyson, were allowed
to intervene as defendants. They filed their answer-in-intervention wherein they
adopted, in their counterclaim, paragraphs 7 to 26 of the answer of their brother,
Engr. Leyson, the original defendant. They prayed that, after due hearing, judgment
be rendered in their favor as follows:
Wherefore, this Honorable Court is prayed to render judgment in favor of the
Defendant and the Defendants-in-Intervention and against the Plaintiffs as follows:
a) Promissory Plaintiffs complaint for failure to include indispensable parties and for
lack of cause of action;
b) Declaring the Defendant and his four (4) sisters, namely: Dr. Josefina L. Poblete;
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
in the name of Naciansino Bontuyan null and void and to order the Register of Deeds
to cancel the same and issue new ones in favor of the Defendant Gabriel V. Leyson
and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza
V. Leyson and Caridad V. Leyson;
d) On the Counterclaim, Plaintiffs should pay the Defendants the following sums:
d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00 per
hearing;
d-2) P500,000.00 as moral damages to each Intervenor;
d-3) P50,000.00 as exemplary damages;
d-4) P15,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the premises.[29]

In their reply, the spouses Bontuyan averred that the counterclaim of the
defendants for the nullity of TCT No. 1392 and the reconveyance of the property was
barred by laches and prescription.
On January 21, 1999, the trial court rendered judgment in favor of the Leyson
heirs and against the spouses Bontuyan. The fallo of the decision reads:
WHEREFORE, foregoing considered judgment is hereby rendered dismissing
plaintiffs complaint for dearth of evidence declaring the defendant and the
intervenors as the true and legal owners and possessors of the subject parcels of land;
declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 in
the name of Naciansino Bontuyan null and void; ordering the Register of Deeds to
cancel OCT No. 0-1619 and TCT No. 1392 and issue new ones in favor of defendant
Gabriel Leyson and intervenors Josefina Poblete, Fe Qua, Esperanza Leyson and
Caridad Leyson; ordering plaintiff to pay defendant and intervenors the following:
a) P50,000.00 attorneys fees;
b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and
intervenors;
d) 10,000.00 exemplary damages; and
e) 10,000.00 litigation expenses.
SO ORDERED.[30]
The trial court held that Simeon Noval had sold the lots to Lourdes Leyson on
May 22, 1968, who thus acquired title over the property.
The spouses Bontuyan appealed the decision to the CA which affirmed, with
modification, the decision of the RTC. The appellate court held that the Leyson heirs
were the owners of Lot No. 13273, while the spouses Bontuyan were the owners of
Lot No. 17150. The CA ruled that the answer of the Leyson heirs to the complaint
constituted a collateral attack of OCT No. 0-1619 which was proscribed by law. The
Leyson heirs filed a motion for reconsideration of the decision insofar as Lot No.
17150 was concerned, contending that their counterclaim for the nullification of
OCT No. 0-1619 contained in their answer constituted a direct attack on the said
title. The CA denied the motion.
The Leyson heirs then filed a petition for review with this Court and made the
following assignments of error:
First Assignment of Error

59

THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT


RULED THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619
CANNOT BE RULED UPON IN THESE PROCEEDINGS BROUGHT BY THE
RESPONDENTS FOR THE QUIETING OF THEIR TITLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT PETITIONERS ANSWER WITH COUNTERCLAIM, PRAYING
FOR THE CANCELLATION OF PLAINTIFFS TORRENS CERTIFICATE IS A
MERE COLLATERAL ATTACK ON THE TITLE.[31]
Third Assignment of Error
THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE
DECISION OF THE REGIONAL TRIAL COURT DATED JANUARY 21, 1999 BY
RULING THAT PETITIONERS ARE DECLARED THE OWNERS OF LOT 13273
BUT RESPONDENTS ARE DECLARED THE OWNERS OF LOT 17150 UNDER
OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392 IN THE
NAME OF NACIANSINO BONTUYAN, DESPITE THE APPELLATE COURTS
AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT FRAUD WAS
COMMITTED BY GREGORIO BONTUYAN (RESPONDENTS PREDECESSORIN-INTEREST) IN ACQUIRING TITLE OVER THE SUBJECT PROPERTIES. [32]
Fourth Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY
OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392, IN FAVOR
OF PETITIONERS HAD PRESCRIBED. [33]
Fifth Assignment of Error
THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING
ATTORNEYS FEES AND APPEARANCE FEES DESPITE RESPONDENTS
FRAUD IN ACQUIRING TITLE OVER THE SUBJECT PROPERTIES.[34]
On the first two assignments of errors, the petitioners aver that the counterclaim
in their answer to the complaint constituted a direct attack of the validity of OCT No.
0-1619. They maintain that the appellate courts reliance on the ruling of this Court
in Cimafrancia v. Intermediate Appellate Court [35] was misplaced. They assert that

what is controlling is the ruling in Pro Line Sports Center, Inc. v. Court of
Appeals[36] wherein this Court held that the counterclaim of the petitioners therein
constituted a direct attack on a certificate of title. The petitioners, likewise, cited
Section 55 of Act No. 496, as amended, to buttress their stance. They plead that their
answer to the complaint should be liberally construed so as to afford them substantial
justice.
On the other hand, the respondents assert that the decision of the CA is correct.
They claim that Lot No. 17150 was still public land when Lourdes Leyson purchased
the same from Simeon Noval, and that the property became private land only when
Free Patent No. 510463 was issued to and under the name of Gregorio Bontuyan.
We agree with the contention of the petitioners that the CA erred in not
nullifying OCT No. 0-1619 and TCT No. 1392 and ordering the respondents to
reconvey the property covered by the said title to the petitioners.
The respondents, as plaintiffs in the court a quo, were burdened to prove their
claim in their complaint that Gregorio Bontuyan was the owner of Lot No. 17150
and that they acquired the property in good faith and for valuable consideration from
him.[37] However, the respondents failed to discharge this burden. The evidence on
record shows that Calixto Gabud sold the property to Protacio Tabal on February 14,
1948,[38] and that the latter sold the property to Simeon Noval on January 5, 1959.
[39]
Simeon Noval then sold the property to Lourdes Leyson on May 22, 1968. [40] The
respondents failed to adduce any evidence to prove that Lourdes Leyson, or even
Simeon Noval, sold the property to Gregorio Bontuyan, or to any of the respondents
for that matter. Since Gregorio Bontuyan was not the owner of the property, he could
not have sold the same to his son Naciansino Bontuyan and the latters wife, the
respondents herein. As the Latin adage goes: NEMO DAT QUOD NON HABET.
Gregorio Bontuyan could not feign ignorance of Simeon Novals ownership of the
property, considering that the latter was his son-in-law, and that he (Gregorio
Bontuyan) was the one who received the owners copy of T.D. No. 100356 covering
the property under the name of Simeon Noval. [41] At the dorsal portion of the said tax
declaration, there was even an annotation that the property was transferred to Simeon
Noval as shown by the deed of sale executed before Notary Public Gregorio A.
Uriarte who notarized the deed of sale over the property executed by Protacio Tabal
in favor of Simeon Noval on January 5, 1959.[42] We note that the respondents failed
to adduce in evidence any receipts of real property tax payments made on the
property under their names, which would have fortified their claim that they were the
owners of the property. We agree with the findings of the CA, thus:
This case involves two parcels of land Lot 17150 and Lot 13273. Lot 17150 is
registered under the Torrens System under the names of plaintiffs-appellants, while
Lot 13273 remained to be unregistered.

60

In this case, records show that defendant-appellee and intervenors-appellees are the
true owners of the subject lots. They have in their favor tax receipts covering the
subject lots issued since 1945.
While, indeed, tax receipts and declarations are not incontrovertible evidence of
ownership, such, however, if accompanied with open, adverse, continuous
possession in the concept of an owner, as in this case, constitute evidence of great
weight that person under whose name the real taxes were declared has a claim of
right over the land.
Further, defendant-appellee and intervenors-appellees presented before the trial court
the Deed of Absolute Sale dated February 14, 1948, executed by Calixto Gabud,
conveying the subject lots in favor of Protacio Tabal. The deed is a notarial
document.
Likewise presented is the Deed of Absolute Sale of the subject lots dated January 5,
1959, executed by Protacio Tabal in favor of spouses Simeon Noval and Vivencia
Bontuyan. The document is, likewise, a notarial document.
Defendant-appellee and intervenors-appellees also presented the Deed of Absolute
Sale of the subject lots dated May 22, 1968, executed by spouses Simeon Noval and
Vivencia Bontuyan in favor of Lourdes Leyson. The deed is a notarial document.
A notarial document is evidence of the facts in clear, unequivocal manner therein
expressed. It has in its favor the presumption of regularity. It is admissible in
evidence without necessity of preliminary proof as to its authenticity and due
execution.
There exist (sic) no trace of irregularity in the transfers of ownership from the
original owner, Calixto Gabud, to defendant-appellee and intervenors-appellees.
Plaintiffs-appellants, on the other hand, offered no convincing evidence as to how
their predecessor-in-interest, Gregorio Bontuyan, acquired the subject lots. Plaintiffsappellants presented only the Free Patent and OCT No. 0-1619, covering Lot No.
17150, issued in the name of Gregorio Bontuyan.
As to Lot No. 13273, We find no sufficient reason why defendant-appellee and
intervenors-appellees should be disturbed in their ownership and possession of the
same.[43]

As copiously shown by the record, Gregorio Bontuyan filed his application for
a free patent with the Bureau of Lands on December 4, 1968 in gross bad faith,
thereby defrauding Lourdes Leyson of the said property through deceit. Gregorio
Bontuyan falsely declared in the said application: (a) that he entered upon and
cultivated the property since 1918 and that the property was not claimed or occupied
by any person; and (b) that Lot No. 17150 was located in Sirao, Cebu City, when, in
fact, the property was located in Adlawon, Cebu City. Lourdes Leyson was not
notified of the said application and failed to file any opposition thereto. Gregorio
Bontuyan was then able to secure Free Patent No. 510463 on November 19, 1971
and OCT No. 0-1619 on March 21, 1974. It appears in the said title that the propertys
location was indicated as Sirao, Cebu City.[44] Indeed, the CA declared that Gregorio
Bontuyan had acquired title to the property through fraud:
However, as to Lot No. 17150, We find that despite the fraud committed by Gregorio
Bontuyan (plaintiffs-appellants predecessor-in-interest) in acquiring his title over the
said lot, ownership over the said lot should be adjudged in favor of plaintiffsappellants.
Records, indeed, show that, at the time when Gregorio Bontuyan applied for Free
Patent, Gregorio Bontuyan was living with his daughter, Vivencia Bontuyan
(defendant-appellees predecessor-in-interest). Thus, Gregorio Bontuyan must have
known that at the time when he applied for free patent on December 1968, the
subject lots were already sold on May 1968 by his daughter Vivencia Bontuyan in
favor of Lourdes Leyson, predecessor-in-interest of defendants-appellees.
Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 17150
to plaintiffs-appellants. The first was in 1976 and the other was in 1980. Plaintiffsappellants offered no reasonable explanation why Gregorio Bontuyan have (sic) to
sell twice Lot No. 17150 in favor of plaintiffs-appellants.
As found by the trial court, these are badges of bad faith which affect the validity of
the title of Gregorio Bontuyan over the subject lots.
We are aware that the torrens system does not create or vest title. It only confirms
and records title already existing and vested. It does not protect a usurper from the
true owner. It cannot be a shield for the commission of fraud. It does not permit one
to enrich himself at the expense of another. Where one does not have any rightful
claim over a real property, the torrens system of registration can confirm or record
nothing.[45]
The findings of the CA affirmed the findings of the trial court in its decision,
thus:

61

After having thoroughly analyzed the records and the evidences adduced during the
trial of this case, this Court is convinced and sincerely believes that the lots in
question were originally owned by Calixto Gabud as evidenced by T.D. [No.]
03276R marked as Exh. 1. In 1945, this consisted of only one lot in Adlawon, Cebu
City, as there was no provincial road yet. However in 1948, the said parcel of land
was divided into two because a provincial road was constructed passing through it.
Hence, T.D. [No.] 03276R and T.D. [No.] 01979-R were issued to Calixto Gabud.
On February 16, 1948, Calixto Gabud sold the said parcels of land to spouses
Protacio Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of
Sale, Exh. 2. On January 5, 1959, spouses Protacio Tabal and Ludegaria (sic)
Bontuyan, in turn, sold the same parcels of land to spouses Simeon Noval and
Vivencia Bontuyan as evidenced by a Deed of Sale, Exh. 4. It is noteworthy to
mention at this point in time that Vivencia Bontuyan is one of the daughters of
Gregorio Bontuyan, the father of herein plaintiff Naciansino Bontuyan. In May 1968,
spouses Simeon Noval and Vivencia Bontuyan sold the subject parcels of land to
Lourdes vs. (sic) Leyson, the mother of herein defendant as evidenced by a Deed of
Sale marked as Exh. 6. It is quite perplexing for the court to imagine that Gregorio
Bontuyan, father of herein plaintiff, who was then residing with spouses Simeon
Noval and Vivencia Bontuyan at 179 C San Jose dela Montaa, Mabolo, Cebu City, as
reflected in his application for Free Patent (Exhs. 8 & 26) dated December 4, 1968
was unaware of the sale of the subject parcels of land made by his daughter Vivencia
Bontuyan and spouse Simeon Noval to Lourdes Leyson. It is evident that, after the
sale from spouses Noval to Lourdes Leyson in May 1968, Gregorio Bontuyan
applied for Free Patent for the same parcels of land in December 1968 claiming to
have cultivated the land since 1918, stating therein the location as Sirao and not
Adlawon which is the true and correct location. Sirao and Adlawon are two different
barangays which are not even adjacent to each other. In fact, as borne out by Exh. 25,
it is separated by Barangay Guba. In 1974, Free Patent No. 510463 and OCT# 01619 was issued to Gregorio Bontuyan covering subject property, the location of
which is in Barangay Sirao in consonance to his application. Gregorio Bontuyans
application for Free Patent over subject parcels of land had raised in the mind of this
Court reasonable badges of bad faith on his part as the subject parcels of land were
already sold by his daughter Vivencia Bontuyan and spouse Simeon Noval to
Lourdes Leyson. Another badge of bad faith is raised in the mind of this Court when
he (Gregorio) sold the subject parcels of land twice to his son Naciansino Bontuyan
in 1976 and 1980, respectively, wherein both Deeds of Sale were notarized by
different Notary Publics, (Exhs. 10 & 16).[46]
Considering that Lourdes Leyson was in actual possession of the property, the
respondents cannot, likewise, claim that they were in good faith when Gregorio
Bontuyan allegedly sold the property to them on April 28, 1980.

Anent the third and fourth assignments of error, we do not agree with the ruling
of the CA that the petitioners failed to directly attack the validity of OCT No. 01619. The CA failed to consider the fact that, in their respective answers to the
complaint, the petitioners inserted therein a counterclaim wherein they repleaded all
the material allegations in their affirmative defenses, that Gregorio Bontuyan secured
OCT No. 0-1619 through fraud and deceit and prayed for the nullification thereof.
While Section 47 of Act No. 496 provides that a certificate of title shall not be
subject to collateral attack, the rule is that an action is an attack on a title if its object
is to nullify the same, and thus challenge the proceeding pursuant to which the title
was decreed. The attack is considered direct when the object of an action is to annul
or set aside such proceeding, or enjoin its enforcement. On the other hand, an attack
is indirect or collateral when, in an action to obtain a different relief, an attack on the
proceeding is nevertheless made as an incident thereof. [47] Such action to attack a
certificate of title may be an original action or a counterclaim in which a certificate
of title is assailed as void. A counterclaim is considered a new suit in which the
defendant is the plaintiff and the plaintiff in the complaint becomes the defendant. It
stands on the same footing and is to be tested by the same rules as if it were an
independent action.[48] Furthermore, since all the essential facts of the case for the
determination of the titles validity are now before the Court, to require the party to
institute cancellation proceedings would be pointlessly circuitous and against the
best interest of justice.[49]
The CA, likewise, erred in holding that the action of the petitioners to assail
OCT No. 0-1619 and TCT No. 1392 and for the reconveyance of the property
covered by the said title had already prescribed when they filed their answer to the
complaint.
Case law has it that an action for reconveyance prescribes in ten years, the point
of reference being the date of registration of the deed or the date of issuance of the
certificate of title over the property. In an action for reconveyance, the decree of
registration is highly regarded as incontrovertible. What is sought instead is the
transfer of the property or its title, which has been wrongfully or erroneously
registered in another persons name, to its rightful or legal owner, or to one who has a
better right.[50]
However, in a series of cases, this Court declared that an action for
reconveyance based on fraud is imprescriptible where the plaintiff is in possession of
the property subject of the acts. In Vda. de Cabrera v. Court of Appeals,[51] the Court
held:
... [A]n action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property, but

62

this rule applies only when the plaintiff or the person enforcing the trust is not in
possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, as the defendants are in the instant case, the right to
seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a piece of
land claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of
a court of equity to ascertain and determine the nature of the adverse claim of a third
party and its effect on his own title, which right can be claimed only by one who is in
possession.
Similarly, in the case of David v. Malay,[52] the same pronouncement was
reiterated by the Court:
... There is settled jurisprudence that one who is in actual possession of a piece of
land claiming to be owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of
the court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one
who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose ... possession of the
litigated property for no less than 30 years and was suddenly confronted with a claim
that the land she had been occupying and cultivating all these years, was titled in the
name of a third person. We hold that in such a situation the right to quiet title to the
property, to seek its reconveyance and annul any certificate of title covering it,
accrued only from the time the one in possession was made aware of a claim adverse
to his own, and it is only then that the statutory period of prescription commences to
run against such possessor.

have a Torrens title for the land which they and their predecessors never possessed
and which has been possessed by another in the concept of an owner.[55]
On the fifth assignment of error, we rule for the petitioners. The award of
attorneys and appearance fees is better left to the sound discretion of the trial court,
and if such discretion is well exercised, as in this case, it will not be disturbed on
appeal.[56] With the trial and the appellate courts findings that the respondents were in
bad faith, there is sufficient basis to award attorneys and appearance fees to the
petitioners. Had it not been for the filing of a baseless suit by the respondents against
the petitioners, the latter would not have sought the services of counsel to defend
their interests and represent them in this case.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decision of the Court of Appeals declaring the respondents the owners of Lot No.
17150 covered by OCT No. 0-1619 and TCT No. 1392; and setting aside the award
of attorneys fees in favor of the petitioners by the Regional Trial Court are
REVERSED AND SET ASIDE.
The Court hereby AFFIRMS the ownership of the petitioners of Lot No. 17150.
OCT No. 0-1619 and TCT No. 1392 covering the said lot are hereby nullified. The
Register of Deeds is ORDERED to cancel TCT No. 1392 and to issue another title
over the property in favor of the petitioners as co-owners thereof. The trial courts
award of P50,000.00 for attorneys fees to the petitioners is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.

The paramount reason for this exception is based on the theory that registration
proceedings could not be used as a shield for fraud. [53] Moreover, to hold otherwise
would be to put premium on land-grabbing and transgressing the broader principle in
human relations that no person shall unjustly enrich himself at the expense of
another.[54]
In the present case, Lourdes Leyson and, after her death, the petitioners, had
been in actual possession of the property. The petitioners were still in possession of
the property when they filed their answers to the complaint which contained their
counterclaims for the nullification of OCT No. 0-1619 and TCT No. 1392, and for
the consequent reconveyance of the property to them. The reconveyance is just and
proper in order to put a stop to the unendurable anomaly that the patentees should

63

G.R. No. 96829 December 9, 1991


EMILIANO S. CASIPIT and ANTONIA C. CASIPIT VDA. DE
BEATO, petitioners,
vs.
HON. COURT OF APPEALS, (FORMER SECOND DIVISION), SPOUSES
SEVERINO B. DIAZ and ZENAIDA ALZONA-DIAZ, ROSA BEATO VDA.
DE DIAZ, FORTUNATO S. BEATO, JUANITA A. BEATO, FELICEDAD A.
BEATO, ARCADIO A. BEATO, ARCADIO A. BEATO, PACIENCIA A.
BEATO, AVELINO K. BEATO, ANTONIA K. BEATO, NILDA K. BEATO,
THE REGISTER OF DEEDS FOR THE PROVINCE OF LAGUNA, AND THE
PROVINCIAL ASSESSOR OF LAGUNA, respondents.
Roldan M. Noynay for petitioners.
Ramon C. Casano for private respondents.

MEDIALDEA, J.:p
This is a petition for review on certiorari seeking reversal of the adverse decision of
public respondent Court of Appeals dated August 22, 1990, in C.A. G.R. CV-No.
22671, entitled "Emiliano S. Casipit, et al. v. Spouses Severino B. Diaz and Zenaida
Alzona-Diaz, et al.," which affirmed the dismissal of petitioners' complaint by the
Regional Trial Court of Calamba, Laguna and ordered them to vacate the questioned
property and pay to private respondents rentals, damages and attorney's fees; and its
resolution dated January 11, 1991, which denied petitioners' motion for
reconsideration.
The antecedent facts, as found by the trial court are, are follows:
On July 21, 1919, Urbano Casipit, father of petitioner Emiliano S. Casipit, bought
Lot No. 144 (questioned property) located at Sinalhan, Sta. Rosa, Laguna, containing
an area of 661 square meters from the, government (Exhibit "2"). On June 7, 1923,
he assigned his rights to the questioned property to Gabriel Beato (Exhibit "3") due
to his (Urbano Casipit) default in paying the installments due thereon (Exhibits "2A" and "2-B"). In 1932, Tax Declaration No. 7233 over the questioned property
(Exhibit "4") was issued in the name of Gabriel Beato. On February 23, 1933, Patent

No. 31464 over the questioned property was issued by Friar Lands Agency No. 2 in
his name (Exhibit "3-A"). On October 7, 1945, Gabriel Beato died.
In 1945, Tax Declaration No. 2561 (Exhibit "C") over the questioned property was
issued in the name of petitioner Emiliano S. Campit, but covering an area of 330
meters only. On February 9, 1949, he paid real estate taxes thereon for the years
1945 to 1949. He also paid taxes thereon for the years 1950 and 1954 (Exhibit "B").
On November 25, 1961, the heirs of Gabriel Beato namely, Ricardo, Rosa, Narciso,
Fortunata and Domingo, all surnamed Beato, executed a document entitled
"Kasulatan ng Pagmamana at Paghahati" wherein they adjudicated to themselves the
properties of Gabriel Beato. In the name document, they sold to private respondents
spouses Severino B. Diaz and Zenaida Alzona-Diaz the questioned property
(Exhibits "F" and "l"). At the time of the sale, there was no occupant on the
questioned property and petitioner Emiliano S. Casipit was then residing in an
adjoining lot.
On January 6, 1962, Narciso Beato filed before the Court of First Instance of Laguna
a Petition for Reconsideration of Titles, which was granted on July 17, 1963. On
August 30, 1963, TCT No. RT-7880 was cancelled by TCT No. T-27996 in the name
of the heirs of Gabriel Beato (Exhibit "8") which was in turn cancelled by TXT No.
T-27997 in the name of private respondents Diaz spouses (Exhibit "9").
In 1965, petitioner Antonia C. Casipit Vda. de Beato and Julian Almadovar erected
their respective houses on a portion of the questioned property. On October 8, 1981,
a criminal complaint for violation of P.D. No. 772 (Penalizing Squatting and Other
Similar Acts) was filed before the Municipal Court of Sta.Rosa, Laguna against them
by private respondent Severino B. Diaz (Exhibit "5"). This complaint was
dismmissed at the instance of the fiscal on March 26, 1985 because the questioned
property is not among the areas approved for inclusion in the slum improvement and
resettlement program of the government thus, said decree does not apply (Exhibit "5A"). On June 6, 1985, a complaint for ejectment (Civil Case No. 1601) was filed
against petitioner Antonia C. Casipit Vda. de Beato by private respondents Diaz
spouses before the Municipal Trial Court of Sta. Rosa, Laguna (Exhibit "6").
On April 27, 1987, a complaint was filed by petitioners agains private respondents
Diaz spouses, Rosa Beato Vda. de Diaz and Fortunate S. Beato mainly for recovery
of ownership over the questioned property before the Regional Trial Court of Bian,
Laguna (pp. 1-14, Records). On June 23, 1987 (pp. 84-98, Records) and April 15,
1988 (pp. 173-188, Records), the complaint was amended. The ejectment case (Civil
Case No. 1601) was then suspended due to the filing of the present case. In their
complaint, it was alleged that petitioner Emiliano S. Casipit is the true and lawful

64

owner of the questioned property by virtue of continuous, uninterrupted, peaceful,


open and public possession in the concept of owner since 1930. Petitioners were
deprived of ownership thereof by the Beatos through Narciso Beato, who filed a
Petition for Reconstitution of Titles in the name of Gabriel Beato, using fictitious
documents. Petitioners therefore prayed that TCT No. RT-7880 and other succeeding
titles be cancelled, as well as Tax Declaration No. 7192 (sic) and succeeding tax
declarations; that the questioned property be reconveyed to them; that the document
entitled, "Kasulatan ng Pagmamana at Paghahati," insofar as it included the
questioned property be rescinded; and that private respondents be ordered to pay
damages and attorney's fees.
Private respondents disputed these allegations in their answer and by way of
counterclaim, prayed for petitioners and all persons deriving title from them to
vacate the questioned property, and to pay reasonable rentals, moral and exemplary
damages and attorney's fees.
On July 11, 1989, the trial court rendered judgment, the dispositive portion of which,
reads (p. 571, Records):
IN VIEW OF THE FOREGOING, judgment is rendered in favor
of the defendants and against the plaintiffs and the Second
Amended Complaint is dismissed. Further, the plaintiffs are
ordered to pay jointly and severally the Spouses Severino Diaz and
Zenaida Diaz the amount of P5,000.00 as attorney's fees. With
costs against the plaintiffs.
SO ORDERED.
In support of this ruling, the trial court ratiocinated (pp. 569-571, Records):
It must be noted that the plaintiffs' claim of ownership over Lot
No. 144 is based on their alleged continuous possession of the
same and on Tax Declaration No. 2561 (Exhibit "C") in the name
of Emiliano Casipit, as well as on the receipts showing payments
of real estate taxes for the years starting 1945 to 1949, 1950 and
1954.
Such claims of the plaintiffs cannot be sustained by the Court for
the following reasons: (1) the testimonies of Antonia Casipit and
Clara Casipit Calderon to the effect that they and their predecessorin-interest have been in continuous possession of Lot No. 144
since time immemorial are self serving; (2) Tax Declaration No.

2561 (Extubit "C") in the name of Emiliano Casipit has been (sic)
issued only in 1945 and does not indicate the previous tax
declaration it cancelled. likewise, it only covers 330 square meters
of Lot No. 144. On the other hand, tax declaration No. 7233
(Exhibit "4") in the name of Gabriel Beato was issued in 1932 and
it covers the whole of Lot No.144; (3) the testimony of Antonia
Casipit that her father Emiliano Casipit inherited from Urbano
Casipit the land covered by tax declaration No. 2561 can not
overcome the ancient documents introduced by the defendants
showing that Urbano Casipit after defaulting in the payment of
installments due the government assigned in 1923 his rights over
Lot No. 144 to Gabriel Beato (Exhibits "2-A", "2-B"and "3"); and
(4)the possession by the plaintiffs of a portion of Lot No. 144 can
not ripened (sic) into ownership, for land registered under the
Torrens System may not be acquired by prescription or adverse
possession.
Manifestly, the defendants have a better right over Lot No. 144
than the plaintiffs. Besides, the cause of action of the plaintiffs
being based on fraud, has prescribed for it must be filed within
four (4) years after the cause of action arose. The issuance of the
reconstituted title over Lot No. 144 and its registration in the office
of the Register of Deeds of Laguna, in 1973 (sic) is the starling
date for the prescriptive period to commence.
Anent the second issue, the Court finds no justifiable reason to
order the cancellation of TCT No. (T-27997) T-13161, since the
plaintiffs have failed to prove that they are the owners of the land
covered by the said title. The fact that the Petition for
Reconstitution of titles was granted by the Court of First Instance
of Laguna in LRC Record No. 23313 and such order having
become final and executory, it is conclusive on Gabriel Beato's title
over Lot No. 144.
As to the third issue, the records show that the plaintiffs' (sic) have
miserably failed to present evidence to establish bad faith on the
part of the defendants Severino Diaz and Zenaida Diaz. On
contrary, Zenaida Diaz declared that when they bought Lot No.
144 nobody was residing thereon and that Emiliano Casipit was the
living at the adjoining lot. Therefore, said defendants are buyers in
good faith and for value, for good faith is presumed unless the
contrary is shown.

