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#1
FIRST DIVISION
[G.R. No. 143281. August 3, 2000]
SPOUSES FRANCISCO and AMPARO DE GUZMAN,
JR., petitioners, vs. THE NATIONAL
TREASURER OF THE REPUBLIC OF THE
PHILIPPINES and THE REGISTER OF DEEDS OF
MARIKINA CITY, respondents.
RESOLUTION
SYNOPSIS
On November 20, 1985, petitioner spouses
Francisco and Amparo de Guzman purchased a
real property from a couple who posed as the
owners thereof. Later, the real Urlan and Asuncion
Milambiling surfaced, identified themselves as the
real owners of the subject property and brought
suit for declaration of nullity of sale and title with
damages. The court ruled in favor of spouses
Milambiling. This decision was affirmed by both the
Court of Appeals and this Court, prompting
petitioners to file an action for damages against
the Assurance Fund. The Regional Trial Court
adjudged the latter liable. On appeal, this decision
was reversed by the Court of Appeals. Hence, this
petition. EHTIDA
Petitioners' claim is not supported by the purpose
for which the Assurance Fund was established. The
Assurance Fund is intended to relieve innocent
persons from the harshness of the doctrine that a
certificate is conclusive evidence of an
indefeasible title to land. Petitioners did not suffer
any prejudice because of the operation of this
doctrine. On the contrary, petitioners sought to
avail of the benefits of the Torrens System by
registering the property in their name. Unfortunately
for petitioners, the original owners were able to
judicially recover the property from them. That
petitioners eventually lost the property to the
original owners, however, did not entitle them to
compensation under the Assurance Fund.
SYLLABUS
CIVIL LAW; PROPERTY REGISTRATION DECREE;
DAMAGES; ASSURANCE FUND; PURPOSE OF
ASSURANCE FUND IS TO RELIEVE INNOCENT
PERSONS FROM THE HARSHNESS OF THE DOCTRINE
THAT A CERTIFICATE IS CONCLUSIVE EVIDENCE OF
AN INDEFEASIBLE TITLE TO LAND; INSTANCES WHEN
THE ASSURANCE FUND MAY BE HELD LIABLE; CASE
AT BAR. Section 95 of Presidential Decree No.
1529, otherwise known as the Property Registration
Decree, provides: SEC. 95. Action for compensation
from funds. A person who, without negligence
on his part, sustains loss or damage, or is deprived
of land or any estate or interest therein in
consequence of the bringing of the land under the
operation of the Torrens system or arising after
original registration of land, through fraud or in
consequence of any error, omission, mistake or
misdescription in any certificate of title or in any
entry or memorandum in the registration book, and
who by the provisions of this Decree is barred or
otherwise precluded under the provision of any law
from bringing an action for the recovery of such

land or the estate or interest therein, may bring an
action in any court of competent jurisdiction for the
recovery of damage to be paid out of the
Assurance Fund. Petitioners have not alleged that
the loss or damage they sustained was "through
any omission, mistake or malfeasance of the court
personnel, or the Registrar of Deeds, his deputy, or
other employees of the Registry in the performance
of their respective duties." Moreover, petitioners
were negligent in not ascertaining whether the
impostors who executed a deed of sale in their
(petitioner's) favor were really the owners of the
property. They were not deprived of their land "as a
consequence of the bringing of [the] land or
interest therein under the provisions of the Property
Registration Decree." Neither was the deprivation
due to "the registration by any other person as
owner of such land," or "by mistake, omission or
misdescription in any certificate or owner's
duplicate, or in any entry or memorandum in the
register or other official book or by any
cancellation." Petitioners' claim is not supported by
the purpose for which the Assurance Fund was
established. The Assurance Fund is intended to
relieve innocent persons from the harshness of the
doctrine that a certificate is conclusive evidence of
an indefeasible title to land. Petitioners did not
suffer any prejudice because of the operation of
this doctrine. On the contrary, petitioners sought to
original owners, however, does not entitle them to
compensation under the Assurance Fund. While we
commiserate with petitioners, who appear to be
victims of unscrupulous scoundrels, we cannot
sanction compensation that is not within the law's
contemplation. As we said in Treasurer of the
Philippines vs. Court of Appeals, the Government is
not an insurer of the unwary citizen's property
against the chicanery of scoundrels. Petitioners'
recourse is not against the Assurance Fund, as the
Court of Appeals pointed out, but against the
rogues who duped them. aD
KAPUNAN, J.:
Petitioners De Guzman spouses seek the
reversal of the decision of the Court of Appeals
holding that the Assurance Fund established under
the Property Registration Decree is not liable for the
losses allegedly sustained by petitioners.
The facts that led to the present proceedings
are succinctly set forth by the Court of Appeals as
follows:
On 01 July 1985, Urlan Milambiling and Asuncion
Velarde purchased a parcel of land situated in
Antipolo, Rizal from Sta. Lucia Realty and
Development, Inc. Although they were already
civilly married, Asuncion used her maiden name in
the Deed of Sale because, being conservative, she
Page 2 of 158
did not want to use her married name until she was
married in church.
After their church wedding on 05 July 1985, Urlan
and Asuncion Milambiling left for Europe on their
honeymoon and from there, they proceeded to
Saudi Arabia where they were working as
accountant and nurse, respectively.
Before leaving for abroad, the spouses Milambiling
entrusted the Deed of Sale of the parcel of land
they bought from Sta. Lucia Realty and the
corresponding Certificate of Title still in the name of
Sta. Lucia Realty to a long-time friend and one of
their principal wedding sponsors, Marilyn Belgica,
who volunteered to register the sale and transfer
the title in their names.
Later, the spouses Milambiling learned from Belgica
through an overseas telephone call that a transfer
certificate of title of the said parcel of land had
already been issued in their names.Belgica
committed to the Milambiling spouses that she will
personally deliver the title to them in Saudi
Arabia. Sometime in May 1986, Belgica arrived in
Saudi Arabia but the title was not with her. Belgica
said that she left it in their house in the Philippines
and forgot to bring it with her.
Urlan Milambiling was angry and immediately
called up his relatives in the Philippines and asked
them to find out from the Office of the Register of
Deeds of Rizal what happened to their title. He was
informed that the Certificate of Title covering the
said parcel of land had indeed been transferred in
their names but was subsequently cancelled and
title transferred in the names of x x x the spouses De
Guzman.
Milambiling was also told about the circumstances
that led to the cancellation of their title. It appears
that while the spouses Milambiling were in Saudi
Arabia, a couple identifying themselves as the
spouses Urlan and Asuncion Milambiling went to
the house of a certain Natividad Javiniar, a real
estate broker, inquiring if the latter could find a
buyer for their lot located in Vermont Subdivision,
Antipolo, Rizal. Javiniar accompanied the said
couple to the house of [the] spouses De
Guzman. Having somehow obtained possession of
the owners duplicate copy of the certificate of title
in the name of the spouses Milambiling, the
impostor-couple were able to convince the de
Guzmans to buy the property. On 20 November
1985, the impostor-couple, posing as the spouses
Milambiling, executed a Deed of Absolute Sale in
favor of [the] spouses de Guzman who paid the
stipulated purchase price of P99,200.00. On 30 April
1986, [the De Guzmans] registered the said sale
with the Register of Deeds of Marikina who
cancelled the certificate of title in the name of the
Milambilings and issued TCT No. N-117249 in the
names of [the] De Guzman[s].
Upon learning of the above, Urlan Milambiling
quickly returned to the Philippines. On 24 July 1986,
the spouses Milambiling filed an action against [the
spouses De Guzman] before the Regional Trial
Court of Antipolo, Rizal, Branch 73, for declaration

of nullity of sale and title with damages.
xxx
[The] spouses De Guzman appealed the decision
of the trial court to the Court of Appeals. On 18 July
1991, [the Court of Appeals] rendered its decision
affirming the decision of the court a quo.
[The] spouses De Guzman then went to the
Supreme Court on a petition for review
on certiorari. On 01 July 1992, the High Tribunal
issued a resolution denying the petition on the
ground that no reversible error was committed by
the Court of Appeals.
On 11 February 1993, [the] spouses De
Guzman filed [an] action for damages against the
Assurance Fund before the Regional Trial Court of
Pasig, Branch 153[,] [impleading the National
Treasurer of the Republic of the Philippines and the
Register of Deeds of Marikina City.][1]
On January 20, 1995, the RTC rendered its
decision finding in favor of the De Guzman spouses,
thus:
IN VIEW OF THE FOREGOING, judgment is hereby
rendered in favor of the plaintiffs and against the
defendants adjudging the Assurance Fund liable to
the amount actually paid by the plaintiffs which is
in the amount of P99,200.00 and ordering the
defendants Treasurer and/or Registrar to pay or
cause the payment of the said amount to herein
plaintiffs.
SO ORDERED.[2]
The National Treasurer and the Marikina
Registrar of Deeds appealed from the above
decision. The Court of Appeals found merit in the
appeal and reversed the decision of the RTC.
We affirm the decision of the Court of
Appeals.
Section 95 of Presidential Decree No. 1529,
otherwise known as the Property Registration
Decree, provides:
SEC. 95. Action for compensation from funds. A
person who, without negligence on his part,
sustains loss or damage, or is deprived of land or
any estate or interest therein in consequence of the
bringing of the land under the operation of the
Torrens system or arising after original registration of
land, through fraud or in consequence of any error,
omission, mistake or misdescription in any
certificate of title or in any entry or memorandum in
the registration book, and who by the provisions of
this Decree is barred or otherwise precluded under
the provision of any law from bringing an action for
the recovery of such land or the estate or interest
therein, may bring an action in any court of
competent jurisdiction for the recovery of damage
to be paid out of the Assurance Fund.
The precursor of Section 95, Section 101 of the
Land Registration Act (Act No. 496), similarly states:
SEC. 101. Any person who without negligence on
his part sustains loss or damage through any
omission, mistake or misfeasance of the clerk, or
register of deeds, or of any examiner of titles, or of
any deputy or clerk of the register of deeds in the
Page 3 of 158
performance of their respective duties under the

provisions of this Act, and any person who is
wrongfully deprived of any land or any interest
therein, without negligence on his part, through the
bringing of the same under the provisions of this Act
or by the registration of any other persons as owner
of such land, or by any mistake, omission, or
misdescription in any certificate or owners
register or other official book, or by any
cancellation, and who by the provisions of this Act
is barred or in any way precluded from bringing an
action for the recovery of such land or interest
therein, or claim upon the same, may bring in any
court of competent jurisdiction an action against
the Treasurer of the Philippine Archipelago for the
recovery of damages to be paid out of the
Assurance Fund.
It may be discerned from the foregoing
provisions that the persons who may recover from
the Assurance Fund are:
1) Any person who sustains loss or damage under
the following conditions:
a) that there was no negligence on his
part; and
b) that the loss or damage sustained was
through any omission, mistake or
malfeasance of the court personnel,
or the Registrar of Deeds, his deputy,
or other employees of the Registry in
the performance of their respective
duties under the provisions of the Land
Registration Act, now, the Property
Registration Decree; or
2) Any person who has been deprived of any land
or interest therein under the following conditions:
a) that there was no negligence on his
part;
b) that he was deprived as a
consequence of the bringing of his
land or interest therein under the
provisions of the Property Registration
Decree; or by the registration by any
other person as owner of such land; or
by mistake, omission or misdescription
in any certificate of owners duplicate,
or in any entry or memorandum in the
cancellation; and
c) that he is barred or in any way precluded
from bringing an action for the recovery of such
land or interest therein, or claim upon the same.[3]
The Court of Appeals correctly held that
petitioners circumstances do not fall under the first
case. Petitioners have not alleged that the loss or
damage they sustained was through any omission,
mistake or malfeasance of the court personnel, or
the Registrar of Deeds, his deputy, or other
employees of the Registry in the performance of
their respective duties. Moreover, petitioners were
negligent in not ascertaining whether the impostors
who executed a deed of sale in their (petitioner's)
favor were really the owners of the property.[4]
Nor does petitioners situation fall under the

second case. They were not deprived of their land
as a consequence of the bringing of [the] land or
interest therein under the provisions of the Property
Registration Decree. Neither was the deprivation
due to the registration by any other person as
owner of such land, or by mistake, omission or
misdescription in any certificate or owners
cancellation.
Petitioners' claim is not supported by the
purpose for which the Assurance Fund was
established. The Assurance Fund is intended to
relieve innocent persons from the harshness of the
doctrine that a certificate is conclusive evidence of
an indefeasible title to land.[5] Petitioners did not
suffer any prejudice because of the operation of
this doctrine. On the contrary, petitioners sought to
original owners, however, does not entitle them to
compensation under the Assurance Fund. While we
commiserate with petitioners, who appear to be
victims of unscrupulous scoundrels, we cannot
sanction compensation that is not within the law's
contemplation. As we said in Treasurer of the
Philippines vs. Court of Appeals,[6] the Government
is not an insurer of the unwary citizens property
against the chicanery of scoundrels. Petitioners
recourse is not against the Assurance Fund, as the
Court of Appeals pointed out, but against the
rogues who duped them.
ACCORDINGLY, the petition is DENIED.
Davide,
Jr.,
C.J.,
(Chairman),
Puno,
Pardo, and Ynares-Santiago, JJ., concur.
#2
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171531
January 30, 2009
GUARANTEED HOMES, INC., Petitioner,

vs.
HEIRS OF MARIA P. VALDEZ, (EMILIA V. YUMUL and
VICTORIA V. MOLINO), HEIRS OF SEVERINA P.
TUGADE (ILUMINADA and LEONORA P. TUGADE,
HEIRS OF ETANG P. GATMIN (LUDIVINA G. DELA
CRUZ (by and through ALFONSO G. DELA CRUZ),
HILARIA G. COBERO and ALFREDO G. COBERO) and
SIONY G. TEPOL (by and through ELENA T. RIVAS
and ELESIO TEPOL, JR.), AS HEIRS OF DECEDENT
PABLO PASCUA, Respondents.
DECISION
Page 4 of 158
Tinga, J.:
This is a petition for review1 under Rule 45 of the
Rules of Court of the Court of Appeals Decision
dated 22 March 20052 and Resolution dated 9
February 20063 in CA-G.R. CV No. 67462. The Court
of Appeals reversed the 12 November 1999 Order
of the Regional Trial Court (RTC) of Olongapo City,
Branch 734 which granted the motion to dismiss
filed by Guaranteed Homes, Inc. (petitioner). The
appellate court denied petitioners motion for
reconsideration.
TCT No. T-1086319 was issued in the name of

petitioner.20
The factual antecedents are as follows:
It was further averred in the complaint that Jorge

