Republic of the Philippines

SUPREME COURT
Manila

IN BANC

GR No. 780 November 16, 1945

MANUEL RIVERA RAMIREZ, plaintiff-appellant,

vs.
THE PROVINCIAL SHERIFF OF PAMPANGA AND OTHERS, defendants-appealed.

x ------------------------------------------------- -------- x

Spout. 780 November 16, 1945

JUANA DE LEON AND VIOLA, applicant,

vs.
SUNDAY B. CHONG AND ANOTHER, MOTIONING-APPEALS.
MANUEL RIVERA RAMIREZ, opponent-appellant.

Mr. Manuel O. Chan on behalf of the plaintiff and appellant.

Messrs. Javier and Javier in representation of the motions and appellants.

PABLO, J .:

The plaintiff in the civil case asks the Court to declare him absolute and exclusive owner of lot 5-
B; that the sale in public auction of said lot and the corresponding Certificate of Transfer of Title No.
11751 be declared null.

In Registry File No. 4892 of the Court of First Instance of Pampanga, Mariano Chong Tiaopoc filed a
motion on October 8, 1938, requesting the cancellation of the Original Certificate of Title No. 121
regarding lot 5-B and the Certificate of Transfer of Title No. 8147 with regard to plot 3.a and in its
place another is issued in the name of Domingo B. Chong. The judge acceded to the petition on
October 28, 1938. On April 17, 1939, Manuel Rivera Ramirez filed a motion for reconsideration. Both
parties requested that this motion be heard jointly with civil case No. 6508.

The Judge a quo , after considering the agreement of facts, oral and documentary evidence, issued
his decision of May 26, 1943, which states: ( a ) that Domingo B. Chong and Faustina de Guzman
are the absolute and exclusive owners of the Lot 5-B, denying the motion of consideration presented
in the Record of Registration and ( b ) that "there is no place to grant the damages."

The plaintiff appealed against the decision regarding the pronouncement ( a ) and the defendants
appealed as to the pronouncement ( b ).

There is no controversy regarding the following facts:

That parcels 3.a and 5.a in litigation were registered in the name of the spouses Leon F. Rustia and
Juana de Leon under the Original Certificate of Title No. 121 from July 16, 1916. On June 18, 1926,
the plaintiff acquired in purchase of said spouses for P4,000 a portion of parcel 5.a (lot 5-B) under
the faith of the Sauco Public Notary, but said sale has not been registered because another parcel
was encumbered to one of Malabon and by the subdivision of plot 5.a On June 30, 1924, Leon F.
Rustia and Juana de Leon sold the other portion of the 5th plot (lot 5-A) in favor of the spouses
Espiridion de la Cruz and Estanislao Almazar; they ordered to subdivide it and the subdivision plan
approved by the Land Office on February 7, 1929, (Exhibit C) delimits the portion purchased by
them, denominating lot 5-A,

Under a writ of execution issued in Civil Cause No. 4853, on September 17, 1934, the sheriff seized
lien on parcel 3.a and 5-B of the Original Certificate of Title NO. 121, with its corresponding
annotation. The sheriff posted the notice of sale of lot 5-B; He sold it in public auction on October 20,
1934, having been Mariano Chong. Tiaopoc, represented by his son Domingo and lawyer Ejercito,
the highest bidder, and on October 20, 1935, I grant the final sale certificate in favor of the bidder
Mariano Chong Tiaopoc for the amount of P238.94 (Exhibit 2). Upon request of the latter in Record
No. 4892, the Court of First Instance of Pampanga, in its order of October 25, 1938, ordered the
cancellation of the Original Certificate of Title No.

The controversial point that we believe is of importance for the decision of this matter is the way in
which the sheriff came to have in his possession the technical description of lot 5-B before
proceeding to its seizure and issuing the corresponding sale announcement.