65

Regarding the last issue, definitely, the plaintiffs are not entitle to
damages, attorney's fees and costs, however, the defendants
Severino Diaz and Zenaida Diaz are. The Diazes since 1985 have
bee trying to eject from the land in question the plaintiffs but have
bee unsuccessful. For this reason, the Diazes are entitled to actual
dam ages and attorney's fees. Unfortunately, the Diazes have not
presented competent evidence to prove the actual damages they
sustained although as to attorney's fees they are entitled to the
amount o P5,000.00. The Court can not award moral damages in
favor of the Diazes since no bad faith or malice has been proven on
the part of plaintiffs.
Both parties appealed to public respondent Court of Appeals Petitioners questioned
the dismissal of their complaint by the trial court whereas private respondents
questioned the fail of said court to grant them their prayer for reasonable rentals
actual and moral damages. On August 22, 1990, respond court resolved the appeal in
favor of private respondents, th dispositive portion of which, reads (p. 32, Rollo):
WHEREFORE, the appealed decision dismissing the complaint
should be as it is hereby AFFIRMED. On the counterclaim of
defendants, judgment is hereby rendered ordering plaintiffs to
vacate lot No. 144, and to pay the reasonable rental in the amount
of P300.00 from October, 1981 until they should have vacatedthe
(sic) premises to pay moral damages in the amount of P30,000.00,
and attorney's fees in the amount of P5,000.00. No costs.
SO ORDERED.
In affirming the trial court's decision, respondent court expounded (pp. 27-29, Rollo):
... To make it worse, on its face the tax declaration (No. 2561)
appears to have been cancelled by provincial form No. 183 in
1966. Thereafter, no other tax declaration or any proof of
ownership was issued in the name of plaintiffs-appellants.
The payment of realty taxes by plaintiffs-appellants do not give
any added weight to their claim of ownership of the lot in dispute.
This is so considering the doctrine that 'payment of land taxes is
not an evidence of ownership of the parcel of land for which
payment is made.' (Reyes vs. Serra, 93 SCRA 472; Director of
Lands vs. C.A., 133 SCRA 701). During the pre-trial on November
2, 1988, the parties agreed, among other things

5. That Emiliano Casipit on February 9, 1949


paid the land taxes for lot 144 for the years 1945,
1946, 1947, 1948 and 1949; and on August 5,
1950 paid the land taxes for the said lot for 1950
and on October 13, 1954 paid the land taxes for
the said lot for 1954. (pp. 492-493, rec.)
Admittedly, therefore, it would appear that plaintiff-appellants paid
realty taxes for the land in dispute only 3 times and no more.
Certainly that kind of payment cannot convey the idea of
ownership.
... Then, the record shows that on October 8, 1981, Severino Diaz
filed charges of anti-squatting against Casipit and Almadovar. On
June 6, 1985, the Diaz spouses again filed an ejectment suit against
Antonia Casipit. These undisputed facts would disprove the claim
of the plaintiffs-appellants to uninterrupted possession that would
have ripened to ownership.
xxx xxx xxx
... Plaintiffs-appellants, ... failed to explain how Emiliano Casipit
acquired a right over 1/2 of lot 144. ...
... Then, tax declaration 7232 (sic) shows on its dorsal side that it
was the very first or original tax declaration issued for lot 144, as
shown by the notation: "New". Thereafter, in the same year, tax
declaration 142 (sic) was issued in the name of the heirs of Gabriel
Beato, and, unlike tax declaration 2561 of Casipit, clearly stated
that is was cancelling tax declaration 7232 (sic) in the name of
Gabriel Beato.
On January 11, 1991, the motion for reconsideration was denied (p.17, Rollo).
Hence, the present petition.
Petitioners assign as errors committed by respondent court the following (pp.78, Rollo):
First Assignment of Error

66

THE HONORABLE COURT OF APPEALS HAS GRAVELY


ERRED WHEN IT DENIED THE MOTION FOR
RECONSIDERATION FILED BY THE PETITIONERS AS THE
ISSUES RAISED THEREIN WERE NOT SQUARELY AND
THOROUGHLY THRESHED OUT IN THE QUESTIONED
RESOLUTION PROMULGATED ON JANUARY 11, 1991 AS
THE CERTIFICATION ISSUED BY THE BUREAU OF LANDS
OR ANNEX "F" OR EXHIBIT "D" HAS PROBATIVE VALUE
TO BE GIVEN FULL CREDENCE AS THE SAME HAS BEEN
ADMITTED BY THE PRIVATE RESPONDENTS AND
THEREBY DECLARING AS NULL AND VOID THE
"KASULATAN NG PAGMAMANA AT PAGHAHTI" OR
EXHIBIT "l" EXECUTED ON NOVEMBER 25, 1961 FOR
WHICH REASON THE ACTION OF PETITIONERS IS
IMPRESCRIPTIBLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN PROMULGATING ITS RESOLUTION OR ANNTEX "B"
WHEN IT DENIED THE MOTION FOR RECONSIDERATION
OF PETITIONERS AS THE QUESTIONED "KASULATAN NG
PAGMAMANA
AT
PAGHAHATI"
EXECUTED
ON
NOVEMBER 25, 1961 CANNOT BE MADE AS BASIS IN
CANCELLING RECONSTITUTED TRANSFER CERTIFICATE
OF TITLE NO. RT-7880 WHICH WAS RECONSTITUTED
ONLY ON AUGUST 30,1963 AND NON-EXISTING ON
NOVEMBER 25, 1961 WITHIN THE KNOWLEDGE OF
PRIVATE RESPONDENTS DIAZES MAKING THEM AS
BUYERS IN BAD FAITH AND BESIDES THE SAID
"KASULATAN NG PAGMAMANA AT PAGHAHATI" HAS TO
BE DECLARED NULL AND VOID AB INITIO.
Third Assignment of Error
THE HONORABLE COURT OF APPEALS HAS GRAVELY
ABUSED ITS DISCRETION IN PROMULGATING ITS
RESOLUTION OR ANNEX "B"AND ITS DECISION OR
ANNEX "E" ORDERING THE EJECTMENT OF THE
PETITIONERS FROM THE PREMISES AND AWARD OF
DAMAGES AND ATTORNEY'S FEES AS SAID ORDER OF
EJECTMENT IS EQUIVALENT TO VIOLATION OF THE

CONSTITUTIONAL RIGHT OF DUE PROCESS OF LAW AND


THE RIGHT TO BE HEARD WHICH THE PETITIONERS ARE
ENTITLED AS PETITIONER EMILLANO CASIPIT IS NOT A
PARTY TO SAID EJECTMENT SUIT AND THE TRIAL COURT
ANDS NO EVIDENCE TO WARRANT EJECTMENT.
They allege that pursuant to the Certification issued by the Bureau of Lands (Exhibit
"D") that Patent No. 31464 over the questioned property has not been issued to
Gabriel Beato, the "Kasulatan ng Pagmamana at Paghahati" is therefore a void
contract. This being the case, the action taken by petitioners is imprescriptible.
Private respondents Diaz spouses were buyers in bad faith because they had full
knowledge that Emiliano Casipit has been in actual possession in the concept of
owner of the questioned property and paid the real property taxes thereon. Private
respondent Zenaida Alzona-Diaz testified that (pp. 46-48, tsn, March 20,1989):
ATTY. NOYNAY:
xxx xxx xxx
Q So, when was that year, if you still remember
when Emiliano Casipit came from lot 144?
A I saw in 1948, that is my first year in teaching,
I saw the house of Emiliano Casipit situated on
that Lot 144.
xxx xxx xxx
Q So, in other words, Mrs. witness before 1948
you have seen the house of Emiliano Casipit in
lot 144?
A Yes, sir.
Likewise, private respondents Diaz spouses were aware that the Beatos had no title
over the questioned property as of November 25, 1961 when the "Kasulatan ng
Pagmamang at Paghahati" was executed because TCT No. RT-7880 was issued only
on August 30, 1963. This was revealed by Zenaida Diaz in her testimony (pp. 4546,supra):
ATTY. NOYNAY:

67

xxx xxx xxx

years after the cause of action arose. Here, more than 4 years has
elapsed. (emphasis supplied)
Q So, when you answered a while ago that
during the time when this Kasulatan was
executed in 1961 and which according to you,
you were shown titles by the Beatos' is not (sic)
correct?
WITNESS:
A At that time, sir, there was no title yet.

The ejectment of petitioners from the questioned property and the award of damages
and attomey's fees are violative of due process of law because petitioner Emiliano S.
Casipit is not a party to the ejectment suit before the trial court (Civil Case No.
1601).
The petition is not impressed with merit.
There is no dispute that an action for reconveyance based on a void contract is
imprescriptible (Castillo, et al. v. Madrigal, et al., G.R. No. 62650, June 27, 1991;
Baranda, et al. v. Baranda, et al., G.R. No. 73275, May 20, 1987, 150 SCRA 59).
However, We simply cannot apply this principle to the present case because the
action filed by petitioner before the trial court was 1) for reconveyance based on
fraud since the ownership of private respondents over the questioned property was
allegedly established on "false assertions, misrepresentations and deceptive
allegations" (p. 182, Records); and 2) for rescission of the "Kasulatan ng Pagmamana
at Paghahati" (pp. 173, 187, Records). Besides, as against said Certification issued
by the Bureau of Land (Exhibit "D") dated March 18, 1987, which petitioners harp
on, is the explicit Certification of Friar Lands Agency No. 2 of the same Bureau
dated June 17, 1951, that ... according to the records of this Office, Lot No. 144 of
the SANTA ROSA (DETACHED) ESTATE, was deeded under Patent No. 31464
dated February 23, 1933 in the name of Gabriel Beato of Sinalhan, Sta. Rosa,
Laguna." Thus, the action for reconveyance based on fraud filed by petitioners
before the trial court is subject to prescription. In this regard, respondent court shares
the same view as the trial court that (p. 29, Rollo):
... The issuance of the reconstituted title over lot No. 144 and its
registration in the office of the Register of Deeds of Laguna in
1973 (sic) is the reckoning point for the prescriptive period to
commence. The 4-year period within which to file this case for
cancellation of title based on fraud must be done within 4

We were categorical in the case of Caro, et al. v. Court of Appeals, et al., G.R. No.
76148, December 20, 1989, 180 SCRA 401 citing the case of Liwalug Amerol, et al.
v. Molok Bagumbaran, G.R. No. L-33261, September 30, 1987, 154 SCRA 396 that
694 the prescriptive period for the reconveyance of fraudulently registered real
property is ten (10) years reckoned from the date of the issuance of the certificate of
title. We even said in the case ofHeirs of Maria Revilleza Vda. de Vega, et al. v.
Court of Appeals, et al., G.R. No. 93507, July 12, 1991 that:
... after numerous illuminating decisions by this Court, nobody can
successfully claim ignorance of the rule that an action for
reconveyance based on an implied or constructive trust prescribes
in ten (10) years...
Conformably with these settled jurisprudence, the prescriptive period for petitioners'
action for reconveyance is ten (10) years from August 30, 1963, the date of the
issuance of TCT No. RT-7880 (Exhibit "7-B"). Obviously, Our discussion on this
subject matter is not beneficial to petitioners because they filed the action for
reconveyance only on April 27, 1987.
While private respondent Zenaida Alzona-Diaz saw the house of petitioner Emiliano
S. Casipit on the questioned property before 1948, at the time of the sale, there was
no occupant on the questioned property and he (Emiliano S. Casipit) was then
residing in an adjoining lot (supra). When she testified that there was no title yet
when the "Kasulatan ng Pagmamana at Paghahati" was executed in 1961, she was
referring to the reconstituted torrens title thereon. The other portions of her testimony
which were conveniently deleted by petitioners read 45-45, tsn, March 20, 1989):
Q In 1961, you mean to say that the Beatos had
already told you that they have already a
reconstituted title over the portion that was sold
to you?
A None yet, sir.
Q What (sic) is it that you were answering (sic)
Atty. Noynay that you were told about the
reconstituted title?

68

A My husband and I were informed that they


will file a petition for reconstitution on Lot No.
(sic) 132, 134 and 144.
A purchaser in good faith 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 (Vda. de Recinto v. Inciong, et al.,
G.R. No. L-26083, May 31, 1977, 77 SCRA 196 citing Cui and Joven v. Henson, 51
Phil. 606 and Fule v. De Legare, 7 SCRA 351). In consonance with this definition,
private respondents Diaz spouses were purchasers in good faith. They bought the
property of private respondents Beatos without notice that some other person has a
right to, or interest in, the questioned property and paid the fun price therefor at the
time of such purchase. In addition, respondent court said (pp. 29-30, Rollo):
The Diaz spouses who bought the land in question from the Beatos
are buyers in good faith. We find no need for an extended
discussion on this issue, considering that plaintiffs-appellants
failed to show a better title to the lot than that of the defendantsappellees Beatos. However, We shall dwell briefly on this matter if
only to erase any doubt as to the good title of the Diazes over the
property which they now own. When the Diazes bought the
property in question for a valuable consideration, they were shown
the Beatos' documents which show and prove how the latter
acquired ownership thereof. These consisted of Exhibits 2, 2-A, 3,
and 4, which are all ancient documents. Then, when the Diaz
spouses purchased the lot in question, there was no house or
structure built thereon, nor anyone living in the premises. Under
the circumstance, the Diaz spouses cannot be imputed with notice
of this adverse claim of the plaintiff (sic) or any flaw, assuming
there is any, in the title of the vendors.
Regarding the last allegation of petitioners, We adopt respondent court's reasoning
thereon (pp. 31-32, Rollo):
... the herein defendants-appellants are entitled to lot 144, and thus,
in effect, plaintiffs-appellees are unlawfully occupying portions of
the said lot. The trial court thus may award actual (sic) damages in
every case where a property right has been invaded (Article 2222
of the New Civil Code). Defendant-appellant Zenaida Diaz
testified that the reasonable rental for the area occupied by Antonio
(sic) Casipit is P300.00 a month (p. 40, tsn; Mar. 20, 1987 (sic)).

This testimony of Diaz was unrebutted. It is also unrebutted that on


October 8, 1981, Severino Diaz filed a criminal complaint against
Antonio (sic) Casipit and Julian Almadovar for violation of P.D.
772, but was dismissed by the prosecuting fiscal on the ground that
the said law applies to urban land only. And on June 6,1987 (sic), a
complaint for ejectment was filed by the Diazes against Antonia
Casipit before the Municipal Trial Court which was suspended due
to the filing of this instant case. Thus, October 8, 1981, should be
the reckoning point for the awed (sic) of P300.00 a month in the
form of reasonable rentals to compensate the Diazes for the loss of
enjoyment of property that lawfully belongs to them.
An award of moral damages is justified since the evidence indicate
(sic) bad faith in the filing of this complaint by plaintiffs-appellees.
Apparently, plaintiffs-appellees are not even convinced of the
validity of their claim since they permitted a period of more than
30 years to lapse before they went to court. It would seem that this
complaint filed by plaintiffs-appellees was merely an afterthought
in order to counteract the ejectment suit filed by defendantsappellants Diazes on June 6, 1985. The numerous court cases
relative to the lot in dispute have caused the Diazes sleepless
nights and thus they should be entitled to moral damages in the
amount of P30,000.00.
In order to give complete relief to the Diazes, plaintiffs-appellees
must vacate the lot in dispute. True, there is now a pending
ejectment case in the Municipal Trial Court of Sta. Rosa, Laguna.
However, the pendency of the said ejectment case should not
constitute a bar to the grant of the relief prayed for by appellants
Diazes in their answer, i.e., to vacate the premises. In the case at
bar, the issue of ownership has in effect settled the issue of
possession which would be litigated upon in the ejectment suit.
The trial court took into account the fact that appellants Diazes
first filed a criminal complaint against plaintiff-appellees in 1981;
and, in 1985, a complaint for ejectment. The Diazes, therefore,
being the lawful owners of the property in dispute, and in this case,
the issue of possession having been properly ventilated, should be
awarded immediate possession of the property. This is necessary in
order to finish once and for all the controversy between the
defendants-appellants and the plaintiffs-appellees. To leave the
issue of ejectment in the hands of the Municipal Trial Court where
a complaint has been pending, would be to deny complete relief to
defendants-appellants. It is best to grant the relief prayer (sic) for,

69

that of ejectment, in the case at bar, in order to avoid multiplicity


of suits. It will not only save the parties and the court the rigors
and expenses of multitple (sic) litigations, but also avoid the
remote probability that there might be conflicting decisions relative
to one and the same imue.
ACCORDINGLY, the petition is hereby DENIED. The decision of the Court of
Appeals dated August 22, 1990 and its resolution dated January 11, 1991 are
AFFIRMED.
SO ORDERED.

70

G.R. No. 71110 November 22, 1988


PAZ VILLAGONZALO, ESTELA VILLAGONZALO, AIDA
VILLAGONZALO, HERMINIA VILLAGONZALO, GWENDOLYN
VILLAGONZALO, JENSINE VILLAGONZALO and LEONILA
VILLAGONZALO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and CECILIA A.
VILLAGONZALO, respondents.
Julio L. Falcone and Makilito B. Mahinay for petitioners.
Adelino B. Sitoy for private respondent.

REGALADO, J.:
From a decision rendered in favor of herein petitioners, as plaintiffs, against herein
private respondent, as defendant, in an action for reconveyance in the then Court of
First Instance of Leyte, 1 which reads:
Wherefore, decision is hereby rendered in favor of the plaintiffs
and against defendant declaring Lot No. 7429 of the Ormoc
Cadastre, situated at Bo. Dolores, Ormoc City, with an area of
97,213 square meters, more or less, as the conjugal property of the
deceased spouses, Juan Villagonzalo and Felicisima Abella
Villagonzalo hereby ordering the cancellation of Transfer
Certificate of Title No. 4259 in the name of Cecilia A. Villagonzalo
and ordering the Register of Deeds of Ormoc City to issue another
Transfer Certificate of Title in the name of spouses Juan C.
Villagonzalo and Felicisima A. Villagonzalo, Filipinos, of legal
age, residents of Cebu City now deceased and survived by the
present plaintiffs and defendants, each of whom upon payment of
the inheritance taxes with the BIR, shall be entitled to 1/9 share of
the land, subject to claims by other heirs and creditors within a
period of two (2) years as provided for by the Rules of Court, and
further ordering the partition of the said land within a period of
ninety (90) days from the finality of this decision and if the parties
cannot agree on the partition this Court may appoint a

commissioner to partition the same without pronouncement as to


costs. 2
therein defendant appealed to the former Intermediate Appellate Court which, in a
decision 3 of the Second Civil Cases Division in AC-G.R. No. 65128, reversed the
appealed judgment and dismissed the complaint for reconveyance.
As found by the respondent Court
The facts in this regard show that on February 22, 1961, Juan C.
Villagonzalo, the predecessor-in-interest of the parties, purchased
Lot No. 7429 of the Ormoc Cadastre, situated at Barrio Dolores,
Municipality of Ormoc, containing an area of 97,213 sq. meters
covered by Transfer Certificate of Title No. 24611 of the Register
of Deeds of Ormoc City, from the Heirs of Roman Matuguina for
Pl,500.00 (Exhibits A and 6, Folder of Exhibits, pp. 1, 15). It was
made to appear however that the sale was in the name of his
daughter, defendant Cecilia Villagonzalo, who was single, since he
borrowed from her the sum of P500.00 to complete the full
payment of the price of the lot. Consequently, TCT No. 4259 was
issued in the name of defendant Cecilia A. Villagonzalo as the
registered owner (Exhibit 5, Ibid., p. 15) on July 18, 1962. The
complaint was filed on April 2, 1975 thirteen (13) years after the
issuance of Transfer Certificate of Title No. 4259 on the subject
land in the name of the defendant Cecilia Villagonzalo. 4
On such factual moorings, the respondent court, now the Court of Appeals, held that
the right of action of therein plaintiffs-appellees, petitioners herein, had prescribed
for the reasons that follow. 5
It ratiocinated that when private respondent obtained Transfer Certificate of Title No.
4259 in her name she thereby excluded herein petitioners from the estate of their
deceased predecessor-in-interest and, consequently, she set up a title to the land
adverse to them. The registration of the deed of sale with the Register of Deeds, so it
opined, was constructive notice to the whole world of defendant's adverse claim to
the property, thereby repudiating any fiduciary or trust relationship involved. It
anchored its conclusion on doctrinal holdings that an action for reconveyance based
on an implied or constructive trust prescribes in ten years counted from the date
when adverse title is asserted by the possessor of the property.
Prescinding therefrom into the field of laches, respondent court further noted that
because of the neglect and inaction of the present petitioners, the private respondent

71

was thereby made to feel secure in her belief that she had rightly acquired the
controverted land and that no legal action would be filed against her. She was thus
induced to spend time, money and effort for the cultivation of the land and the
payment of the taxes thereon. It then further rested its conclusion on the established
principle that inaction and neglect of a party to assert a right can convert what could
otherwise be a valid claim into a stale demand.
Petitioners have come before Us contending that their action was seasonably filed
because private respondent's registration of the land in her name was not a
repudiation of the implied trust created between her and their father; and, confusing
extinctive for aquisitive prescription, that good faith and just title are essential
requisites in this case.
The respondent court is correct and certiorari must be denied.
It is now well settled that an action for reconveyance of real property to enforce an
implied trust shall prescribe after ten years, 6 since it is an action based upon an
obligation created by law, 7 and there can be no doubt as to its prescriptibility. 8
It is likewise established that said period of ten years is counted from the date
adverse title to the property is asserted by the possessor thereof. In the case at bar,
that assertion of adverse title, which consequently was a repudiation of the implied
trust for the purpose of the statute of limitations, took place when Transfer
Certificate of Title No. 4259 was issued in the name of private respondent on July
18, 1962. As succinctly but pithily resolved inVda. de Pama vs. Pama, et al.: 9

twelve (12) years, ten (10) months and ten (10) days after their
cause of action had accrued on June 18, 1956; this Court resolved
to dismiss this petition and to affirm the questioned order
dismissing petitioner's complaint ... 10
There is also evidence of record that as far back as 1961, private respondent refused
to give any share in the produce of the land to petitioners; that in 1963 she
mortgaged the property in her own name; and that in 1969, she leased the same to
one Ramon Valera, without the petitioners taking preventive or retaliatory legal
action. 11
The rule in this jurisdiction is that an action to enforce an implied trust may be
barred not only by prescription but also by laches, in which case repudiation is not
even required. 12 Whether the trust is resulting or constructive, its enforcement may
be barred by laches. 13 Petitioners were, therefore, correctly faulted for their
unjustified inaction.
WHEREFORE, the judgment of the respondent Court is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

... Considering the settled doctrine that an action for reconveyance


of real property based upon constructive or implied trust prescribes
in ten (10) years counted from the date adverse title is asserted by
the possessor of the property (Diaz vs. Gorricho, 103 Phil. 261;
Candelaria vs. Romero, 109 Phil. 100; J. M. Tuazon vs.
Magdangal, 114 Phil. 42); that when respondent Guillermo Pama
caused the registration on June 18, 1956 of the affidavit of
adjudication declaring himself to be the sole heir of the late Mateo
Pama and obtained Transfer Certificate of Title No. T-4006 in his
own name, he thereby excluded petitioners from the estate of the
deceased Mateo Pama and, consequently, set up a title adverse to
them; that such registration constitutes constructive notice to
petitioners of the respondent's adverse claim to the property
(Carantes vs. Court of Appeals, 76 SCRA 514, 523; Gerona vs. de
Guzman, 11 SCRA 153, 157); and it appearing that petitioners
filed their complaint for reconveyance only on April 28, 1969, or

72

G.R. No. L-33261 September 30, 1987


LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL,
DIBARATUN AMEROL, DIBARATUN, MATABALAO, MINDALANO
DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.

SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of First
Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case No. 1354, entitled,
"Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act No. 5400, "as
only question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for reconveyance
of real property which has been wrongfully or erroneously registered under the
Torrens System in another's name. In other words, what is the prescriptive period for
the action to reconvey the title to real property arising from an implied or
constructive trust and, corrolarily reference. The petitioners herein, defendants in the
trial court, assert that they have ten years to bring the action, while the respondent,
plaintiff in the court below, claims the prescriptive period is four years. The trial
court ruled tor the plaintiff, now respondent.
We reverse. We hold that the prescriptive period for such an action for reconveyance,
as this case, is ten years. The point of reference is, or the ten-year prescriptive period
commences to run from, the. date of the issuance of the certificate of title over the
real property.
There is no issue as to the facts, this case having been elevated to this Court, as
aforestated, on purely a question of law. Be that as it may, in order to satisfy
constitutional requirements as well as to place the question of law in proper
perspective, there is need to state the facts of the case. On this regard, the findings of
the trial court would best serve the stated purposes.
xxx xxx xxx

From the evidence submitted during the trial there is no dispute


concerning the fact relative to the Identity of the land in litigation.
It is commonly known as Lot No. 524, Pls-126 and technically
described and bounded in the sketch (Exh. "7 "). This is the very
tract of land alleged by the plaintiff to have been forcibly entered
into by the defendants and which plaintiff now w&s to recover
possession thereof. It has also been proven that the same lot was
covered by two free patent applications: (l) that of defendant
Liwalug Datomanong (erroneously surnamed Amerol) which he
filed on the 4th day of September, 1953, and (2) that of Molok
Bagumbaran which was filed on December 27, 1954. There is also
no question regarding the fact that as to these two free patent
applications, that of plaintiff Molok Bagumbaran was given due
course as a result of which Free Patent No. V-19050 was issued on
August 16,1955 by authority of the President of the Philippines
Ramon Magsaysay, by Jaime Ferrer, Undersecretary of Agriculture
and Natural Resources and duly registered with the office of the
Register of Deeds of the Province of Lanao (now Lanao del Sur) in
the mm year whereupon Original Certificate of Title No. P-466
was duly issued, owner's duplicate certificate having been
furnished the herein plaintiff.
This court is also inclined to believe that defendant Liwalug
Datomanong had never known of plaintiff's free patent application
on the land in question nor was he ever notified or participated in
the administrative proceedings relative to plaintiff's free patent
application. In the meantime, since the date he purchased the land
from Mandal Tondo, said defendant has been and up to the present
in con. tinuous occupation and cultivation of the same. His codefendants named in the complaint are merely his tenants.
It is also incontrovertible fact that said defendant did not take
appropriate action to annul the patent and title of the plaintiff
within one year from issuance thereof and that the first step taken
by him to contest said patent and title was a formal protest (Exh.
"12", p. 408, Record) dated April 24, 1964, filed before the Bureau
of Lands after the lapse of Nine (9) long years from the issuance of
patent in favor of the plaintiff. The second step he took was his
counterclaim contained in his answer to the complaint in the above
entitled case, which answer was filed with this court on December
4, 1964. In said counterclaim, defendant reiterated his stand that
plaintiff secured patent on the land by means of deceit and fraud,
wherefore, defendant prayed that said title be annulled, or,

73

alternatively, plaintiff be ordered to reconvey the said land to the


said defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty
of fraud or misrepresentation in securing the Free Patent No. V19050 covering the land in question.
Upon a thorough examination of the evidence, proofs are sufficient
to support defendant's contention that plaintiff is guilty of fraud
and misrepresentation. In the first place, proofs are abundant
tending to show that since 1952 when Mandal Tando transferred
the land to said defendant, the latter occupied, took possession
thereof and cultivated the same continuously, publicly, adversely
against any claimant and in the concept of owner up to the present;
that said defendant had introduced considerable improvements
such as coconut and coffee plantations and other fruit trees besides
his farm house, a mosque, cassava plantation and clearing and full
cultivation of the entire area. The fact of possession on the part of
said defendant has been attested to by competent and creditable
witnesses like Mandal Tando who conveyed the land to the
defendant; Hadji Sirad Gomandang, the barrio captain of Montay,
Malabang, Lanao del Sur, Hadji Rasol Maruhom and Hadji
Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur
who are farmers and barrio-mates of said defendant; and also
Disomnong Dimna Macabuat, an employee in the office of the
District Land Officer at Marawi City who had officially conducted
occular inspection and investigation of the premises in connection
with the protest of said defendant found thereon the abovementioned improvements introduced by the said defendant.
What is more, on or before filing his free patent application,
plaintiff knew that the land in question which was covered by his
free patent application was then actually occupied and cultivated
by defendant Liwalug Datomanong if not by Mandal Tando, the
original occupant. Be it remembered that Mandal Tando had
transferred to defendant Liwalug Datomanong Twenty Four (24)
hectares, more than eleven hectares of which is (sic) outside the
military reservation and designated as Lot No. 524, Pls-126 and the
rest which is in the southern portion lies within the military
reservation. Now, immediately adjacent thereto on the south is the
land claimed and occupied by the herein plaintiff also consisting of
Twenty Four (24) hectares but wholly within the military
reservation. It appears that plaintiff declared this Twenty four

hectares for the first time on October 24, 1950 for taxation
purposes (Tax Declaration No. 1529, Record) and stated in said tax
declaration (Exhs. "8" and "8-A," p. 414, Record) regarding the
boundaries that the adjacent owner on the north is Mandal Tando.
In other words, plaintiff had expressly recognized the fact that
Mandal Tando is an adjacent land owner north of plaintiff's
property. On February 19, 1951 herein plaintiff revised the abovestated tax declaration and secured another (Tax Declaration No.
1794, Exh. "9" and "9-A," p. 413, Record) and still plaintiff stated
therein that his boundary land owner on the north is Hadji Abdul
Gani. 3[a.k.a.Liwalug Datomanong(Amerol)]. 4
xxx xxx xxx
Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court
denied the counterclaim of the defendants, now petitioners, for the affirmative relief
of reconveyance on the ground of prescription. Said the court:
xxx xxx xxx
The patent of the plaintiff having been registered back in 1955 and
in contemplation of law registration thereof is notice to the whole
world and yet defendant exerted no effort whatsoever either to
annul the title or institute proceedings for reconveyance except in
his counterclaim contained in his answer to the complaint in this
case at bar which answer and counter-claim was filed on December
4, 1964, some nine long years from the date of registration of the
patent, defendant unfortunately lost his right to reconveyance
within the period of four (4) years from the date of registration of
said patent. 5
xxx xxx xxx
Thus, the dispositive portion of the assailed decision stated:
xxx xxx xxx
PREMISES CONSIDERED, judgment is hereby rendered as
follows: (1) declaring the herein plaintiff the registered owner of
Lot No. 524, Pls-126 and sustaining and respecting the validity of
the plaintiff's Original Certificate of Title No. P-466 covering the