Pascua, Sr., son of Cipriano, filed on 24 January
1997 a petition before the RTC of Olongapo City,
Branch 75, for the issuance of a new owners
duplicate of OCT No. 404, docketed as Other Case
No. 04-0-97.21 The RTC denied the petition.22 The
trial court held that petitioner was already the
owner of the land, noting that the failure to
annotate the subsequent transfer of the property to
it at the back of OCT No. 404 did not affect its title
to the property.
Respondents, who are the descendants of Pablo

Pascua (Pablo), filed a complaint seeking
reconveyance of a parcel of land with an area of
23.7229 hectares situated in Cabitaugan, Subic,
Zambales and covered by Original Certificate of
Title (OCT) No. 404 in the name of Pablo.5 In the
alternative, the respondents prayed that damages
be awarded in their favor.6
Petitioner filed a motion to dismiss23 the complaint

on the grounds that the action is barred by the
Statute of Limitations, more than 28 years having
elapsed from the issuance of TCT No. T-10863 up to
the filing of the complaint, and that the complaint
states no cause of action as it is an innocent
purchaser for value, it having relied on the clean
title of the spouses Rodolfo.
OCT No. 4047 was attached as one of the annexes

of respondents complaint. It contained several
annotations in the memorandum of encumbrances
which showed that the property had already been
sold by Pablo during his lifetime to Alejandria
Marquinez and Restituto Morales. Respondents also
attached copies of the following documents as
integral parts of their complaint: Transfer Certificate
of Title (TCT) No. T-8241,8 TCT No. T-8242,9 TCT No. T10863,10 the Extrajudicial Settlement of a Sole Heir
and Confirmation of Sales11 executed by Cipriano
Pascua, Sr. (Cipriano), and the Deed of Sale with
Mortgage12 between spouses Albino Rodolfo and
Fabia Rodolfo (spouses Rodolfo) and petitioner.
Impleaded as defendants, the heirs of Cipriano

filed an answer to the complaint in which they
denied knowledge of the existence of the
extrajudicial settlement allegedly executed by
Cipriano and averred that the latter, during his
lifetime, did not execute any document transferring
ownership of the property.24
In their complaint,13 respondents alleged that

Pablo died intestate sometime in June 1945 and
was survived by his four children, one of whom was
the deceased Cipriano.14 On 13 February 1967,
Cipriano executed a document denominated as
"Extrajudicial Settlement of a Sole Heir and
Confirmation of Sales,"15 wherein he declared
himself as the only heir of Pablo and confirmed the
sales made by the decedent during his lifetime,
including the alleged sale of the disputed property
to spouses Rodolfo.
Respondents likewise averred that on the following
day 14 February 1967, TCT No. T-824116 was issued
in the name of Cipriano "without OCT No. 404
having been cancelled."17 However, TCT No. T8241 was not signed by the Register of Deeds. On
the same day, TCT No. T-8242 was issued in the
name of the spouses Rodolfo and TCT No. T-8241
was thereby cancelled.18 Subsequently, on 31
October 1969, the spouses Rodolfo sold the
disputed property to petitioner by virtue of a Deed
of Sale with Mortgage. Consequently, on 5
November 1969, TCT No. T-8242 was cancelled and
The Register of Deeds and the National Treasurer

filed, through the Office of the Solicitor General, an
answer averring that the six (6)-year period fixed in
Section 102 of Presidential Decree (P.D.) No. 1529
for the filing of an action against the Assurance
Fund had long prescribed since the transfer of
ownership over the property was registered through
the issuance of TCT No. T-10863 in favor of petitioner
as early as 1969. They also claimed that
respondents have no cause of action against the
Assurance Fund since they were not actually
deprived of ownership over the property, as they
could have recovered the property had it not been
for their inaction for over 28 years.25
The RTC granted petitioners motion to dismiss.26
Noting that respondents had never claimed nor
established that they have been in possession of
the property and that they did not present any
evidence to show that petitioner has not been in
possession of the property either, the RTC applied
the doctrine that an action to quiet title prescribes
where the plaintiff is not in possession of the
property.
The trial court found that the complaint per its
allegations presented a case of implied or
constructive trust on the part of Cipriano who had
inaccurately claimed to be the sole heir of Pablo in
the deed of extrajudicial settlement of estate
which led to the issuance of TCT No. T- 8241 in his
Page 5 of 158
favor. As the prescriptive period for reconveyance

of a fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of
the title, the trial court held that the action for
reconveyance had already prescribed with the
lapse of more than 28 years from the issuance of
TCT No. T-10863 on 5 November 1969 as of the filing
of the complaint on 21 November 1997.
The RTC added that it is an enshrined rule that even
a registered owner of property may be barred from
recovering possession of property by virtue of
laches.
The RTC further held that petitioner had the right to
rely on TCT No. T- 8242 in the name of spouses
Rodolfo. Petitioner is not obliged to go beyond the
title considering that there were no circumstances
surrounding the sale sufficient to put it into inquiry.
Concerning the Assurance Fund, the RTC held that
the claim against it had long prescribed since
Section 102 of P.D. No. 1529 provides for a six-year
period within which a plaintiff may file an action
against the fund and in this case the period should
be counted from the time of the issuance of the
challenged TCT No. T-10863 on 5 November 1969
and thus expired in 1975.
Undaunted, respondents appealed to the Court of
Appeals.27
The Court of Appeals reversed the RTCs order.28 In
ordering the reinstatement of the complaint, the
appellate court ruled that the averments in
respondents complaint before the RTC make out a
case for quieting of title which has not prescribed.
Respondents did not have to prove possession over
the property since petitioner as the movant in a
motion to dismiss hypothetically admitted the truth
of the allegations in the complaint. The appellate
court found that possession over the property was
sufficiently alleged in the complaint which stated
that "neither petitioner nor the Rodolfo spouses ever
had possession of the disputed property" as "a
number of the Pascua heirs either had been (still
are) in actual, continuous and adverse possession
thereof or had been enjoying (still are enjoying) the
use thereof."29 By the same token, laches had not
set in, the Court of Appeals added.
The appellate court further held that the ruling of
the RTC that petitioner is an innocent purchaser for
value is contrary to the allegations in respondents
complaint.
Hence, the present petition for review.
The sole issue before this Court revolves around the
propriety of the RTCs granting of the motion to
dismiss and conversely the tenability of the Court of
Appeals reversal of the RTCs ruling.
The petition is meritorious.

It is well-settled that to sustain a dismissal on the
ground that the complaint states no cause of
action, the insufficiency of the cause of action must
appear on the face of the complaint, and the test
of the sufficiency of the facts alleged in the
complaint to constitute a cause of action is
whether or not, admitting the facts alleged, the
court could render a valid judgment upon the
same in accordance with the prayer of the
complaint. For the purpose, the motion to dismiss
must hypothetically admit the truth of the facts
alleged in the complaint.30 The admission,
however, is limited only to all material and relevant
facts which are well pleaded in the complaint.31
The factual allegations in respondents complaint
should be considered in tandem with the
statements and inscriptions on the documents
attached to it as annexes or integral parts. In a
number of cases, the Court held that in addition to
the complaint, other pleadings submitted by the
parties should be considered in deciding whether
or not the complaint should be dismissed for lack of
cause of action.32 Likewise, other facts not alleged
in the complaint may be considered where the
motion to dismiss was heard with the submission of
evidence, or if documentary evidence admitted
by stipulation discloses facts sufficient to defeat the
claim.33 For while the court must accept as true all
well pleaded facts in the complaint, the motion
does not admit allegations of which the court will
take judicial notice are not true, nor does the rule
apply to legally impossible facts, nor to facts
inadmissible in evidence, nor to facts which appear
by record or document included in the pleadings
to be unfounded.34
In the case at bar, the trial court conducted a
hearing on the motion to dismiss. At the hearing,
the parties presented documentary evidence.
Among the documents marked and offered in
evidence are the annexes of the complaint.35
Based on the standards set by this Court in relation
to the factual allegations and documentary
annexes of the complaint as well as the exhibits
offered at the hearing of the motion to dismiss, the
inescapable conclusion is that respondents
complaint does not state a cause of action against
petitioner.
Firstly, the complaint does not allege any defect
with TCT No. T-8242 in the name of the spouses
Rodolfo, who were petitioners predecessors-ininterest, or any circumstance from which it could
reasonably be inferred that petitioner had any
actual knowledge of facts that would impel it to
make further inquiry into the title of the spouses
Rodolfo.36 It is basic that a person dealing with
registered property need not go beyond, but only
has to rely on, the title of his predecessor-in-interest.
Page 6 of 158
Since "the act of registration is the operative act to

convey or affect the land insofar as third persons
are concerned," it follows that where there is
nothing in the certificate of title to indicate any
cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not
required to explore farther than what the Torrens
title upon its face indicates in quest for any hidden
defect or inchoate right that may subsequently
defeat his right thereto. If the rule were otherwise,
the efficacy and conclusiveness of the certificate
of title which the Torrens system seeks to insure
would entirely be futile and nugatory. The public
shall then be denied of its foremost motivation for
respecting and observing the Torrens system of
registration. In the end, the business community
stands to be inconvenienced and prejudiced
immeasurably.37
the root of a valid title.39 And one such instance is

where the certificate of title was already
transferred from the name of the true owner to the
forger, and while it remained that way, the land
was subsequently sold to an innocent purchaser.
For then, the vendee had the right to rely upon
what appeared in the certificate.40
Contrary to the assertion of respondents, OCT No.

404 was expressly cancelled by TCT No. T-8241. The
alleged non-signature by the Register of Deeds
Soliman Achacoso, , does not affect the validity of
TCT No. T-8241 since he signed TCT No. T- 8242 and
issued both titles on the same day. There is a
presumption of regularity in the performance of
official duty. The presumption is further bolstered by
the fact that TCT No. T-8241 was certified to be on
file with the Registry of Deeds and registered in the
name of Cipriano. It is enough that petitioner had
examined the latest certificate of title which in this
case was issued in the name of the immediate
transferor, the spouses Rodolfo. The purchaser is not
bound by the original certificate but only by the
certificate of title of the person from whom he had
purchased the property.38
Sec. 56. Each register of deeds shall keep an entry

book in which he shall enter in the order of their
reception all deeds and other voluntary
instruments, and all copies of writs and other
process filed with him relating to registered land. He
shall note in such book the year, month, day, hour,
and minute of reception of all instruments, in the
order in which they are received. They shall be
regarded as registered from the time so noted, and
the memorandum of each instrument when made
on the certificate of title to which it refers shall bear
the same date. [Emphasis supplied]
Secondly, while the Extrajudicial Settlement of a

Sole Heir and Confirmation of Sales executed by
Cipriano alone despite the existence of the other
heirs of Pablo, is not binding on such other heirs,
nevertheless, it has operative effect under Section
44 of the Property Registration Decree, which
provides that:
SEC. 44. Statutory Liens Affecting Title. Every
registered owner receiving a certificate of title in
pursuance of a decree of registration, and every
subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall
hold the same free from all encumbrances except
those noted on said certificate and any of the
following encumbrances which may be subsisting,
namely:
xxxx
Even assuming arguendo that the extrajudicial
settlement was a forgery, the Court still has to
uphold the title of petitioner. The case law is that
although generally a forged or fraudulent deed is a
nullity and conveys no title, there are instances
when such a fraudulent document may become
The Court cannot give credence to respondents

claims that the Extrajudicial Settlement of a Sole
Heir and Confirmation of Sales was not registered
and that OCT No. 404 was not cancelled by the
Register of Deeds. The Register of Deeds of
Zambales certified that the extrajudicial settlement
was recorded on 14 February 1967, per Entry No.
18590. This is in compliance with Section 56 of Act
No. 496,41 the applicable law at the time of
registration, which provides that:
Registration in the public registry is notice to the

whole world. Every conveyance, mortgage, lease,
lien, attachment, order, judgment, instrument or
entry affecting registered land shall be, if
registered, filed or entered in the Office of the
Register of Deeds of the province or city where the
land to which it relates lies, be constructive notice
to all persons from the time of such registering, filing
or entering.42
Thirdly, respondents cannot make out a case for
quieting of title since OCT No. 404 had already
been cancelled. Respondents have no title to
anchor their complaint on.43 Title to real property
refers to that upon which ownership is based. It is
the evidence of the right of the owner or the extent
of his interest, by which means he can maintain
control and, as a rule, assert right to exclusive
possession and enjoyment of the property.44
Moreover, there is nothing in the complaint which
specified that the respondents were in possession
of the property. They merely alleged that the
occupants or possessors are "others not defendant
Spouses Rodolfo"45 who could be anybody, and
that the property is in actual possession of "a
number of the Pascua heirs"46 who could either be
the respondents or the heirs of Cipriano. The
admission of the truth of material and relevant facts
well pleaded does not extend to render a demurrer
an admission of inferences or conclusions drawn
Page 7 of 158
therefrom, even if alleged in the pleading; nor

mere inferences or conclusions from
facts not stated; nor conclusions of law; nor matters
of evidence; nor
REPUBLIC OF THE PHILIPPINES, represented by the