The sheriff, testifying as a witness, said that the technical description of plot 5-B has been provided
to him by one of the two lawyers of Mariano Chong Tiaopoc, Mr. Ejercito or Mr. Natividad. The
lawyer Mr. Army, declaring as a witness of the defendant Mariano Chong Tiaopoc, said that Mr.
Natividad did not intervene in Civil Cause No. 6508; that he personally, together with the plaintiff's
son named Jacinto Baetiong, was the one who took the execution order to the Provincial Sheriff of
Pampanga; and added "I have not provided the technical description, it's not for me anymore, but
the sheriff is the one who must take it out" (Pag. 36, TNT). Asked by the Court: "You mean, Mr.
Army, that when you indicated the technical descriptions of parcels 3.a and 5.a of the Original
Certificate of Title No. 121, whose descriptions have been put by the sheriff of this province in
Exhibits D and E of the plaintiff, you did not need to go to the General Office of the Land Registry
and the Land Bureau in Manila to get those descriptions? "the witness answered : "I have not
presented the technical description nor have I gone to the General Office of the Land Registry of
Manila. I had only to go to the Office of the Registrar of Title of Pampanga to indicate the title where
parcels 3.a and 5.a appear "(Page 37, TNT) And asked by the lawyer Javier:" Did you know, then,
that is, before the seizure of plot 5-B, that is, on September 21, 1934, or some time after that lot was
already sold in favor of plaintiff Manuel Rivera Ramirez? "I reply:" I do not know. As I've said before,

MR. JAVIER:

The parties agree to insert in the record the seat No. 6179 that appears annotated at the
bottom of the same Original Certificate of Title No. 121, Sheet No. 3 , which reads as follows:

"The lot portion No. 5, known as Lot No. 5-A in Subdivision PSD-3610, has been sold at all
for the sum of P2,000, according to a deed granted and ratified before Mr. Martin Ortiz,
notary Bulacan public, in virtue, said lot No. 5 has been partially canceled, and a new title T-
No. 4164 has been issued in the Transfer Book, and its duplicate has been issued to the
owner, leaving the other portion without canceling , known as Lot No. 5-B, "and that this
annotation bears the date April 15, 1930.

We do not believe that the title registrar has dared to issue a transfer certificate to the presentation
of a description written on a single piece of paper. For the description to be considered authentic it is
necessary that it be attached to the subdivision plan approved by the Director of Land: the technical
description is not signed but the plan.
The sheriff who enforced the seizure of lot 5-B at the request of the executor stated positively that
one of Mariano Chong Tiaopoc's lawyers was the one who provided the technical description of said
lot, necessary for the sale notice. Mr. Ejercito admits that he was the lawyer of Mariano Chong
Tiaopoc in the civil matter and delivered the execution order to the sheriff, but denies having
provided this description. Being the duty of the executing party (lot sued today) or of his lawyer to
provide the sheriff with that description, and not the sheriff to inquire about it, we give more credit to
the sheriff's testimony on the matter;

"MANUEL RIVERA

Lot 5-B

Area - 66179 Sq. M. "

His denial of having given such a description to the sheriff reinforces this conclusion, because had
he admitted the truth, he would have had to admit that he had seen the plan and the technical
description.

In addition, Mariano Chong Tiaopoc, in presenting his sworn motion on October 8, 1938, in the
record file alleged: "That the appellant, as a merchant, never had an interest in owning and
possessing agricultural land, nor did he intend to acquire it for himself. the two plots of palayean
lands described in paragraph 3 of this motion, but in the name and representation of his son
Domingo B. Chong, and therefore, this and not the appearing one is the true owner of said two
parcels of land, "and requested" that after the certificates of Title Nos. 121 and 8147 have been
canceled, the expedition of another in the name of Domingo B. Chong, married to Faustina de
Guzman, Filipino citizens, and not on behalf of the appearing Mariano, is ordered. Chong Tiaopoc. "