74

said land; (2) ordering the defendants to vacate the premises of Lot
No. 524; Pls-126 and deliver possession thereof to the herein
plaintiff under certain terms and conditions herein below stated;
(3) denying and hereby dismissing the counterclaim of the herein
defendants and consequently the prayer to annul the title and/or for
reconveyance of the land to said defendant Liwalug Datomanong
must Likewise be denied; (4) that before plaintiff could take
possession of said premises he must reimburse defendant Liwalug
Datomanong the total sum of Six Thousand Seven Hundred FiftyTwo Pesos and Sixty-Two Centavos (P6,752.62) which he incurred
for the necessary and useful expenses on the land in question with
the right of said defendant to retain possession of the premises if
said reimbursement be not completely made. No pronouncement as
to costs. 6
xxx xxx xxx
Hence, this petition. 7
The petitioners in their Brief 8 assign the following two errors allegedly committed
by the trial court:
I.
THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT
PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION
OF AN IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS FROM THE
REGISTRATION OF THE PATENT OF RESPONDENT.
II.
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF
EVIDENCE AS BASIS IN THE ASSESSMENT OF THE FAIR MARKET VALUE
OF THE IMPROVEMENT INTRODUCED ON THE LAND IN GOOD FAITH BY
PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT UPON PURE AND
SIMPLE GUESS WORKS AND WILD ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.
Indubitably, the act of respondent in misrepresenting that he was in actual possession
and occupation of the property in question, obtaining a patent and Original

Certificate of Title No. P- 466 in his name, created an implied trust in favor of the
actual possessor of the said property. The Civil Code provides:
ARTICLE 1456. If property is acquired through mistake or fraud,
the person obtaining it is by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.
In this case, the land in question was patented and titled in respondent's name by and
through his false pretenses. Molok Bagumbaran fraudulently misrepresented that he
was the occupant and actual possessor of the land in question when he was not
because it was Liwalug Datomanong. Bagumbaran falsely pretended that there was
no prior applicant for a free patent over the land but there was Liwalug
Datomanong. By such fraudulent acts, Molok Bagumbaran is deemed to hold the
title of the property in trust and for the benefit of petitioner Liwalug Datomanong.
Notwithstanding the irrevocability of the Torrens title already issued in the name of
respondent, he, even being already the registered owner under the Torrens system,
may still be compelled under the law to reconvey the subject property to Liwalug
Datomanong. After all, the Torrens system was not designed to shield and protect
one who had committed fraud or misrepresentation and thus holds title in bad faith.
Further, contrary to the erroneous claim of the respondent, 9 reconveyance does not
work to set aside and put under review anew the findings of facts of the Bureau of
Lands. In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this case the
title thereof, which has been wrongfully or erroneously registered in another person's
name, to its rightful and legal owner, 10 or to one with a better right. That is what
reconveyance is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust is not
absolute. It is subject to extinctive prescription. 11 Happily, both parties agree on this
point. The seeming impediment however, is that while the petitioners assert that the
action prescribes in ten years, the respondent avers that it does in only four years.
In support of his submission, the respondent invokes several cases. We have
examined the invocations and find them inapplicable. For instance, the case
of Fabian vs. Fabian, 12 relied on by the respondent, does not square with the
present case. In Fabian, the party who prayed for reconveyance was not in actual
possession and occupation of the property. It was instead the party to whom title over
the property had been issued who occupied and possessed it. Further, the litigated
property had been in the adverse possession of the registered owner for well-nigh
over twenty-nine big years, hence, reconveyance had been irretrievably lost.

75

Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual
occupant and possessor of the controverted parcel of land, after having been enticed
by Leonor Reyes, an ambulatory notary public, with promise of help, engaged and
retained the services of the latter to facilitate the issuance of a patent for the said land
in his (Miguel's) favor. Thus, there existed between the parties a relationship very
much akin to that of lawyer-client and which is similarly fiduciary in character. But
Reyes, inspite of his compensation of one-fifth of the yearly produce of the property,
still violated the trust reposed on him and instead worked for the issuance of the
patent in the name of his own wife. So, after the demise of Leonor Reyes, the
property was fraudulently patented and titled in his widow's favor. The reconveyance
of the property was decreed by the Court based on "breach of fiduciary relations
and/or fraud." It was shown that the parties were legally bound to each other by a
bond of fiduciary trust, a bond lacking in the case at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because
the period of prescription was not there definitely and squarely settled. In fact,
Ramirez underscores a vacillation between the four-year and the ten-year rule. There
it was stated that "an action for relief on the ground of fraud to which class the
remedy prayed for by Paguia belong scan only be brought within four years after
accrual of the right of action, or from the discovery of the fraud." If the decision just
stayed pat on that statement, there would be merit in the respondent's presentation.
But Ramirez continues: "(I)ndepedently, however, of the alleged fraud on the part of
Ramirez, the right to demand a reconveyance prescribes after 10 years from accrual
of the cause of action, June 22, 1944, the date of registration of the patent and of the
issuance of OCT No. 282- A in his name." 15
Significantly, the three cases cited by the respondent to buttress his position and
support the ruling of the trial court have a common denominator, so to speak. The
cause of action assailing the frauds committed and impugning the Torrens titles
issued in those cases, all accrued prior to the effectivity of the present Civil Code.
The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950,
and in Ramirez, 1944. It must be remembered that before August 30, 1950, the date
of the effectivity of the new Civil Code, the old Code of Civil Procedure (Act No.
190) governed prescription. It provided:
SEC. 43. Other civil actions; how limited-Civil actions other than
for the recovery of real property can only be brought within the
following periods after the right of action accrues:
xxx xxx xxx

3. Within four years: x x x An action for relief on the ground of


fraud, but the right of action in such case shall not be deemed to
have accrued until the discovery of the fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in favor of the
true owner. In this context, and vis-a-vis prescription, Article 1144 of the Civil Code
is applicable.
Article 1144. The following actions must be brought within ten
years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must perforce
prescribed in ten years and not otherwise. A long line of decisions of this Court, and
of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled
that an action for reconveyance based on an implied or constructive trust prescribes
in ten years from the issuance of the Torrens title over the property. 16 The only
discordant note, it seems, is Balbin vs. Medalla, 17 which states that the prescriptive
period for a reconveyance action is four years. However, this variance can be
explained by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the
fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190, was
applied, the new Civil Code not coming into effect until August 30, 1950 as
mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have no counterparts in the old Civil Code or in the
old Code of Civil Procedure, the latter being then resorted to as legal basis of the
four-year prescriptive period for an action for reconveyance of title of real property
acquired under false pretenses.

76

It is abundantly clear from all the foregoing that the action of petitioner Datomanong
for reconveyance, in the nature of a counterclaim interposed in his Answer, filed on
December 4, 1964, to the complaint for recovery of possession instituted by the
respondent, has not yet prescribed. Between August 16, 1955, the date of reference,
being the date of the issuance of the Original Certificate of Title in the name of the
respondent, and December 4, 1964, when the period of prescription was interrupted
by the filing of the Answer cum Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the existence of a
mortgage on the property. It is claimed by the respondent that reconveyance would
not be legally possible because the property under litigation has already been
mortgaged by him to the Development Bank of the Philippines. 19 This claim is
untenable otherwise the judgment for reconveyance could be negated at the will of
the holder of the title. By the simple expedient of constituting a mortgage or other
encumbrance on the property, the remedy of reconveyance would become illusory. In
the instant case, the respondent being doubly in bad faith for applying for and
obtaining a patent and the Original Certificate of Title therefor without being in
possession of the land and for mortgaging it to the Development Bank knowing that
his Original Certificate of Title was issued under false pretenses must alone suffer
the consequences.
Besides, given the undisputed facts, we cannot consider the mortgage contracted by
the respondent in favor of the Development Bank of the Philippines as valid and
binding against petitioner Liwalug Datomanong. It would be most unjust to saddle
him, as owner of the land, with a mortgage lien not of his own making and from
which he derived no benefit whatsoever. The consequences of the void mortgage
must be left between the mortgagor and the mortgagee. In no small measure the
Development Bank of the Philippines might even be faulted for not making the
requisite investigation on the possession of the land mortgaged.
Premises considered, we deemed it superfluous to rule on the second assignment of
error raised by the petitioners.
WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of
the then Court of First Instance of Lanao del Sur in Civil Case No. 1354 is hereby
ANNULLED and SET ASIDE and a new one entered ORDERING the respondent to
RECONVEY Original Certificate of Title No. P-466 in favor of petitioner Liwalug
Datomanong, free of any encumbrance. Costs against the respondent.

Separate Opinions

PADILLA, J, concurring and dissenting:


I concur in the result. I do not however agree with the sweeping proposition that all
actions for reconveyance, based upon the ground of fraud, prescribed in ten (10)
years. A distinction should be made. Fraud, or dolo it should be recalled, is of two (2)
kinds: dolo causante or that which determines or is the essential cause of the
consent; and dolo incidente, or that which does not have such decisive influence and
by itself cannot cause the giving of consent by refers only to some particular or
accident of obligation. (Tolentino, Civil Code of the Philippines, 1956 ed., Vol. IV, p.
463).
If the fraud committed was but an incident to the registration of land (dolo
incidents), as in the case at bar, then I would agree that the action for reconveyance
prescribes in ten (10) years. But, where it is necessary to annul a deed or title before
relief could be granted, as when fraud, which vitiates consent dolo causante is
alleged to have been committed in the execution of the deed which became the basis
for the registration of a parcel of land, the action for reconveyance should be filed
within four (4) years from the discovery of the fraud.
In Rone vs. Claro and Baquiring (91 Phil. 250, 251), the Court held that an action for
the recovery of title to parcel of registered land, where it was alleged that the
defendants or one of them, through fraud, deceit and breach of faith, succeeded in
getting the original certificate of title from one of the plaintiffs, and then, again, with
use of fraud, deceit, breach of faith, and other machinations, succeeded in having the
plaintiffs execute a deed of sale of the lot in question in favor of the defendants, and,
thereafter, obtained a certificate of title in their names: "It may be that the recovery
of title and possession of the lot was the ultimate objective of plaintiffs, but to attain
that goal, they must need first travel over the road of relief on the ground of fraud."

SO ORDERED.
Yap (Chairman), Melencio-Herrera and Paras, JJ., concur.

77

Separate Opinions
PADILLA, J, concurring and dissenting:
I concur in the result. I do not however agree with the sweeping proposition that all
actions for reconveyance, based upon the ground of fraud, prescribed in ten (10)
years. A distinction should be made. Fraud, or dolo it should be recalled, is of two (2)
kinds: dolo causante or that which determines or is the essential cause of the
consent; and dolo incidente, or that which does not have such decisive influence and
by itself cannot cause the giving of consent by refers only to some particular or
accident of obligation. (Tolentino, Civil Code of the Philippines, 1956 ed., Vol. IV, p.
463).
If the fraud committed was but an incident to the registration of land (dolo
incidents), as in the case at bar, then I would agree that the action for reconveyance
prescribes in ten (10) years. But, where it is necessary to annul a deed or title before
relief could be granted, as when fraud, which vitiates consent dolo causante is
alleged to have been committed in the execution of the deed which became the basis
for the registration of a parcel of land, the action for reconveyance should be filed
within four (4) years from the discovery of the fraud.
In Rone vs. Claro and Baquiring (91 Phil. 250, 251), the Court held that an action for
the recovery of title to parcel of registered land, where it was alleged that the
defendants or one of them, through fraud, deceit and breach of faith, succeeded in
getting the original certificate of title from one of the plaintiffs, and then, again, with
use of fraud, deceit, breach of faith, and other machinations, succeeded in having the
plaintiffs execute a deed of sale of the lot in question in favor of the defendants, and,
thereafter, obtained a certificate of title in their names: "It may be that the recovery
of title and possession of the lot was the ultimate objective of plaintiffs, but to attain
that goal, they must need first travel over the road of relief on the ground of fraud."
Footnotes

78

G.R. No. 83383

May 6, 1991

SOLID STATE MULTI-PRODUCTS CORPORATION, petitioner,


vs.
THE COURT OF APPEALS (Former Sixth Division) and THE INTESTATE
ESTATE OF ANTENOR S. VIRATA and the DEVELOPMENT BANK OF
THE PHILIPPINES, respondents.
Antonio M. Chavez for petitioner.
Rodolfo M. Dela Rosa for respondent Intestate Estate of Antenor S. Virata.

MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals
which affirmed the decision of the trial court dismissing the complaint filed by
petitioner for quieting of title and declaring Antenor Virata as the true and lawful
owner of the disputed property.
The antecedent facts are as follows:
On September 28, 1982, petitioner, a domestic corporation, filed an action for
quieting of title against the respondent estate of Virata alleging that it is the
registered owner of a parcel of land located at Imus, Cavite, with an area of 48,182
sq. meters, covered by Certificate of Title No. T-80889 of the Register of Deeds of
Cavite, which was issued on February 24, 1976; that Virata, during his lifetime thru
the use of fraud, caused the issuance of Certificate of Title No. T-11520 RT 1660 on
September 1, 1959 thru an administrative reconstitution of a nonexistent original title
covering the same parcel of land; that by reason of the said reconstitution and
subsequent issuance of TCT No. T-11520 RT 1660, there now exists a cloud on the
title of petitioner.
As gathered by the respondent appellate court and trial court, the evidence for the
petitioner consists of the following:
Pursuant to the provisions of Act No. 32, as amended, Julian Pearanda
submitted with the Bureau of Lands, thru its District Land Office at Rosario,
Cavite an application dated November 22, 1968, in a verified Indorsement

dated November 25, 1968, to purchase a friar land which was subscribed
and sworn to before Manuel Cupino, Acting District Land Officer (Exh.
"D"). The application covers Lot No. 7449 of the Imus Friar Lands Estate,
situated at Barrio Molino, Bacoor, Cavite, containing an area of 4 hectares,
81 ares and 82 centares. Said application was accompanied by a
"SALAYSAY" (Exhibit "A") signed and sworn to by one Mabini Legaspi
before said District Land Officer Cupino, purporting to transfer to, and to
waive in favor of, Julian Pearanda, all the rights of executor to Lot No.
7449.
Following the routine in cases of this nature, District Land Officer Cupino
referred to Land Investigator Alberto Buhain for investigation and in a
verified Indorsement dated November 25, 1968, said investigator made a
Report (Exh. "B") on the result of his investigation, to District Land Officer
Cupino, District Land Office No. III-8 Bureau of Lands, Rosario, Cavite,
certifying that applicant Julian Pearanda is the actual occupant of Lot No.
7449, has introduced improvements consisting of upland rice and other
seasonal crops; that Pearanda's occupation of the land is derived through a
voluntary assignment of right of the former occupant, Mabini Legaspi, and
that the same is free from claims and conflicts and that the said applicant
has established his rights over the subject land, in view of which, said
investigator recommended that said lot be awarded to applicant Julian
Pearanda according to law.
Thereafter, the Report having been submitted to Cupino, the latter directed
investigator Buhain to prepare an Information Sheet (Exh. "G" up to "G-3")
and Cupino made the Appraisal Report (Exh. "E-2"). The above
requirements having been accomplished, District Land Officer Cupino
forwarded Pearanda's application to the Director of Lands, thru the Chief,
Land Management Division, recommending disposition of Lot No. 7449 be
made in accordance with the findings of his office, to Julian Pearanda,
pursuant to the provisions of C.A. of No. 32, as amended.
By second Indorsement dated December 16, 1968, Higinio P. Sunico, Chief,
Land Management Division, acting for and in behalf of the Director of
Lands, forwarded to the Secretary of Agriculture and Natural Resources, the
application of Julian Pearanda, recommending that Lot No. 7449 be sold to
said applicant without public auction for a sum of P1,198.00 (Exh. "I") and
by a 3rd Indorsement dated December 16, 1969, the application of Julian
Pearanda was returned by the Secretary of Agriculture and Natural
Resources, to the Director of Lands, Manila, approving that sale without
auction, to Julian Pearanda, of lot No. 7449. Pursuant to this approval, the
Director of Lands authorized the District Land Officer, Rosario, Cavite, to

79

sell without auction to Julian Pearanda, and directing that the sales
contract should be executed soonest (Exh- "I"). The Director of Lands and
Julian Pearanda executed, therefore, Sales Contract No. V-447 (Exh. "K"),
on February 28, 1969, for a consideration of P1,198.00, to be paid in ten
(10) monthly installments, the first installment of P290.00 having been paid
upon execution of the sales contract and the payment of the P1,198.00 was
fully paid on August 6, 1969 (Exh. "O").
The contract price of the land having been paid by Pearanda,
Undersecretary of Agriculture and Natural Resources Isoceles Pascual, on
August 13, 1969, issued the final deed of conveyance of lot No. 7449
(Exh."8") in favor of Julian Pearanda and the said deed of conveyance
contains the physical and technical description of the lot in
question (See Exh. "S-l").
xxx

xxx

xxx

On the basis of said Deed of Conveyance No. 10431, the Register of Deeds
of Cavite issued on November 14, 1969 in favor of Julian Pearanda TCT
No. T-39631 (Exh. "Z-6") which on its face shows it to have come from a
direct transfer from OCT no. 1002, and on February 17, 1976, the plaintiff,
by way of a Deed of Absolute Sale (Exh. "Z") bought said Lot No. 7449 as
a consequence of which, TCT No. T-39631 was cancelled and new TCT No.
T-80889 was issued on February 24, 1976 to the plaintiff, Solid State Multi
Products Corporation.
Plaintiff Solid State Multi-Products Corporation enrolled Lot No. 7449 with
the issuance of Tax Declaration No. 20893 which was superseded by Tax
Declaration No. 10973 and continued to religiously pay the realty taxes as
covered by receipts of tax payments (Exh. for 1977 and Exh. "7-19" for
1984) and the subject property is in its actual possession since its
acquisition from Pearanda up to the present. (pp. 109-112,Rollo (Emphasis
Ours)
On the other hand, respondent Virata denied the allegations in the complaint and
presented evidence to prove his claim over the land. The appellate court and trial
court made the following findings:
. . . on March 20, 1943, the Director of Lands, Mr. Jose F. Dans, gave
authority to sell at public auction Lot No. 7449 of the Imus Estate,
containing an area of 4.8182 hectares at the price of not less than its
appraised value of P290.00 (Exh. X-33). Accordingly on April 20, 1943, the

Bureau of Friar Lands Agent Severo Rivera issued a Notice fixing the
public auction of Lot No. 7449, among others, on May 5, 1943 at 10:00
a.m. (Exh. 1). On said date, Mabini Legaspi (appellee Virata's predecessorin-interest) submitted a winning bid of P290.00 and paid P29.00 (10% of
the purchase price) and even issued Bureau of Lands Official Receipt No.
77735 dated May 5, 1943 (Exh. 7). The subsequent installments were paid
on January 14, 1944, April 24, 1944, August 17, 1944, and September 20,
1944 in the amounts of P29.00, P29.00, 87.00 and P116.00, respectively.
The payments were evidenced by Official Receipts Nos. 78396, 783392,
784704 and 78466 (Exhs. 7-A, 7-B, 7-C and V)
On December 12, 1944, the Bureau of Lands, through Mr. Vicente
Tordesillas, sent a letter to the Register of Deeds at Imus, Cavite, requesting
the issuance of the corresponding certificates of title to eight persons,
among whom was Mabini Legaspi, specifying with respect to him Lot No.
7449 with an area of 4.8182 located at Bacoor, Cavite Exh. 2). Accordingly,
the Register of Deeds of Cavite issued TCT No. A-2188 to Mabini Legaspi
who held ownership of the property up to December 6, 1957 when he
executed a Deed of Sale transferring it to Antenor S. Virata (Exh. 6). The
deed was registered with the Registry of Deeds on December 10, 1957 . . . .
On the same day, December 10, 1957, the Register of Deeds issued TCT
No. 11520 (Exh. 12) to Antenor Virata . . .
However, on June 7, 1959, the Provincial Capitol building of Cavite which
housed the Registry of Deeds was burned, destroying land records and titles
in d registry among which were the records relating to Lot No. 7449.
On September 1, 1959, the Registry of Deeds administratively reconstituted
the original of TCT No. T-11520 based on owner's duplicate certificate
(Exh. 12) and renumbered the same as TCT No. (T-11520) RT-1660.
xxx

xxx

xxx

The sentence of TCT No. 80889 issued in the name of appellant on


February 24, 1976 came to the knowledge of Antenor Virata in August 1978
when he received a subpoena from the National Bureau of Investigation
(NBI) in connection with its investigation of the conflicting land titles on
Lot No. 7449. Virata presented Mabini Legaspi as his witness. NBI Agent
Manuel C. Dionisio took the sworn testimony of Mabini Legaspi on August
27, 1978 (Exh. 10) and submitted a written report (Exhs. 9 to 9-H) of his
investigation on October 27, 1978. Mabini Legaspi in her sworn testimony
(Exh. 10) declared that she acquired Lot 7449 during the Japanese

80

occupation and in support of her acquisition, she presented to NBI agent


Dionisio the carbon or duplicate original of the notice of public auction and
the letters dated December 12, 1944 of Vicente Tordesillas of the Bureau of
Lands to the Register of Deeds requesting the issuance of a certificate of
title in favor of Mabini Legaspi, which documents were substituted on the
same occasion with xerox copies (Exh. 1 and 2) also marked as Exhibits 10C and 10-D, respectively, after a comparison with the duplicate originals.
Legaspi also presented the originals of the receipts of payment she made to
the Bureau of Lands, which were substituted with xerox copies (Exhs. 7, 7A, 7-B and 7-C, also marked as Exhibit 10-E, 10-F 10-G and 10-H) after
comparison with the original. She (Mabini) also testified on the sale of the
lot in favor of Antenor Virata on December 6, 1957, presenting as proof
thereof, the duplicate or carbon original of the Absolute Deed of Sale of
Agricultural Land, which was likewise, substituted with xerox copies (Exhs.
6 to 6-F, inclusive, also marked Exh. 11).
Mabini Legaspi testified that the originals of Exhibits 1 and 2 got lost. She
said she placed the documents on the table in her house after returning from
the NBI investigation, thinking "all the while that those documents will be
useless because I had my property sold." (Tsn., p. 17, December 19, 1984).
She denied having sold the land to Julian Pearanda, nor having waived her
right over the land in his favor (tsn., p. 12, March 18, 1985). (pp. 113116, Rollo).
On June 15, 1985, the trial court rendered its decision, the dispositive portion of
which reads:
WHEREFORE, by preponderance of evidence, judgment is hereby rendered
for defendant Virata and against the plaintiff, to wit:
a. Dismissing the complaint which states no cause of action;
b. Recognizing that defendant Virata is the true and lawful owner of the
land covered by Transfer Certificate of Title No. (T-11520) RT 1660 of the
Register of Deeds of the Province of Cavite and holding that the same is
valid;
c. Declaring that Transfer Certificate of Title No. T-80889 in the name of
plaintiff, the Solid State Multi Products Corporation is null and void and of
no force and effect and is, therefore, ordered cancelled;
d. Sentencing the plaintiff to pay the costs of the proceeding.

SO ORDERED. (p. 70, Rollo).


Not satisfied with the decision of the trial court, the petitioner appealed to the Court
of Appeals. On July 13, 1987, the respondent appellate court rendered its decision
affirming the decision of the trial court.
Hence, this petition was filed with the petitioner assigning the following errors:
THE RESPONDENT COURT GROSSLY ERRED WHEN IT IGNORED
THE BASIC CONSIDERATION THAT THE CONTESTED PROPERTY
CAME FROM THE FRIAR LANDS ESTATE THE DISPOSITION OF
WHICH IS GOVERNED BY SPECIAL LAWS SPECIFYING THE
REQUIREMENTS
FOR
ITS
ACQUISITION
FROM
THE
GOVERNMENT THROUGH SALE, WHICH LAW AND SPECIAL
REQUIREMENTS SHOULD SERVE AS THE MEASURE AGAINST
WHICH THE EVIDENCE OF THE PARTIES TO THIS CASE SHOULD
BE WEIGHED, SUCH GROSS ERROR LEADING THE APPELLATE
COURT TO
(A) ERRONEOUSLY INFER THE EXISTENCE AND/OR DUE
ISSUANCE OF THE SUPPOSED TCT NO. A-2188 (IN THE
NAME OF PRIVATE RESPONDENTS PREDECESSOR-IN
INTEREST), FROM DOCUMENTS THAT CAME AFTER
WERE BASED ON SUCH TCT NO. A-2188, CLEARLY
BEGGING THE ISSUE WHICH IS PRECISELY WHETHER OR
NOT THE TRANSFER CERTIFICATE OF TITLE WAS IN FACT
ISSUED IN COMPLIANCE WITH THE FRIAR LANDS ACT
AND CA-32 TO COVER THE PROPERTY IN QUESTION;
(B) ERRONEOUSLY BASE ITS DECISION IN FAVOR OF
PRIVATE RESPONDENT ON TCTs ISSUED BY THE
REGISTER OF DEEDS INSPITE OF THE FACT THAT IT IS
THE BUREAU OF LANDS UNDER THE DIRECTION OF THE
SECRETARY OF AGRICULTURE AND COMMERCE
(NATURAL RESOURCES) WHICH DISPOSES FRIAR LANDS
AND NOT THE REGISTER OF DEEDS WHOSE RECORDS
CAN BE NO BETTER THAN THE RIGHT IT HAS
REGISTERED;
(C)
ERRONEOUSLY
DISREGARD
THE
PATENT
INADMISSIBILITY OF THE DOCUMENTARY EVIDENCE
OFFERED BY THE PRIVATE RESPONDENT THE

81

ORIGINALS OF WHICH WERE


BEFORE THE TRIAL COURT;

NEVER

PRESENTED

requisites laid down in Act No. 1120, for the validity of the sale by the
government in favor of Pearanda of such friar lands.

(D) ERRONEOUSLY IGNORE THE LACK OF PROBATIVE


VALUE OF SUCH DOCUMENTARY EVIDENCE SUCH LACK
OF PROBATIVE VALUE BEING PATENT ON THE FACE OF
SUCH DOCUMENT;

It also argues that the sale of Lot No. 7449 to respondent's predecessor,
Mabini Legaspi, and the issuance of a certificate of title in her favor was in
violation of the Friar Lands Act as there was no required approval by the
Secretary of Agriculture and Natural Resources.

(E) ERRONEOUSLY IGNORE THE VERITY THAT THE


DOCUMENTARY EVIDENCE COULD SUPPORT NO MORE
THAN
THE
FACT
THAT
THE
RESPONDENTS
PREDECESSOR-IN-INTEREST
HAD
MERELY
A
QUESTIONABLE INCHOATE AND INCOMPLETE RIGHT TO
ACQUIRE THE PROPERTY IN QUESTION, WHICH
QUESTIONABLE INCHOATE AND IN FACT UNCOMPLETED
RIGHT CANNOT PREVAIL OVER THE TITLE OF
PETITIONER'S PREDECESSOR IN INTEREST WHO WAS
THE ACTUAL POSSESSOR THAT APPLIED FOR THE
PURCHASE OF THE LAND EVERY NEEDED STEP FOR THE
PURCHASE HAVING BEEN PASSED UPON AND
RECORDED BY THE BUREAU OF LANDS WHOSE
RECORDS SHOW ONE AND ONLY TITLE ISSUED OVER
THE LAND, THAT IS, THE TITLE OF THE PETITIONER'S
PREDECESSOR-IN-INTEREST (pp. 20, 22,Rollo)

There is no dispute here that the land involved in this case is a friar land and
that the laws which are applicable are Act No. 1120, know as the Friar
Lands Act, providing for the administration and temporary leasing and sale
of certain haciendas and parcels of land, commonly known as friar lands,
and Commonwealth Act No. 32 dated September 15, 1936 as amended by
Commonwealth Act No. 316 dated June 9, 1938, which provided for the
subdivision and sale of all the portions of the friar lands estated remaining
undisposed of.

We find the petition impressed with merit.