Administrator of the Land Registration Authority,
NATIONAL TREASURER OF THE PHILIPPINES, HEIRS OF
CASIANO DE LEON, MARIA SOCORRO DE LEON, and
PILARITA M. REYES,
Respondents.
surplusage and irrelevant matters.47

G.R. No. 151424
The other heirs of Pablo should have filed an action
for reconveyance based on implied or constructive
trust within ten (10) years from the date of
registration of the deed or the date of the issuance
of the certificate of title over the property.48 The
legal relationship between Cipriano and the other
heirs of Pablo is governed by Article 1456 of the
Civil Code which provides that if a 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.
Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
July 4, 2008
From the above discussion, there is no question that

petitioner is an innocent purchaser for value;
hence, no cause of action for cancellation of title
will lie against it.49 The RTC was correct in granting
petitioners motion to dismiss.
x-----------------------------------------------------------------------------------x
DECISION
Lastly, respondents claim against the Assurance
Fund also cannot prosper. Section 101 of P.D. No.
1529 clearly provides that the Assurance Fund shall
not be liable for any loss, damage or deprivation of
any right or interest in land which may have been
caused by a breach of trust, whether express,
implied or constructive. Even assuming arguendo
that they are entitled to claim against the
Assurance Fund, the respondents claim has
already prescribed since any action for
compensation against the Assurance Fund must be
brought within a period of six (6) years from the
time the right to bring such action first occurred,
which in this case was in 1967.
WHEREFORE, the petition is GRANTED. The decision
of the Court of Appeals in CA-G.R. CV No. 67462 is
REVERSED and SET ASIDE. The 12 November 1999
Order of the Regional Trial Court of Olongapo City,
Branch 73 in Civil Case No. 432-097 is REINSTATED.
SO ORDERED.
NACHURA, J.:
This petition assails the Court of Appeals Decision[1]
dated January 22, 2001, and Resolution[2] dated
January 8, 2002, which annulled Original Certificate
of Title (OCT) No. 129 issued by the Register of
Deeds of Pasay City, and its derivative titles, the
latest of which is in the name of petitioner.
The antecedents of the case are as follows:

On May 21, 1963, the spouses Casiano de Leon and
Maria Socorro de Leon filed with the then Court of
First Instance (CFI) of Rizal an application for
registration of Lots 1 and 2, Plan Psu-173022-B,
located at Barrio San Dionisio, Paraaque, Rizal, with
an area of 57,989 square meters. The case was
raffled to Branch II presided over by Judge Pedro
C. Navarro and docketed as LRC Case No. N-4140.
The applicants were represented by Atty.
Domicador L. Reyes.
DANTE O. TINGAAssociate Justice

Several parties opposed the application, including
the Heirs of Dionisio Tomas, represented by Atty.
Lorenzo Sumulong, and the Carabeo family,
represented by Atty. Romulo Bobadilla.
WE CONCUR:
#3
THIRD DIVISION
EAGLE REALTY CORPORATION,
Petitioner,
- versus -
On December 11, 1979, the CFI rendered a

decision in favor of Casiano de Leon and his
children, namely, Esmeralda, Rosario Rodriguez,
Bernardita, and Cesario (Maria Socorro having died
on September 21, 1974). Copies of this decision (De
Leon Decision, for brevity) were sent through
registered mail to the Land Registration Commission
Page 8 of 158
(LRC), Solicitor General, Atty. Sumulong, and Atty.

Bobadilla.[3]
Reyes, and TCT No. 78982 in the name of petitioner

Eagle Realty Corporation.
The Heirs of Dionisio Tomas appealed the De Leon

Decision to the Intermediate Appellate Court. On
March 23, 1984, the appellate court affirmed the
decision. The Heirs of Tomas elevated the case to
this Court for review, docketed as G.R. No. 66949.
On June 25, 1984, this Court dismissed the petition
for having been filed out of time and for lack of
merit. This judgment became final and executory
on August 13, 1984.[4]
Consequently, on September 6, 1984, the Republic

of the Philippines, represented by the Acting Land
Registration Commissioner, filed a complaint for
Annulment of Judgment and Cancellation of
Decree and Titles against Martina G. Medina,
Pilarita Reyes and petitioner Eagle Realty
Corporation. The Register of Deeds of Pasay City
was impleaded as a nominal party.
It appears that another decision, similar to the De

Leon Decision but adjudicating the property to a
certain Martina G. Medina, alleged intervenor in
LRC Case No. N-4140, was surreptitiously inserted in
the records of the LRC.[5] This decision (Medina
Decision, for brevity) was similarly dated December
11, 1979 and purportedly signed by Judge Pedro C.
Navarro. Likewise inserted in the records of the LRC
was the Order for the Issuance of the Decree
dated February 14, 1980, also bearing what
purports to be the signature of Judge Pedro C.
Navarro, with a Certification dated February 17,
1980 by Clerk of Court Nicanor G. Salaysay,
attesting that the decision has not been
supplemented, amended or otherwise modified.
[6]
On May 30, 1983, pursuant to these documents,
Hon. Oscar R. Victoriano, then Acting Land
Registration Commissioner, issued Decree of
Registration No. N-188044. In accordance with this
Decree, the Register of Deeds of Pasay City issued
OCT No. 129 on July 7, 1983 in the name of a
Martina G. Medina.[7]
Medina later exchanged the property for a 3,000hectare parcel of land in Norzagaray, Bulacan
owned by Pilarita Reyes through a Deed of
Exchange dated September 12, 1983. The value of
each property was approximately P451,900.00. On
November 2, 1983, OCT No. 129 was canceled and
Transfer Certificate of Title (TCT) No. 74216 issued in
the name of Reyes. Thereafter, through a Deed of
Sale dated February 22, 1984, Reyes sold the
property to petitioner for P1,200,000.00. On March
1, 1984, TCT No. 74216 was canceled, and TCT No.
78982 was issued in petitioners name.[8]
Meanwhile, Cesario de Leon discovered that OCT
No. 129 was issued to Martina G. Medina. The De
Leons sent a letter-complaint to the LRC asking for
an investigation on the matter. This was referred to
Atty. Manuel Panis, Chief of the Inspection and
Investigation Division of the LRC. In a report dated
July 20, 1984, Atty. Panis concluded that the
Medina Decision and the Order for the Issuance of
Decree dated February 14, 1980 were fake. He
then recommended that the appropriate action
be filed for the nullification of OCT No. 129 and its
derivative titles TCT No. 74216 in the name of Pilarita
The complaint alleged that the LRC received a

copy of the De Leon Decision but this was
surreptitiously substituted with the Medina Decision,
together with the Order for the Issuance of the
Decree dated February 14, 1980, in the LRC
records. It further alleged that the LRC, unaware of
any irregularity, issued OCT No. 129 to Martina
Medina on the basis of these fake documents.
In her Answer, Medina averred that she purchased
the property from Justino de Leon on March 5,
1973. Justino, in turn, acquired this property from
Casiano and Maria de Leon on October 29, 1971
through a Deed of Absolute Sale. She alleged that
she verified the genuineness of this Deed of
Absolute Sale from the Manila CFI Notarial Section
and from Casiano de Leon himself. She
immediately occupied the properties, appointed a
caretaker thereof, paid all the land taxes, and
caused the transfer to her name of LRC Survey Plan
No. 13305 covering the property.[9] She claimed
that, in 1979, she learned that this property was the
subject of a pending registration proceeding,
commenced by Casiano and Maria de Leon in
1966. She then filed, on September 28, 1979, a
petition for intervention in said case. This petition for
intervention was allegedly granted on October 4,
1979 by the CFI of Pasig.[10]
For its part, petitioner Eagle Realty Corporation
alleged, inter alia, as affirmative defenses, that (a)
the Republic of the Philippines is not the real partyin-interest since the subject property is private, (b)
the one-year prescriptive period within which to
seek a review of a decree of registration has
already lapsed, and (c) it is a buyer in good faith
and for value. Petitioner also filed a cross-claim
against Pilarita Reyes to seek reimbursement for the
purchase price and the Register of Deeds to hold
the Assurance Fund liable in case Reyes fails to
pay.[11] Later, petitioner filed a third-party
complaint against the National Treasurer of the
Philippines, the public officer entrusted with the
payment of claims against the Assurance Fund.[12]
Pilarita Reyes interposed the same defenses as the
petitioner. She further claimed that she had no
knowledge of any infirmity in Medinas title and that
she entered into the Deed of Exchange in good
faith and for value. As for the petitioners crossclaim, she averred that she acted in good faith in
selling the property to petitioner.[13]
Page 9 of 158
On February 8, 1985, respondents Heirs of Casiano

and Maria de Leon filed a Motion for Leave of
Court to Intervene which the trial court granted.[14]
On July 19, 1985, they filed a Complaint-inIntervention praying that judgment be rendered in
accordance with the prayer alleged in the
complaint and, in addition, order defendants jointly
and severally to pay intervenors actual, moral and
nominal damages, attorneys fees plus legal
interest.[15]
On November 17, 1992, the RTC ruled in favor of the
private respondents Heirs of De Leon, thus:
From all the foregoing discussion, judgment is
hereby rendered as follows:
1.
Declaring the decision dated
December 11, 1979 and the order for the issuance
of decree dated February 14, 1980 in favor of
Martina G. Medina purporting to emanate from
LRC Case No. N-4140, LRC Record No. N-24165, null
and void;
2.
Declaring Decree No. N-188044 and
Original Certificate of Title No. 129 in the name of
Martina G. Medina, and Transfer Certificates of Title
Nos. 74216 and 78982 in the name, respectively, of
Pilarita M. Reyes and Eagle Realty Corporation, null
and void;
3.
Ordering Eagle Realty Corporation to
surrender the owners duplicate copy of Transfer
Certificate of Title No. 78982 to the Register of
Deeds of Pasay City (or his successor) who is hereby
ordered to cancel this owners copy and the
original copy in his files;
4.
Ordering the defendants to desist from
exercising or representing acts of possession or
ownership over the lots covered by the said titles;
7.
Ordering Martina G. Medina and
Pilarita Reyes, jointly and severally, to refund to
Eagle Realty Corporation the following amounts:
a.
The sum of P1.2 Million which Eagle Realty
Corporation paid to Pilarita Reyes for the property,
with interest at the legal rate from February 22, 1984
to the time the same is fully paid;
b.
The sum of P250,000.00 by way of
reimbursement of attorneys fees;
c.
The attorneys fees that Eagle Realty
Corporation, under paragraph 6 above, may have
paid to the INTERVENORS;
8.
The counterclaims interposed by the
defendants are dismissed;
9.
In the event that Eagle Realty
Corporation is unable to collect the sum of P1.2
million with legal interest from its co-defendants, the
third-party defendant National Treasurer of the
Philippines is ordered to pay the said amount.[16]
On appeal, the CA, in its Decision dated January

22, 2001, affirmed the RTC Decision with
modifications, thus:
Wherefore, premises considered, the appeal is
DISMISSED and the Decision, dated November 17,
1992, of the Regional Trial Court of Makati, Branch
142, in Civil Case No. 8400, is AFFIRMED with the
following modifications: the liability of defendantappellant Eagle Realty Corporation for attorneys
fees under paragraph 6 of the dispositive portion is
deleted and; paragraph 9 [Id.] is also deleted.
Costs against defendants-appellants Medina and
Eagle Realty Corporation.
SO ORDERED.[17]
5.
Ordering the defendant Martina G.
Medina to pay to the INTERVENORS the following
amounts:
a.
the sum of P500,000.00 as moral damages for
the sufferings said INTERVENORS have suffered
arising from the submission of the forged decision
and order for the issuance of decree to the Land
Registration Commission;
b.
The sum of P300,000.00 to serve as exemplary
damages and thereby discourage the proliferation
of similar incidents;
6.
Ordering the defendants Martina G.
Medina, Pilarita Reyes and Eagle Realty
Corporation jointly and severally to pay or
reimburse to the INTERVENORS attorneys fees in the
sum of P250,000.00;
The CA held that the complaint is actually an

action for the annulment of a certificate of title, not
for annulment of judgment as alleged by petitioner;
hence, the RTC properly acquired jurisdiction. It
also upheld the LRCs personality to institute the
complaint based on Section 100 of Presidential
Decree (P.D.) No. 1529 in order to protect the
Assurance Fund from being held accountable by
the private respondents for the erroneous issuance
of a certificate of title to Medina. It dismissed the
issue on prescription, ratiocinating that an action to
declare the nullity of a void title does not prescribe
and, moreover, prescription does not run against
the State.[18]
According to the CA, the trial court was correct in
finding that the Medina Decision and the Order for
the Issuance of Decree were both spurious and
that petitioner was not an innocent purchaser for
Page 10 of 158
value because it failed to make a prior inspection

of the subject property which would have revealed
that it was being occupied by the private
respondents. This omission amounted to a failure to
exercise diligence which prevented it from
becoming an innocent purchaser for value.[19]
Hence, the Assurance Fund cannot be made
liable.[20]
On January 8, 2002, the CA issued a Resolution[21]
denying petitioners motion for reconsideration.
Petitioner filed this petition for review alleging the
following errors:
B.
IN FAILING TO CONSIDER THE DEEDS OF SALE
EXECUTED BY CASIANO DE LEON, JUSTINO DE LEON
AND MEDINA, AS WELL AS THE PETITION FOR
INTERVENTION AND SUBSTITUTION AND THE MEDINA
DECISION.
VI.
WITH ALL DUE RESPECT, THE COURT OF APPEALS
GRAVELY ERRED IN RULING THAT RESPONDENT
NATIONAL TREASURER IS NOT LIABLE TO PETITIONER
EAGLE REALTY UNDER THE ASSURANCE FUND.[22]
I.
ERRED IN RULING THAT THE SUBJECT MATTER OR
NATURE OF THE ACTION IS NOT ONE FOR
ANNULMENT OF JUDGMENT WITHIN THE EXCLUSIVE
ORIGINAL JURISDICTION OF THE COURT OF APPEALS
AND THAT THE TRIAL COURT ALLEGEDLY PROPERLY
ACQUIRED JURISDICTION OVER THE SAME.
We deny the petition.