It will be seen that the moratorium stated that his made Domingo B. Chong is a Filipino citizen, when
it is not true. Paragraph 2 of the amended application, which alleges that Mariano Chong Tiaopoc
and Domingo B. Chong are Chinese citizens, is not denied in the amended response (pages 5 and
43, Joint Record on Appeal , Rule 9, Article 8, Rules of Court.) I also argue in the motion that he did
not intend to acquire said land, "but in the name and representation of his son Domingo B. Chong,
and therefore, this and not the appearing one is the true owner." Another inaccuracy: Domingo with
the lawyer Mr. Ejercito is the one who represented the performer Mariano in the auction and for that
reason in the deed of sale Mariano, the father, has been registered as buyer. If it is true that Dominic
was "the true owner" he would have said so to the sheriff and would not have allowed his father to
appear as a buyer in the deed. If Mariano Chong Tiaopoc was able to present under oath, a motion
with two essential and false allegations, What of estrano is that its witness and lawyer deny to have
knowledge of Exhibito C and that insists on which did not provide to the sheriff the technical
description, in spite of the positive declaration of this civil employee? The tendency of this chain of
inaccurate statements is obvious: it is wished to make believe that Domingo B. Chong is Filipino and
is qualified to acquire agricultural land under the Constitution (Article XIII, sec 5) and that he was a
buyer in good faith shielding himself under the doctrine of the Supreme Court in the affairs of Wm. H.
Anderson & Co. 5) and that he was a good faith buyer shielding himself under the doctrine of the
Supreme Court in the affairs of Wm. H. Anderson & Co. 5) and that he was a good faith buyer
shielding himself under the doctrine of the Supreme Court in the affairs of Wm. H. Anderson &
Co.against Garcia (64 Phil., 506); Reynes vs. Barrera (RG No. 46724); and Hernandez v. Katigbak
Widow of Salas (40 Gac. Of., 7th Supplement, 135) in the most recent matter of which, the present
President of the Court, Honorable Manuel V. Moran, said:

It is a well-settled rule that, when the property is executed under the system, registration is
the operative act that gives validity to the transfer, or creates a lien on the land, and a
 purchaser, on execution sale, is not required to go behind the registry to determine the
conditions of the property. Such purchaser acquires such right, title and interest as appear
on the certificate of title issued on the property, subject to no liens, encumbrances or
burdens that are not noted thereon. (Wm H. Anderson & Co. vs. Garcia, 64 Phil., 506,
Reynes vs. Barrera, GR No. 46724.)

In none of these three cases there is the slightest indication that the buyers were aware, when the
embargo was seized, of any data that inspires the slightest suspicion that someone has claimed the
purchased land: the buyers acted in good faith. In the present case, the defendant's attorney closed
his eyes to the eloquent fact that Manuel Rivera owned the lot 5-B, as the plan and the technical
description clearly showed, when he was established in the Office of the Registrar of Titles to obtain
a copy of the description, although he wanted to make believe that "there was no annotation on the
back of the title."

In the case of Leung Yee v. FL Strong Machinery Co. (37 Jur. Fil., 672), the Supreme Court said:

The buyer can not close his eyes to facts that would warn a reasonable man and then argue
that I act in good faith, believing that the title of the seller lacked defects. The mere fact of
refusing to believe in the existence of such defects, or of voluntarily closing one's eyes to the
possibility that the title of the seller suffered from a defect, will not turn him into a good faith
buyer for consideration, if it subsequently results. that the title actually suffered from defects,
and that he was aware of their existence to such an extent that he would have discovered
them if he had proceeded with the caution that can reasonably be demanded of a prudent
man in an analogous situation. Good faith, or lack of good faith, is ultimately a question of
intent; but to determine the intention that one has at a given moment, we are necessarily
subject to the evidence relating to the way of proceeding and external acts by means of
which only internal acts can be safely determined. Thus, the "honesty in intention," "the licit
and honest intention" that constitute good faith, presuppose "being alien to the knowledge
and the circumstances that must put us in the field of investigation," of which it turns out that
the proof that there has been such a knowledge distorts the presumption in good faith that
the courts always assume in the absence of evidence to the contrary. "Good faith or the
absence of this is not a visible or tangible fact that can be seen or palpated, but is rather a
state or condition of the mind,vs. Gilman, 55 Vt. 504, 505; Cf. Cardenas vs. Miller, 108 Cal.,
250; Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 The. Ann., 2094-2098; Pinkerton
Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)

This Court declares that only the lack of inscription on the back of the certificate of title can be
successfully invoked as evidence of good faith, when the buyer does not find out any information
indicating that the land is already owned by another.