Since the assigned errors were interrelated, it would be well for this Court
to discuss them jointly.
Petitioner does not question the factual findings made by the respondent
appellate court and supported by the records (p. 22, Rollo). It does not
however accept the legal conclusion made by the appellate court and trial
court that the registered title of private respondent to the land should prevail
over its own title.
Petitioner contends that Act No. 1120, otherwise known as the Friar Lands
Act provides the procedure for the sale and disposition of the friar lands to
private persons; that pursuant thereto, the acquisition by petitioner's
predecessor-in-interest Julian Pearanda of the disputed Lot 7449, which
was formerly part of the friar lands estate, was in compliance with all legal

Sec. 12 of Act No. 1120 provides in part:


. . . the Chief of the Bureau of Public Lands shall give the said
settler and occupant a certificate which shall set forth in detail
that the Government has agreed to sell to such settler and
occupant the amount of land so held by him at the price so fixed
payable as provided in this Act at the Office of the Chief of the
Bureau of Public Lands . . . and that upon the payment of the final
installment together with all accrued interest the Government will
convey to such settler and occupant the said land so held by him
by proper instrument of conveyance, which shall be issued and
become effective in the manner provided in section one hundred
and twenty two of the Land Registration Act.
Also, Sec. 18 of the same Act provides:
No lease or sale made by the Chief of the Bureau of Public Lands
under the provisions of this Act shall be valid until approved by the
Secretary of the Interior. (Emphasis ours)
Similarly, Sec. 2 of C.A. No. 32, as amended by C.A. No. 316 provides in
part:

82

. . . The persons who, at the time of the subdivision survey are


actual and bona fide occupants of any portion of the Friar Lands
Estates, not exceeding ten hectares, shall be given preference to
purchase the portion occupied at a private sale and at a price to
be fixed in such case, by the Director of Lands, subject to the
approval of the Secretary of Agriculture and Commerce, after
taking into consideration its location, quality, and any other
circumstances as may affect its value, the provisions of section
twelve of Act Numbered Eleven hundred and twenty, as amended,
to the contrary, . . . (Emphasis ours)
It is clear from the foregoing provisions that the friar lands were purchased by the
government for sale to actual settlers and occupants at the time said lands are
acquired by the government. The Bureau of Lands shall first issue a certificate
stating therein that the government has agreed to sell the land to such settler or
occupant. The latter then shall accept the certificate and agree to pay the purchase
price so fixed and in the installments and at the interest specified in the certificate.
The conveyance executed in favor of a buyer or purchaser, or the so called certificate
of sale, is a conveyance of the ownership of the property, subject only to the
resolutory condition that the sale may be cancelled if the price agreed upon is not
paid for in full. The purchaser becomes the owner upon the issuance of the
certificate of sale in his favor subject only to the cancellation thereof in case the
price agreed upon is not paid (Pugeda vs. Trias, No. L-16925, March 31, 1962, 4
SCRA 849.)
Upon the payment of the final installment together with all accrued interests, the
government shall then issue a final deed of conveyance in favor of the purchaser.
However, the sale of such friar lands shall be valid only if approved by the Secretary
of Interior as provided in Act No. 1120. Later laws, however, required that the sale
shall be approved by the Secretary of Agriculture and Commerce. In short, the
approval by the Secretary of Agriculture and Commerce is indispensable for the
validity of the sale.
It is undisputed that petitioner's predecessor, Julian Pearanda was the actual
occupant of Lot 7449 when he filed his application to purchase the said lot on
November 22, 1968; that on December 16, 1989, the Secretary of Agriculture and
Natural Resources approved the sale of the lot without auction to Pearanda; that a
sales contract was executed between the Director of Lands and Pearanda on
February 28, 1969 for a consideration of P 1,198.00 payable in 10 monthly
installments; that upon the full payment of the price, the Undersecretary of
Agriculture and Natural Resources issued the final deed of conveyance of Lot No.

7449 in favor of Pearanda. Subsequently, the Register of Deeds of Cavite issued


TCT No. 39631 in the name of Pearanda, and when the latter sold the land to
petitioner, TCT No. 39631 was cancelled and TCT No. T-80889 was issued in favor
of the latter.
Clearly, the purchase of the friar land made by Pearanda was in compliance with
law. The execution of the sales contract vested the right of ownership in Pearanda
over the land. There is no doubt whatsoever that the said sale was valid as it was
approved by the Secretary of Agriculture and Natural Resources. Hence, the sale
made by Pearanda in favor of the petitioner transferred the ownership of the land in
favor of the latter resulting in the proper issuance of TCT No. T-80889 in its name.
On the other hand, the antecedents leading to the acquisition of title by respondent
Virata are clearly shown in the records. The latter's predecessor, Mabini Legaspi
bought Lot 7449 in a sale by public auction held on May 5, 1943 conducted by the
Bureau of Lands and friar lands agent Severino Rivera, and paid the purchase price
thereof in installments in 1943; that on December 12, 1944, the Bureau of Lands sent
a letter to the Register of Deeds of Cavite requesting the issuance of certificates of
title to several persons including Mabini Legaspi, in whose favor TCT A-2188 was
issued; that subsequently on December 6, 1957, she sold the disputed land to
respondent Virata, which was evidenced by a deed of sale registered with the
Registry of Deeds of Cavite on December 10, 1957; that on the same date, TCT No.
11520 was issued in the name of Virata. Due to the fire which gutted the building
housing the Registry of Cavite on June 7, 1959, the latter administratively
reconstituted the original of TCT No. 11520 on September 1, 1959, based on the
owner's duplicate certificate and renumbered the same as TCT No. 1120 RT 1660.
Apparently, the sale of the lot to Mabini Legaspi occurred much earlier than the date
of acquisition of same lot by petitioner's predecessor, and the evidence presented by
respondent Virata indicates that the latter's predecessor paid the purchase price of Lot
No. 7449 on installments.
Nowhere in the evidence for the respondent or in the records of this case however,
would show that a certificate of sale was ever issued by the Bureau of Lands, which
would vest ownership and title over the land in favor of Mabini Legaspi. The
existence of the official receipts showing payment of the price of the land by Legaspi
does not prove that the land was legally conveyed to her without any contract of sale
having been executed by the government in her favor. Viewed from all angles, the
acquisition of the lot by Legaspi was highly irregular and void, and not in
compliance with the procedure mandated by law for the sale of friar lands. For one
thing, Mabini Legaspi allegedly purchased the land in a sale at public auction, which
procedure is nowhere provided in Act No. 1120 or in C.A. 32, as amended by C.A.

83

316. The laws expressly state that an actual occupant of the land shall purchase the
lot occupied by him at a private sale and not in a sale at public auction (Sec. 2, C.A.
32 as amended). Further, neither was there any deed of conveyance issued to Legaspi
by the government after the full payment of the installments on the disputed lot.
Highly significant at this point is the fact that there was neither allegation nor proof
that the sale was with the approval of the Secretary of Agriculture and Commerce.
The absence of such approval made the supposed sale null and void ab initio.
Without the certificate of sale to prove the transfer of the ownership of the land from
the government Mabini Legaspi and without the required approval of the sale by the
Secretary of Agriculture and Commerce, We find that Mabini Legaspi did not in any
manner acquire ownership over the land in 1943. The ownership or title over the friar
land, specifically Lot No. 7449 remained in the government until Pearanda,
petitioners predecessor, lawfully acquired ownership over the same lot on February
28, 1969 by virtue of a sales contract executed in his favor.
The issuance of a certificate of title in favor of Mabini Legaspi did not vest
ownership upon her over the land nor did it validate the alleged purchase of the lot,
which is null and void. Time and again, it has been held that registration does not
vest title. It is merely evidence of such title over a particular property. Our land
registration laws do not give the holder any better title than that what he actually has
(De man et al. vs. Court of Appeals, G.R. L- 46935 December 21, 1987, 156 SCRA
701; Cruz vs. Cabana, No. 56232, June 22, 1984, 129 SCRA 656).
Although a period of one year has already expired from the time the certificate of
title was issued to Mabini Legaspi pursuant to the alleged sale from the government,
said title does not become incontrovertible but is null and void since the acquisition
of the property was in violation of law. Further, the petitioner herein is in possession
of the land in dispute. Hence, its action to quiet title is imprescriptible (Coronel vs.
Intermediate Appellate Court, No. 70191, October 29, 1987, 155 SCRA
270).1wphi1 In one case, this Court ruled that an adverse claimant of a registered
land who is in possession thereof for a long period of time is not barred from
bringing an action for reconveyance which in effect seeks to quiet title to the
property against a registered owner relying upon a Torrens title which was illegally
or wrongfully acquired (Caragay-Layno vs. Court of Appeals, 133 SCRA 718). In
actions for reconveyance of property predicated on the fact that the conveyance
complained of was void ab initio, a claim of prescription of the action would be
unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil. 722; Agne vs. Director of Lands,
G.R. L-40399, February 6, 1990, 181 SCRA 793). Being null and void, the sale made
to Mabini Legaspi and the subsequent titles issued pursuant thereto produced no
legal effects whatsoever. Quod nullum est nullum producit affectum (Agnes vs.
Director of Lands, supra). There being no title to the land that Mabini Legaspi

acquired from the government, it follows that no title to the same land could be
conveyed by the former to respondent Virata.
Even assuming that respondent Virata was a purchaser in good faith and for value,
the law is, as between two persons both of whom are in good faith and both innocent
of any negligence, the law must protect and prefer the lawful holder of registered
title over the transferee of a vendor bereft of any transmissible rights (Baltazar vs.
Court of Appeals, G.R. 78728, December 8, 1988, 168 SCRA 354, emphasis ours).
Further if a person happened to obtain property by mistake or to the prejudice of
another with or without bad faith, the certificate of title which may have been issued
to him under the circumstances may and should be cancelled or corrected.
Our unavoidable conclusion in this case is that the title of petitioner under the
Torrens land system should be upheld considering that no previous valid title to the
same land existed.
ACCORDINGLY, the petition is hereby GRANTED and the decision of the
respondent Court of Appeals dated July 13, 1987 is hereby REVERSED. Petitioner
Solid State Multi-Products Corporation is hereby declared the true owner of the land
covered by Transfer Certificate of Title No. T-80889. The Register of Deeds of
Cavite is ordered to cancer transfer Certificate of Title No. (T-11520) RT 1660 in the
name of respondent Antenor Virata.
SO ORDERED.

84

On 22 July 1980, Nestor Lacsamana purportedly sold his one-half (1/2) share to
LBJ Development Corporation (LBJ) represented by its President, Conrad C.
Leviste. A certain Rolando Lumanglas registered the deed of sale in the Registry of
Deeds resulting in the cancellation of TCT No. 46245 and the issuance of TCT No.
47475 in the names of EL DORADO and LBJ.
[G.R. No. 121658. March 27, 1998]

NESTOR LACSAMANA,* EL DORADO PLANTATION, INC., LBJ


DEVELOPMENT CORPORATION and CONRAD C.
LEVISTE, petitioners, vs. COURT OFAPPEALS, ESTER GAITOS
ROBLES, LEON GAITOS ROBLES and DULCE CLARA
ROBLES, respondents.
DECISION
BELLOSILLO, J.:
This is a petition to review the decision of the Court of Appeals affirming that
of the Regional Trial Court in an action by private respondents against petitioners for
reconveyance and cancellation of certificates of title.[1]
Leon Robles and his niece Amparo Robles were the registered co-owners in
equal shares of Lot No. 13535, a 56,864-square meter piece of land situated in Bo.
Inosloban, Lipa City, covered by OCT No. 0-363-R issued on 3 March 1965 by the
local Register of Deeds.[2]
On 26 April 1965 Amparo sold her one-half (1/2) undivided share to El Dorado
Corporation (EL DORADO). Consequently, OCT No. 0-363-R was cancelled and
TCT No. 15261 issued in the names of EL DORADO and Leon Robles as coowners.
On 24 September 1969 Leon Robles, who was then residing in San Francisco,
California, U.S.A., died survived by his wife Ester Gaitos Robles and children Leon
Jr. and Dulce Clara as his sole heirs. However, in a Deed of Absolute Sale dated 22
July 1971, Leon Robles purportedly with the marital consent of his wife Ester sold
his one-half (1/2) undivided share in Lot No. 13535 to one Nestor Lacsamana. Nine
(9) years later, or on 22 January 1980, the Deed of Absolute Sale was registered in
the Registry of Deeds of Lipa City by one Philip Neri Gonzales. Consequently, TCT
No. 15261 in the names of EL DORADO and Leon Robles was cancelled and TCT
No. 46245 issued in the names of EL DORADO and Nestor Lacsamana.

On 26 January 1982 LBJ became the owner of the entire Lot No. 13535 when
EL DORADO sold its one-half share for P30,000.00. Consequently, TCT No. 47475
was cancelled and TCT Nos. 49915 to 49990 were issued in the name of LBJ
conformably with an approved consolidated subdivision plan.
On 11 November 1983 Ester, Leon Jr. and Dulce Clara, all surnamed Robles, as
surviving heirs of Leon Robles, filed a complaint with the Regional Trial Court of
Lipa City[3] gainst Nestor Lacsamana, EL DORADO, LBJ and Conrad C. Leviste for
the recovery of the one-half undivided share of Leon in Lot No. 13535 and the
cancellation of TCT Nos. 49915 to 49990. The complaint alleged that the signature
of Leon Robles in the Deed of Absolute Sale dated 22 July 1971 in favor of
defendant Nestor Lacsamana was a forgery as Leon was already dead at the time of
the alleged sale; that defendant LBJ, a corporation owned and controlled by the
Leviste family with defendant Conrad C. Leviste as its President, was not a buyer in
good faith since facts existed which should have put it on guard as to defects in the
title of Lacsamana; and, that defendant EL DORADO, likewise owned and
controlled by the Leviste family with Conrad C. Leviste as President, participated in
the fraud by surrendering the only co-owner's duplicate copy of TCT No. 15261 in
its name and that of Leon Robles thus paving the way for the issuance of a new TCT
in the name of Nestor Lacsamana as co-owner in place of Leon Robles.
Defendants LBJ and EL DORADO invoked the defense of prescription and/or
laches and alleged that LBJ was a buyer in good faith and for value. However, their
defenses were rejected by the court a quo which ruled that the complaint filed by
plaintiffs on 11 November 1983, i.e., almost three (3) years and nine (9) months from
the date of registration of the questioned Deed of AbsoluteSale on 22 January 1980
was timely filed since actions for reconveyance of real property on ground of fraud
may be filed within four (4) years from its discovery.
As regards the second issue, the trial court ruled that LBJ was not an innocent
purchaser because facts existed which should have put it on inquiry as to possible
defects in the title of Lacsamana, e.g., while the questioned Deed of Absolute Sale
purportedly executed in Manila stated that Leon and Ester Robles personally
appeared before Notary Public Engracio S. Concepcion and presented their
Residence Certificates issued in Makati, the same document showed that the spouses
were residing at 695 22nd Avenue, San Francisco, California, U.S.A., and did not
indicate that they were temporarily staying in the Philippines at the time of its
execution; and, the Deed of Absolute Sale was registered in the Office of the
Register of Deeds of Lipa City only in 1980, or after the lapse of more than eight (8)

85

years. Additionally, the court found that Leon Robles and Roman Payumo, one of the
supposed instrumental witnesses to the deed of sale, were already dead at the time of
the execution of the sale;[4] that Nestor Lacsamana was a non-existent person;[5] and,
that EL DORADO, Leon Robles' co-owner at the time of the alleged sale in favor of
Lacsamana, and LBJ, to whom Lacsamana purportedly sold Leon's one-half share,
were both corporations owned and controlled by the Leviste family with defendant
Conrad C. Leviste as its common President. [6] Thus, on the basis of the foregoing, the
court a quo rendered judgment in favor of plaintiffs[7] the dispositive portion of
which read WHEREFORE, the Court holds that defendant LBJ Development
Corporation is not a purchaser in good faith. Accordingly, the Court
hereby orders the Register of Deeds of Lipa City to cancel all the present
titles covering the parcel of land formerly covered by Transfer Certificate
of Title No. T-47475 in the names of defendants El Dorado Plantation,
Inc., and LBJ Development Corporation and to reinstate Transfer
Certificate of Title No. T-15261 in the names of Leon Robles and El
Dorado Plantation, Inc.
In the event that reconveyance of the property involved is not possible due
to any subsequent transfer of the property to third persons or persons not
parties to this suit, the Court hereby orders defendant LBJ Development
Corporation to pay plaintiffs the present fair market value of plaintiffs'
one-half (1/2) share in the property, which fair market value shall be
determined by an appraiser to be agreed upon by the parties, and in case of
disagreement the parties shall recommend to the Court the appraisers of
their choice who shall appraise the property jointly and submit the
corresponding report for approval or resolution of the Court.
The Court further orders defendants LBJ Development Corporation, El
Dorado Plantation, Inc., and Conrad Leviste to pay jointly and
severally plaintiffs attorney's fees in the sum of Twenty Thousand Pesos
(P20,000.00), since the latter was compelled to institute this case to protect
their interests, and to pay the costs of suit.[8]
The Court of Appeals affirmed the findings and conclusions of the trial court on
appeal by EL DORADO, LBJ and Conrad C. Leviste. [9] They differed only insofar as
the issue of prescription was concerned. Instead of the period of four (4) years for
filing actions for reconveyance on ground of fraud cited by the trial court, respondent
appellate court ruled that the present action had not yet prescribed since actions to
declare the nullity of a void contract was imprescriptible.
Petitioners insist that the action instituted by private respondents has already
prescribed, but even if it has not, it is already barred by laches and reiterate their
position that LBJ was a buyer in good faith.

We affirm the decision of respondent appellate court. On the issue of


prescription, we agree that the present action has not yet prescribed because the right
to file an action for reconveyance on the ground that the certificate of title was
obtained by means of a fictitious deed of sale is virtually an action for the declaration
of its nullity, which action does not prescribe. [10] Hence, the fact that the alleged sale
took place in 1971 and the action to have it declared void or inexistent was filed in
1983 is of no moment.[11] To reiterate, an action for reconveyance based on a void
contract is imprescriptible.[12]
Neither can the defense of laches be sustained. We cannot see how private
respondents may be considered guilty of laches. It should be noted that private
respondents, upon learning that the relevant portion of Lot No. 13535 was no longer
registered in the name of Leon, immediately caused an investigation to be made for
the purpose of finding out the author and the circumstances behind the execution of
the fictitious 1971 Deed of Absolute Sale. Thus, in less than two (2) months after it
was discovered by the National Bureau of Investigation that Nestor Lacsamana was
in fact a fictitious/non-existent person, [13] private respondents through their attorneyin-fact
Petronilo
Gaitos
instituted
on
11
November
1983, the present action i.e., barely three (3) years and nine (9) months after the
fraudulent registration on 22 January 1980. Thus, it is said, the concept of laches is
not concerned with the lapse of time but only with the effect of unreasonable lapse.
[14]

We are urged by petitioners to rule that LBJ was a buyer in good faith. We
cannot. Besides being a factual finding shared by both the trial court and the Court of
Appeals that it was not, and supported by the evidence on record, it is conclusive
upon us.[15]
Three (3) reasons, at least, militate against petitioner LBJ's claim of good
faith. First, Conrad C. Leviste, President of LBJ, claimed that the company came to
know of the disputed property through its driver Jovito Lacsamana who allegedly
introduced his nephew Nestor Lacsamana as its owner who was interested in selling
his share in the property. On this point, without necessarily underestimating the
capacity of driver Jovito's nephew Nestor to own one-half of a 5.6-hectare parcel of
land, Leviste's curiosity should have been aroused just the same as to how Nestor
came to own his portion of the property. The records fail to disclose any inquiry,
formal or informal, to determine how Nestor acquired his portion. Second, Nestor
Lacsamana allegedly presented a copy of TCT No. 46425 in his name and that of EL
DORADO as co-owners. However, it is a fact that, as testified to by Register of
Deeds Antonio Escutin, the only co-owner's duplicate copy of TCT No. 46425 was
issued to EL DORADO, LBJ's sister company. [16] Third, the fictitious 1971 Deed of
Absolute Sale in favor of Nestor Lacsamana, the root of the issuance of TCT No.
46245, was only registered more than eight (8) years later.[17]

86

Given the attendant circumstances, in addition to the defects of the 1971 Deed
of Absolute Sale found by the trial court and affirmed by respondent Court of
Appeals, petitioner LBJ cannot claim to be a buyer in good faith. But even if we
concede that petitioner LBJ was innocent of the fraud perpetrated against private
respondents, the records abound with facts which should have impelled it to
investigate deeper into the title of Lacsamana, more so when such effort would not
have entailed additional hardship, nay, would have been quite easy, since the titled
co-owner of Lacsamana is LBJ's own sister company EL DORADO.
The rule that a person dealing with registered land has the right to rely on the
Torrens title will not apply when such person has actual knowledge of facts that
would impel a reasonably cautious man to make an inquiry. [18] He cannot close his
eyes to such facts and later claim that he acted in good faith. [19] Thus, LBJ is not
entitled to the mantle of protection accorded by the Torrens System of registration
which protects only the title holder in good faith. It has never been created as a shield
to fraud.[20]
WHEREFORE, premises considered, the petition is DENIED. The questioned
decision of respondent Court of Appeals dated 20 July 1995 in CA-G.R. CV No.
38246 affirming that of the Regional Trial Court of Lipa City dated 8 April 1992
is AFFIRMED, with costs against petitioners.
SO ORDERED.
G.R. No. L-11285

May 16, 1958

VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffsappellants,


vs.
APOLONIO FABIANA, defendant-appellee.
Rodolfo
A.
Napoleon B. Nidea for appellee.

Ta-Asan

for

appellants.

REYES, J.B.L., J.:


Sapto (Moro), now deceased was the registered owner of a parcel of land located in
Alambre, Toril, Davao City, under Transfer Certificate of Title No. T-5701 (0-28) of
the Register of Deeds of Davao City. When Sapto died, he left his children Samuel,
Constancio, and Ramon as heirs of the property in question. Ramon pre-deceased his
two brothers, leaving no, other heirs. On June 6, 1931, Samuel and Constancio Sapto
executed a deed of sale of a portion of four hectares of the land aforementioned if
favor of defendant Apolonio Fabiana, in consideration of the amount of P245.00. The

sale was duly approved by the Provincial Governor of Davao, but was never
registered. Possession of the land conveyed was, however, transferred to Fabiana and
the latter has been in the possession thereof 1931 up to the present.
Thereafter, Constancio Sapto died without any issue, Samuel Sapto married one
Dora (Bagoba) and upon his death was survived by his widow and two children,
Laureana and Vicente Sapto. On October 19, 1954, the widow and children of
Samuel Sapto filed this action in the Court of First Instance of Davao for the
recovery of the parcel of land sold by their predecessors to defendant Apolonio
Fabiana in 1931. After trial, the lower court held that although the sale between
Samuel and Constancio Sapto and defendant in 1931 was never registered, it was
valid and binding upon the parties and the vendors heirs, and ordered the plaintiffs to
execute the necessary deed of conveyance in defendant's favor and its annotation in
the certificate of title. From this judgment, plaintiffs appealed to this Court.
The issue is whether the deed of sale executed by appellants' predecessors in favor of
the appellee over the land in question, although never registered, is valid and binding
on appellants and operated to convey title and ownership to the appellee.
The question is not new. In a long line of cases already decided by this Court, we
have consistently interpreted sec. 50 of the Land Registration Act providing that "no
deed . . . shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the clerk or register of
deeds to make registration" in the sense that as between the parties to a sale
registration is not necessary to make it valid and effective, for actual notice is
equivalent to registration (Obras Pias vs. Devera Ignacio, 17 Phil., 45; Gustilo vs.
Maravilla, 48 Phil., 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43
Phil., 609; Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91
Phil., 265). "The peculiar force of a title under Act No. 492", we said in Medina vs.
Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus), "is exhibited only when
the purchaser has sold to innocent third parties the land described in the conveyance.
Generally speaking, as between vendor and vendee, the same rights and remedies
exist in relation to land not so registered". In Galanza vs. Nuesa, 95 Phil., 713, we
held that "registration is intended to protect the buyer against claims of third persons
arising from subsequent alienations by the vendor, and is certainly not necessary to
give effect as between the parties to their deed of sale". And in the recent case of
Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957, we reiterated that "the
purpose of registration is merely to notify and protect the interests of strangers to a
given transaction, who may be ignorant thereof, and the non-registration of the deed
evidencing said transaction does not relieve the parties thereto of their obligations
thereunder".

87

No right of innocent third persons or subsequent transferees of the property in


question is involved herein. The property has remained and still is in the possession
of the vendee of appellants' predecessors, herein appellee. It is, therefore, clear that
the conveyance between appellee and his vendors and valid and binding upon the
latter, and is equally binding and effective against the heirs of the vendors, herein
appellants. To hold otherwise would make of the Torrens system a shield for the
commission of fraud by the vendors or his heirs (Gustilo vs. Maravilla, 48 Phil.,
442), who would then be able to reconvey the same property to other persons.

possession is disturbed or his title is attacked before taking steps to


vindicate his right. But the rule that the statute of limitations is not available
as a defense to an action to remove a cloud from title can only be invoked
by a complaint when he is in possession. One who claims property which is
in the possession of another must, it seems, invoke his remedy within the
statutory period. (44 Am. Jur., p. 47)
Wherefore, the judgment appealed from is affirmed. Costs against appellants. So
ordered.

Appellants cite several cases wherein we have held that under the Torrens system,
registration is the operative act that gives validity to the transfer or creates a lien
upon the land. The authorities cited refer, however, to cases involving conflicting
rights over registered property and those of innocent transferees who relied on the
clean titles of the properties in question. These cases have, therefore, no bearing on
the instant case, where the appellee has always, remained in the possession of the
land in question and no subsequent transfer thereof to other persons has been made
either by appellants or their prodecessors-in-interest.
The appellants aver that it was error to require them to execute a deed of conveyance
in favor of the plaintiff, appellee, and argue that the latter's action to obtain it had
long prescribed, twenty years having elapsed since the original sale. This contention
must be overruled, being predicated on the assumption that the reconveyance is
sought by way of performance of the contract of sale entered into in 1931. No
enforcement of the contract is in fact needed, since the delivery of possession of the
land sold had consummated the sale and transferred title to the purchaser, registration
of the contract not being indispensable as between the parties. Actually the action for
conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's
ownership by the refusal of the appellants to recognize the sale made by their
predecessors. This action accrued only when appellant, initiated their suit to recover
the land in 1954. Furthermore, it is an established rule of American jurisprudence
(made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions
to quiet title to property in the possession of the plaintiff are imprescriptible (44 Am.
Jur. p. 47; Cooper vs. Rhea, 39 L. R. A. 930; Inland Empire Land Co. vs. Grant
County, 138 Wash. 439, 245 Pac. 14).
The prevailing rule is that the right of a plaintiff to have his title to land
quieted, as against one who is asserting some adverse claim or lien thereon,
is not barred while the plaintiff or his grantors remain in actual possession
of the land, claiming to be owners thereof, the reason for this rule being that
while the owner in fee continues liable to an action, proceeding, or suit
upon the adverse claim, he has a continuing right to the aid of a court of
equity to ascertain and determine the nature of such claim and its effect on
his title, or to assert any superior equity in his favor. He may wait until his

88

G.R. No. L-52064 December 26, 1984


JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO
LAYNO, petitioner,
vs.
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as
Administrator of the Estate of the Deceased, MARIANO DE
VERA, respondents.
Pedro Peralta for petitioner.
Andres T. Gutierrez for private respondent.