Initially, petitioner undertakes to have the case
dismissed on the ground of lack of jurisdiction by
the RTC over the complaint. It insists that the
complaint is an action for annulment of judgment
which, under Rule 47 of the Rules of Court is
cognizable by the CA.[23]
II.
ERRED IN RULING THAT THE RESPONDENT REPUBLIC IS
A
REAL
PARTY-IN-INTEREST
AND
HAS
THE
PERSONALITY TO FILE THE SUIT BELOW.
III.
ERRED IN RULING THAT THE ONE-YEAR PRESCRIPTIVE
PERIOD PROVIDED BY LAW IS NOT APPLICABLE TO
THE INSTANT CASE.
IV.
ERRED IN RULING THAT PETITIONER EAGLE REALTY IS
NOT AN INNOCENT PURCHASER FOR VALUE OF THE
SUBJECT PROPERTY.
V.
COMMITTED
A
GRAVE
AND
SERIOUS
MISAPPREHENSION OF THE FACTS HEREIN INVOLVED
AND MADE MANIFESTLY MISTAKEN, ABSURD OR
IMPOSSIBLE INFERENCES:
A.
IN UPHOLDING THE FACTUAL FINDINGS OF THE TRIAL
COURT DESPITE THE GLARING EVIDENCE ON
RECORD WHICH SHOWS THAT THE DECISION DATED
11 DECEMBER 1979 IN LRC CASE NO. 4140 IN FAVOR
OF DEFENDANT-APPELLANT MEDINA IS THE GENUINE
DECISION OF JUDGE PEDRO G. NAVARRO.
We do not agree. The body of the pleading or

complaint determines the nature of an action, not
its title or heading.[24] This is because the
complaint must contain a concise statement of the
ultimate facts constituting the plaintiffs cause of
action and specify the relief sought.[25] Although
denominated as an Action for Annulment of
Judgment and Cancellation of Decree and Titles,
the complaint is not an action for annulment of
judgment under Rule 47, but a case for
cancellation of void titles.
Annulment of judgment is a remedy against a final
and executory judgment. Therefore, a necessary
allegation in the complaint would be that there
was in fact a judgment that has been issued by the
trial court, which judgment has become final. Here,
the Complaint does not contain any averment to
such effect. On the contrary, the Complaint
consistently mentions that the Medina Decision,
upon which OCT No. 129 was issued, is a fake
document. The pertinent portions of the Complaint
state:
8. Subsequently thereafter, without the knowledge
of the Land Registration Commission as to the
contents and true import of the Decision
mentioned in paragraph 6 hereof and before the
said Decision, together with the case record, could
be processed and examined, there were
surreptitiously inserted and substituted in its place, in
the records of the Land Registration Commission,
copies of another Decision also dated December
11, 1979 and an Order for the Issuance of Decree
dated February 14, 1980, both purportedly
rendered in the same land registration case and
Page 11 of 158
record, the dispositive portion of said falsified

decision quoted hereunder:
xxxx
13. In July 1984, upon representations of the
Applicants-Heirs of Casiano B. de Leon and Maria L.
de Leon, thru Counsel Atty. Conrado M. Vasquez,
Jr., and after a thorough investigation, the Land
Registration Commission found and confirmed the
falsity of the decision dated December 11, 1979
adjudicating the lots in favor of defendant Martina
Medina and the order of decree dated February
14, 1980 for several reasons x x x.[26]
From the allegations in the Complaint, it is evident

that the action is mainly for the declaration of
nullity of the certificates of title issued as a result of
the fake court decision. This is an action incapable
of pecuniary estimation; hence, the RTC properly
assumed jurisdiction.
Secondly, petitioner attacks the personality of the
Republic of the Philippines, represented by the
Commissioner of Land Registration, to file the
Complaint. It contends that the CAs reliance on
Section 100 of P.D. 1529 to justify the plaintiffs
personality to file the complaint for cancellation of
erroneously or unlawfully issued titles is misplaced as
this provision only gives the Register of Deeds the
authority to file such action. It is Section 32 of the
same law that should apply and this provision
clearly requires that the plaintiff must have a
dominical right over the property. Petitioner argues
that since the subject parcel of land is private
property over which the government has no
interest, the Republic of the Philippines has no right
to file the suit for cancellation of titles.
Indisputably, the government is charged with the
duty to preserve the integrity of the Torrens System
and protect the Assurance Fund. The plaintiff
instituted the complaint precisely to perform this
duty. The Complaint seeks the cancellation of
erroneously issued titles to protect the Assurance
Fund from being made liable by the private
respondents for damages in case they fail to
recover the property. The public officer specifically
tasked to perform this duty is the Register of Deeds
who, under Section 100 of P.D. No. 1529, is
authorized to file an action to annul a certificate of
title erroneously or unlawfully issued, thus:
SEC. 100. Register of Deeds as party in interest.
When it appears that the Assurance Fund may be
liable for damages that may be incurred due to
the unlawful or erroneous issuance of a certificate
of title, the Register of Deeds concerned shall be
deemed a proper party in interest who shall, upon
the authority of the Commissioner of Land
Registration, file the necessary action in court to
annul or amend the title.
The court may order the Register of Deeds to

amend or cancel a certificate of title or to do any
other acts as may be just and equitable. (Emphasis
supplied.)
Under Section 6, P.D. 1529, the Commissioner of

Land Registration shall exercise supervision and
control over all Registers of Deeds. It is well
understood that supervision and control includes
the authority to act directly whenever a specific
function is entrusted by law or regulation to a
subordinate.[27] As the public officer having
supervision and control over Registers of Deeds, the
Commissioner of Land Registration therefore also
has the authority to file the action himself.
The LRC is a mere agency of the government,
unincorporated, and with no separate juridical
personality from that of the Republic of the
Philippines. Naming the Republic of the Philippines
as plaintiff and merely acting as its representative
was not even necessary since the Commissioner of
Land Registration himself, as the superior of and
exercising control over the Register of Deeds, had
the authority to file the complaint on his own. Under
Section 1, Rule 3, an entity specifically authorized
by law to file the action may be a party in a civil
action.
Likewise, it is not essential that the Republic of the
Philippines has proprietary rights over the property
covered by the subject titles as it does not lay any
claim over this property. As previously stated, the
complaint merely seeks the cancellation of
erroneously issued titles in order to protect the
Assurance Fund from liability for damages that may
be filed by the rightful owners under Section 95 of
P.D. No. 1529.
Moreover, it should be noted that the private
respondents also filed a Complaint-in-Intervention
which was granted by the RTC. The complaint in
intervention reiterated the material allegations in
the complaint and prayed for the same reliefs, plus
damages. Hence, even if the main action is
dismissed on the ground that the plaintiff had no
personality to file the action, the complaint in
intervention will remain. Dismissal of the plaintiffs
action would not necessarily result in the dismissal
of the intervenors complaint in intervention. An
intervenor has the right to claim the benefit of the
original suit and to prosecute it to judgment.[28]
Having been permitted to become a party in order
to better protect his interest, an intervenor is
entitled to have the issues raised between him and
the original parties tried and determined.[29]
Petitioner likewise makes an issue out of the
inclusion of the Register of Deeds as a partydefendant. It contends that it would cause an
absurd situation because the plaintiff and
defendant would be represented by the same
Page 12 of 158
counsel. Such contention is not worthy of

consideration because the Register of Deeds was
only impleaded as a nominal party for purposes of
enforcement, since he is the public officer charged
with the duty of registering land documents and
certificates of title.[30]
Still on its bid to have the case dismissed, petitioner
submits that the action to cancel OCT No. 129, and
its derivative titles, has already prescribed because
under Sec. 32 of P.D. No. 1529, upon the expiration
of one year from the entry of the decree of
registration, the certificate of title shall become
incontrovertible. In this case, more than one year
has already lapsed since the entry of the decree of
registration on May 30, 1983. Petitioner further
contends that the indefeasibility of a Torrens title
binds even the government.
The principle of indefeasibility of a Torrens title does
not apply where fraud attended the issuance of
the title. The Torrens title does not furnish a shield for
fraud. As such, a title issued based on void
documents may be annulled.[31] Moreover,
elementary is the rule that prescription does not run
against the State and its subdivisions.[32]
As a rule, the Court cannot review the factual
findings of the trial court and the CA in a petition
for review on certiorari under Rule 45 of the Rules of
Court. When supported by substantial evidence,
findings of fact of the trial court, as affirmed by the
CA, are conclusive and binding on the parties. As
found by both the trial court and the appellate
court, Medina never intervened in the land
registration case and the Medina Decision and the
Order of Registration were forged documents.
These findings are firmly grounded on the evidence
on record which leaves no room for a review by this
Court.
Petitioner is left with no other recourse but to pursue
its claim that it is an innocent purchaser for value,
entitled to be protected by law. Petitioner asserts
that a person dealing with registered land may
safely rely on the correctness of the certificate of
title and need not go beyond the said title to
determine the condition of the property. It argues
that it had no actual knowledge of any fact that
would engender suspicion that the sellers title is
defective. It could hardly have discovered any
defect in OCT No. 129 and TCT No. 72416
considering that these titles were actually issued by
the Register of Deeds.
Case law has it that he who alleges that he is a
purchaser in good faith and for value of registered
land bears the onus of proving such statement. This
burden is not discharged by involving the ordinary
presumption of good faith.[33]
Petitioner failed to discharge this burden. In its
Answer, petitioner merely alleged that it is an
innocent purchaser for value since it acquired the

land from Pilarita Reyes for P1,200,000.00, without
notice of any defect in her title and after verifying
the genuineness of the title in the Register of Deeds
of Pasay City and the LRC. However, petitioner did
not present any proof that would substantiate this
allegation nor did it present any evidence to show
that it took other steps to verify the authenticity of
its predecessors title.
Indeed, the general rule is that a purchaser may
rely on what appears on the face of a certificate of
title. He may be considered a purchaser in good
faith even if he simply examines the latest
certificate of title. An exception to this rule is when
there exist important facts that would create
suspicion in an otherwise reasonable man (and
spur him) to go beyond the present title and to
investigate those that preceded it.[34] The
presence of anything which excites or arouses
suspicion should then prompt the vendee to look
beyond the certificate and investigate the title of
the vendor as appearing on the face of said
certificate. One who falls within the exception can
neither be denominated an innocent purchaser for
value nor a purchaser in good faith, hence, does
not merit the protection of the law.[35]
As correctly observed by the public respondent,
the property covered by the void titles was
transferred from Medina to petitioner with unusual
haste. Only 8 months lapsed since OCT No. 129 was
issued on July 7, 1983 until it was transferred to
petitioner on February 22, 1984. The property was
transferred to petitioner from Reyes only more than
five months after she herself acquired the property.
These circumstances, plus the fact that the subject
property is a vast tract of land in a prime location,
should have, at the very least, triggered petitioners
curiosity.
Moreover, petitioner is a corporation engaged in
the real estate business. A corporation engaged in
the buying and selling of real estate is expected to
exercise a higher standard of care and diligence in
ascertaining the status and condition of the
property subject of its business transaction. Similar
to investment and financing corporations, it cannot
simply rely on an examination of a Torrens
certificate to determine what the subject property,
looks like as its condition is not apparent in the
document.[36]
Petitioners claim against the Assurance Fund must
necessarily fail. Its situation does not come within
the ambit of the cases protected by the Assurance
Fund. It was not deprived of land in consequence
of bringing it under the operation of the Torrens
system through fraud or in consequence of any
error, omission, mistake or misdescription in the
certificate of title[37] It was simply a victim of
unscrupulous individuals. More importantly, it is a
condition sine qua non that the person who brings
the action for damages against the Assurance
Page 13 of 158
Fund be the registered owner and, as the holders

of transfer certificates of title, that they be innocent
purchasers in good faith and for value.[38] And we
have already established that petitioner does not
qualify as such.
WHEREFORE, premises considered, the petition is
DENIED. The Court of Appeals Decision dated
January 22, 2001, and Resolution dated January 8,
2002, are AFFIRMED.
SO ORDERED.
#4
FIRST DIVISION
G.R. No. 195825
February 27, 2013
SPOUSES ALFONSO AND MARIA ANGELES CUSI,