As the lawyer Ejercito acted as agent or agent of the client, and his acts obligate him, the lawyer's
knowledge that when the embargo was already the plaintiff's batch 5-B, was also his client's
knowledge (6. CJ, § 144, pp. 638-639, Henry Wittenbrock, Appt. vs. John A. Parker, 24 LRA, 197,
Newton vs. Easterwood, 154 SW, 646, and US vs.Umali, 15 Phil., 33), and therefore, it can not
allege that it is a third party in good faith when acquiring said lot 5-B in the sale of this in public
auction by the sheriff.

Manuel Rivera can not be deprived of lot 5-B bought by him in P4,000 from June 18, 1926 (about 19
years of Sunday ownership) and awarded to Domingo B. Chong for having bought his father
Mariano Chong Tiaopoc, as performer, for P238.44, without subverting the eternal and high
principles of justice and equity.
Therefore, lot 5-B is declared property of the claimant; cancel the Certificate of Transfer of Title No.
11751 in the name of Domingo Baetiong and Faustina de Guzman and issue another in the name of
the plaintiff, and dismiss the appeal of the defendants Domingo B. Chong and Mariano Chong
Tiaopoc, with the costs in both instances against these.

Jaranilla, Feria, and De Joya, MM., Are satisfied.

OZAETA, J .:

I concur in the annulment of the sale on the sole ground that "the price is so inadequate as to shock
the conscience of the court." (Director of Lands vs. Abarca, 61 Phil., 70.)

Separate Opinions

PARAS, J., concurring and dissenting:

The lot in controversy, No. 5-B, originally belonged to, and was registered under the Torrens System
in the names of, Leon F. Rustia and Juana de Leon. In 1926 the lot was sold to Manuel Rivera
Ramirez who, however, did not register the sale. In 1934 the same property was levied upon and
sold by the provincial sheriff of Pampanga by virtue of a writ of execution issued in civil case No.
4853, in which Mariano Chong Tiaopoc was the judgment creditor (who became the purchaser at the
sheriff's sale) and Leon F. Rustia and Juana de Leon (registered owners) the judgment debtors. It is
admitted that Mariano Chong Tiaopoc never had current knowledge of the prior unregistered leaves
in favor of Manuel Rivera Ramirez,

By inferences built on mere conjectures, the majority have ruled against Mariano Chong Tiaopoc
and then brushed aside good and sound jurisprudence. It is assumed that ( a ) the information of a
lawyer on the question of title is information of his client who becomes a purchaser; ( b ) the
technical description of a part of a subdivision is always annexed to the subdivision plan and,
therefore, a lawyer who has read the description must also have seen the plan; and ( c ) if the
subdivision plan contains, with reference to a specific lot, the name of a person other than the
registered owner, said person may be held to own such an interest in said lot to preclude the idea
that the registered land is free from all aliens and encumbrances.

For our purposes, the legal correctness of the first assumption may be accepted, and we will
proceed to show that the other conjectural propositions of the majority do not and can not have any
width in law or in fact.