MELENCIO-HERRERA, J.:
Respondent Appellate Court, then the Court of Appeal, affirmed in toto the judgment
of the former Court of First Instance of Pangasinan, Branch III, at Dagupan
adjudging private respondent entitled to recover possession of a parcel of land and
ordering petitioners, as defendants below, to vacate the premises. Petitioners, as
paupers, now seek a reversal of that judgment.
It was established by a relocation survey that the Disputed Portion is a 3,732 squaremeter-area of a bigger parcel of sugar and coconut land (Lot No. 1, Psu-24206 [Case
No. 44, GLRO Rec. No. 117]), with a total area of 8,752 square meters, situated at
Calasiao, Pangasinan. The entire parcel is covered by Original Certificate of Title
No. 63, and includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the
name of Mariano M. DE VERA, who died in 1951 without issue. His intestate estate
was administered first by his widow and later by her nephew, respondent Salvador
Estrada.
Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were first
cousins, "both orphans, who lived together under one roof in the care of a common
aunt."
As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 of the
former Court of First Instance of Pangasinan, Branch III, an Inventory of all
properties of the deceased, which included "a parcel of land in the poblacion of

Calasiao, Pangasinan, containing an area of 5,417 square meters, more or less, and
covered by Tax Declaration No. 12664."
Because of the discrepancy in area mentioned in the Inventory as 5,147 square
meters (as filed by the widow), and that in the title as 8,752 square meters,
ESTRADA repaired to the Disputed Property and found that the northwestern
portion, subsequently surveyed to be 3,732 square meters, was occupied by
petitioner-spouses Juliana Caragay Layno and Benito Layno. ESTRADA demanded
that they vacate the Disputed Portion since it was titled in the name of the deceased
DE VERA, but petitioners refused claiming that the land belonged to them and,
before them, to JULIANA's father Juan Caragay.
ESTRADA then instituted suit against JULIANA for the recovery of the Disputed
Portion (Civil Case No. D-2007), which she resisted, mainly on the ground that the
Disputed Portion had been fraudulently or mistakenly included in OCT No. 63, so
that an implied or constructive trust existed in her favor. She then counterclaimed for
reconveyance of property in the sense that title be issued in her favor.
After hearing, the Trial Court rendered judgment ordering JULIANA to vacate the
Disputed Portion.
On appeal respondent Appellate Court affirmed the Decision in toto.
Before us, JULIANA takes issue with the following finding of respondent Court:
Although Section 102 of Act 496 allows a Petition to compel a
Trustee to reconvey a registered land to the cestui que trust
(Severino vs. Severino, 44 Phil 343; Escobar vs. Locsin, 74 PhiL
86) this remedy is no longer available to Juliana Caragay. Mariano
de Vera's land, Lot 1, Psu-24206, was registered on September 11,
1947 (Exhibit"C") and it was only on March 28, 1967 when the
defendants filed their original answer that Caragay sought the
reconveyance to her of the 3,732 square meters. Thus, her claim
for reconveyance based on implied or constructive trust has
prescribed after 10 years (Banaga vs. Soler, L-15717, June
30,1961; J.M. Tuason & Co. vs. Magdangal, L-15539, Jan. 30,
1962; Alzona vs. Capunitan, 4 SCRA 450). In other words,
Mariano de Vera's Original Certificate of Title No. 63 (Exhibit
"C") has become indefeasible. 1
We are constrained to reverse.

89

The evidence discloses that the Disputed Portion was originally possessed openly,
continuously and uninterruptedly in the concept of an owner by Juan Caragay, the
deceased father of JULIANA, and had been declared in his name under Tax
Declaration No. 28694 beginning with the year 1921 (Exhibit "2-C"), later revised
by Tax Declaration No. 2298 in 1951 (Exhibit "2-B"). Upon the demise of her father
in 1914, JULIANA adjudicated the property to herself as his sole heir in 1958
(Exhibit "4"), and declared it in her name under Tax Declaration No. 22522
beginning with the year 1959 (Exhibit "2-A"), later cancelled by TD No. 3539 in
1966 (Exhibit "2"). Realty taxes were also religiously paid from 1938 to 1972
(Exhibits "3-A" to "3-H"). Tacking the previous possession of her father to her own,
they had been in actual open, continuous and uninterrupted possession in the concept
of owner for about forty five (45) years, until said possession was disturbed in 1966
when ESTRADA informed JULIANA that the Disputed Portion was registered in
Mariano DE VERA's name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT
No. 63, JULIANA, an unlettered woman, declared that during his lifetime, DE
VERA, her first cousin, and whom she regarded as a father as he was much older,
borrowed from her the Tax Declaration of her land purportedly to be used as
collateral for his loan and sugar quota application; that relying on her cousin's
assurances, she acceded to his request and was made to sign some documents the
contents of which she did not even know because of her ignorance; that she
discovered the fraudulent inclusion of the Disputed Portion in OCT No. 63 only in
1966 when ESTRADA so informed her and sought to eject them.
Of significance is the fact, as disclosed by the evidence, that for twenty (20) years
from the date of registration of title in 1947 up to 1967 when this suit for recovery of
possession was instituted, neither the deceased DE VERA up to the time of his death
in 1951, nor his successors-in-interest, had taken steps to possess or lay adverse
claim to the Disputed Portion. They may, therefore be said to be guilty of laches as
would effectively derail their cause of action. Administrator ESTRADA took interest
in recovering the said portion only when he noticed the discrepancy in areas in the
Inventory of Property and in the title.
Inasmuch as DE VERA had failed to assert any rights over the Disputed Portion
during his lifetime, nor did he nor his successors-in-interest possess it for a single
moment: but that, JULIANA had been in actual, continuous and open possession
thereof to the exclusion of all and sundry, the inescapable inference is, fraud having
been unsubstantiated, that it had been erroneously included in OCT No. 63. The
mistake is confirmed by the fact that deducting 3,732 sq. ms., the area of the
Disputed Portion from 8,752 sq. ms., the area of Lot 1 in OCT No. 63, the difference
is 5,020 sq. ms., which closely approximates the area of 5,147 sq. ms., indicated in
the Inventory of Property of DE VERA. In fact, the widow by limiting the area in

said Inventory to only 5,147 sq. ms., in effect, recognized and admitted that the
Disputed Portion of 3,132 sq. ms., did not form part of the decedent's estate.
The foregoing conclusion does not necessarily wreak havoc on the indefeasibility of
a Torrens title. For, mere possession of a certificate of title under the Torrens System
is not conclusive as to the holder's true ownership of all the property described
therein for he does not by virtue of said certificate alone become the owner of the
land illegally included. 2 A Land Registration Court has no jurisdiction to decree a lot
to persons who have never asserted any right of ownership over it.
... Obviously then, the inclusion of said area in the title of Lot No.
8151 is void and of no effect for a land registration Court has no
jurisdiction to decree a lot to persons who have put no claim in it
and who have never asserted any right of ownership over it. The
Land Registration Act as well as the Cadastral Act protects only
the holders of a title in good faith and does not permit its
provisions to be used as a shield for the commission of fraud, or
that one should enrich himself at the expense of another. 3
JULIANA, whose property had been wrongfully registered in the name of another,
but which had not yet passed into the hands of third parties, can properly seek its
reconveyance.
The remedy of the landowner whose property has been wrongfully
or erroneously registered in another's name is, after one year from
the date of the decree, not to set aside the decree, but, respecting
the decree as incontrovertible and no longer open to review, to
bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an
innocent purchaser for value, for damages. 4
Prescription cannot be invoked against JULIANA for the reason that as lawful
possessor and owner of the Disputed Portion, her cause of action for reconveyance
which, in effect, seeks to quiet title to the property, falls within settled jurisprudence
that an action to quiet title to property in one's possession is imprescriptible. 5 Her
undisturbed possession over a period of fifty two (52) years gave her a continuing
right to seek the aid of a Court of equity to determine the nature of the adverse claim
of a third party and the effect on her own title. 6
Besides, under the circumstances, JULIANA's right to quiet title, to seek
reconveyance, and to annul OCT. No. 63 accrued only in 1966 when she was made
aware of a claim adverse to her own. It was only then that the statutory period of

90

prescription may be said to have commenced to run against her, following the
pronouncement in Faja vs. Court of Appeals, supra, a case almost Identical to this
one.

SO ORDERED

... Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that


Felipa Faja has been in possession of the property since 1945 up to
the present for a period of 30 years, her cause of action for
reconveyance, which in effect seeks to quiet her title to the
property, falls within that rule. If at all, the period of prescription
began to run against Felipa Faja only from the time she was served
with copy of the complaint in 1975 giving her notice that the
property she was occupying was titled in the name of Indalecio
Frial. There is settled jurisprudence that one who is in actual
possession of a piece of land claiming to be owner thereof may
wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, the reason for the rule being, that
his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the
adverse claim of a third party and its effect on his own title, which
right can be claimed only by one who is in possession. No better
situation can be conceived at the moment for Us to apply this rule
on equity than that of herein petitioners whose mother, Felipa Faja,
was in possession of the litigated property for no less than 30 years
and was suddenly confronted with a claim that the land she had
been occupying and cultivating all these years, was titled in the
name of a third person. We hold that in such a situation the right to
quiet title to the property, to seek its reconveyance and annul any
certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is
only then that the statutory period of prescription commences to
run against such possessor.
WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE,
and another one entered ordering private respondent Salvador Estrada, as
Administrator of the Estate of the Deceased, Mariano de Vera, to cause the
segregation of the disputed portion of 3,732 square meters forming part of Lot No. 1,
Psu-24206, Case No. 44, GLRO Rec. No. 117, presently occupied by petitioner
Juliana Caragay-Layno, and to reconvey the same to said petitioner. After the
segregation shall have been accomplished, the Register of Deeds of Pangasinan is
hereby ordered to issue a new certificate of title covering said 3,732 sq. m. portion in
favor of petitioner, and another crtificate of title in favor of the Estate of the
deceased, Mariano de Vera covering the remaining portion of 5,0520 square meters.
No costs.

91

[G.R. No. L-9335. October 31, 1956.]


CONCORDIA MEJIA DE LUCAS, Plaintiff-Appellee, vs. ANDRES
GAMPONIA, Defendant-Appellant.
DECISION
LABRADOR, J.:
Appeal from the judgment of the Court of First Instance of Nueva Vizcaya,
Honorable Jose de Venecia, presiding, and appealed directly to this court as judgment
was rendered on a stipulation of facts and only questions of law are raised in the
appeal.
By the stipulation of the parties it appears that on March 13, 1916, free patent No.
3699 was issued over the land subject of the action in the name of Domingo Mejia.
This patent was transcribed in the Office of the Register of Deeds of Nueva Vizcaya
on July 26, 1916 and certificate of title No. 380 issued in the name of Domingo
Mejia. On March 24, 1916, after the issuance of the patent but before the registration
of the same, patentee Domingo Mejia deeded the land to Zacarias Ciscar, who
immediately took possession thereof and enjoyed its fruits. Upon his death the
property was included in the distribution of his estate and adjudicated to Roque
Sanchez. Roque Sanchez in turn sold the land on January 21, 1940 to Andres
Gamponia, Defendant herein. Sanchez was in possession and enjoyment of the land
from the time he acquired it by inheritance from Ciscar up to the time he sold it
to Defendant Andres Gamponia, the latter has also possessed and enjoyed the
property from the time he bought it to date.
Domingo Mejia, upon his death, left no descendants or ascendants and his only
surviving kin was his brother Pedro Mejia. Pedro Mejia is now also dead and is
survived by his daughter Concordia Mejia de Lucas, Plaintiff herein. Upon the above
facts the court a quo held that the sale by the patentee to Zacarias Ciscar is null and
void, as the sale was made only 11 days after the issuance of a patent in violation of
the provisions of section 35 of Act No. 926. The Court further held that since the
land is registered land no title in derogation to that of the registered owner could
have been acquired either by Zacarias Ciscar or his successors in interest, namely,
Roque Sanchez andDefendant Andres Gamponia.
The main defense presented in the answer, is that Plaintiffs right of action has
already prescribed by virtue of the possession of the land by the Defendant and his
predecessors in interest for a period of 37 years. This defense was overruled by the
court a quo on the ground that as the land is registered, with a certificate of title in
the name of patentee Domingo Mejia, title thereto may not be acquired by
the Defendant and his predecessors in interest against said registered owner. This

ruling is evidently based on Section 46 of the Land Registration Act, which provides
that no title to registered land in derogation to that of the registered owner shall be
acquired by prescription or adverse possession.
Upon a careful consideration of the facts and circumstances, we are constrained to
find, however, that while no legal defense to the action lies, an equitable one lies in
favor of the Defendant and that is, the equitable defense of laches. No hold that the
defense of prescription or adverse possession in derogation of the title of the
registered owner Domingo Mejia does not lie, but that of the equitable defense of
laches. Otherwise, stated, we hold that while Defendant may not be considered as
having acquired title by virtue of his and his predecessors long continued possession
for 37 years, the original owners right to recover back the possession of the property
and the title thereto from the Defendant has, by the long period of 37 years and by
patentees inaction and neglect, been converted into a stale demand.
In Go Chi Gun, et al., vs. Co Cho, et al., (96 Phil., 622) we held that the equitable
defense of laches requires four elements:chanroblesvirtuallawlibrary (1) conduct on
the part of the Defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made and for which the complaint seeks a
remedy; chan roblesvirtualawlibrary(2) delay in asserting the complainants rights,
the complainant having had knowledge or notice, of the Defendants conduct and
having been afforded an opportunity to institute a suit, (3) lack of knowledge or
notice on the part of the Defendant that the complainant would assert the right on
which he bases his suit; chan roblesvirtualawlibraryand (4) injury or prejudice to
the Defendant in the event relief is accorded to the complainant, or the suit is not
held to be barred.
All the four elements mentioned above are present in the case at bar. The first
element is present because on March 24, 1916 Domingo Mejia sold the land which
was covered by a free patent title dated March 13, 1916 and said sale or conveyance
was made in violation of Section 35 of the Public Land Act. The second element is
also present because from the date of the sale on March 24, 1916 the patentee and
vendor Domingo Mejia could have instituted the action to annul the conveyance and
obtain back the possession and ownership of the land, but notwithstanding the
apparent invalidity of the sale, neither patentee nor his successors in interest, his
brother, or the latters daughter, Plaintiff herein, who should have known of the
invalidity of the sale because it is a matter of law and had all the opportunity to
institute an action for the annulment of the sale, instituted no suit to annul the sale or
to recover the land for a period of 37 years. Again theDefendant and his predecessors
in interest, the original vendee and purchaser Zacarias Ciscar, as well as vendees
successors in interest, Roque Sanchez, and later, Andres Gamponia, never expected
or believed that the original patentee or his successors in interest would bring an
action to annul the sale. These circumstances constitute the third element of laches.
The fourth element is also present, not only because Zacarias Ciscar paid for the land
but this same land was divided among the heirs of Zacarias Ciscar in the proceedings

92

for the settlement of his estate (Civil Case No. 301 of the Court of First Instance of
Nueva Vizcaya) and Roque Sanchez, to whom the land was adjudicated, sold the
property for P800 to the present Defendant Andres Gamponia. All of these transfer
from Zacarias Ciscar to his heirs, to Roque Sanchez and to Defendant Andres
Gamponia, acts which covered a period of 37 years, would all have to be undone and
the respective rights and obligations of the parties affected adjusted, unless the
defense is sustained.
It is to be noted that all the above complications would never had been occasioned
had the original patentee and his successors in interest not slept on their rights for
more than a generation. Add to this the fact that the original conveyance made by the
patentee is not absolutely null and void. The prohibition against the sale of free
patents is for a period of seven years (Section 35, Act No. 926); chan
roblesvirtualawlibraryafter that period of time a patentee would be free to dispose of
the land. Within seven years from the conveyance the original patentee could have
brought an action to recover back his property. Since nothing of this sort was done
by him, it was certainly natural for the purchase to have assumed that the original
patentee gave up his right to recover back the property and acquiesced in vendees
right and title. The successor in interest of the original purchaser must also have
believed in good faith that the patentee and his successors in interest were reconciled
to the idea of allowing the property to stay in the hands of the successors in interest.
By this inaction for a period of 37 years to the consequent prejudice that annulment
of the original sale would entail upon so many successive owners, the equitable
principle now stands up as a bar.

and when the wife died and the conjugal properties divided between her heirs and
her husband, the vendor did not present his claim against the estate and only did so
four years later against the widower, it was held that the lender was guilty of laches
in so far as the estate of the deceased spouse is concerned because it would be
inequitable and unjust to permit him to revive any claims which he may have had,
which claims he did not present during the distribution of the estate of the deceased
wife. (Yaptico vs. Marina Yulo, et al., 57 Phil., 818). In a third case (Kambal vs.
Director of Lands, 62 Phil., 293), cadastral proceedings for compulsory registration
of certain parcels of land in Cotabato were instituted. These proceedings included
two lands belonging to the Petitioner. Petitioner failed to claim said lands in said
proceedings and in 1917 the titles to the lands of the Petitioner were
cancelled. Petitioner alleges that he came to know by accident of the cancellation of
his titles in the year 1933 or 1935. It was held that because of the lapse of 16 years
from the date the decision was rendered in the said registration case to the filing of
the petition, no relief can be granted the Petitioner as he has been guilty of laches. In
the three cases decided previously by this Court, the periods of inaction were from
10 to 16 years. In the case at bar it was a full period of 37 years.
The judgment appealed from is hereby reversed and one is hereby entered absolving
theDefendant from the action. Without costs.

The reason upon which the rule is based is not alone the lapse of time during which
the neglect to enforce the right has existed, but the changes of condition which may
have arisen during the period in which there has been neglect. In other words, where
a court of equity finds that the position of the parties has to change that equitable
relief cannot be afforded without doing injustice, or that the intervening rights of
third persons may be destroyed or seriously impaired, it will not exert its equitable
powers in order to save one from the consequences of his own neglect. (Penn
Mutual Life Inc. Co., et al., vs. City of Austin et al., U. S. 962.)
In effect, the principle is one of estoppel because it prevents people who have slept
on their rights from prejudicing the rights of third parties who have placed reliance
on the inaction of the original patentee and his successors in interest.
The equitable defense of laches has been held to exist in this jurisdiction for periods
less than the period in the case at bar. Thus in the case of Gonzales vs. Director of
Lands, 52 Phil. 895, it was held in a cadastral case that the owner of a lot who failed
to appear in the proceedings, as a result of which his land was declared public
property, who brings an action 10 years later, is guilty of laches and inexcusable
negligence and his action under Section 513 of the Code of Civil Procedure can no
longer be maintained. In another case where the Plaintiff loaned money to a couple

93

HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs. COURT


OF APPEALS and MAGUESUN MANAGEMENT AND
DEVELOPMENT CORPORATION,respondents.
DECISION
CARPIO, J.:

The Case
This is a petition to cite for indirect contempt the officers of Meycauayan
Central Realty Corporation (Meycauayan) for defying the final and executory
Decision and Resolution of this Court in G.R. No. 118436 entitled Heirs of Manuel
A. Roxas and Trinidad de Leon Vda. De Roxas v. Court of Appeals and Maguesun
Management & Development Corporation (G.R. No. 118436).[1]

The Antecedents
This petition stems from a case filed by Trinidad de Leon Vda. De Roxas to set
aside the decree of registration over two unregistered parcels of land in Tagaytay
City granted to Maguesun Management and Development Corporation (Maguesun)
before the Regional Trial Court on the ground of actual fraud. The trial court
dismissed the petition to set aside the decree of registration. On appeal, the Court of
Appeals denied the petition for review and affirmed the findings of the trial court. On
21 March 1997, this Court reversed the appellate courts decision in G.R. No. 118436.
The dispositive portion reads:
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court
of Appeals in C.A. G.R. CV No. 38328 (Trinidad de Leon Vda. de Roxas v.
Maguesun Management & Development Corporation, et al.) promulgated on
December 8, 1994 is hereby REVERSED AND SET ASIDE. Accordingly,
registration of title over the subject parcels of land, described in Plan AS-04-000108,
Lot Nos. 7231 and 7239, with an area of 3,461 and 10,674 square meters,
respectively, as shown and supported by the corresponding technical descriptions
now forming part of the Records of LRC No. TG-373, is awarded to herein petitioner
Trinidad de Leon vda. de Roxas and her heirs, herein substituted as petitioners. Upon
finality of this Decision, the Land Registration Authority is hereby directed to ISSUE

with reasonable dispatch the corresponding decree of registration and certificate of


title pursuant to Section 39 of Presidential Decree No. 1529.[2]
On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No.
118436. Meycauayan alleged that on 14 May 1992, it purchased three parcels of land
from Maguesun which form part of the property awarded to the heirs of Trinidad de
Leon Vda. De Roxas (Roxas heirs). Meycauayan contended that since it is a
purchaser in good faith and for value, the Court should afford it the opportunity to be
heard. Meycauayan contends that the adverse decision in G.R. No. 118436 cannot
impair its rights as a purchaser in good faith and for value.
On 25 June 1997, this Court denied the Petition for Intervention. This Court
also denied the Motion for Reconsideration filed by Maguesun. Thus, on 21 August
1997, the Decision dated 21 March 1997 in G.R. No. 118436 became final and
executory.
On 13 April 1998, the Land Registration Authority (LRA) submitted a Report
to the Regional Trial Court of Tagaytay City, Branch 18 (land registration court), in
LR Case No. TG-373, praying that the land registration court:
a) Order the LRA to cancel Decree No. N-197092 in the name of
Maguesun to enable it to issue another decree in favor of the heirs
of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas;
b) Order the Register of Deeds to cancel OCT No. 0-515 and all its
derivative titles; and
c) Order the issuance of the Decree with respect to the decision of the
Supreme Court dated 21 March 1997.
Meycauayan filed with the land registration court a Motion For Leave To
Intervene And For Period Of Time To File Opposition To The Report Dated March
25, 1998 Filed By The LRA And To File Complaint-in-Intervention.
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with this Court
raising the following issues:
a) Whether it is necessary for the trial court to first order the LRA to cancel Decree
No. N-197092 in the name of Maguesun Management and Development Corporation
to enable (the LRA) to issue another decree in favor of the Heirs of Manuel A. Roxas
and Trinidad de Leon Vda. de Roxas? Or is that order necessarily included in the
dispositive portion of the Supreme Court decision directing the LRA to issue with
reasonable dispatch the corresponding decree of registration and certificate of title in

94

favor of the Roxas heirs? Please note that this necessary implication is a consequence
of the Supreme Court finding that the decree in favor of Maguesun was wrongfully
issued because it was not entitled to the registration decree as it had no registrable
title, since Zenaida Melliza (from whom Maguesun supposedly bought the lots)
conveyed no title over the subject parcels of land to Maguesun Corporation as she
was not the owner thereof.
b) Whether an order from the trial court is necessary for the Register of Deeds
concerned to cancel OCT No. 0-515 and all its derivative titles? Or is that order
necessarily included in the dispositive portion of the Supreme Court decision
directing the LRA to issue the corresponding decree of registration and certificate of
title in favor of the Roxas heirs, considering that the original certificate of title issued
to Maguesun was basedon an illegal decree of registration as found by this
Honorable Court. Further, the unconditional order of the Supreme Court to LRA to
issue the corresponding certificate of title to the Roxas heirs necessarily implies that
the OCT issued to Maguesun and its derivative titles shall be canceled, for it cannot
[be] assumed that the Supreme Court intended that the same parcel of land shall be
covered by more than one certificate of title.
c) Whether an order from the trial court is necessary before the LRA can comply
with the Supreme Court decision directing the LRA to issue with reasonable dispatch
the corresponding decree of registration andcertificate of title in favor of the Roxas
heirs?
On 23 June 1998, the Roxas heirs filed a Supplement to Motion for
Clarification, the pertinent portions of which are:
1. In petitioners Motion for Clarification, one of the items sought to be clarified is
whether the derivative titles (i.e., the titles derived from Maguesun Management and
Development Corporations [Maguesun] Original Certificate of Title No. 0-515 and
issued to Meycauayan Central Realty Corp.) should be canceled, together with
Maguesuns certificates of title, so that new decree of registration and certificate of
title can be issued to petitioners, as ordered in the decision of this Honorable Court
dated 21 March 1997, which has become final and executory?
2. From the Petition for Intervention filed by Meycauayan Central Realty
Corporation (Meycauayan) with this Honorable Court on 22 May 1997, the
following statements, among others, are alleged:
a. That on May 14, 1992, the intervenor purchased for value several
parcels of real property from private respondent
Maguesun Management and Development Corp. covered

by TCT Nos. 24294, 24295 and 24296 containing an area


of 2,019 square meters each, more or less.
b. That prior to paying the agreed purchase price in full to
respondent Maguesun, an investigation with the Tagaytay
City Office of the Register of Deeds was made to
determine and ascertain the authenticity, status and
condition of the titles of Maguesun over the aforesaid
properties.
c. That investigation made by the intervenor with the Office of
Register of Deeds of Tagaytay City showed that in all the
certified true copies of the titles to the properties abovementioned which were registered in the name of
Maguesun, the last entry which appeared was the
following, to wit: x x x.
d. Appearing that the properties to be purchased by the herein
intervenor from respondent Maguesun have no existing
liens and/or encumbrances and considering that the
properties do not appear to be the subject of a pending
case which would affect the titles of those who may
subsequently purchase the same, the herein intervenor
proceeded to pay, in full, the total amount of ONE
MILLION FIVE HUNDRED THOUSAND PESOS
(P1,500,000.00) to Maguesun. Immediately thereafter,
Maguesun, through its duly authorized officer, executed
the corresponding Deeds of Absolute Sale.
e. That after the corresponding taxes and/or fees were paid by herein
intervenor, the aforementioned TCT Nos. T-24294, 24295
and 24296, were canceled and in lieu thereof, new titles in
the name of intervenor were issued by the Register of
Deeds of Tagaytay City.
f. That on March 25, 1997, an officer of the intervenor corporation
was informed of a newspaper report stating, in big bold
letters, the following sub-headline, to wit:
SC RULES ON ROXAS FAMILY
LAND ROW IN TAGAYTAY.

95

g. The President of herein intervenor right after secured from the


Tagaytay City Office of the Register of Deeds certified
true copies of torrens titles over its Tagaytay City
properties.

P.D. No. 1529, has earlier entered a copy thereof in his record book. OCT No. 0-515
having been nullified, all titles derived therefrom must also be considered void it
appearing that there had been no intervening rights of an innocent purchaser for
value involving the lots in dispute.

h. That only then, after it secured certified true copies of the titles
mentioned in the preceding paragraph from the Office of
the Register of Deeds of Tagaytay City, did intervenor
come to know of the existence of a case involving the
properties sold to it by respondent Maguesun on May 14,
1992.

ACCORDINGLY, the Court hereby resolves to GRANT petitioners Motion for


Clarification together with the Supplement thereto. For this reason, the dispositive
portion of our decision dated March 21, 1997 is clarified, thus:

3. Meycauayans Petition for Intervention was denied by this Honorable Court in its
Resolution dated 25 June 1997, a denial that has since become final and
executory. However, as stated in petitioners Motion for Clarification, Meycauayan
committed the proscribed act of forum-shopping by filing with the trial court a
motion for leave to intervene raising again the issue of its alleged ownership of
portions of the land.
4. In order to settle once and for all Meycauayans allegation that it was a buyer in
good faith, and to show that its derivative titles should be declared void and canceled
by this Honorable Court, petitioners will show herein that the sale to Meycauayan
was spurious or, at the very least, it was a buyer in bad faith.
In a Resolution dated 29 July 1998, this Court acted favorably on the Roxas
heirs Motion for Clarification and its Supplement. The pertinent portions of the
Resolution read:
Upon careful consideration of the points made by petitioners in their motions, this
Court finds the same meritorious and, hence, a clarification is in order. We, therefore,
declare that our directive on the LRA to issue with reasonable dispatch the
corresponding decree of registration and certificate of title also includes, as part
thereof, the cancellation, without need of an order of the land registration court, of
Decree No. N-197092, as well as OCT No. 0-515, and all its derivative titles. This is
a necessary consequence of the Courts earlier finding that the foregoing documents
were illegally issued in the name of respondent. But in light of Section 39 of
Presidential Decree No. 1529 (the Property Registration Decree), Decree No. N197092 which originated from the LRA must be cancelled by the LRA itself. On
account of this cancellation, it is now incumbent upon the LRA to issue in lieu of the
cancelled decree a new one in the name of petitioners as well as the
corresponding original certificate of title. Cancellation of OCT No. 0-515, on the
other hand, properly devolves upon the Register of Deeds who, under Section 40 of

First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative
titles, namely, TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689,
and T-25690, the latter three being already in the name of Meycauayan Realty and
Development Corporation (also designated as Meycauayan Central Realty, Inc.
and Meycauayan Realty Corporation).
Thereafter, the Land Registration Authority shall:
(a) CANCEL Decree No. N-197092 originally issued in the name of
Maguesun Management and Development Corporation
without need of an order from the land registration court;
and
(b) ISSUE with reasonable dispatch a new decree of registration and
a new original certificate of title (OCT) in favor of
petitioners pursuant to Section 39 of Presidential Decree
No. 1529. (Emphasis added)
On 11 December 1998, the land registration court issued an order denying the LRA
Report dated 25 March 1998 and the Motion for Leave to Intervene filed by
Meycauayan since the Supreme Court Resolution of 29 July 1998 had rendered them
moot.
The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627,
T-25628, T-25688, T-25689, T-25690 and T-27390.[3] TCT Nos. T-25688, T-25689,
T-25690 and T-27390 were derivative titles already in the name of Meycauayan.
On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of
Possession with the land registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, damages
and quieting of title with the trial court entitled Meycauayan Central Realty Corp. v.
Heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas, Maguesun

96

Management and Development Corp., Register of Deeds of Tagaytay City, City


Assessor of Tagaytay City and Land Registration Authority.[4] The Complaint is
almost an exact reproduction of the Petition for Intervention filed by Meycauayan
before this Court. The Complaint prayed for judgment:
1. Ordering the defendants Land Registration Authority and the Register of Deeds of
Tagaytay City to cancel the titles and decree of registration they issued in lieu of
TCT Nos. 25688, 25689, 25690 and 27390 registered in the name of plaintiff
Meycauayan Central Realty Corporation and reconvey said properties to the plaintiff
corporation by reinstating the said cancelled titles or if the same not be possible,
cause the issuance of new decrees and titles thereto;
2. Ordering the defendant City Assessor of Tagaytay City to reinstate the
Assessments for real estate taxes it previously cancelled covering the properties of
plaintiff;
3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff actual and/or compensatory damages in the total amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00);
4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00) as
and by way of nominal damages;
5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff exemplary damages in the amount of TWO HUNDRED THOUSAND
PESOS (P200,000.00);
6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff Attorneys fees in the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00); and
7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff the costs of suit.[5]
On 6 May 1999, Meycauayan filed a Special Appearance Questioning Court
Jurisdiction and Opposition to the Motion for Issuance of Writ of Possession Against
Meycauayan Central Realty Corporation with the land registration court.

WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued


against Maguesun Management and Development Corporation in these
cases. However, insofar as Meycauayan Central Realty is concerned, let a resolution
of the motion filed by the movants herein be deferred until the Supreme Court had
resolved with finality the petition for contempt of herein movant in G.R. No. 138660.
On 7 March 2000, the trial court dismissed for lack of merit Meycauayans
complaint for reconveyance, damages and quieting of title. The trial court held that
(1) the nullity of OCT No. 0-515, which is the source of Meycauayans titles, is
now res judicata; (2) the complaints prayer for the trial court to annul the decision of
the Supreme Court in G.R. No. 118436 is beyond the trial courts jurisdiction; and (3)
Meycauayan is guilty of forum shopping. [6] The trial court likewise denied
Meycauayans Motion for Reconsideration in an Order dated 20 June 2000. [7] On 24
August 2000, Meycauayan filed a petition for certiorari under Rule 65 of the Rules
of Court with the Court of Appeals assailing the trial courts dismissal of the
complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for indirect
contempt the officers of Meycauayan.

The Issues
The parties raised the following issues:
1. Whether this Courts Decision and Resolution in G.R. No. 118436 bind
Meycauayan;
2. Whether Meycauayans act of filing with the trial court a complaint for
reconveyance, damages and quieting of title involving parcels of
land, which were the subject of this Courts Decision and
Resolution in G.R. No. 118436, constitutes indirect contempt
under Section 3, Rule 71 of the Rules of Civil Procedure; and
3. Whether Meycauayan is guilty of forum shopping.

The Courts Ruling

On 2 September 1999, the land registration court issued an order, the


dispositive portion of which reads:

97

The petition is meritorious. We find Meycauayans Executive Vice-President


Juan M. Lamson, Jr. guilty of indirect contempt. We also find that Meycauayan
committed forum shopping, and thus Meycauayan and its Executive Vice President
Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan constitute
indirect contempt under Section 3, Rule 71 of the Rules of Civil Procedure:
(1)Meycauayans defiance of the final and executory Decision and Resolution of this
Court in G.R. No. 118436; (2) its act of filing pleadings before the land registration
court to prevent execution of the Decision and Resolution; (3) its act of filing a
Complaint raising the same issues in its Petition for Intervention which this Court
had already denied and urging the trial court to ignore and countermand the orders of
this Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No. 118436
does not bind Meycauayan because it was not a party in the case. According to
Meycauayan, the Decision in G.R. No. 118436 may be enforced against Maguesun
but not against Meycauayan which is a stranger to the case. Meycauayan insists that
as a purchaser in good faith and for value its rights cannot be prejudiced by the
alleged fraudulent acquisition by Maguesun of the subject properties. Meycauayan,
therefore, is not liable for contempt of court for filing an action for reconveyance,
quieting of title and damages.
The issue of whether the Decision in G.R. No. 118436 binds Meycauayan was
already addressed by this Court when it denied Meycauayans Petition for
Intervention. Furthermore, this Courts Resolution dated 29 July 1998 clarified the
Decision dated 21 March 1997 by ordering the Register of Deeds to CANCEL OCT
No. 0-515 and all its derivative titles, namely, TCT Nos. T-25625, T-25626, T25627, T-25628, T-25688, T-25689, and T-25690, the latter three already in the
name of Meycauayan Realty and Development Corporation (also designated as
Meycauayan Central Realty, Inc. and Meycauayan Realty Corporation). This
Court also found that there had been no intervening rights of an innocent purchaser
for value involving the lots in dispute.

Indirect Contempt
Meycauayans obstinate refusal to abide by the Courts Decision in G.R. No.
118436 has no basis in view of this Courts clear pronouncement to the contrary. The
fact that this Court specifically ordered the cancelation of Meycauayans titles to the
disputed parcels of land in the Resolution dated 29 July 1998 should have laid to rest
the issue of whether the Decision and Resolution in G.R. No. 118436 is binding on
Meycauayan. Clearly, Meycauayans defiance of this Courts Decision and Resolution

by filing an action for reconveyance, quieting of title and damages involving the
same parcels of land which this Court already decided with finality constitutes
indirect contempt under Section 3(d), Rule 71 of the Rules of Civil Procedure.
Section 3(d) of Rule 71 reads:
SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in
writing has been filed, and an opportunity given to the respondent to comment
thereon within such period as may be fixed by the court and to be heard by himself
or counsel, a person guilty of any of the following acts may be punished for indirect
contempt:
xxx
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice;
In Halili, et al. v. CIR, et al.,[8] this Court explained the concept of contempt of
court:
Contempt of court is a defiance of the authority, justice or dignity of the court; such
conduct as tends to bring the authority and administration of the law into disrespect
or to interfere with or prejudice parties litigant or their witnesses during litigation (12
Am. Jur. 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the Court by acting in opposition
to its authority, justice and dignity. It signifies not only a willful disregard or
disobedience of the courts orders, but such conduct as tends to bring the authority of
the court and the administration of law into disrepute or in some manner to impede
the due administration of justice (17 C.J.S. 4).
This Court has thus repeatedly declared that the power to punish for contempt is
inherent in all courts and is essential to the preservation of order in judicial
proceedings and to the enforcement of judgments, orders, and mandates of the court,
and consequently, to the due administration of justice (Slade Perkins vs. Director of
Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs.
Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).
Meycauayans continuing resistance to this Courts judgment is an affront to the
Court and to the sovereign dignity with which it is clothed.[9] Meycauayans persistent
attempts to raise issues long since laid to rest by a final and executory judgment of

98

no less than the highest tribunal of the land constitute contumacious defiance of the
authority of this Court and impede the speedy administration of justice. [10]
Well-settled is the rule that when a court of competent jurisdiction has tried and
decided a right or fact, so long as the decision remains unreversed, it is conclusive on
the parties and those in privity with them. [11] More so where the Supreme Court has
already decided the issue since the Court is the final arbiter of all justiciable
controversies properly brought before it.[12] As held in Buaya v. Stronghold
Insurance Co., Inc.:[13]
x x x An existing final judgment or decree rendered upon the merits, without fraud or
collusion, by a court of competent jurisdiction acting upon a matter within its
authority is conclusive of the rights of the parties and their privies. This ruling holds
in all other actions or suits, in the same or any other judicial tribunal of concurrent
jurisdiction, touching on the points or matters in issue in the first suit.
xxx
Courts will simply refuse to reopen what has been decided. They will not allow the
same parties or their privies to litigate anew a question, once it has been considered
and decided with finality. Litigations must end and terminate sometime and
somewhere. The effective and efficient administration of justice requires that once a
judgment has become final, the prevailing party should not be deprived of the fruits
of the verdict by subsequent suits on the same issues filed by the same parties.
This is in accordance with the doctrine of res judicata which has the following
elements: (1) the former judgment must be final; (2) the court which rendered it had
jurisdiction over the subject matter and the parties; (3) the judgment must be on the
merits; and (4) there must be between the first and the second actions, identity of
parties, subject matter and causes of action. [14] The application of the doctrine of res
judicata does not require absolute identity of parties but merely substantial identity
of parties.[15] There is substantial identity of parties when there is community of
interest or privity of interest between a party in the first and a party in the
second case even if the first case did not implead the latter.[16]
The Court ruled in G.R. No. 118436 that Meycauayans predecessor-in-interest,
Maguesun, committed actual fraud in obtaining the decree of registration of the
subject properties. The Decision in G.R. No. 118436 binds Meycauayan under the
principle of privity of interest since it was a successor-in-interest of Maguesun.
Meycauayan, however, insists that it was a purchaser in good faith because it had no
knowledge of any pending case involving the lots. Meycauayan claims that the trial
court had already canceled the notice of lis pendens on the titles when it purchased
the lots from Maguesun. In its Memorandum, Meycauayan stresses that to ensure the

authenticity of the titles and the annotations appearing on the titles, particularly the
cancelation of the notice of lis pendens, Meycauayan checked with the Register of
Deeds and the Regional Trial Court of Tagaytay City.[17] Since Meycauayan checked
with the Regional Trial Court of Tagaytay City, Meycauayan then had actual
knowledge, before it purchased the lots, of the pending case involving the lots
despite the cancelation of the notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas family has
been in possession of the property uninterruptedly through their caretaker, Jose
Ramirez, who resided on the property.[18] Where the land sold is in the possession of
a person other than the vendor, the purchaser must go beyond the certificates of title
and make inquiries concerning the rights of the actual possessor. [19] Meycauayan
therefore cannot invoke the right of a purchaser in good faith and could not have
acquired a better right than its predecessor-in-interest. This Court has already
rejected Meycauayans claim that it was a purchaser in good faith when it ruled in
G.R. No. 118436 that there had been no intervening rights of an innocent purchaser
for value involving the lots in dispute. As held in Heirs of Pael v. Court of Appeals:
[20]

In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R.
No. 106194, 276 SCRA 674 [1997]), petitioner maintained that as a
purchaser pendente lite of the land in litigation, it had a right to intervene under Rule
12, Section 2. We rejected this position and said that since petitioner is not a stranger
to the action between Quisumbing and the PNB, petitioner in fact having stepped
into the shoes of PNB in a manner of speaking, it follows that it cannot claim any
further right to intervene in the action. As in the instant Petition, it was argued that
the denial of the Motion to Intervene would be a denial likewise of due process. But
this, too, was struck down in Santiago Land where we held that petitioner is not
really denied protection. It is represented in the action by its predecessor in interest.
Indeed, since petitioner is a transferee pendente lite with notice of the pending
litigation between Reyes and private respondent Carreon, petitioner stands exactly in
the shoes of Reyes and is bound by any judgment or decree which may be rendered
for or against the latter.
Indeed, one who buys property with full knowledge of the flaws and defects of
the title of his vendor and of a pending litigation over the property gambles on the
result of the litigation and is bound by the outcome of his indifference. [21] A
purchaser cannot close his eyes to facts which should put a reasonable man on guard
and then claim that he acted in good faith believing that there was no defect in the
title of the vendor.[22]
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules of
Court provides:

99

SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of


indirect contempt committed against a Regional Trial Court or a court of equivalent
or higher rank, he may be punished by a fine not exceeding thirty thousand pesos or
imprisonment not exceeding six (6) months or both. x x x

did mention in its certification of non-forum shopping its attempt to intervene in


G.R. No. 118436, which this Court denied, [27] does not negate the existence of forum
shopping. This disclosure does not exculpate Meycauayan for deliberately seeking a
friendlier forum for its case and re-litigating an issue which this Court had already
decided with finality.[28]

In this case, Meycauayan Executive Vice President Juan M. Lamson, Jr. caused
the preparation and the filing of the Petition for Intervention in G.R. No. 118436 and
the Complaint for Reconveyance, Damages and Quieting of Title with the trial court.
[23]
Juan M. Lamson, Jr. signed the verification and certification of non-forum
shopping for the Petition for Intervention and the Complaint for Reconveyance,
Damages and Quieting of Title. Even though a judgment, decree, or order is
addressed to the corporation only, the officers, as well as the corporation itself, may
be punished for contempt for disobedience to its terms, at least if they knowingly
disobey the courts mandate, since a lawful judicial command to a corporation is in
effect a command to the officers.[24]Thus, for improper conduct tending to impede the
orderly administration of justice, Meycauayan Executive Vice President Juan M.
Lamson, Jr. should be fined ten thousand pesos (P10,000).[25]

The general rule is that a corporation and its officers and agents may be held
liable for contempt. A corporation and those who are officially responsible for the
conduct of its affairs may be punished for contempt in disobeying judgments,
decrees, or orders of a court made in a case within its jurisdiction.[29]

Direct Contempt
Meycauayans act of filing a Complaint for Reconveyance, Quieting of Title and
Damages raising the same issues in its Petition for Intervention, which this Court had
already denied, also constitutes forum shopping. Forum shopping is the act of a party
against whom an adverse judgment has been rendered in one forum, seeking another
and possibly favorable opinion in another forum other than by appeal or special civil
action of certiorari. There is also forum shopping when a party institutes two or more
actions based on the same cause on the expectation that one or the other court might
look with favor on the party.[26]

Under Section 1 of Rule 71 of the Rules of Court, direct contempt is punishable


by a fine not exceeding two thousand pesos (P2,000) or imprisonment not exceeding
ten (10) days, or both, if committed against a Regional Trial Court or a court of
equivalent or higher rank. Hence, Meycauayan [30] and its Executive Vice President
Juan M. Lamson, Jr. are each fined P2,000 for direct contempt of court for forum
shopping.
WHEREFORE, we find Meycauayan Central Realty Corporations Executive
Vice President Juan M. Lamson, Jr. GUILTY of INDIRECT CONTEMPT and FINE
him TEN THOUSAND PESOS (P10,000). Furthermore, we find Meycauayan
Central Realty Corporation and its Executive Vice President Juan M. Lamson, Jr.
GUILTY of DIRECT CONTEMPT for forum shopping and FINE them TWO
THOUSAND PESOS (P2,000) each. The Court warns them that a repetition of the
same or similar offense shall merit a more severe penalty.
SO ORDERED.

In this case, the Court had already rejected Meycauayans claim on the subject
lots when the Court denied Meycauayans Petition for Intervention in G.R. No.
118436. The Court ruled that there had been no intervening rights of an innocent
purchaser for value involving the lots in dispute. The Decision of this Court in G.R.
No. 118436 is already final and executory. The filing by Meycauayan of an action to
re-litigate the title to the same property, which this Court had already adjudicated
with finality, is an abuse of the courts processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that if the acts of the party or
his counsel clearly constitute willful and deliberate forum shopping, the same shall
be a ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions. The fact that Meycauayan

100

G.R. No. L-23712

April 29, 1968

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,


vs.
RAMONA RUIZ, DOMINGO PINTO, BONIFACIO PINTO, VICTORIA
PINTO, MARIA PINTO, ET AL., defendants-appellants.
Office of the Solicitor General for plaintiff-appellee.
Silvestre Br. Bello for defendants-appellants.
REYES, J.B.L., Actg. C.J.:
This is an appeal from the decision of the Court of First Instance of Isabela (in its
Civil Case No. Br. II-419), ordering the cancellation of Original Certificate of Title
No. I-1600, substituted by Transfer Certificate of Title No. T-7196, issued in the
names of therein defendants heirs of Cayetano Pinto, and declaring the reversion to
the State of the land covered thereof.
During the hearing of the case in the lower court, the parties submitted the following
stipulation of facts:
1. That the plaintiff (Republic of the Philippines) instituted the present
action filed with the Court on October 12, 1958 for the reversion of the
entire land containing an area of 23 hectares, 97 ares and 57 centares,
covered by Homestead Patent No. 22711, granted on June 13, 1933
corresponding to Original Certificate of Title No. I-1600, issued on July 7,
1933 as per Annex "1" of the Complaint in the name of Cayetano Pinto,
who died in 1945;
2. That on May 28, 1937 the registered owner, Cayetano Pinto, married to
Ramona Ruiz, sold a portion of 3 hectares of land covered by Original
Certificate of Title No. I-1600 in favor of Jacobo Pinto, married to Herminia
Tinonas, for the sum of P500.00 as per Annex "3" of the Complaint;
3. That the Deed of Sale executed by the deceased Cayetano Pinto in favor
of Jacobo Pinto who died sometime in 1950, was never registered in the
Office of the Register of Deeds of Isabela, nor annotated at the back of the
Original Certificate of Title No. I-1600, as could be verified in Annex "1" of
the Complaint;

4. That Ramona Ruiz and her children executed an extrajudicial partition of


the entire land on October 12, 1951 which was registered on February 2,
1956, reason for the issuance of Transfer Certificate of Title No. T-7196, as
per Annex "2" of the Complaint;
5. That on June 29, 1956, the widow Herminia Tinonas and heirs of the late
Jacobo Pinto filed an action against the widow Ramona Ruiz and heirs of
the late Cayetano Pinto for the conveyance of the portion of 3 hectares, sold
and conveyed by the late Cayetano Pinto in favor of the late Jacobo Pinto
on May 28, 1937, which case was docketed in the Court of First Instance of
Isabela (Second Branch) as Civil Case No. Br. II-90;
6. That on August 5, 1958 the Court of First Instance of Isabela, Second
Branch, rendered a decision Annex "4" of the Complaint, declaring that the
Deed of Sale executed by the deceased Cayetano Pinto in favor of the late
Jacobo Pinto (Annex 3) null and void ab initio, for being in violation of
Section 116 of the Public Land Law and dismissed the complaint with costs
against the plaintiffs;
7. That from the decision of the Court of First Instance of Isabela, Second
Branch, mentioned in the next preceding paragraph, the plaintiffs appealed
to the Supreme Court on September 4, 1958, which appeal was dismissed
on November 6, 1959, thereby terminating Civil Case No. Br. II-90 of the
Second Branch of the Court of First Instance of Isabela, whereby the
appealed decision became final and executory;
8. That before the appeal of the plaintiffs in Civil Case No. Br. II-90 has
been perfected and the record elevated to the Supreme Court, the plaintiffs
in the above-entitled case filed the instant action against the widow and
heirs of the late Cayetano Pinto, namely: Ramona Ruiz, Domingo Pinto,
Bonifacio Pinto, Victoria Pinto, Maria Pinto, Rufina Pinto, Jesusa Pinto, and
Teodoro Pinto on October 12, 1958 for cancellation of the Original
Certificate of Title No. I-1600 and Transfer Certificate of Title No. T-7196
and the reversion of the land covered by the said titles to the State; and
9. That on April 23, 1956, the registered owners in Transfer Certificate of
Title No. T-7196 mortgaged the entire parcel of land covered therein to the
Philippine National Bank, Santiago Branch, to secure a loan of P4,000.00
and the mortgaged instrument was registered in the Office of the Register of
Deeds of Isabela and annotated at the back of the Transfer Certificate of
Title No. T-7196, on April 24, 1956, as per Annex 2 of the Complaint.

101

Based upon the foregoing stipulation, the court ruled that the execution by the
homesteader Cayetano Pinto of the document, Exhibit "C", within the prohibited 5year period from the issuance of the patent, being in violation of Section 118 of
Commonwealth Act 141, produced the effect of annulling and cancelling the said
patent and thus caused the reversion to the State of the property thereby covered.

Certificate of Title I-1600 in favor of Jacobo Pinto, married to Herminia Tinonas, for
the sum of P500.00" (p. 121, Record on Appeal). By defendants' own admissions in
the lower court, therefore, the character of Exhibit C as a deed of sale executed
almost four years after the issuance of the patent to the homestead Cayetano Pinto
has become a settled matter, which they cannot now dispute on appeal.

Defendants interposed the present appeal, raising as main issue the alleged lack of
cause of action of the complaint. It is now claimed that (1) the document, Exhibit C,
executed by Cayetano Pinto was not a consummated contract of sale, but a mere
unilateral promise to sell without consideration and, consequently, was
unenforceable and without effect; (2) assuming the contract to be one of sale within
the prohibited 5-year period and, therefore, null and void, then under Article 1409 of
the Civil Code, said contract is inexistent and without effect and Cayetano Pinto can
not be considered to have committed any violation of the Public Land law at all; (3)
to order the reversion of the land to the government would render nugatory the
policy of the State to promote the spread of small land-ownership and preserve land
grants in the hands of the underprivileged; (4) the violation of Commonwealth Act
141 by Cayetano Pinto, if there was any, can not affect the rights of his heirs,
particularly of his widow, who allegedly owned 1/2 of the land; (5) the Original
Certificate of Title No. I-1600 in the name of Cayetano Pinto having been cancelled
and substituted by Transfer Certificate of Title No. T-7196, issued in the names of his
widow and heirs on February 2, 1956, to order their cancellation and the reversion of
the property to the government would be contrary to the principle underlying the
Torrens System and (6) the prohibition under Section 118 of Commonwealth Act 141
contemplates of the alienation or encumbrance of the entire land grant and not
merely of a portion thereof like the one in the present case.

We also find as erroneous appellants' argument that because the deed of sale was null
and void, then it may be treated as not having ever existed, with the result that the
grantee Cayetano Pinto can not be considered to have violated the Public Land Law.
Carried to its logical conclusion, this argument would mean that no violation of law
could be punished.

There is no merit to this appeal.


Appellants can not be heard to question the nature of the document, Exhibit "C",
executed by their predecessor-in-interest. It appears on record that in their motion to
dismiss the complaint filed in the court below, appellants, as therein defendants,
averred among others: "While it is true as alleged in the complaint that on May 28,
1937, the late Cayetano Pinto executed an absolute deed of sale over a portion of
three hectares, of the parcel of land covered by Original Certificate of Title No. I1600, in favor of one Jacobo Pinto . . ." (p. 51. Record on Appeal). And, when the
aforesaid motion was denied, defendant-appellants admitted in their answer the
allegation of the complaint that, ". . . on May 28, 1937, four years after the late
Cayetano Pinto had been granted the said homestead patent, he executed an absolute
deed of sale over a portion of 3 hectares of the parcel covered by Original Certificate
of Title No. I-1600 in favor of one Jacobo Pinto" (pp. 3, 93, Record on Appeal). The
stipulation of facts, submitted by the parties and approved by the court, likewise
stated that Cayetano Pinto "sold a portion of 3 hectares of land covered by Original

This case is actually no necessity for logical reasoning; by express provision of


Section 118 of Commonwealth Act 141, any transfer or alienation of a homestead
grant within five years from the issuance of the patent is forbidden, making said
alienation null and void, 1 and constituting a cause for reversion of the homestead to
the State. 2 In other words, it was the transgression of the law that nullifies and
renders the deed of conveyance null and void and without effect; not vice-versa.
Inexistence in law merely signifies that the act can not be taken into account as
source of rights or obligations for parties as well as strangers; as if it had never
existed. Certainly, the law can not destroy or wipe out physical existence, and it has
never attempted to do so.
It may likewise be stated that while the prohibition against the alienation of the land
grant is designed to preserve it within the family of the homesteader and to promote
small land ownership in this country it is equally true that this policy of the State can
not be invoked to condone a violation of the Public Land Act and withhold
enforcement of the provision directing the reversion of the property to the grantor in
case of such violation. 3 For, the prohibitory provision against any alienation or
encumbrance of the land grant is not only mandatory, 4 but is considered a condition
attached to the approval of every application. 5
Neither is there merit in the proposition that Cayetano Pinto's heirs should not be
made to suffer on account of a violation of law committed by their said predecessor.
In a previous case wherein the same contention was made, this Court ruled:
One other point remains to be explained and that is whether the parties
plaintiffs in this case, the widow and the children of the deceased
homesteader Jose Lagon, can be considered as bound by the sale made by
the husband and whether they can claim to be third parties as to whom
registration should be considered as the operative act of conveyance. As to
the widow, the sale was executed by Jose Lagon in his capacity as

102

administrator of the conjugal partnership. Jose Lagon was the agent of the
conjugal partnership, of which the widow is a partner, and under general
principles the act of the authorized agent is the act of the partners
themselves (2 American Jurisprudence, 169, 276). It is not, therefore,
necessary that the widow had actual notice of the sale, and she can not be
considered a third person or party in relation thereto. The sale made by the
husband is binding on her (Cruz vs. Buenaventura, 84 Phil. 12; 46 Off.
Gaz., 6032.)
As respect the children of Jose Lagon, the other plaintiffs-appellees, they
may not be considered third parties because there is a privity of interest
between them and their father. They only succeed to whatever rights their
father had and what is valid and binding against him is also valid and
binding against it them. (Galasinao, et al. vs. Austria, 97 Phil. 82, 86-87).
Every penalty or sanction, in fact, carries with it some hardship for the family of the
offender; that is part of the penalty's built-in deterrence. Only that the occassion to
reflect on it is before, and not after, violating the law.
Similarly, the court below committed no error in ordering the reversion to plaintiff of
the land grant involved herein, notwithstanding the fact that the original certificate
title based on the patent had been cancelled and another certificate issued in the
names of the grantee's heirs. As held by this Court in the case of Campanero, et al.
vs. Coloma, L-11908, January 30, 1960, the principle of conclusiveness of the title of
a registered owner, "although sound as applied to land registered under the Land
Registration Act through judicial proceedings, cannot defeat the express policy of the
State prohibiting the alienation and encumbrance of lands of the public domain
acquired under the provisions of the Public Land Act within five years from and after
the date of the issuance of patent." Thus, where a grantee is found not entitled to hold
and possess in fee simple the land, by reason of his having violated Section 118 of
the Public Land Law, the court may properly order its reconveyance to the grantor,
although the property has already been brought under the operation of the Torrens
System.6 And, this right of the government to bring an appropriate action for
reconveyance (or reversion) is not barred by the lapse of time; the Statute of
Limitations does not run against the State.7

issuance of the patent to the grantee, such alienation is a sufficient cause for
reversion to the State of the whole grant. In granting a homestead to an
applicant, the law imposes as a condition that the land should not be
encumbered, sold or alienated within five years from the issuance of the
patent. The sale or alienation of part of the homestead violates that
condition. (Republic vs. Garcia, L-11597, May 27, 1959).
We found no abuse of discretion in the lower court's denial of defendants' motion for
postponement of the hearing of January 14, 1964, it appearing that the parties by
then had already submitted a stipulation of facts (upon which the decision now under
consideration was based), and that the many postponements of the hearing which
delayed early termination of the case were previously secured at the instance of
counsel for said defendants.
WHEREFORE, the decision appealed from being in accordance with law, the same
is hereby affirmed; defendants-appellants are ordered to reconvey to plaintiffappellee the land covered by Transfer Certificate of Title No. T-7196 of the Registry
of Deeds of Isabela. Costs against appellants.
Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando,
JJ.,
concur.
< Concepcion, C.J., is on leave.

As regards the claim of appellants that reversion of the homestead may be ordered
only if the alienation covers the whole area and not merely a portion thereof, we
declared in another case:
Even if only 19 out of the 23.21 hectares of the homestead land had been
sold or alienated within the prohibitive period of five years from date of

103

[G.R. No. 105630. February 23, 2000]


REPUBLIC OF THE PHILIPPINES, petitioner, vs. ENRIQUE P. DE
GUZMAN, Spouses RIO RIVERA and CAROLINA R. DE GUZMAN, THE
CITY REGISTER OF DEEDS OF GENERAL SANTOS CITY and HOECHST
PHILS., INC., respondents.
RIO RIVERA and CAROLINA DE GUZMAN, respondents.
DECISION
PARDO, J.:
This is a petition for review assailing the decision of the Court of Appeals,
[1]
reversing and setting aside that of the Regional Trial Court, Branch 22, General
Santos City,[2] and dismissing the complaint for reversion of lot 5249, Ts-217,
situated at Dadiangas. General Santos City and cancellation of titles, for lack of
merit.
The facts are as follows:
After public bidding held on March 18, 1950, the Board of Liquidators, [3] awarded
Lot 5249 Ts-217, a 450 square meter land situated in Dadiangas, General Santos
City, to Eusebio Diones of Takurong, Bubon, Cotabato. On March 11, 1955, Eusebio
Diono transferred his rights over the lot to Enrique P. de Guzman (de Guzman, for
brevity) for P700.00, evidenced by an Agreement of Transfer of Right. [4] On
November 12, 1956, the Board of Liquidators cancelled the award previously given
to Eusebio Diones.[5]
From the time he purchased the lot, de Guzman did not occupy it. In 1963, Lucena
Ong Ante, another claimant of Lot 5249 Ts-217, authorized Carmen Ty to occupy the
land. Ong Ante paid the corresponding real estate taxes from 1963 until 1980.
Carmen Ty remained the occupant of the land until this time.
On August 12, 1967, de Guzman filed with the Board of Liquidators, Miscellaneous
Sales Application No. 00222-E,[6] and submitted supporting documents.
On August 29, 1967, the Director of Lands ordered the award and issuance of a
patent in favor of de Guzman. [7] On September 5, 1967, the Department of
Agriculture and Natural Resources approved and issued Miscellaneous Sales Patent

No. 814 to de Guzman.[8] On September 26, 1967, the Register of Deeds, General
Santos, issued Original Certificate of Title No. P-29712 in the name of de Guzman.[9]
Sometime in 1973, de Guzman sold the lot to his married daughter and her husband,
Carolina R. de Guzman and Rio Rivera for P5,000.00. The covering deed of sale
could not be located[10] and Rio Rivera admitted that his father-in-law Enrique P. de
Guzman was not in occupation of the lot in question. [11] On September 4, 1973, the
Register of Deeds of General Santos City issued Transfer Certificate of Title No.T7203 to spouses Rio Rivera and Carolina R. de Guzman. [12] On March 21, 1974,
Lucena Ong-Antes adverse claim was annotated on the title of the lot.[13]
Meanwhile, on February 13, 1974, spouses Rivera and Hoeschst, Phils., Inc., as
mortgagor and mortgagee, respectively, executed a deed of real estate mortgage
involving the lot. For failure to settle their obligation, on October 29, 1977,
mortgagee Hoechst Phils., Inc., foreclosed on the mortgage and acquired the lot at
the foreclosure sale. A certificate of sale was issued in favor of Hoechst Phils., Inc.
However, for unknown reasons, the real estate mortgage and certificate of sale were
not registered with the Register of Deeds. Thus, the transfer certificate of title
remained in the name of spouses Rivera.
On January 14, 1981, petitioner Republic of the Philippines filed with the Court of
First Instance, 16th Judicial District, General Santos City re-amended
complaint[14] for reversion of Lot 5249 Ts-217 and cancellation of titles against
Enrique P. de Guzman, spouses Rio Rivera and Carolina R. de Guzman, the City
Registrar of Deeds, General Santos City and Hoechst Phils., Inc.
In its re-amended complaint,[15] petitioner Republic of the Philippines averred that
Enrique P. de Guzman obtained Original Certificate of Title No. P-29712 through
fraudulent means. Petitioner contended since Lot 5249 Ts-217 was awarded to
Eusebio Diones, hence, Eusebio Diono had no right to execute a deed of transfer in
favor of Enrique de Guzman. Petitioner maintained that the documents presented by
de Guzman to support his miscellaneous sales application were either issued by
fictitious persons who were not employees of the Board of Liquidators, or contained
inconsistencies that cast doubt on their authenticity.
De Guzman was neither in actual possession of the land, nor made improvements
thereto, as he alleged in his sales application. Actual possession of the land by the
applicant and making improvements thereto were among the legal requirements to be
complied with by an applicant. Thus, Miscellaneous Sales Patent No. 814 and
Original Certificate of Title No. P-29712 issued to de Guzman pursuant thereto were
null and void. Also, Transfer Certificate of Title No. T-2703 in the name of spouses
Rivera was null and void for they were not innocent purchasers for value.