Petitioners,
vs.
LILIA V. DOMINGO, Respondent.
x-----------------------x
G.R. No. 195871
RAMONA LIZA L. DE VERA, Petitioner,
vs
LILIA V. DOMINGO AND SPOUSES RADELIA AND
ALFRED SY, Respondents.
DECISION
BERSAMIN, J.:
Under the Torrens system of land registration, the
registered owner of realty cannot be deprived of
her property through fraud, unless a transferee
acquires the property as an innocent purchaser for
value. A transferee who acquires the property
covered by a reissued owner's copy of the
certificate of title without taking the ordinary
precautions of honest persons in doing business
and examining the records of the proper Registry of
Deeds, or who fails to pay the full market value of
the property is not considered an innocent
purchaser for value.
Under review in these consolidated appeals is the
Decision promulgated on July 16, 2010,1 whereby
the Court of Appeals (CA) in CA-G.R. CV No. 90452
affirmed the revised decision rendered on March 1,
2007 by the Regional Trial Court in Quezon City
(RTC) against the petitioners and their seller.2
Antecedents
The property in dispute was a vacant unfenced lot
situated in White Plains, Quezon City and covered
by Transfer Certificate of Title (TCT) No. N-165606
issued in the name of respondent Lilia V. Domingo
by the Registry of Deeds of Quezon City. It had an
area of 658 square meters.3 In July 1999, Domingo
learned that construction activities were being

undertaken on her property without her consent.
She soon unearthed the series of anomalous
transactions affecting her property.
On July 18, 1997, one Radelia Sy (Sy),4 representing
herself as the owner of the property, petitioned the
RTC for the issuance of a new owners copy of
Domingos TCT No. N-165606, appending to her
petition a deed of absolute sale dated July 14,
1997 purportedly executed in her favor by
Domingo;5 and an affidavit of loss dated July 17,
1997,6 whereby she claimed that her bag
containing the owners copy of TCT No. N-165606
had been snatched from her on July 13, 1997 while
she was at the SM City in North EDSA, Quezon City.
The RTC granted Sys petition on August 26, 1997.7
The Registry of Deeds of Quezon City then issued a
new owners duplicate copy of TCT No. N-165606,
which was later cancelled by virtue of the deed of
absolute sale dated July 14, 1997, and in its stead
the Registry of Deeds of Quezon City issued TCT No.
186142 in Sys name.8
Sy subsequently subdivided the property into two,
and sold each half by way of contract to sell to
Spouses Edgardo and Ramona Liza De Vera and to
Spouses Alfonso and Maria Angeles Cusi. The
existence of the individual contracts to sell was
annotated on the dorsal portion of Sys TCT No.
186142 as Entry No. PE-8907/N-186142,9 stating that
the consideration of the sale was P1,000,000.00 for
each set of buyers, or for a total of P2,000,000.00 for
the entire property that had an actual worth of not
less than P14,000,000.00. TCT No. 186142 in the
name of Sy was then cancelled by virtue of the
deeds of sale executed between Sy and Spouses
De Vera, and between Sy and Spouses Cusi, to
whom were respectively issued TCT No. 18956810
and TCT No. 189569.11 All the while, the
transactions between Sy and the De Veras, and
between Sy and the Cusis were unknown to
Domingo, whose TCT No. N-165606 remained in her
undisturbed possession.12
It turned out that the construction activities taking
place on the property that Domingo learned about
were upon the initiative of the De Veras in the
exercise of their dominical and possessory rights.
Domingo commenced this action against Sy and
her spouse, the De Veras and the Cusis in the RTC,
the complaint being docketed as Civil Case No. Q99-39312 and entitled Lilia V. Domingo v. Spouses
Radelia and Alfred Sy, Spouses Alfonso G. and
Maria Angeles S. Cusi, Spouses Edgardo M. and
Ramona Liza L. De Vera, BPI Family Savings Bank
and The Register of Deeds of Quezon City, seeking
the annulment or cancellation of titles, injunction
and damages. Domingo applied for the issuance
of a writ of preliminary prohibitory and mandatory
injunction, and a temporary restraining order
(TRO).13 The RTC granted Domingos application
Page 14 of 158
for the TRO enjoining the defendants from

proceeding with the construction activities on the
property. The RTC later granted her application for
the writ of preliminary injunction.
Ruling of the RTC
On September 30, 2003, the RTC rendered a
decision,14 disposing:
WHEREFORE, in view of all the foregoing judgment is
hereby rendered:
(a) declaring the sale between Lilia V. Domingo
and Radella Sy void and of (sic) effect;
(b) declaring the Sps. Edgardo and Ramona Liza
De Vera and Sps. Alfonso and Maria Angeles Cusi
to be purchasers in good faith and for value;
(b) Declaring the Sps. Edgardo and Ramona Liza

De Vera and Sps. Alfonso and Maria Angeles Cusi
not purchasers in good faith and for value;
(c) TCT Nos. 189568 and 189569 are hereby
cancelled and declared Null and Void Ab Initio;
(d) Directing the Register of Deeds of Quezon City
to annotate this Order on TCT No. 189568 and
189569;
(e) TCT No. 165606 in the name of Lilia Domingo is
hereby revalidated; and,
(f) Finding defendant Radelia Sy liable to the
plaintiff Lilia V. Domingo liable (sic) for damages, as
follows:
1. One Million Pesos (P1,000,000.00) representing
moral damages;
(c) lifting the writ of preliminary injunction;

(d) finding defendant Radella Sy liable to the
plaintiff Lilia Domingo liable (sic) for damages, as
follows:
1.
Fourteen
Million
Pesos
(P14,000,000.00)
representing the value of the property covered by
TCT No. 165606 plus legal rate of interest until fully
paid;
2. Five Hundred Thousand Pesos (P500,000.00)

representing exemplary damages;
representing attorneys fees;
4. Two Hundred Thousand Pesos (P200,000.00)
representing litigation expenses; and,
5. Costs of suit.
2. One Million Pesos (P1,000,000.00) representing

moral damages;
representing exemplary damages;
representing attorneys fees;
This Decision is without prejudice to whatever civil

action for recovery and damages, the defendants
Sps. De Vera and Sps. Cusi may have against
defendant Spouses Radelia and Alfred Sy.
SO ORDERED.
Ruling of the CA
5. Two Hundred Thousand Pesos (P200,000.00)

representing litigation expenses; and
On appeal, the assignment of errors each set of

appellants made was as follows:
6. Costs of Suit.
Spouses Cusi
IT IS SO ORDERED.
Acting on the motions for reconsideration
separately filed by Sy and Domingo,15 the RTC
reconsidered and set aside its September 30, 2003
decision, and allowed the presentation of rebuttal
and sur-rebuttal evidence.
On March 1, 2007, the RTC rendered a new
decision,16 ruling:
WHEREFORE, in view of the foregoing, Judgment is
hereby rendered:
(a) Declaring the sale between Lilia Domingo and
Radelia Sy void and of no effect;
a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN

FINDING THAT DEFENDANTS SPOUSES ALFONSO AND
MARIA ANGELES CUSI ARE NOT PURCHASERS IN
GOOD FAITH AND FOR VALUE.
b) THE REGIONAL TRIAL COURT GRAVELY ERRED IN
FAILING TO RESOLVE THE ISSUE OF WHETHER OR NOT
CODEFENDANTS SPOUSES RADELIA SY AND ALFRED
SY ARE LIABLE FOR SPOUSES CUSIS CROSS-CLAIM.
c) THE REGIONAL TRIAL COURT ERRED IN FAILING TO
AWARD DAMAGES AND ATTORNEYS FEES TO
DEFENDANTS SPOUSES CUSI.17
Spouses Sy
Page 15 of 158
a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT

THE SALE BETWEEN LILIA DOMINGO AND RADELIA SY
VOID AND OF NO EFFECT AND WAS PROCURRED
(sic) THROUGH FRAUDULENT MEANS.
b) THAT THE HONORABLE COURT ERRED IN
AWARDING
ACTUAL
MORAL
DAMAGES,
EXEMPLARY DAMAGES AND ATTORNEYS FEES AND
LITIGATION EXPENSES THE SAME BEING NULL AND
VOID FOR BEING CONTRARY TO LAW.
c) THAT THE SAID DECISION IS CONTRARY TO LAW
AND JURISPRUDENCE AND IS NOT SUPPORTED BY
EVIDENCE, AS THE SAME CONTAIN SERIOUS
REVERSIBLE ERRORS WHEN THE COURT A QUO
DECLARED THAT TCT NOS. 189568 AND 189569
CANCELLED AND DECLARED NULL AND VOID AB
INITIO.
d) THE INSTANT ASSAILED DECISION OF THE
HONORABLE
COURT
HAVE
(sic)
DEPRIVED
DEFENDANT[S] SPOUSES SY OF THEIR BASIC
CONSTITUTIONAL RIGHT TO DUE PROCESS OF
LAW.18
acknowledging that a purchaser could rely on

what appeared on the face of the certificate of
title, the Cusis and De Veras did not have the status
of purchasers in good faith and for value by reason
of their being aware of Sys TCT No. 186142 being a
reconstituted owners copy, thereby requiring them
to conduct an inquiry or investigation into the status
of the title of Sy in the property, and not simply rely
on the face of Sys TCT No. 186142; and that the
Cusis and De Veras were also aware of other facts
that should further put them on guard, particularly
the several nearly simultaneous transactions
respecting the property, and the undervaluation of
the purchase price from P7,000,000.00/half to only
P1,000,000.00/half to enable Sy to pay a lesser
capital gains tax.
The CA later on
reconsideration.21
denied
the
motions
for
Issues
Hence, this appeal via petitions for review on
certiorari by the Cusis (G.R. No. 195825) and
Ramona Liza L. De Vera22 (G.R. No. 195871).
Spouses De Vera
a) THE LOWER COURT ERRED IN HOLDING THAT THE
DE VERA SPOUSES ARE NOT PURCHASERS IN GOOD
FAITH AND NOT ENTITLED TO THE POSSESSION OF THE
PROPERTY COVERED BY TCT NO. N-189568.
b) THE LOWER COURT ALSO ERRED IN NOT
AWARDING DEFENDANT-APPELLANT DE VERA HER
COUNTERCLAIMS AGAINST PLAINTIFF-APPELLEE.19
As stated, the CA promulgated its decision on July
16, 2010, affirming the RTC with modification of the
damages to be paid by the Sys to Domingo, viz:
WHEREFORE, premises considered, the instant
appeal is denied. Accordingly, the Decision dated
March 1, 2007 of the Regional Trial Court is hereby
AFFIRMED with the modification on the award of
damages to be paid by defendants-appellants
Spouses Radelia and Alfred Sy in favor of the
plaintiff-appellee Lilia V. Domingo, to wit;
1. P500,000.00 by way of moral damages;
2. P200,000.00 by way of exemplary damages;
3. P100,000.00 as attorneys fees and litigation
expenses.
In G.R. No. 195825, the Cusis submit the following

issues:23
I
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN FINDING THAT TRANSFER
CERTIFICATE OF TITLE NO. 186142 REGISTERED IN THE
NAME OF RADELIA SY IS A RECONSTITUTED TITLE.
II
WHETHER OR NOT THE PETITIONERS ARE BUYERS IN
GOOD FAITH AND FOR VALUE.
III
GRANTING, WITHOUT ADMITTING, THAT THE
DECISION OF THE HONORABLE COURT OF APPEALS
IS CORRECT WITH RESPECT TO THE SECOND ISSUE,
WHETHER OR NOT PETITIONERS ARE ENTITLED TO
REIMBURSEMENT OF ALL THE PAYMENTS MADE BY
PETITIONERS TO THEIR CODEFENDANTS SPOUSES
ALFRED AND RADELIA SY IN ADDITION TO DAMAGES
AND ATTORNEYS FEES.
In G.R. No. 195871, De Vera asserts that the
primordial issue is whether or not she was an
innocent purchaser for value and in good faith.
SO ORDERED.20
Ruling of the Court
The CA held that the sale of the property from
Domingo to Sy was null and void and conveyed no
title to the latter for being effected by forging the
signature of Domingo; that Sy thereby acquired no
right in the property that she could convey to the
Cusis and De Veras as her buyers; that although
The petitions for review are bereft of merit.

Firstly, now beyond dispute is the nullity of the
transfer of Domingos property to Sy because both
lower courts united in so finding. The unanimity in
Page 16 of 158
findings of both the RTC and the CA on this allimportant aspect of the case is now conclusive on
the Court in view of their consistency thereon as
well as by reason of such findings being fully
supported by preponderant evidence. We
consider to be significant that the Sys no longer
came to the Court for further review, thereby
rendering the judgment of the CA on the issue of
nullity final and immutable as to them.
Secondly, the Cusis and De Vera commonly
contend that the CA gravely erred in not
considering them to be purchasers in good faith
and for value. They argue that Sys TCT No. 186142
was free of any liens or encumbrances that could
have excited their suspicion; and that they
nonetheless even went beyond the task of
examining the face of Sys TCT No. 186142,
recounting every single detail of their quest to
ascertain the validity of Sys title, but did not find
anything by which to doubt her title.
The Court concurs with the finding by the CA that
the Cusis and De Vera were not purchasers for
value and in good faith. The records simply do not
support their common contention in that respect.
Under the Torrens system of land registration,24 the
State is required to maintain a register of
landholdings that guarantees indefeasible title to
those included in the register. The system has been
instituted to combat the problems of uncertainty,
complexity and cost associated with old title
systems that depended upon proof of an unbroken
chain of title back to a good root of title. The State
issues an official certificate of title to attest to the
fact that the person named is the owner of the
property described therein, subject to such liens
and encumbrances as thereon noted or what the
law warrants or reserves.25
One of the guiding tenets underlying the Torrens
system is the curtain principle, in that one does not
need to go behind the certificate of title because it
contains all the information about the title of its
holder. This principle dispenses with the need of
proving
ownership
by
long
complicated
documents kept by the registered owner, which
may be necessary under a private conveyancing
system, and assures that all the necessary
information regarding ownership is on the
certificate of title. Consequently, the avowed
objective of the Torrens system is to obviate
possible conflicts of title by giving the public the
right to rely upon the face of the Torrens certificate
and, as a rule, to dispense with the necessity of
inquiring further; on the part of the registered
owner, the system gives him complete peace of
mind that he would be secured in his ownership as
long as he has not voluntarily disposed of any right
over the covered land.26
The Philippines adopted the Torrens system through