The majority rely on the testimony of the sheriff who levied upon and subsequently sold lot 5-B, to
the effect that the technical description was furnished by the lawyer of Mariano Chong Tiaopoc who
on the assumption that the technical description was annexed to the subdivision plan , must be held
to have not only seen the description but also the plan which contained, with reference to lot 5-B the
name of Manuel Rivera Ramirez. And it is the latter fact that the majority of the majority of the
executioners are in Mariano Chong Tiaopoc, through to his attorney, must have known Manuel
Rivera Ramirez. The argument is faulty for many reasons: (1) The lawyer concerned has testified
that he merely instructed the sheriff to levy upon any registered interest of the judgment debtors. (2)
Although the technical description of surveyed land, which is contained in a separate sheet, is
usually annexed to the plan, this is not necessarily true in all cases. (3) The register of deeds or the
man in charge of his office has testified that there was no plan of any kind corresponding to lot 5-B,
although a separate sheet containing its description is clipped to the record. (4) The annotation
appearing on the back of original certificate of title No. 121, covering the land in question, to the
effect that Although a separate sheet containing its description is clipped to the record. (4) The
annotation appearing on the back of original certificate of title No. 121, covering the land in question,
to the effect that Although a separate sheet containing its description is clipped to the record. (4) The
annotation appearing on the back of original certificate of title No. 121, covering the land in question,
to the effect that

The portion of lot No. 5, known as Lot No. 5-A in Subdivision PSD-3610, has been sold at all
for the sum of P2,000, according to a notarial deed granted and ratified before Mr. Martin
Ortiz, notary public of Bulacan. In virtue thereof, lot 5 has been partially canceled, and a new
title T-No has been extended in the transfer book. 4164, and its duplicate has been issued to
the owner, leaving without canceling the other portion, known as lot No. 5-B,

instead of supporting the assumption of the relished by the majority, it is positive evidence that the 5-
B remained unaffected by said annotation. This annotation undoubtedly accounts for the testimony
of the lawyer of Mariano Chong Tiaopoc that, in the relative sense "there was no annotation on the
back of the title." (5) The position of the majority militates against the presumption of good faith in
favor of a purchaser for value and against the finding of the trial court, which had seen and heard the
witness testify, to the effect that Mariano Chong Tiaopoc was a bona fide purchaser, without the
least showing that important details or evidence had been overlooked by said court. (6) The decision
of the majority practically reverses the settled doctrine that for the simple reason that

It is a well-settled rule that, when the property is sold under execution is registered under the
Torrens System, registration is the operative act that gives validity to the transfer, or creates
a lien on the land, and a purchaser, on execution sale, is not required to go behind the
registry to determine the conditions of the property. Such purchaser acquires such right, title
and interest as appear on the certificate of title issued on the property, subject to no liens,
encumbrances or burdens that are not noted thereon. (Hernandez vs. Viuda de Salas, 40 Off
Gaz., 7th Supplement, P. 135.)

for the simple reason that, in effect, the majority is demanding the purchaser in the case at bar to go
behind the registry and to recognize "liens, encumbrances or burdens that are not noted" on original
certificate of title No. 121. The case of Leung Yee vs. Strong Machinery Co. and Williamson, 37
Phil., 644, cited by the majority, is good law but not applicable to the instant case, because in the
former the Court found as a fact that the judgment creditor and execution purchaser had been duly
notified of the prior sale, aside from the fact that its subject was a building that was not covered by
an outstanding Torrens Certificate of Title. The one in point is the case of Quiamson. Suarez , 45
Phil., 901-907, wherein it has been held:

The third assignment of error relates to the main question in the case, ie , the determination
of the legal effect of the two leases and of their relative priority. As we have already stated,
the land in question is registered under Act. No. 496. the plaintiff's law is duly entered upon
the certificate of title; The defendant's lease, although prior in date, has never been
registered, nor is any intimation of its existence to be found upon the certificate of title. At the
time the plaintiff entered into his contract of lease, he had knowledge of the fact that the
defendant was in possession of the land and if the land were unregistered this would be
 sufficient to put him upon inquiry and charge him with constructive notice of the defendant's
rights.