104

Admittedly, they knew that their vendor de Guzman was not in possession of the lot.
Petitioner asserted that Lot 5249 Ts-217 must be reverted back to the mass of public
domain.
On July 9, 1987, the trial court rendered decision in favor of petitioner. [16] It held that
the supporting documents submitted by de Guzman were falsified, hence, OCT No.
P-29712 issued in his name was obtained through fraudulent means. Furthermore,
the fact that de Guzman was not in possession of the property disqualified him from
being awarded the sales patent. The trial court ruled that Rio Rivera and Carolina R.
de Guzman were not innocent purchasers for value since their close relationship with
Enrique P. de Guzman put them on notice of knowledge of a defect in the acquisition
of title to the land. The trial court ordered the reversion of the land to the mass of
public domain.
The dispositive portion decreed as follows:
"WHEREFORE, IN VIEW OF ALL THE FOREGOING, plaintiff
having preponderantly proven the allegations of the complaint,
judgment is hereby rendered:
"1. Declaring the Miscellaneous Sales Patent No. 814 and OCT
No. P-29712 in the name of Enrique de Guzman covering Lot
5249, Ts-217, situated at Dadiangas, General Santos City, and TCT
No. T-7203 in the name of Rio Rivera and Carolina de Guzman
and the Certificate of Sale executed by the City Sheriff, General
Santos City, dated October 29, 1977, in favor (sic) Hoechst
Philippines, Inc., null and void;
"2. Ordering Rio Rivera and Carolina de Guzman and/or Hoechst
Philippines, Inc., to Surrender to the Register of Deeds, General
Santos City, the Owners Duplicate of said TCT No. T-7203 or any
subsequent transfer certificate of title issued in the name of
Hoechst Philippines, Inc. if any, and once surrendered, ordering the
Register of Deeds, General Santos City, to cancel the owners
duplicate original of said Title No. P-29712 in the name of Enrique
de Guzman and owners duplicate of TCT No. T-2703 in the name
of Rio Rivera and Carolina de Guzman on file with this (Register
of Deeds) Office;
"3. Ordering the Register of Deeds, General Santos City, to cancel
OCT No. P-29712 and TCT No. T-7203 in the name of Enrique de
Guzman and Rio Rivera, respectively, and all other subsequent

transfer certificate of titles derived therefrom should said


defendants Enrique P. de Guzman, Rio Rivera and Carolina de
Guzman or Hoechst Philippines, Inc fail to surrender their
respective certificate of titles over Lot No. 5249, Ts-217;
"4. Ordering the reversion of Lot No. 5249, Ts-217 situated at
Dadiangas, General Santos City, to the mass of public domain,
subject to the administration and disposition of the Director of
Lands or the Board of Liquidators as the case maybe, giving
preference to qualified and actual occupant; and
"5. Dismissing the counterclaim with costs against the defendants.
"SO ORDERED.
"General Santos City, July 9, 1987.
"(s/t) ABEDNEGO O. ADRE
"Judge"[17]
On November 10, 1988, spouses Rivera appealed the decision to the Court of
Appeals.[18]
On May 25, 1992, the Court of Appeals rendered decision reversing the decision of
the trial court.[19] The Court of Appeals ruled that when Enrique P. de Guzman
obtained Original Certificate of Title No. P-29712, the land ceased to be part of the
public domain. The land became registered under the Torrens system, converted into
a private registered land, and governed by the Property Registration Decree (P.D.
1529). Being a private land, the Director of Lands had neither control nor jurisdiction
over the land. Furthermore, the title became indefeasible after the expiration of one
(1) year from issuance thereof.
The Court of Appeals found that no fraud attended the issuance of the patent and
Original Certificate of Title to de Guzman. It stated that the discrepancy in the name
Diono and Diones appearing in the records was a mere typographical error.
The appellate court gave little credit to the investigation report relied upon by the
trial court. It held that no other evidence, whether testimonial or documentary, was
presented to prove that the documents presented by de Guzman were issued by
fictitious persons or entirely fabricated.

105

However, the Court of Appeals sustained the finding of the trial court that Enrique P.
de Guzman and spouses Rivera were not in possession of the property. The Court of
Appeals concluded that de Guzman misrepresented facts in his application since he
was not the possessor at the time he applied for the sales patent. Nonetheless, the
Court of Appeals ruled that title founded on fraud or misrepresentation could not be
assailed since more than one year had lapsed from the issuance of the public land
patent.

bar to an investigation by the Director of Lands as to how such title had been
acquired, if the purpose of such investigation is to determine whether or not fraud
had been committed in securing such title, in order that the appropriate action for
reversion may be filed by the Government.[22]

At any rate, the Court of Appeals held that the land has passed to innocent purchasers
for value, namely, spouses Rivera. The Court of Appeals argued that mere
relationship to de Guzman, without any other proof of bad faith on the part of
spouses Rivera, did not dispute the presumption that they were innocent purchasers
for value.

We rule in the negative. There is no question that de Guzman was not in possession
of the property. Hence, de Guzman misrepresented facts in his application for sales
patent. Even the Court of Appeals sustained the factual finding of the trial court on
this point. However, the Court of Appeals held that an action for cancellation of
patent or title could not be maintained after the lapse of one year from the date of
issuance thereof. As heretofore stated, the ruling is erroneous.

On August 19, 1992, the Republic of the Philippines filed with this Court, a petition
for review on certiorari of the Court of Appeals decision.[20]
On February 17, 1993, we gave due course to the petition and required the parties to
file their respective memoranda.[21] The parties have complied.
Petitioner Republic of the Philippines contends that Enrique de Guzman obtained the
Miscellaneous Sales Patent No. 814 and OCT No. P-29712 through fraudulent
means. Petitioner avers that the supporting documents submitted by de Guzman
together with his sales application, were either fabricated or issued by fictitious
persons. Thus, both the sales application and original certificate of title issued in
favor of Enrique P. de Guzman were null and void. Petitioner avers that respondent
spouses Rivera being related by consanguinity and affinity to de Guzman were not
innocent purchasers for value.
We grant the petition.
Initially, we resolve the question of whether or not the Director of Lands loses
authority over the land the moment an original certificate of title is issued covering
the same. The Court of Appeals ruled that the issuance of the original certificate of
title converted the lot into a private land, thereby placing it beyond the authority of
the Director of Lands.
We disagree. The authority of the Director of Lands to investigate conflicts over
public lands is derived from Section 91 of the Public Land Act. In fact, it is not
merely his right but his specific duty to conduct investigations of alleged fraud in
securing patents and the corresponding titles thereto. While title issued on the basis
of a patent is as indefeasible as one judicially secured, such indefeasibility is not a

The next issue to determine is whether or not Enrique P. de Guzman validly obtained
the sales patent and the original certificate of title.

The next issue is whether or not the validity of the patent and the original certificate
of title can still be assailed after the lapse of one year from the issuance of the
disputed title.
We rule that the State can assail a patent fraudulently issued by the Director of
Lands. "Where public land is acquired by an applicant through fraud and
misrepresentation, the State may institute reversion proceedings even after the lapse
of one year."[23] "The indefeasibility of a title does not attach to titles secured by
fraud and misrepresentation."[24]
The last issue to resolve is whether the spouses Rivera are innocent purchasers for
value.
We agree with the trial court that spouses Rivera are not innocent purchasers for
value. Spouses Rivera are related by consanguinity and affinity to Enrique P. de
Guzman knew that de Guzman was not in possession of the land. In fact, Rio Rivera
testified that his father-in-law was not in possession of the lot in question. Carmen Ty
was in possession of the land since 1963 and paid the real estate taxes thereon. We
do not agree with the Court of Appeals that the presumption of a buyer in good faith
must prevail. "The burden of proving the status of a purchaser in good faith and for
value lies upon him who asserts that status. In discharging the burden, it is not
enough to invoke the ordinary presumption of good faith." [25] "The rule is settled that
a buyer of real property which is in the possession of persons other than the seller
must be wary and should investigate the rights of those in possession. Otherwise,
without such inquiry, the buyer can hardly be regarded as buyer in good faith."[26]

106

"A purchaser or mortgagee cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor or mortgagor. His mere
refusal to believe that such defect exists, or his willful closing of his eyes to the
possibility of the existence of a defect in the vendors or mortgagor's title, will not
make him an innocent purchaser or mortgagee for value, if it afterwards develops
that the title was in fact defective, and it appears that he had such notice of the
defects as would have led to its discovery had he acted with the measure of
precaution which may be required of a prudent man in a like situation."[27]
WHEREFORE, we GRANT the petition and REVERSE the decision of the Court
of Appeals. We declare Miscellaneous Sales Patent No. 814 and Original Certificate
of Title No. P-29712 in the name of Enrique P. de Guzman, and Transfer Certificate
of Title No. T-7203 in the name of spouses Rio Rivera and Carolina R. de Guzman,
and all subsequent transfer certificates of title derived therefrom, as null and void.
We order the reversion to the mass of public domain of Lot 5249, Ts-217, located in
Dadiangas, General Santos City.
No costs.
SO ORDERED.

107

G.R. No. 118114 December 7, 1995


TEODORO ACAP, petitioner,
vs.
COURT OF APPEALS and EDY DE LOS REYES, respondents.

PADILLA, J.:
This is a petition for review on certiorari of the decision 1 of the Court of Appeals,
2nd Division, in CA-G.R. No. 36177, which affirmed the decision 2 of the Regional
Trial Court of Himamaylan, Negros Occidental holding that private respondent Edy
de los Reyes had acquired ownership of Lot No. 1130 of the Cadastral Survey of
Hinigaran, Negros Occidental based on a document entitled "Declaration of Heirship
and Waiver of Rights", and ordering the dispossession of petitioner as leasehold
tenant of the land for failure to pay rentals.
The facts of the case are as follows:
The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental
was evidenced by OCT No. R-12179. The lot has an area of 13,720 sq. meters. The
title was issued and is registered in the name of spouses Santiago Vasquez and
Lorenza Oruma. After both spouses died, their only son Felixberto inherited the lot.
In 1975, Felixberto executed a duly notarized document entitled "Declaration of
Heirship and Deed of Absolute Sale" in favor of Cosme Pido.
The evidence before the court a quo established that since 1960, petitioner Teodoro
Acap had been the tenant of a portion of the said land, covering an area of nine
thousand five hundred (9,500) meters. When ownership was transferred in 1975 by
Felixberto to Cosme Pido, Acap continued to be the registered tenant thereof and
religiously paid his leasehold rentals to Pido and thereafter, upon Pido's death, to his
widow Laurenciana.
The controversy began when Pido died intestate and on 27 November 1981, his
surviving heirs executed a notarized document denominated as "Declaration of
Heirship and Waiver of Rights of Lot No. 1130 Hinigaran Cadastre," wherein they
declared; to quote its pertinent portions, that:

. . . Cosme Pido died in the Municipality of Hinigaran, Negros


Occidental, he died intestate and without any known debts and
obligations which the said parcel of land is (sic) held liable.
That Cosme Pido was survived by his/her legitimate heirs, namely:
LAURENCIANA PIDO, wife, ELY, ERVIN, ELMER, and
ELECHOR all surnamed PIDO; children;
That invoking the provision of Section 1, Rule 74 of the Rules of
Court, the above-mentioned heirs do hereby declare unto [sic]
ourselves the only heirs of the late Cosme Pido and that we hereby
adjudicate unto ourselves the above-mentioned parcel of land in
equal shares.
Now, therefore, We LAURENCIANA 3, ELY, ELMER, ERVIN and
ELECHOR all surnamed PIDO, do hereby waive, quitclaim all our
rights, interests and participation over the said parcel of land in
favor of EDY DE LOS REYES, of legal age, (f)ilipino, married to
VIRGINIA DE LOS REYES, and resident of Hinigaran, Negros
Occidental, Philippines. . . . 4 (Emphasis supplied)
The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes
did not sign said document.
It will be noted that at the time of Cosme Pido's death, title to the property continued
to be registered in the name of the Vasquez spouses. Upon obtaining the Declaration
of Heirship with Waiver of Rights in his favor, private respondent Edy de los Reyes
filed the same with the Registry of Deeds as part of a notice of an adverse
claimagainst the original certificate of title.
Thereafter, private respondent sought for petitioner (Acap) to personally inform him
that he (Edy) had become the new owner of the land and that the lease rentals
thereon should be paid to him. Private respondent further alleged that he and
petitioner entered into an oral lease agreement wherein petitioner agreed to pay ten
(10) cavans of palay per annum as lease rental. In 1982, petitioner allegedly
complied with said obligation. In 1983, however, petitioner refused to pay any
further lease rentals on the land, prompting private respondent to seek the assistance
of the then Ministry of Agrarian Reform (MAR) in Hinigaran, Negros Occidental.
The MAR invited petitioner to a conference scheduled on 13 October 1983.
Petitioner did not attend the conference but sent his wife instead to the conference.
During the meeting, an officer of the Ministry informed Acap's wife about private

108

respondent's ownership of the said land but she stated that she and her husband
(Teodoro) did not recognize private respondent's claim of ownership over the land.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a
complaint for recovery of possession and damages against petitioner, alleging in the
main that as his leasehold tenant, petitioner refused and failed to pay the agreed
annual rental of ten (10) cavans of palay despite repeated demands.
During the trial before the court a quo, petitioner reiterated his refusal to recognize
private respondent's ownership over the subject land. He averred that he continues to
recognize Cosme Pido as the owner of the said land, and having been a registered
tenant therein since 1960, he never reneged on his rental obligations. When Pido
died, he continued to pay rentals to Pido's widow. When the latter left for abroad, she
instructed him to stay in the landholding and to pay the accumulated rentals upon her
demand or return from abroad.
Petitioner further claimed before the trial court that he had no knowledge about any
transfer or sale of the lot to private respondent in 1981 and even the following year
after Laurenciana's departure for abroad. He denied having entered into a verbal
lease tenancy contract with private respondent and that assuming that the said lot was
indeed sold to private respondent without his knowledge, R.A. 3844, as amended,
grants him the right to redeem the same at a reasonable price. Petitioner also
bewailed private respondent's ejectment action as a violation of his right to security
of tenure under P.D. 27.
On 20 August 1991, the lower court rendered a decision in favor of private
respondent, the dispositive part of which reads:
WHEREFORE, premises considered, the Court renders judgment
in favor of the plaintiff, Edy de los Reyes, and against the
defendant, Teodoro Acap, ordering the following, to wit:
1. Declaring forfeiture of defendant's preferred right to issuance of
a Certificate of Land Transfer under Presidential Decree No. 27
and his farmholdings;
2. Ordering the defendant Teodoro Acap to deliver possession of
said farm to plaintiff, and;

3. Ordering the defendant to pay P5,000.00 as attorney's fees, the


sum of P1,000.00 as expenses of litigation and the amount of
P10,000.00 as actual damages. 5
In arriving at the above-mentioned judgment, the trial court stated that the evidence
had established that the subject land was "sold" by the heirs of Cosme Pido to private
respondent. This is clear from the following disquisitions contained in the trial
court's six (6) page decision:
There is no doubt that defendant is a registered tenant of Cosme
Pido. However, when the latter died their tenancy relations
changed since ownership of said land was passed on to his heirs
who, by executing a Deed of Sale, which defendant admitted in his
affidavit, likewise passed on their ownership of Lot 1130 to herein
plaintiff (private respondent). As owner hereof, plaintiff has the
right to demand payment of rental and the tenant is obligated to
pay rentals due from the time demand is made. . . . 6
xxx xxx xxx
Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff
does not of itself extinguish the relationship. There was only a
change of the personality of the lessor in the person of herein
plaintiff Edy de los Reyes who being the purchaser or transferee,
assumes the rights and obligations of the former landowner to the
tenant Teodoro Acap, herein defendant. 7
Aggrieved, petitioner appealed to the Court of Appeals, imputing error to the lower
court when it ruled that private respondent acquired ownership of Lot No. 1130 and
that he, as tenant, should pay rentals to private respondent and that failing to pay the
same from 1983 to 1987, his right to a certificate of land transfer under P.D. 27 was
deemed forfeited.
The Court of Appeals brushed aside petitioner's argument that the Declaration of
Heirship and Waiver of Rights (Exhibit "D"), the document relied upon by private
respondent to prove his ownership to the lot, was excluded by the lower court in its
order dated 27 August 1990. The order indeed noted that the document was not
identified by Cosme Pido's heirs and was not registered with the Registry of Deeds
of Negros Occidental. According to respondent court, however, since the Declaration
of Heirship and Waiver of Rights appears to have been duly notarized, no further
proof of its due execution was necessary. Like the trial court, respondent court was

109

also convinced that the said document stands as prima facie proof of appellee's
(private respondent's) ownership of the land in dispute.

land to private respondent because no consideration is stated in the contract


(assuming it is a contract or deed of sale).

With respect to its non-registration, respondent court noted that petitioner had actual
knowledge of the subjectsale of the land in dispute to private respondent because as
early as 1983, he (petitioner) already knew of private respondent's claim over the
said land but which he thereafter denied, and that in 1982, he (petitioner) actually
paid rent to private respondent. Otherwise stated, respondent court considered this
fact of rental payment in 1982 as estoppel on petitioner's part to thereafter refute
private respondent's claim of ownership over the said land. Under these
circumstances, respondent court ruled that indeed there was deliberate refusal by
petitioner to pay rent for a continued period of five years that merited forfeiture of
his otherwise preferred right to the issuance of a certificate of land transfer.

Private respondent defends the decision of respondent Court of Appeals as in accord


with the evidence and the law. He posits that while it may indeed be true that the trial
court excluded his Exhibit "D" which is the Declaration of Heirship and Waiver of
Rights as part of his evidence, the trial court declared him nonetheless owner of the
subject lot based on other evidence adduced during the trial, namely, the notice of
adverse claim (Exhibit "E") duly registered by him with the Registry of Deeds,
which contains the questioned Declaration of Heirship and Waiver of Rights as an
integral part thereof.

In the present petition, petitioner impugns the decision of the Court of Appeals as not
in accord with the law and evidence when it rules that private respondent acquired
ownership of Lot No. 1130 through the aforementioned Declaration of Heirship and
Waiver of Rights.

In the first place, an asserted right or claim to ownership or a real right over a thing
arising from a juridical act, however justified, is not per se sufficient to give rise to
ownership over the res. That right or title must be completed by fulfilling certain
conditions imposed by law. Hence, ownership and real rights are acquired only
pursuant to a legal mode or process. While title is the juridical justification, mode is
the actual process of acquisition or transfer of ownership over a thing in question. 8

Hence, the issues to be resolved presently are the following:


1. WHETHER OR NOT THE SUBJECT DECLARATION OF
HEIRSHIP AND WAIVER OF RIGHTS IS A RECOGNIZED
MODE OF ACQUIRING OWNERSHIP BY PRIVATE
RESPONDENT OVER THE LOT IN QUESTION.
2. WHETHER OR NOT THE SAID DOCUMENT CAN BE
CONSIDERED A DEED OF SALE IN FAVOR OF PRIVATE
RESPONDENT OF THE LOT IN QUESTION.
Petitioner argues that the Regional Trial Court, in its order dated 7 August 1990,
explicitly excluded the document marked as Exhibit "D" (Declaration of Heirship,
etc.) as private respondent's evidence because it was not registered with the Registry
of Deeds and was not identified by anyone of the heirs of Cosme Pido. The Court of
Appeals, however, held the same to be admissible, it being a notarized document,
hence, a prima facie proof of private respondents' ownership of the lot to which it
refers.
Petitioner points out that the Declaration of Heirship and Waiver of Rights is not one
of the recognized modes of acquiring ownership under Article 712 of the Civil Code.
Neither can the same be considered a deed of sale so as to transfer ownership of the

We find the petition impressed with merit.

Under Article 712 of the Civil Code, the modes of acquiring ownership are generally
classified into two (2) classes, namely, the original mode (i.e., through occupation,
acquisitive prescription, law or intellectual creation) and thederivative mode (i.e.,
through succession mortis causa or tradition as a result of certain contracts, such as
sale, barter, donation, assignment or mutuum).
In the case at bench, the trial court was obviously confused as to the nature and effect
of the Declaration of Heirship and Waiver of Rights, equating the same with a
contract (deed) of sale. They are not the same.
In a Contract of Sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to pay a price
certain in money or its equivalent. 9
Upon the other hand, a declaration of heirship and waiver of rights operates as a
public instrument when filed with the Registry of Deeds whereby the intestate heirs
adjudicate and divide the estate left by the decedent among themselves as they see
fit. It is in effect an extrajudicial settlement between the heirs under Rule 74 of the
Rules of Court. 10

110

Hence, there is a marked difference between a sale of hereditary rights and


a waiver of hereditary rights. The first presumes the existence of a contract or deed
of sale between the parties. 11 The second is, technically speaking, a mode of
extinction of ownership where there is an abdication or intentional relinquishment of
a known right with knowledge of its existence and intention to relinquish it, in favor
of other persons who are co-heirs in the succession. 12 Private respondent, being then
a stranger to the succession of Cosme Pido, cannot conclusively claim ownership
over the subject lot on the sole basis of the waiver document which neither recites
the elements of either a sale, 13 or a donation, 14 or any other derivative mode of
acquiring ownership.
Quite surprisingly, both the trial court and public respondent Court of Appeals
concluded that a "sale" transpired between Cosme Pido's heirs and private
respondent and that petitioner acquired actual knowledge of said sale when he was
summoned by the Ministry of Agrarian Reform to discuss private respondent's claim
over the lot in question. This conclusion has no basis both in fact and in law.
On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights"
was excluded by the trial court in its order dated 27 August 1990 because the
document was neither registered with the Registry of Deeds nor identified by the
heirs of Cosme Pido. There is no showing that private respondent had the same
document attached to or made part of the record. What the trial court admitted was
Annex "E", a notice of adverse claim filed with the Registry of Deeds which
contained the Declaration of Heirship with Waiver of rights and was annotated at the
back of the Original Certificate of Title to the land in question.

allegation of private respondent's ownership without the corresponding


proof thereof.
Petitioner had been a registered tenant in the subject land since 1960 and religiously
paid lease rentals thereon. In his mind, he continued to be the registered tenant of
Cosme Pido and his family (after Pido's death), even if in 1982, private respondent
allegedly informed petitioner that he had become the new owner of the land.
Under the circumstances, petitioner may have, in good faith, assumed such statement
of private respondent to be true and may have in fact delivered 10 cavans of palay as
annual rental for 1982 to private respondent. But in 1983, it is clear that petitioner
had misgivings over private respondent's claim of ownership over the said land
because in the October 1983 MAR conference, his wife Laurenciana categorically
denied all of private respondent's allegations. In fact, petitioner even secured a
certificate from the MAR dated 9 May 1988 to the effect that he continued to be the
registered tenant of Cosme Pido and not of private respondent. The reason is that
private respondent never registered the Declaration of Heirship with Waiver of
Rights with the Registry of Deeds or with the MAR. Instead, he (private respondent)
sought to do indirectly what could not be done directly,i.e., file a notice of adverse
claim on the said lot to establish ownership thereover.
It stands to reason, therefore, to hold that there was no unjustified or deliberate
refusal by petitioner to pay the lease rentals or amortizations to the
landowner/agricultural lessor which, in this case, private respondent failed to
establish in his favor by clear and convincing evidence. 16

A notice of adverse claim, by its nature, does not however prove private respondent's
ownership over the tenanted lot. "A notice of adverse claim is nothing but a notice of
a claim adverse to the registered owner, the validity of which is yet to be established
in court at some future date, and is no better than a notice of lis pendenswhich is a
notice of a case already pending in court." 15

Consequently, the sanction of forfeiture of his preferred right to be issued a


Certificate of Land Transfer under P.D. 27 and to the possession of his farmholdings
should not be applied against petitioners, since private respondent has not established
a cause of action for recovery of possession against petitioner.

It is to be noted that while the existence of said adverse claim was duly proven, there
is no evidence whatsoever that a deed of sale was executed between Cosme Pido's
heirs and private respondent transferring the rights of Pido's heirs to the land in favor
of private respondent. Private respondent's right or interest therefore in the tenanted
lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT
to the land and title the same in private respondent's name.

WHEREFORE, premises considered, the Court hereby GRANTS the petition and the
decision of the Court of Appeals dated 1 May 1994 which affirmed the decision of
the RTC of Himamaylan, Negros Occidental dated 20 August 1991 is hereby SET
ASIDE. The private respondent's complaint for recovery of possession and damages
against petitioner Acap is hereby DISMISSED for failure to properly state a cause of
action, without prejudice to private respondent taking the proper legal steps to
establish the legal mode by which he claims to have acquired ownership of the land
in question.

Consequently, while the transaction between Pido's heirs and private


respondent may be binding on both parties, the right of petitioner as a
registered tenant to the land cannot be perfunctorily forfeited on a mere

SO ORDERED.