Act No. 496,27 also known as the Land Registration
Act, which was approved on November 6, 1902
and took effect on February 1, 1903. In this
jurisdiction, therefore, "a person dealing in
registered land has the right to rely on the Torrens
certificate of title and to dispense with the need of
inquiring further, except when the party has actual
knowledge of facts and circumstances that would
impel a reasonably cautious man to make such
inquiry".28
To obtain a grasp of whether a person has actual
inquiry, an internal matter, necessitates an analysis
of evidence of a persons conduct.29 That renders
the determination of intent as a factual issue,30
something that the Court does not normally involve
itself in because of its not being a trier of facts.
Indeed, as a rule, the review function of the Court is
limited to a review of the law involved.
But the Court now delves into the facts relating to
the issue of innocence of the petitioners in their
purchase of the property, considering that the RTC,
through its original decision, at first regarded them
to have been innocent purchasers who were not
aware of any flaw or defect in Sys title based on
the fact that the property had been unfenced and
vacant. The RTC also regarded the petitioners
making of reasonable verifications as their exercise
of the due diligence required of an ordinary
buyer.31 The RTC later completely turned around
through another decision, however, and it was
such decision that the CA affirmed subject to the
modifications of the damages granted to
Domingo.
There is no question that the petitioners exerted
some effort as buyers to determine whether the
property did rightfully belong to Sy. For one, they
did not find any encumbrance, like a notice of lis
pendens, being annotated on the TCT of Sy.
Nonetheless, their observance of a certain degree
of diligence within the context of the principles
underlying the Torrens system
was not their only barometer under the law and
jurisprudence by which to gauge the validity of
their acquisition of title. As the purchasers of the
property, they also came under the clear
obligation to purchase the property not only in
good faith but also for value.
Therein lay the problem. The petitioners were shown
to have been deficient in their vigilance as buyers
of the property. It was not enough for them to show
that the property was unfenced and vacant;
otherwise, it would be too easy for any registered
owner to lose her property, including its possession,
through illegal occupation. Nor was it safe for them
to simply rely on the face of Sys TCT No. 186142 in
Page 17 of 158
view of the fact that they were aware that her TCT
was derived from a duplicate owners copy
reissued by virtue of the loss of the original
duplicate owners copy. That circumstance should
have already alerted them to the need to inquire
beyond the face of Sys TCT No. 186142. There were
other circumstances, like the almost simultaneous
transactions affecting the property within a short
span of time, as well as the gross undervaluation of
the property in the deeds of sale, ostensibly at the
behest of Sy to minimize her liabilities for the capital
gains tax, that also excited suspicion, and required
them to be extra-cautious in dealing with Sy on the
property.
To the Court, the CAs treatment of Sys TCT No.
186142 as similar to a reconstituted copy of a
Torrens certificate of title was not unwarranted. In
doing so, the CA cited the ruling in Barstowe
Philippines Corporation v. Republic,32 where the
Court, quoting from precedents, opined that "the
nature of a reconstituted Transfer Certificate of Title
of registered land is similar to that of a second
Owners Duplicate Transfer Certificate of Title," in
that "both are issued, after the proper proceedings,
on the representation of the registered owner that
the original of the said TCT or the original of the
Owners Duplicate TCT, respectively, was lost and
could not be located or found despite diligent
efforts exerted for that purpose;"33 and that both
were "subsequent copies of the originals thereof," a
fact that a "cursory examination of these
subsequent copies would show" and "put on notice
of such fact [anyone dealing with such copies who
is] thus warned to be extracareful."34
Verily, the Court has treated a reissued duplicate
owners copy of a TCT as merely a reconstituted
certificate of title. In Garcia v. Court of Appeals,35
a case with striking similarities to this one, an
impostor succeeded in tricking a court of law into
granting his petition for the issuance of a duplicate
owners copy of the supposedly lost TCT. The
impostor then had the TCT cancelled by presenting
a purported deed of sale between him and the
registered owners, both of whom had already
been dead for some time, and another TCT was
then issued in the impostors own name. This
issuance in the impostors own name was followed
by the issuance of yet another TCT in favor of a
third party, supposedly the buyer of the impostor. In
turn, the impostors transferee (already the
registered owner in his own name) mortgaged the
property to Spouses Miguel and Adela Lazaro, who
then caused the annotation of the mortgage on
the TCT. All the while, the original duplicate owners
copy of the TCT remained in the hands of an heir of
the deceased registered owners with his co-heirs
knowledge and consent.
The inevitable litigation ensued, and ultimately
ended up with the Court.1wphi1 The Lazaros, as
the mortgagees, claimed good faith, and urged
the Court to find in their favor. But the Court

rebuffed their urging, holding instead that they did
not deal on the property in good faith because: (a)
"the title of the property mortgaged to the Lazaros
was a second owners duplicate TCT, which is, in
effect a reconstituted title. This circumstance
should have alerted them to make the necessary
investigation, but they did not;" and (b) their
argument, that "because the TCT of the property
on which their mortgage lien was annotated did
not contain the annotation: "Reconstituted title,"
the treatment of the reissued duplicate owners
copy of the TCT as akin to a reconstituted title did
not apply, had no merit considering that: "The
nature of a reconstituted Transfer Certificate of Title
of registered land is similar to that of a second
Owner's Duplicate Transfer Certificate of Title. Both
are issued, after the proper proceedings, on the
representation of the registered owner that the
original of the said TCT or the original of the Owner's
Duplicate TCT, respectively, was lost and could not
be located or found despite diligent efforts exerted
for that purpose. Both, therefore, are subsequent
copies of the originals thereof. A cursory
examination of these subsequent copies would
show that they are not the originals. Anyone
dealing with such copies are put on notice of such
fact and thus warned to be extra-careful. This
warning the mortgagees Lazaros did not heed, or
they just ignored it."36
The fraud committed in Garcia paralleled the fraud
committed here.1wphi1 The registered owner of
the property was Domingo, who remained in the
custody of her TCT all along; the impostor was Sy,
who succeeded in obtaining a duplicate owners
copy; and the Cusis and the De Veras were similarly
situated as the Spouses Lazaro, the mortgagees in
Garcia. The Cusis and the De Veras did not
investigate beyond the face of Sys TCT No. 186142,
despite the certificate derived from the reissued
duplicate owners copy being akin to a
reconstituted TCT. Thereby, they denied themselves
the innocence and good faith they supposedly
clothed themselves with when they dealt with Sy on
the property.
The records also show that the forged deed of sale
from Domingo to Sy appeared to be executed on
July 14, 1997; that the affidavit of loss by which Sy
would later on support her petition for the issuance
of the duplicate owners copy of Domingos TCT
No. 165606 was executed on July 17, 1997, the very
same day in which Sy registered the affidavit of loss
in the Registry of Deeds of Quezon City; that Sy filed
the petition for the issuance of the duplicate
owners copy of Domingos TCT No. 165606; that
the RTC granted her petition on August 26, 1997;
and that on October 31, 1997, a real estate
mortgage was executed in favor of one Emma
Turingan, with the mortgage being annotated on
TCT No. 165606 on November 10, 1997.
Page 18 of 158
Being the buyers of the registered realty, the Cusis

and the De Veras were aware of the
aforementioned several almost simultaneous
transactions
affecting
the
property.
Their
awareness, if it was not actual, was at least
presumed, and ought to have put them on their
guard, for, as the CA pointed out, the RTC
observed that "[t]hese almost simultaneous
transactions, particularly the date of the alleged
loss of the TCT No. 165606 and the purported Deed
of Sale, suffice[d] to arouse suspicion on [the part
of] any person dealing with the subject property."37
Simple prudence would then have impelled them
as honest persons to make deeper inquiries to clear
the suspiciousness haunting Sys title. But they still
went on with their respective purchase of the
property without making the deeper inquiries. In
that regard, they were not acting in good faith.
Another circumstance indicating that the Cusis and
the De Veras were not innocent purchasers for
value was the gross undervaluation of the property
in the deeds of sale at the measly price of
P1,000,000.00 for each half when the true market
value was then in the aggregate of at least
P14,000,000.00 for the entire property. Even if the
undervaluation was to accommodate the request
of Sy to enable her to minimize her liabilities for the
capital gains tax, their acquiescence to the fraud
perpetrated against the Government, no less, still
rendered them as parties to the wrongdoing. They
were not any less guilty at all. In the ultimate
analysis, their supposed passivity respecting the
arrangement to perpetrate the fraud was not even
plausible, because they knew as the buyers that
they were not personally liable for the capital gains
taxes and thus had nothing to gain by their
acquiescence. There was simply no acceptable
reason for them to have acquiesced to the fraud,
or for them not to have rightfully insisted on the
declaration of the full value of the realty in their
deeds of sale. By letting their respective deeds of
sale reflect the grossly inadequate price, they
should suffer the consequences, including the
inference of their bad faith in transacting the sales
in their favor.
De Vera particularly insists that she and her late
husband did not have any hand in the
undervaluation; and that Sy, having prepared the
deed of sale, should alone be held responsible for
the undervaluation that had inured only to her
benefit as the seller. However, such insistence was
rendered of no consequence herein by the fact
that neither she nor her late husband had seen fit
to rectify the undervaluation. It is notable that the
De Veras were contracting parties who appeared
to have transacted with full freedom from undue
influence from Sy or anyone else.
Although the petitioners argue that the actual
consideration of the sale was nearly P7,000,000.00
for each half of the property, the Court rejects their
argument as devoid of factual basis, for they did

not adduce evidence of the actual payment of
that amount to Sy. Accordingly, the recitals of the
deeds of sale were controlling on the consideration
of the sales.
Good faith is the honest intention to abstain from
taking unconscientious advantage of another. It
means the "freedom from knowledge and
circumstances which ought to put a person on
inquiry."38
Given this notion of good faith, therefore, 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 full and fair price for the same.38 As an
examination of the records shows, the petitioners
were not innocent purchasers in good faith and for
value. Their failure to investigate Sy's title despite
the nearly simultaneous transactions on the
property that ought to have put them on inquiry
manifested their awareness of the flaw in Sy's title.
That they did not also appear to have paid the full
price for their share of the property evinced their
not having paid true value.39
Resultantly, the Court affirms the lower courts, and
restores to Domingo her rights of dominion over the
propetiy.
WHEREFORE, the Court AFFIRMS the decision of the
Court of Appeals promulgated on July 16, 201 0;
and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.
#6
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 142313
March 1, 2001
SPOUSES MANUEL CHU, SR. and CATALINA B. CHU,

the former substituted by THEANLYN B. CHU, THEAN
CHING LEE B. CHU, THEAN LEEWN B. CHU and
MARTIN LAWRENCE B. CHU, the latter represented
by his mother and guardian ad litem, petitioner
CATALINA B. CHU, petitioners,
vs.
BENELDA ESTATE DEVELOPMENT CORPORATION,
respondent.
SYNOPSIS
Petitioners spouses Manuel Chu, Sr. and Catalina
Chu were the registered owners of five parcels of
land situated in Barrio Saguin, San Fernando,
Pampanga. They executed a deed of sale with
assumption of mortgage in favor of Trinidad N.
Cunanan. Although Cunanan has actually an
Page 19 of 158
unpaid balance, it was made to appear in the

deed of sale that the total consideration had been
fully paid to enable Cunanan to have the parcels
of land registered in her name so that she could
mortgage the same to secure a loan and from the
proceeds of the loan to pay the balance.
Consequently, Cunanan was able to cause the
cancellation of titles of said properties and in lieu
thereof new transfer certificate of titles were issued
in her name. Cunanan failed to pay the balance of
the total purchase price of the petitioners. Without
the knowledge of the petitioners, Cunanan sold the
three parcels of land to Cool Town Realty and
Development Corporation, and the two other
parcels of land to spouses Amado and Gloria
Carlos. The spouses Carlos, in turn, sold these two
properties to the respondent Benelda Estate
Development Corporation. Petitioners commenced
civil case before the Regional Trial Court of
Pampanga against Trinidad N. Cunanan, Cool
Town Realty and Development Corporation and
the Register of Deeds of Pampanga. Later, it was
amended to include respondent Benelda Estate
Development Corporation as a defendant. The
respondent filed its answer with a motion to dismiss
on the ground, among others, that the amended
complaint states no cause of action as it acted in
good faith in buying the subject properties. The trial
court denied the motion to dismiss. In a petition for
certiorari, the Court of Appeals dismissed the case
on the ground of lack of cause of action and for
failure of the petitioners to include the spouses
Carlos as indispensable parties in the complaint.
Hence, this petition. acHDTE
This Court has time and again held that a person
dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor
and the law will in no way oblige him to go behind
the certificate to determine the condition of the
property. Thus, a title procured through fraud and
misrepresentation can still be the source of a
completely legal and valid title if the same is in the
hands of an innocent purchaser for value.
In a case for annulment of title, failure to prove,
much less impute, bad faith on said purchaser who
has acquired a title in his favor would make it
impossible for the court to render a valid judgment
thereon
due
to
the
indefeasibility
and
conclusiveness of his title. In view of the foregoing,
there is no need to discuss the assignment of error
as to whether the spouses Amado E. Carlos and
Gloria A. Carlos (sellers of the subject titled parcels
of land to respondent) are real and indispensable
parties in the case at bar.
The petition is DENIED for lack of cause of action.
SECcAI
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; CAUSE
OF ACTION; DEFINED. A cause of action is
defined as an act or omission by which a party
violates a right of another. The test of the
sufficiency of the facts found in a petition as
constituting a cause of action is whether or not,
admitting the facts alleged, the court can render a