One of the main features of the Torrens System of registration is that all encumbrances on
the land or special estates therein shall be shown, or, at least intimated upon the certificate
of title and a person dealing with the owner of the registered land is not bound to go behind
the certificate and inquire into transactions, the existence of which is not there
intimated. There being in the present case no indication on the certificate of the existence of
the defendant's lease, and the certificate therefore showing a clear title and right of
possession in favor of the lessor, the plaintiff had a perfect right to rely on the lessor's
statement that defendant's right of possession terminated on April 30, 1921, and was not
bound to make further inquiries. I can not, therefore, not be charged with fraud,

The disadvantages of adopting the rule suggested by the appellant would far outweigh the
advantages, would be out of harmony with the underlying principles of the Torrens System of
registration and would tend to impair the value of the registered titles.

Our view may have been to Manuel Rivera Ramirez, since he had been enjoying the products since
1926. Assuming that his average annual yield is P200, he should have been more than repaid for
what he gave for the lot. Moreover, he does not impugn the regularity of the sheriff's sale, and had
failed to avail himself of the right to redeem the property in due time.

The other point touched upon by the majority, namely, the alleged Chinese citizenship of the
purchaser, is immaterial, since the sale and registration of the property in controversy took place
before the Constitution took effect. (Haw pia vs. Omaña, 64 Phil., 469.)

The appeal of Mariano Chong Tiaopoc concerns the failure of the lower court to award indemnity in
his favor. It was stipulated that the net product of the land is approximately P200 per year, and since
Mariano Chong Tiaopoc was entitled to the proceeds of lot 5-B since 1935 at least, it is claimed that
it should be admitted at the annual rate.

There is no doubt that the possession of Manuel Rivera Ramirez, a prior purchaser, has been in
good faith, and should be compelled to pay damages, if any, except from the time of judicial
demand. This demand may have been deemed to have been made in November, 1941; But since
we have judicial cognizance of the recent war and its consequences, we can find no basis for a
definite ruling as to the amount of such damages. For aught that we know, the land might never
have been cultivated for the duration of the war.

For the foregoing reasons, I am of the opinion that the appealed judgment should be affirmed.

MORAN, CJ, concurring and dissenting:

I concur in this opinion of Mr. Justice Paras.

PERFECT, J., concurring:

In view of the fact the proceedings in these two cases took place under the Japanese regime, they
are included in those declared annulled in the October Proclamation of General MacArthur, as we
have maintained in our opinion case in GR No. L-5, Co Kim Cham vs. Valdez Tan Keh and Dizon
(page 153, ante). But it appearing that a majority of the Supreme Court declared these proceedings
valid and we are bound to express our opinion on the merits, based on the facts proved as stated in
the decision penned by Mr. Justice Pablo, we cast our vote in favor of the result stated in said
decision. Principles of equity so demand. Rivera must not be deprived of his property for which I
have paid a substantial amount of money and taxes, and which is in his possession for many
years. It will be revolting to conscience to adjudicate it to another person who paid for it to trifling
price many years later.

HILADO, J., dissenting:

For the reason stated in my main dissenting opinion in GR No. L-5, Co Kim Cham vs. Valdez Tan
Keh and Dizon (page 199, ante ), in my dissenting opinion on the motion for reconsideration therein
(page 398, ante), and in my concurring opinion in GR No. L-49, Peralta vs. Director of Prisons (p
355, ante), I am of the opinion that the judgment of the Japanese-sponsored Court of First Instance
of Pampanga, dated May 26, 1943, as well as the other proceedings had in connection therewith
during the regime of the Philippine Executive Commission or that of the "Republic of the Philippines,"
were and are null and void. Consequently, my opinion is that there is no valid judgment to the
subject of this appeal, and the case should be dismissed, without costs, as regards both this appeal
and said void judgment, other proceedings below, without prejudice to the parties, if they so desire,
the litigation of their respective claims before the restored Commonwealth Court of First Instance of
Pampanga, commencing with the last proceeding had there been prior to its being replaced and
supplanted by the said enemy-sponsored court.