111

[G.R. No. 107653. February 5, 1996]

FELIPA GARBIN, petitioner, vs. THE HONORABLE COURT OF APPEALS


(FORMER TENTH DIVISION) and SPOUSES ANTONIO JULIAN
and CASIMIRA GARBIN, respondents.
DECISION
ROMERO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals
reversing the Regional Trial Court of Tarlac, Tarlac which had earlier dismissed the
complaint for annulment of sale filed by private respondents.
The facts are the following:
Pablo Garbin and Leoncia Garbin are the parents of petitioner Felipa Garbin
(Felipa) and private respondent Casimira Garbin (Casimira) married to private
respondent Antonio Julian. Pablo Garbin is the original owner of Lot 12712,
Camiling, Tarlac Cadastre with an area of 25,681 square meters, title thereto being
evidenced by Original Certificate of Title No. 33251.
On October 31, 1955, Pablo Garbin and his wife Leoncia executed a Deed of
Absolute Sale of Real Estate purportedly conveying to private respondent Casimira
Garbin the undivided northern half of the said lot. Casimira then registered an
adverse claim over the property.
On May 24, 1970, Pablo Garbin sold the entire Lot 12712, including the
northern portion, to petitioner Felipa by virtue of a Deed of Sale. Consequently,
Transfer Certificate of Title No. 88932 was issued in favor of Felipa. On July 29,
1974, Felipa and Pablo Garbin filed an ejectment case against private respondent
spouses. In that case, the Municipal Trial Court of Camiling, Tarlac decided against
private respondents. They appealed the case to the Regional Trial Court of Tarlac
which affirmed the questioned decision. Private respondents then filed a petition for
review with the Court of Appeals, but said petition was dismissed. They questioned
the dismissal in this Court docketed as G.R. No. 59817 but the petition was denied
due course.
On March 1, 1982, before judgment could become final in the ejectment case,
private respondents filed a complaint for annulment of sale, partition and damages

with the Regional Trial Court of Tarlac. The issue presented therein was whether or
not private respondents, as the alleged first vendees in a double sale, (who annotated
the same as an adverse claim on the covering title) have a superior right over
petitioner, the subsequent vendee (who received a transfer certificate of title for the
entire lot despite prior inscription of the adverse claim).
The RTC ruled in favor of petitioner and dismissed the complaint. Aggrieved,
private respondents went to the Court of Appeals which reversed and set aside the
decision of the trial court.
The appellate court said:
x x x it is Our view, and so We hold, that, at the very least, the inscription of the
adverse claim of plaintiffs-appellants on vendor Pablo Garbins OCT No. 33251 did
constitute a sufficient notice to the whole world, defendant-appellee Felipa Garbin
included, - that the northern half of subject Lot 12712 was deeded out by the
registered owner to plaintiffs-appellants. Therefore, defendant-appellee is a buyer in
bad faith, with full awareness of the prior sale of the northern half of Lot 12712 to
her sister Casimira Garbin, and consequently, the registration of the sale in favor of
defendant-appellee did not cleanse her bad faith and the legal consequences thereof,
and did not vest in her (appellee) the ownership over the northern half of Lot 12712,
as against the first buyer thereof, plaintiff-appellant Casimira Garbin.
It is well-settled that in a double sale of real property, ownership thereof shall belong
to the person acquiring it who in good faith first recorded it in the Registry of
Property (2nd paragraph, Article 1544, New Civil Code of the Philippines). Under
this applicable provision of law, mere registration of the sale of real or immovable
property is not enough. The good faith of the buyer registering the sale must concur.
In the case of defendant-appellee she cannot be considered in good faith, within legal
contemplation, and her profession of innocence or lack of knowledge of the prior
sale is incredible and unworthy of belief. To be sure, the annotation of plaintiffsappellants adverse claim on the title of vendor Pablo Garbin made defendantappellee fully aware of such earlier sale.
As regards the defense of prescription or laches invoked by defendant-appellee to
defeat the claim of plaintiffs-appellants over the portion of land in question:
We find the same equally undeserving of serious consideration. Considering that
before instituting this action on March 2, 1982, plaintiffs-appellants were preoccupied with the ejectment proceedings commenced against them by defendantappellee on July 29, 1970; it cannot be said, then, that plaintiffs-appellants slumbered
on their rights and had failed to assert their claim seasonably. As a matter of fact,
even during the pendency of the ejectment case they did find time to initiate this case

112

under consideration. Plaintiffs-appellants having been busy defending themselves in


said ejectment case against them; their inability to file the present action sooner is
understandable. It should be borne in mind that the running of the period of
prescription is capable of interruption. And, to repeat; during the pendency of the
ejectment case aforementioned; We believe that the running of the period of
prescription of plaintiffs-appellants cause of action had been interrupted.
As regards the equitable principle of laches, the attendant facts and circumstances
come to the fore. Whether or not laches set in depends on the surrounding facts and
circumstances. Here, We believe that plaintiffs-appellants have not faltered or failed
for an unreasonable length of time to assert their claim of ownership.
With respect to the southern half of Lot 12712; plaintiffs-appellants stance is also
meritorious. When the wife of Pablo Garbin died, her estate was transmitted by
operation of the law on intestate succession to plaintiff-appellant Casimira Garbin,
defendant-appellee Felipa Garbin, and surviving spouse Pablo Garbin. So, when
Pablo Garbin executed the deed of sale in favor of defendant-appellee, he could only
convey to the latter his undivided share therein, which was 4/6 of the southern
portion of Lot 12712 because as hereinabove pointed out, the northern half of the
said lot was effectively conveyed to plaintiffs-appellants, so that he could only
dispose of 4/6 of the southern portion. Plaintiff-appellant Casimira Garbin inherited
1/6, and the remaining 1/6 of the southern portion went to defendant-appellee as her
inheritance from their mother. Therefore, plaintiffs-appellants own 7/12 of Lot 12712
while defendant-appellee owns 5/12; the northern half being equivalent to 6/12, and
out of the other 6/12, Pablo Garbin conveyed 4/12 to appellee Felipa Garbin, who
inherited 1/12 in her own right. Plaintiff-appellant Casimira Garbin also inherited
1/12 which portion added to what appellants bought from Pablo Garbin, made
appellants area 7/12 of Lot 12712.
WHEREFORE, the decision appealed from is hereby SET ASIDE; the sale by Pablo
Garbin to defendant-appellee Felipa Garbin of the entire Lot 12712, Camiling, Tarlac
Cadastre (Exh. B) is hereby declared null and void and without force and effect, and
the resulting TCT No. T-88932 of the latter (Exh. C) is ordered canceled; plaintiffsappellants are adjudged the owners pro-indiviso of seven-twelfth (7/12), including
the northern half, of the said lot, with defendant-appellee as the owner of the
remaining five-twelfth (5/12) southern portion thereof.
To avoid multiplicity of suits; the plaintiffs-appellants and defendant-appellee are
hereby given thirty (30) days from finality of this disposition, to submit to the trial
court of origin a scheme of partition for subject lot on the basis of their undivided coownership of seven-twelfth (7/12) and five-twelfth (5/12), respectively; otherwise,
pursuant to Rule 69, Revised Rules of Court, the lower court shall by order appoint

not more than three (3) competent and disinterested commissioners to effect the
partition in accordance herewith. Costs against defendant-appellee.
SO ORDERED.
Petitioner, before this Court, now questions the appellate courts decision stating
that:
1. No evidence has been presented by private respondents to prove the validity of the
Deed of Absolute sale of Real Estate executed in their favor by Pablo Garbin.
2. The annotation on the title of the adverse claim is not sufficient to prove validity
of the said claim.
3. Pablo Garbin himself repudiated the alleged sale to private respondent spouses in
testimony before the trial court in the ejectment case, denying knowledge of the sale
of subject property to them.
4. Pablo Garbin solely owned the subject lot, as shown by the Original Certificate of
Title, and thus the property could not be considered conjugal.
5. Private respondents cause of action had already prescribed.
We find the petition meritorious.
The central issue to be resolved here is: does the registration of the said adverse
claim by private respondents prevail over the title of petitioner which was registered
subsequent to the adverse claim?
Considering the circumstances peculiar to the present case, we must rule in the
negative.
Sec. 110 of Act No. 496 (otherwise known as the Land Registration Act) states:
whoever claims any right or interest in registered land adverse to the registered
owner, arising subsequent to the date of the original registration, may, if no other
provision is made in the Land Registration Act for registering the same, make a
statement in writing setting forth fully his alleged right or interest, and how or under
whom acquired, and a reference to the volume and page of the certificate of title of
the registered owner, and a description of the land in which the right or interest is
claimed. The statement shall be signed and sworn to, and shall state the adverse
claimants residence, and designate a place at which all notices may be served upon

113

him. This statement shall be entitled to registration as an adverse claim, and the
court, upon a petition of any party in interest shall grant a speedy hearing upon the
question of the validity of such adverse claim and shall enter such decree therein as
justice and equity may require. If the claim is adjudged to be invalid, the registration
shall be canceled. If in any case the court after notice and hearing finds that a claim
thus registered was frivolous or vexatious, it may tax the adverse claimant double or
treble costs in its discretion. (Italics supplied)
The purpose of the annotation of an adverse claim is to protect the interest of a
person over a piece of real property where the registration of such interest or right is
not otherwise provided for by the Land Registration Act, and serve as a notice and
warning to third parties dealing with said property that someone is claiming an
interest on the same or a better right than the registered owner.[1]
It is undisputed that the adverse claim of private respondents was registered
pursuant to Sec. 110 of Act No. 496, the same having been accomplished by the
filing of a sworn statement with the Register of Deeds of the province where the
property was located. However, what was registered was merely the adverse claim
and not the Deed of Sale, which supposedly conveyed the northern half portion of
the subject property. Therefore, there is still need to resolve the validity of the
adverse claim in separate proceedings, as there is an absence of registration of the
actual conveyance of the portion of land herein claimed by private respondents.
From the provisions of the law, it is clear that mere registration of an adverse
claim does not make such claim valid, nor is it permanent in character. More
importantly, such registration does not confer instant title of ownership since judicial
determination on the issue of the ownership is still necessary.[2]
Regarding the alleged Deed of Sale by Pablo Garbin in favor of private
respondents, the trial court correctly observed:
On the assumption that the deed in favor of the plaintiffs was presented for
registration as claimed, it should, however, be underscored that the entry in the day
book is but a preliminary step of registration, the actual annotation of the
memorandum or the issuance of a new certificate of title being the final step to
accomplish registration.
In Pilapil v. CA,[3] we said:
To affect the land sold, the presentation of the Deed of Sale and its entry in the day
book must be done with the surrender of the owners duplicate of the certificate of
title.

Considering further that Pablo Garbin himself denied the sale of the subject
property, it is evident that the sale never transpired.
In view of the above, the entry in the day book automatically loses force and
effect. Thus, it is the Deed of Sale that petitioner registered in her favor and the
Transfer Certificate of Title subsequently obtained over the property, which has a
superior right thereon.
As regards the issue of the ownership by Pablo Garbin of the property, the
Original Certificate of Title clearly states that he is the sole owner thereof. There is
no basis, therefore, for the ruling of the appellate court that said property is conjugal
in character and also for its computation of the shares that Pablo Garbin could
dispose of when he executed the Deed of Sale on May 24, 1970 to Felipa.
Lastly, on the issue of prescription, we agree with the trial court which found
that the action for annulment of sale had already prescribed.
x x x the title of the defendant must be upheld for failure or the neglect of the
plaintiffs for an unreasonable and unexplained length of time of more that
fifteen (15) years since they registered their adverse claim, or for a period of more
than three (3) decades since the execution of the deed of sale in their favor upon
which their adverse claim is based, to do that which, by exercising diligence, could
or should have been done earlier. For it is this negligence or omission to assert a right
within reasonable time that is construed that plaintiffs had abandoned their right to
claim ownership under the deed of sale, or declined to assert it. Thus, when a person
slept in his rights for 28 years from the time of the transaction, before filing the
action amounts to laches which cannot be excused even by ignorance resulting from
unexcusable negligence (Vda. de Lima vs. Tiu, 52 SCRA516 [1970]).
Private respondents, having waited for 36 long years before flung an action to
annul the sale to Felipa in the trial court we hold that this constitutes laches.
The unexplained interval of 29 years that the plaintiffs allowed to elapse before
making any claim or instituting action constitutes laches that places them in estoppel
to question the validity of the probate courts order and of the sale executed in
pursuant thereof.[4]
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE
and that of the Regional Trial Court REINSTATED. Private respondents complaint
for annulment of sale is hereby DISMISSED.
SO ORDERED.
Regalado (Chairman), Puno and Mendoza, JJ, concur.

114

G.R. No. L-33360 April 25, 1977


MAXIMINO CARANTES (Substituted by Engracia Mabanta
Carantes), petitioner,
vs.
COURT OF APPEALS, BILAD CARANTES, LAURO CARANTES,
EDUARDO CARANTES and MICHAEL TUMPAO, respondents,
Sinforoso Fingonil and Sinai C. Hamada for petitioner.
Ruben C. Ayson for private respondents.

Apparently because negotiations were, by that time, under way for the purchase by
the Government of Lots Nos. 44-B and 44-C for the purpose of widening the Loakan
Airport, the only property listed by Maximino in the project of partition was the
remaining portion of Lot No. 44.
On October 23, 1939 a deed denominated "Assignment of Right to Inheritance" was
executed by four of Mateo Carantes children, namely, Bilad, Sianang, Lauro and
Crispino, and the heirs of Apung Carantes (also a son of Mateo who died in 1923),
namely, Pitag, Bill, Alson, Eduardo and Juan, assigning to Maximino Carantes their
rights to inheritance in Lot No. 44. The stated monetary consideration for the
assignment was P1.00. However, the document contains a recital to the effect that the
said lots, "by agreement of all the direct heirs and heirs by representation of the
deceased Mateo Carantes as expressed and conveyed verbally. by him during his
lifetime, rightly and exclusively belong to the particular heir, Maximino Carantes,
now and in the past in the exclusive, continuous, peaceful and notorious possession
of the same for more than ten years."

CASTRO, C.J:
This is an appeal by certiorari from the decision of the Court of Appeals in CA-G.R.
36078-R promulgated on December 23, 1970 reversing the judgment of the Court of
First Instance of Baguio City, Branch II, in Civil Case 804, and from the appellate
court's resolution dated March 7, 1971 denying herein petitioner's motion for
reconsideration.
Mateo Carantes was the original owner of Lot No. 44 situated at Loakan, Baguio
City, as evidenced by Original Certificate of Title No. 3 issued in his name on
September 22, 1910 by virtue of Free Patent No. 5 granted to him on the same date.
In 1913 Mateo died. He was survived by his widow Ogasia and six children, namely,
Bilad, Lauro, Crispino, Maximino, Apung and Sianang, all surnamed Carantes.

On the same date Maximino Carantes sold to the Government Lots Nos. 44-B and
44-C and divided the proceeds of the sale among himself and the other heirs of
Mateo.
On February 6, 1940, upon joint petition of the heirs of Mateo Carantes, the Court of
First Instance of Baguio City issued an Order in another proceeding
Administrative Case No. 368 cancelling O.C.T. No. 3. Pursuant thereto the said
title was cancelled, and in its place Transfer Certificate of Title No. 2533 was issued
in the joint names of the five children of Mateo Carantes and the children of Apung
Carantes (representing their deceased father) as co-owners pro indiviso, or one-sixth
share for each child.

In 1930 construction of the Loakan Airport was commenced by the Government.


Because a portion of Lot No. 44 was needed for the landing field, the Government
instituted proceedings (Civil Case 338) for its expropriation. For the purpose, Lot
No. 44 was subdivided into Lots Nos. 44-A, 44-B, 44-C, 44-D and 44-E. The portion
expropriated by the Government was Lot No. 44-A.

On March 16, 1940 Maximino Carantes registered the deed of "Assignment of Right
to Inheritance." Accordingly, T.C.T. No. 2533 in the names of the heirs was
cancelled, and in lieu thereof Transfer Certificate of Title No. 2540 was issued on the
same date in the name of Maximino Carantes. Also on the same date, Maximino,
acting as exclusive owner of the land covered by T.C.T. No. 2540, executed a formal
deed of sale in favor of the Government over Lots Nos. 44-B and 44-C.

In 1933 Special Proceedings Nos. 409 to 413 were filed with the court for the
settlement of the estate of the late Mateo Carantes. One of his sons, herein petitioner
Maximino Carantes, was appointed and qualified as judicial administrator of the
estate. In his capacity as administrator, Maximino filed on June 20, 1939 a project of
partition wherein he listed as the heirs of Mateo Carantes who were entitled to inherit
the estate, himself and his brothers and sisters, or the latter's surviving children

On February 21, 1947, as a result of the approval of the Subdivision Survey Plan
psd-16786, and pursuant to the deed of sale executed in 1940 by Maximino Carantes
in favor of the Government, T.C.T. No. 2540 in Maximino's name was cancelled, and
in lieu thereof Transfer Certificate of Title No. T98, covering Lots Nos. 44-A, 44-B
arid 44-C, was issued in the name of the Government, while Transfer Certificate of
Title No. T-99, covering the remaining Lots Nos. 44-D (100, 345 square meters) and

115

44-E (10,070 square meters) was issued in the name of Maximino Carantes, who has
up to the present remained the registered owner of said lots.
On September 4, 1958 the present complaint was filed by three children of the late
Mateo Carantes, namely, Bilad, Lauro and Crispino, and by some of the surviving
heirs of Apung and of Sianang ('also children of Mateo Carantes). Maximino
Carantes was named principal defendant, and some of the heirs of Apung and
Sianang were impleaded as parties-defendants in view of their alleged reluctance to
join as parties-plaintiffs.
In their complaint the plaintiffs alleged inter alia that they and/or their predecessorsin-interest executed the deed of "Assignment of Right to Inheritance" on October 23,
1939, only because they were made to believe by the defendant Maximino Carantes
that the said instrument embodied the understanding among the parties that it merely
authorized the defendant Maximino to convey portions of Lot No. 44 to the
Government in their behalf to minimize expenses and facilitate the transaction; and
that it was only on February 18, 1958, when the plaintiffs secured a copy of the deed,
that they came to know that the same purported to assign in favor of Maximino their
rights to inheritance from Mateo Carantes. The plaintiffs prayed that the deed of
"Assignment of Right to Inheritance" be declared null and void; that Lots Nos. 44-D
and 44-E covered by T.C.T. No. T99 be ordered partitioned into six (6) equal shares
and the defendant Maximino Carantes be accordingly ordered to execute the
necessary deeds of conveyance in favor of the other distributees and that the said
defendant be ordered to pay the plaintiffs the sum of P1,000 as attorney's fees and
the sum of P200 as costs of suit.
On September 10, 1958 the defendants filed a motion to dismiss on the grounds (1)
that the plaintiffs' cause of action is barred by the statute of limitations because the
deed of assignment was recorded in the Registry of Property at the latest on February
21, 1947, hence, plaintiffs' cause of action accrued from the said date, and since
pursuant to article 1144 of the new Civil Code an action based on a written contract
must be brought within ten years from the time the right of action accrues, plaintiffs'
right to file the complaint had already prescribed on September 4, 1958; and (2) that
the complaint states no cause of action because ownership over the property became
vested in Maximino Carantes by acquisitive prescription ten years from its
registration in his name on February, 21, 1947.
In an Order dated September 30, 1958, the trial court denied the motion to dismiss on
the grounds that there are allegations of co-ownership and trust in the complaint, and,
therefore, prescription did not lie, and that the complaint alleges that the plaintiffs
discovered the alleged fraud only in February, 1958.

In their answer filed on October 7, 1958, the defendants traversed the material
averments of the complaint and alleged inter alia that the property of the deceased
Mateo Carantes and his wife had been divided and distributed among their six
children; that the deed of "Assignment of Right to Inheritance" was an
acknowledgment of the fact of designation of the property therein described as
specifically pertaining or belonging by right of inheritance to the defendant
Maximino Carantes: that there was never any agreement between the assignors and
the assignee authorizing the latter to merely represent his co-heirs in negotiations
with the Government; and that the assignors knew fully well that the deed of
assignment contained what, on its face, it represented, By way of special defenses,
the defendants alleged that any supposed agreement between the plaintiffs and/or
their predecessors-in-interest and the defendant Maximino Carantes, other than the
deed of assignment, is barred by the statute of frauds and is null and void because not
in writing, much less, in a public instrument; that the only agreement between the
parties is what appears in the deed of assignment; that the plaintiffs' right of action
has already prescribed; that the defendant Maximino Carantes acquired absolute
ownership over the property in question by acquisitive prescription and registration;
and that any obligation on the part of the defendants in relation to the property had
been discharged by novation, condonation and compensation. The defendants set up
the counterclaim that in the event the rights of the heirs are disturbed, the produce
from the lands inherited by the plaintiffs from Mateo Carantes as well as the real
estate taxes on the land paid by the defendant Maximino Carantes should be collated;
and that the filing of the complaint being malicious, the defendants should be
awarded the sum of P4,500 by way of nominal, compensatory, moral and corrective
damages, including attorney's fees and expenses of litigation. The defendants prayed
for the dismissal of the complaint and payment of damages to them.
An answer to the counterclaim was filed by the plaintiffs on November 7, 1958
denying the material allegations of the counterclaim.
After trial, the court rendered its decision on January 28, 1965. It was the trial court's
opinion that since an action based on fraud prescribes in four years from the
discovery of the fraud, and in this case the fraud allegedly perpetrated by the
defendant Maximino Carantes must be deemed to have been discovered on March
16, 1940 when the deed of assignment was registered, the plaintiffs' right of action
had already prescribed when they filed the action in 1958; and even assuming that
the land remained the common property of the plaintiffs and the defendant Maximino
Carantes notwithstanding the execution of the deed of assignment, the co-ownership
was completely repudiated by the said defendant by performance of several acts, the
first of which was his execution of a deed of sale in favor of the Government on
October 23, 1939, hence, ownership had vested in the defendant Maximino Carantes
by acquisitive prescription. The court accordingly dismissed the complaint. It
likewise dismissed the counterclaim.

116

The plaintiffs moved for reconsideration. Their motion having been denied in an
Order dated March 8, 1965, they appealed to the Court of Appeals.
As adverted to above, the Court of Appeals reversed the judgment of the trial court,
hence the present recourse.
-IIn her brief filed with this Court, the petitioner argues that the private respondents'
action is not actually one for annulment of the deed of "Assignment of Right to
Inheritance" but for the reformation thereof, hence, the said action has prescribed
long before the filing of the complaint.
The petitioner's theory that the private respondents' action is for reformation of an
instrument is a new one, adopted by the petitioner for the first time on appeal to this
Court. Her husband did not raise it as a defense in his answer filed with the trial
court, where, consequently, trial proceeded on the theory that the action sought the
declaration of nullity of the deed of assignment. When the case reached the
respondent court the petitioner likewise did not raise this issue, although in truth,
even had she done so, it would have been a belated and futile exercise. She cannot be
allowed to change her theory of the case at this stage of the proceedings.
The settled rule is that defenses not pleaded in the answer may not be raised for the
first time on appeal. 1 A party cannot, on appeal, change fundamentally the nature of
the issue in the case. 2 When a party deliberately adopts a certain theory and the case
is decided upon that theory in the court below, he will not be permitted to change the
same on appeal, because to permit him to do so would be unfair to the adverse
party. 3
Consequently, we have to disregard the petitioner's theory that the action is for
reformation of an instrument, and must proceed on the basis of the issues properly
raised and ventilated before the trial court.
- II We do not agree with the respondent court's legal conclusion that the deed of
"Assignment of Right to Inheritance" is void ab initio and inexistent on the grounds
that real consent was wanting and the consideration of P1.00 is so shocking to the
conscience that there was in fact no consideration, hence, the action for the
declaration of the contract's inexistence does not prescribe pursuant to article 1410 of
the new Civil Code.

Article 1409 (2) of the new Civil Code relied upon by the respondent court provides
that contracts "which are absolutely simulated or fictitious" are inexistent and void
from the beginning. The basic characteristic of simulation is the fact that the apparent
contract is not really desired or intended to produce legal effects or in any way alter
the juridical situation of the parties. 4
The respondents' action may not be considered as one to declare the inexistence of a
contract for lack of consideration. It is total absence of cause or consideration that
renders a contract absolutely void and inexistent. 5 In the case at bar consideration
was not absent. The sum of P1.00 appears in the document as one of the
considerations for the assignment of inheritance. In addition and this of great
legal import the document recites that the decedent Mateo Carantes had, during
his lifetime, expressed to the signatories to the contract that the property subjectmatter thereof rightly and exclusively belonged to the petitioner Maximino Carantes.
This acknowledgment by the signatories definitely constitutes valuable consideration
for the contract.
- III The present action is one to annul the contract entitled "Assignment of Right to
Inheritance" on the ground of fraud.
Article 1390 of the new Civil code provides that a contract "where the consent is
vitiated by mistake, violence, intimidation, undue influence or fraud," is voidable or
annullable. Even article 1359, which deals on reformation of instruments, provides in
its paragraph 2 that "If mistake, fraud, inequitable conduct, or accident has prevented
a meeting of the minds of the parties, the proper remedy is not reformation of the
instrument but annulment of the contract," When the consent to a contract was
fraudulently obtained, the contract is avoidable. 6 Fraud or deceit does not render a
contract void ab initio and can only be a ground for rendering the contract voidable
or annullable pursuant to article 1390 of the new Civil Code by a proper action in
court. 7
The present action being one to annul a contract on the ground of fraud, its
prescriptive period is four years from the time of the discovery of the fraud. 8
The next question that must be resolved is: from what time must fraud, assuming that
there was fraud, be deemed to have been discovered in the case at bar? From
February, 1958, when, according to the private respondents, and as found by the
respondent court, the private respondents actually discovered that they were
defrauded by the petitioner Maximino Carantes when rumors spread that he was
selling the property for half a million pesos? Or from March 16, 1940, when, as

117

admitted by the parties and found by both the trial court and the respondent court, the
deed of "Assignment of Right to Inheritance" was registered by the petitioner in the
Office of the Register of Deeds?

exclusively, for the registration of the deed of extra-judicial settlement constituted


constructive notice to the whole world."
- IV -

The weight of authorities is to the effect that the registration of an instrument in the
Office of the Register of Deeds constitutes constructive notice to the whole world,
and, therefore, discovery of the fraud is deemed to have taken place at the time of the
registration. 9 In this case the deed of assignment was registered on March 16, 1940,
and in fact on the same date T.C.T. No. 2533 in the names of the heirs of Mateo
Carantes was cancelled, and T.C.T. No. 2540 in the name of the petitioner was issued
in lieu thereof. The four-year period within which the private respondents could have
filed the present action consequently commenced on March 16, 1940; and since they
filed it only on September 4, 1958, it follows that the same is barred by the statute of
limitations.
The respondent court refused to accord recognition to the rule of constructive notice,
because, according to it, there was a fiduciary relationship between the parties. Upon
this premise it concluded that the four-year prescriptive period should be deemed to
have commenced in February, 1958 when private respondents had actual notice of
the fraud. Without resolving the question of whether or not constructive notice
applies when a fiduciary relationship exists between the parties a point which is
not in issue in this case we hold that the respondent court's conclusion, lacking the
necessary premise upon which it should be predicated, is erroneous.
Definitely, no express trust was created in favor of the private respondents. If trust
there was, it could only be as held by respondent court a constructive trust,
which is imposed by law. In constructive trusts there is neither promise nor fiduciary
relations; the so-called trustee does not recognize any trust and has no intent to hold
the property for the beneficiary. 10 In at least two cases, the rule of constructive
notice was applied by this Court although a constructive trust had been created.
Thus, in Lopez, et al. vs. Gonzaga, et al., 11 where the plaintiffs and the defendants
were co-heirs and the decedent owner of the lands had merely allowed the principal
defendant to use the products and rentals of the lands for purposes of coconut oil
experimentation, but said defendant later caused the transfer of the certificates of title
in his own name through the registration of certain judicial orders, this Court held
that the recording of the judicial orders sufficed as notice to the other heirs, for the
rule is that knowledge of what might have been revealed by proper inquiry is
imputable to the inquirer. In Gerona, et al. vs. De Guzman, et a., supra, the
petitioners and the private respondents were co-heirs, and the petitioners' action for
partition and reconveyance was based upon a constructive trust resulting from fraud.
This Court held that the discovery of the fraud "is deemed to have taken place, in the
case at bar, on June 25, 1948, when said instrument was filed with the Register of
Deeds and new certificates of title were issued in the name of respondents

The decision under review found that a constructive trust was created in favor of the
private respondents, and, holding that an action for reconveyance based on
constructive trust is imprescriptible, recognized the right of the private respondents
to file an action for reconveyance regardless of the lapse of time, citing Gayandato
vs. Treasurer of the Philippine Islands, et al. 12
We have examined Gayandato, and have failed to find support therein for the
holding of the respondent court. In any event, it is now settled that an action for
reconveyance based on implied or constructive trust is prescriptible it prescribes in
ten years. 13 In this case the ten-year prescriptive period began on March 16, 1940,
when the petitioner registered the deed of "Assignment of Right to Inheritance" and
secured the cancellation of the certificate of title in the joint names of the heirs of
Mateo Carantes, and, in lieu thereof, the issuance of a new title exclusively in his
name. 14 Since the present action was commenced only on September 4, 1958, it is
clear that the same is barred by extinctive prescription.
-VIt was also held by the respondent court that the petitioner was merely holding the
property in trust for the benefit of his co-heirs as administrator, hence, there was a
continuing and subsisting trust, and pursuant to section 38 of the Code of Civil
Procedure, the provisions of the said Code on prescription (Secs. 40-41) do not
apply. It is our view, however, that there was no continuing and subsisting trust.
From March 16, 1940, when the petitioner registered the deed of assignment and had
the Certificate of title in the names of the heirs cancelled and a new certificate of title
issued in his own name, he began to hold the property in open and clear repudiation
of any trust. 15 It will be noted that on the same date, the petitioner also executed a
formal deed of sale over portions of Lot No. 44 in favor of the Government. In 1948
he mortgaged Lot No. 44-D with the Philippine National Bank as his exclusive
property. The petitioner's exercise of such rights of dominion is anathema to the
concept of a continuing and subsisting trust. The circumstances, found by the
respondent court, that the name of Mateo Carantes still appeared in the tax
declaration as owner of the land and the name of the petitioner as administrator, that
the real estate taxes, were shared by the other heirs with the petitioner, and that some
of the heirs are living in houses erected by them on the land, wane in legal
significance in the face of the petitioner's aforesaid uncontroverted acts of strict

118

dominion. In connection with the payment of real estate taxes, it is to be noted that
the respondent court also found that all the receipts were issued in the name of the
petitioner. The circumstances mentioned above do not make out a case of a
continuing and subsisting trust.
ACCORDINGLY, the judgment of the Court of Appeals appealed from is set aside,
and another entered dismissing the complaint in Civil Case No. 804 of the Court of
First Instance of Baguio. No costs.
Makasiar, Muoz-Palma and Martin, JJ., concur

Separate Opinions

TEEHANKEE, J, concurring:
I concur on the ground that respondents' action based on constructive trust prescribed
after ten years.

Separate Opinions
TEEHANKEE, J, concurring:
I concur on the ground that respondents' action based on constructive trust prescribed
after ten years.

119