valid judgment upon the same in accordance with
the prayer thereof.
2.
CIVIL LAW; LAND TITLES AND DEEDS;
PERSON DEALING WITH REGISTERED LAND MAY
SAFELY RELY ON THE CORRECTNESS OF THE
CERTIFICATE OF TITLE. In land title cases, this Court
has time and again held that a person dealing with
registered land may safely rely on the correctness
of the certificate of title issued therefor and the law
will in no way oblige him to go behind the
certificate to determine the condition of the
property. This person is considered in law as an
innocent purchaser for value who is defined as one
who buys the property of another, without notice
that some other person has a right or interest in
such property and pays a full price for the same, at
the time of such purchase or before he has notice
of the claims or interest of some other person in the
property. In this connection, Section 53 of
Presidential Decree No. 1529, otherwise known as
the Property Registration Decree, provides that:
"Presentation of owner's duplicate upon entry of
new certificates. No voluntary instrument shall be
registered by the Register of Deeds, unless the
owner's duplicate certificate is presented with such
instrument, except in cases expressly provided for in
this Decree or upon order of the court, for cause
shown. The production of the owner's duplicate
certificate, whenever any voluntary instrument is
presented for registration, shall be conclusive
authority from the registered owner to the Register
of Deeds to enter a new certificate or to make a
memorandum of registration in accordance with
such instrument, and the new certificate or
memorandum shall be binding upon the registered
owner and upon all persons claiming under him, in
favor of every purchaser for value and in good
faith. [Italics Supplied]" Thus, a title procured
through fraud and misrepresentation can still be
the source of a completely legal and valid title if
the same is in the hands of an innocent purchaser
for value. TCASIH
3.
REMEDIAL
LAW
CIVIL
PROCEDURE;
ANNULMENT OF TITLE; COMPLAINT MUST ALLEGE
THAT THE PURCHASER WAS AWARE OF THE DEFECT
IN THE TITLE. In a case for annulment of title,
therefore, the complaint must allege that the
purchaser was aware of the defect in the title so
that the cause of action against him will be
sufficient. Failure to do so, as in the case at bar, is
fatal for the reason that the court cannot render a
valid judgment against the purchaser who is
presumed to be in good faith in acquiring the said
property. Failure to prove, much less impute, bad
faith on said purchaser who has acquired a title in
his favor would make it impossible for the court to
render a valid judgment thereon due to the
indefeasibility and conclusiveness of his title.
4.
ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT
BAR. We find that the Court of Appeals did not
err in dismissing the amended complaint insofar as
the respondent is concerned. The amended
Page 20 of 158
complaint and the annexes thereto did not allege

bad faith on the part of the respondent
corporation. In fact, respondent's claim that it
bought the two (2) parcels of land in good faith are
supported by the Annexes "I" and "I-2" (Deeds of
Absolute Sale) attached to petitioner's amended
complaint. These deeds executed by the spouses
Carlos in favor of herein private respondent state
that the spouses Carlos warranted "valid title(s) to
and possession of the properties sold and
conveyed," and furthermore declare that their titles
thereto are "free and clear of all liens and
encumbrances of any kind whatsoever." There is no
way for the trial court to render judgment against
herein respondent whose title to the subject parcels
of land remains indefeasible and conclusive, there
being no allegation in the amended complaint
that it allegedly acquired the said properties in bad
faith. IDScTE
5.
ID.; ID.; ID.; ASSUMED ADMISSION DOES NOT
DEFEAT DEFENDANT'S STATUS AS INNOCENT
PURCHASER FOR VALUE. We find that the
technical or assumed admission on the part of
respondent, in such an event, does not defeat its
status as an innocent purchaser for value. The
defense of good faith of respondent is valid for the
reason that such mental disposition was present at
the time it purchased those two (2) parcels of land
from the Carlos spouses up to the time the
corresponding two (2) transfer certificates of title
thereto were issued in its favor. What is important is
that when respondent bought the subject
properties, it was not aware of any defect in the
covering certificates of title thereto at the time of
such purchase. There is no allegation to the
contrary in the amended complaint. Therefore, the
title of respondent, being that of an innocent
purchaser for value remains valid.
6.
CIVIL LAW; LAND TITLES AND DEEDS; BY
ALLOWING ISSUANCE OF NEW CERTIFICATES OF TITLE
IN THE NAME OF THE PURCHASER DESPITE THE NONPAYMENT OF THE FULL PURCHASE PRICE, THE
VENDORS TAKE THE RISK OF LOSING THEIR
PROPERTIES. By allowing the cancellation of their
certificates of title and the issuance of new ones in
lieu thereof in the name of Trinidad N. Cunanan
despite alleged non-payment of the full purchase
price for their subject two (2) parcels of land, the
petitioners took the risk of losing their titles on the
said properties inasmuch as the subject deed of
sale with assumption of mortgage constitutes their
consent and announcement to the whole world
that Cunanan was indeed the legal owner of the
properties by virtue of the said deed which is a
public document.
7.
ID.; ID.; NO ONE CAN TRANSFER A GREATER
RIGHT TO ANOTHER THAN HE HIMSELF HAS; NOT
APPLICABLE IN CASE AT BAR. Petitioners' reliance
on Mathay v. Court of Appeals which held that "No
one can transfer a greater right to another than he
himself has" is not applicable to the instant case for
the reason that the said legal maxim, according to
the same case, only holds true if the same land had
already been registered and an earlier certificate

for the same is in existence. In the case at bar, the
petitioners no longer have any title to the subject
two (2) parcels of land inasmuch as petitioners
spouses Manuel Chu, Sr. and Catalina B. Chu, as
sellers, have consented to the cancellation of their
certificates of title in favor of Cunanan, as buyer.
Thus, the conclusiveness of respondent's certificates
of title is binding on the whole world including the
petitioners. IHaSED
8.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS;
CERTIORARI; DENIAL OF MOTION TO DISMISS CAN BE
A SUBJECT THEREOF IF IT WAS TAINTED WITH GRAVE
ABUSE OF DISCRETION. Petitioners also claim that
since the orders of the trial court denying their
motion to dismiss are merely interlocutory, the same
cannot be the subject of a petition for certiorari.
However, as correctly pointed out by the
respondent, the rule admits of an exception. Thus,
where the denial of the motion to dismiss by the
trial court was tainted with grave abuse of
discretion amounting to lack or excess of
jurisdiction, as in the case at bar, the aggrieved
party may assail the order of denial on certiorari. A
wide breadth of discretion is granted in certiorari
proceedings in the interest of substantial justice and
to prevent a substantial wrong. The appellate court
therefore was correct in entertaining the petition for
the reason that the trial court committed a grave
abuse of discretion when it refused to dismiss the
case as against herein respondent, despite the
obvious insufficiency of the amended complaint
against the respondent. To implead the herein
respondent in the case at bar, absent an allegation
of bad faith on its part, is to undermine a wellsettled rule protecting innocent purchasers for
value and the indefeasibility and conclusiveness of
certificates of title issued under the Torrens System.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
Decision1 and Resolution2 of the Court of
Appeals,3 dated November 29, 1999 and March
14, 2000, respectively, which reversed the Order4
dated March 30, 1998 of the Regional Trial Court of
Pampanga, Branch 52, denying respondent's
motion to dismiss as well as the Order denying
respondent's motion for reconsideration, dated
May 26, 1998.
The petitioners spouses Manuel Chu, Sr. and
Catalina Chu (the former substituted by Theanlyn
Chu, Thean Ching Lee Chu, Thean Leewn Chu, and
Martin Lawrence Chu) were the registered owners
of five (5) parcels of land situated in Barrio Saguin,
San Fernando, Pampanga, covered and described
in Transfer Certificate of Title Nos. 198470-R, 198471R, 198472-R, 198473-R and 199556-R of the Registry
of Deeds of the province of Pampanga.
On September 30, 1986, the petitioners executed a
deed of sale with assumption of mortgage in favor
Page 21 of 158
of Trinidad N. Cunanan in consideration of

P5,161,090.00. Although Cunanan has actually an
unpaid balance of P2,561,090.00, it was made to
appear in the deed of sale that the total
consideration had been fully paid to enable
Cunanan to have the parcels of land registered in
her name so that she could mortgage the same to
secure a loan and thereupon pay from the
proceeds of the loan the said balance of
P2,561,090.00. Their agreement, however, was that
the ownership of the properties shall remain with
the petitioners until full payment of the balance of
the total purchase price. Trinidad N. Cunanan was
thus able to cause the cancellation of the said titles
registered in the name of the petitioners spouses
Manuel Chu, Sr. and Catalina Chu and in lieu
thereof the issuance of TCTs No. 239278-R, No.
239376-R, No. 239279-R, No. 239277-R, and No.
239280-R which are all registered in her name.
Cunanan failed to pay the balance of the total
purchase price to the petitioners. Without the
knowledge of the petitioners, Cunanan sold the
three (3) parcels of land to Cool Town Realty and
Development Corporation, and the two (2) other
parcels of land subject of the instant case and
covered by TCT Nos. 239276-R and 239277-R to the
spouses Amado and Gloria Carlos. The spouses
Carlos, in turn, sold these two (2) properties to the
respondent
Benelda
Estate
Development
Corporation.
Petitioners commenced Civil Case No. G-1936
before the Regional Trial Court of Pampanga
against Trinidad N. Cunanan, Cool Town Realty and
Development Corporation and the Register of
Deeds of Pampanga. The petitioners amended
their complaint to include respondent Benelda
Estate Development Corporation as a defendant,
alleging, insofar as the latter is concerned that:
13.
That in order to cause financial damage
and irreparable injury to the original plaintiffs,
defendant Trinidad N. Cunanan without any lawful
right and authority whatsoever sold the remaining
two (2) parcels of land involved in this case
previously covered by Transfer Certificates of Title
Nos. 239276-R and 239277-R registered in her name
(formerly embraced by Transfer Certificates of Titles
Nos. 198471-R and 198472-R in the names of the
original plaintiffs) in favor of the spouses AMADO E.
CARLOS and GLORIA A. CARLOS, who like
defendant Cool Town Realty and Development
Corporation are not also buyers for value and in
good faith of the subject two (2) parcels of land as
shown by Transfer Certificates of Titles Nos. 247026-R
and 246947-R both of the Register of Deeds of
Pampanga, whose xerox copies are hereto
attached respectively as Annexes "G", "G-1", "G-2",
"H", and "H-1" hereof .
14.
That likewise in order to cause further
financial damage and prejudice to the plaintiffs,
the spouses AMADO E. CARLOS AND GLORIA A.

CARLOS, who have never acquired valid titles over
the two (2) parcels of land previously embraced by
Transfer Certificates of Titles Nos. 247026-R and
246947-R both of the Registry of Deeds of
Pampanga registered in their names referred to in
the immediately preceding paragraph sold the
same two (2) parcels of land on November 13, 1995
in
favor
of
defendant
BENELDA
ESTATE
DEVELOPMENT CORPORATION as shown by the
corresponding Deed of Absolute Sale, whose xerox
copy is hereto attached as Annexes "I" and "I-2"
hereof .
15.
That in view of the fact that the ownership
of the five (5) parcels of land in issue in this case
legally remains with the plaintiffs, the deed of
conveyances executed by defendant Trinidad N.
Cunanan relative to the subject five (5) parcels of
land in litigation in favor of defendant Cool Town
Realty & Development Corporation and in favor of
the spouses Amado L. Carlos and Gloria A. Carlos
and the deed of absolute sale dated November
13e 1995 executed by the spouses Amado E. Carlos
and Gloria A. Carlos on lot 4224-A-2 of the
subdivision plan previously covered by Transfer
Certificate of Title No. 246947-R and Lot 4224-A-3 of
the subdivision plan formerly embraced by Transfer
Certificate of Title No. 247026-R both of the Registry
of Deeds of Pampanga in favor of defendant
BENELDA ESTATE DEVELOPMENT CORPORATION,
which are among the five (5) parcels of land
involved in this case are all null and void,
consequently the said deed of conveyances did
not vest valid title of ownership over the said five (5)
parcels of land in controversy in favor of defendant
COOL TOWN REALTY DEVELOPMENT CORPORATION
and BENELDA ESTATE DEVELOPMENT CORPORATION
because defendant Trinidad N. Cunanan, who has
never been an owner of any of the five (5) parcels
of land in dispute cannot validly and legally transfer
the ownership thereof in favor of any person
whomsoever.
16.
That despite demands made by the
plaintiffs to the defendants, the latter unjustifiably
failed and refused as they still fail and refuse to
reconvey the five (5) parcels of land to the said
plaintiffs.5
The respondent filed its answer with a motion to
dismiss on the ground, among others, that the
amended complaint states no cause of action
against herein respondent. It alleged that
respondent corporation, through its officers, acted
in good faith in buying the properties inasmuch as it
exerted all efforts to verify the authenticity of the
titles and that no defect was found therein. After
the petitioner filed an opposition to the motion to
dismiss, the trial court rendered a decision denying
the motion to dismiss.
Page 22 of 158
The respondent filed a petition for certiorari under

Rule 65 of the Rules of Court before the Court of
Appeals alleging that the trial court committed
grave abuse of discretion in denying its motion to
dismiss the amended complaint. The Court of
Appeals reversed the order of the trial court and
dismissed the case as against herein respondent on
the ground of lack of cause of action and for
failure of the petitioners to include the spouses
Carlos as indispensable parties in the complaint.
Petitioner raises the following assignments of error:
I
WITH ALL DUE RESPECT TO THIS HONORABLE COURT
CONTRARY TO ITS CONCLUSION IN ITS DECISION
SOUGHT TO BE SET ASIDE, PETITIONERS' AMENDED
COMPLAINT DATED JUNE 9, 1997 STATES A VALID
CAUSE OF ACTION AGAINST RESPONDENT BENELDA
ESTATE DEVELOPMENT CORPORATION.
II
WITH ALL DUE RESPECT TO THIS HONORABLE COURT
THE SPOUSES AMADO E. CARLOS AND GLORIA A.
CARLOS ARE NOT REAL AND INDISPENSABLE PARTIES
IN THE CASE AT BENCH.
III
IT IS RESPECTFULLY SUBMITTED THAT THE
AVERMENTS MADE IN THAT DEED OF ABSOLUTE SALE,
WHOSE XEROX COPY IS ATTACHED AS ANNEXES "1"
AND "1-2" OF THE AMENDED COMPLAINT INVOLVED
IN THIS CASE TO THE EFFECT THAT THE SPOUSES
AMADO E. CARLOS AND GLORIA A. CARLOS
WARRANTED "VALID TITLES TO AND POSSESSION OF
THE PROPERTIES SOLD AND CONVEYED" AND THAT
THEIR TITLES THERETO ARE " FREE AND CLEAR OF ALL
LIENS AND ENCUMBRANCES OF ANY KIND
WHATSOEVER" CANNOT BE VALIDLY CONSIDERED IN
DETERMINING WHETHER OR NOT PETITIONERS'
AMENDED COMPLAINT DATED JUNE 9, 1997 STATES
A VALID CAUSE OF ACTION AGAINST RESPONDENT.
A cause of action is defined as an act or omission

by which a party violates a right of another.6 The
test of the sufficiency of the facts found in a
petition as constituting a cause of action is whether
or not, admitting the facts alleged, the court can
render a valid judgment upon the same in
accordance with the prayer thereof.7
In land title cases, this Court has time and again
held that a person dealing with registered land
may safely rely on the correctness of the certificate
of title issued therefor and the law will in no way
oblige him to go behind the certificate to
determine the condition of the property.8 This
person is considered in law as an innocent
purchaser for value who is defined as one who
buys the property of another, without notice that
some other person has a right or interest in such
property and pays a full price for the same, at the
time of such purchase or before he has notice of
the claims or interest of some other person in the
property.9 In this connection, Section 53 of
Presidential Decree No. 1529, otherwise known as
the Property Registration Decree, provides that:
Presentation of owner's duplicate upon entry of
new certificates. No voluntary instrument shall be
registered by the Register of Deeds, unless the
owner's duplicate certificate is presented with such
instrument, except in cases expressly provided for in
this Decree or upon order of the court, for cause
shown.
The production of the owner's duplicate certificate,
whenever any voluntary instrument is presented for
registration, shall be conclusive authority from the
registered owner to the Register of Deeds to enter
a new certificate or to make a memorandum of
registration in accordance with such instrument,
and the new certificate or memorandum shall be
binding upon the registered owner and upon all
persons claiming under him, in favor of every
purchaser for value and in good faith. [Italic
Supplied]
xxx
xxx
xxx
IV
IT IS RESPECTFULLY SUBMITTED THAT THE
AMADO E. CARLOS AND GLORIA A.
CANNOT TRANSFER VALID TITLE TO THE
PARCELS OF LAND INVOLVED IN THIS
WHICH THEY THEMSELVES DO NOT HAVE.
SPOUSES
CARLOS
TWO (2)
PETITION
V
IT
IS
RESPECTFULLY
SUBMITTED
THAT
THE
EXTRAORDINARY WRIT OF CERTIORARI IS NOT
AVAILABLE TO CHALLENGE THE ASSAILED ORDERS
OF MARCH 30, 1998 AND MAY 26, 1998 WHICH ARE
BOTH INTERLOCUTORY IN CHARACTER.
Thus, a title procured through fraud and

misrepresentation can still be the source of a
completely legal and valid title if the same is in the
hands of an innocent purchaser for value.10
In a case for annulment of title, therefore, the
complaint must allege that the purchaser was
aware of the defect in the title so that the cause of
action against him will be sufficient. Failure to do so,
as in the case at bar, is fatal for the reason that the
court cannot render a valid judgment against the
purchaser who is presumed to be in good faith in
acquiring the said property. Failure to prove, much
less impute, bad faith on said purchaser who has
acquired a title in his favor would make it
impossible for the court to render a valid judgment
Page 23 of 158
and
properties by virtue of the said deed which is a

public document.
We find that the Court of Appeals did not err in

dismissing the amended complaint insofar as the
respondent is concerned. The amended complaint
and the annexes thereto did not allege bad faith
on the part of the respondent corporation. In fact,
respondent's claim that it bought the two (2)
parcels of land in good faith are supported by the
Annexes "1" and "1-2" (Deeds of Absolute Sale)
attached to petitioner's amended complaint.
These deeds executed by the spouses Carlos in
favor of herein private respondent state that the
spouses Carlos warranted "valid title(s) to and
possession of the properties sold and conveyed,"
and furthermore declare that their titles thereto are
"free and clear of all liens and encumbrances of
any kind whatsoever."11 There is no way for the trial
court to render judgment against herein
respondent whose title to the subject parcels of
land remains indefeasible and conclusive, there
being no allegation in the amended complaint
that it allegedly acquired the said properties in bad
faith.
Petitioners' reliance on Mathay v. Court of

Appeals12 which held that "No one can transfer a
greater right to another than he himself has" is not
applicable to the instant case for the reason that
the said legal maxim, according to the same case,
only holds true if the same land had already been
registered and an earlier certificate for the same is
in existence. In the case at bar, the petitioners no
longer have any title to the subject two (2) parcels
of land inasmuch as petitioners spouses Manuel
Chu, Sr. and Catalina B. Chu, as sellers, have
consented to the cancellation of their certificates
of title in favor of Cunanan, as buyer. Thus, the
conclusiveness of respondent's certificates of title is
binding on the whole world including the
petitioners.
thereon
due
to
the
conclusiveness of his title.
indefeasibility
Petitioners contend that since the ground of

respondent's motion to dismiss is lack of cause of
action, the allegations in the amended complaint
are hypothetically assumed to be true or admitted,
and consequently the respondent's claim of good
faith is defeated by its knowledge of the allegedly
admitted facts in the amended complaint
regarding the fraudulent circumstances involving
the passing of the titles. We find that the technical
or assumed admission on the part of respondent, in
such an event, does not defeat its status as an
innocent purchaser for value. The defense of good
faith of respondent is valid for the reason that such
mental disposition was present at the time it
purchased those two (2) parcels of land from the
Carlos spouses up to the time the corresponding
two (2) transfer certificates of title thereto were
issued in its favor. What is important is that when
respondent bought the subject properties, it was
not aware of any defect in the covering
certificates of title thereto at the time of such
purchase. There is no allegation to the contrary in
the amended complaint. Therefore, the title of
respondent, being that of an innocent purchaser
for value, remains valid.
By allowing the cancellation of their certificates of
title and the issuance of new ones in lieu thereof in
the name of Trinidad N. Cunanan despite alleged
non-payment of the full purchase price for their
subject two (2) parcels of land, the petitioners took
the risk of losing their titles on the said properties
inasmuch as the subject deed of sale with
assumption of mortgage constitutes their consent
and announcement to the whole world that
Cunanan was indeed the legal owner of the
Petitioners also claim that since the orders of the

trial court denying their motion to dismiss are merely
interlocutory, the same cannot be the subject of a
petition for certiorari. However, as correctly pointed
out by the respondent, the rule admits of an
exception. Thus, where the denial of the motion to
dismiss by the trial court was tainted with grave
abuse of discretion amounting to lack or excess of
jurisdiction, as in the case at bar, the aggrieved
party may assail the order of denial on certiorari. A
wide breadth of discretion is granted in certiorari
proceedings in the interest of substantial justice and
to prevent a substantial wrong.13 The appellate
court therefore was correct in entertaining the
petition for the reason that the trial court
committed a grave abuse of discretion when it
refused to dismiss the case as against herein
respondent, despite the obvious insufficiency of the
amended complaint against the respondent. To
implead the herein respondent in the case at bar,
absent an allegation of bad faith on its part, is to
undermine a well-settled rule protecting innocent
purchasers for value and the indefeasibility and
conclusiveness of certificates of title issued under
the Torrens System.
In view of the foregoing, there is no need to discuss
the assignment of error as to whether the spouses
Amado E. Carlos and Gloria A. Carlos (sellers of the
subject titled parcels of land to respondent) are
real and indispensable parties in the case at bar.
WHEREFORE, the petition is DENIED for lack of cause
of action. With costs against the petitioners.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and Buena, JJ .,
concur.
#7
SUPREME COURT
Page 24 of 158
Manila
FIRST DIVISION
G.R. No. 80687
April 10, 1989

DIRECTOR OF LANDS, petitioner,
vs.
HONORABLE MARIANO M. UMALI, in his capacity as
Presiding Judge, Regional Trial Court, Fourth
Judicial Region, Branch 23, Trece Martires City,
REMEDIOS MICLAT, JUAN C. PULIDO, ROSALINA
NAVAL, and the REGISTER OF DEEDS OF CAVITE,
respondents.
SYLLABUS
1.
LAND REGISTRATION; TORRENS SYSTEM;
PROTECTS INNOCENT TRANSFEREES FOR VALUE;
TITLES OBTAINED RENDERED INDEFEASIBLE AND
CONCLUSIVE. There is no allegation in the
complaint filed by the petitioner that any one of
the defendants was privy to the forged joint
affidavit or that they had acquired the subject land
in bad faith. Their status as innocent transferees for
value was never questioned in that pleading. Not
having been disproved, that status now accords to
them the protection of the Torrens System and
renders the titles obtained by them thereunder
indefeasible and conclusive. The rule will not
change despite the flaw in TCT No. 55044. Section
39 of the Land Registration Act clearly provided:
"Sec. 39. Every person receiving a certificate of title
in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes
a certificate of title for value in good faith shall hold
the same free of all encumbrance except those
noted on said certificate."
2.
ID.; ID.; ID.; PIERO v. DIRECTOR OF LANDS,
57 SCRA 386, NOT APPLICABLE IN CASE AT BAR.
The decision in Piero v. Director of Lands is not
applicable to the present proceeding because the
lands involved in that case had not yet passed to
the hands of an innocent purchaser for value. They
were still held by the Pieros. The action for
reversion was filed by the government against
them as the original transferees of the properties in
question. They were the direct grantees of the free
patents issued by the government pursuant to
which the corresponding certificates of title were
issued under the Torrens system. The fraud alleged
by the government as a ground for the reversion
sought was imputable directly to the Pieros, who
could not plead the status of innocent purchasers
for value. The difference between them and the
private respondents is that the latter acquired the
land in question not by direct grant but in fact after
several transfers following the original sale thereof
to Bobadilla in 1910. The presumption is that they
are innocent transferees for value in the absence
of evidence to the contrary.
3.
ID.; ID.; SUBJECT LAND NO LONGER PART OF
PUBLIC DOMAIN; LAND REGISTRATION ACT, NOW
CALLED
"PROPERTY
REGISTRATION
DECREE"
GOVERNS. The land being now registered under
the Torrens system in the names of the private
respondents, the government has no more control
or jurisdiction over it. It is no longer part of the
public domain or, as the Solicitor General contends
as if it made any difference of the Friar Lands.
The subject property ceased to be public land
when OCT No. 180 was issued to Florentina
Bobadilla in 1910 or at the latest from the date it
was sold to the Cenizals in 1971 upon full payment
of the purchase price. As private registered land, it
is governed by the provisions of the Land
Registration Act, now denominated the Property
Registration Decree, which applies even to the
government. The pertinent provision of the Land
Registration Act was Section 122, which read as
follows: Sec. 122. "Whenever public lands in the
Philippine Islands belonging to the Government of
the United States or to the Government of the
Philippine Islands are alienated, granted, or
conveyed to persons or to public or private
corporations, the same shall be brought forthwith
under the operation of this Act and shall become
registered lands." This should be related to Section
12 of the Friar Lands Act, providing thus: "Sec. 12. . .
. 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 (Sec. 122) of the Land
Registration Act."
4.
ID.; ID.; ORIGINAL TRANSFER OF LAND,
MERELY VOIDABLE, NOT VOID AB-INITIO; LAND
CEASES TO BE PUBLIC UPON REGISTRATION AND
ISSUANCE OF CERTIFICATE OF TITLE. The petitioner
errs in arguing that the original transfer was null and
void ab initio, for the fact is that it is not so. It was
only voidable. The land remained private as long
as the title thereto had not been voided, but it is
too late to do that now. As the Court has held in
Ramirez vs. Court of Appeals. (30 SCRA 301): "A
certificate of title fraudulently secured is not null
and void ab initio, unless the fraud consisted in
misrepresenting that the land is part of the public
domain, although it is not. In such case the nullity
arises, not from the fraud or deceit, but from the
fact that the land is not under the jurisdiction of the
Bureau of Lands. Inasmuch as the land involved in
the present case does not belong to such
category. OCT No. 282-A would be merely
voidable or reviewable. . . . Once a patent is
registered and the corresponding certificate of title
is issued, the land ceases to be part of public
domain and becomes private property over which
the director of Lands has neither control nor
jurisdiction. A public land patent, when registered
in the corresponding Register of Deeds, is a
veritable Torrens Title, and becomes as indefeasible
as Torrens Title upon the expiration of one (1) year
from the date of issuance thereof."
Page 25 of 158
CRUZ, J.:
The petitioner seeks reversion of a parcel of land on
the ground that the original sale thereof from the
government was tainted with fraud because based
on a forgery and therefore void ab initio. The
present holders of the property claiming to be
innocent purchasers for value and not privy to the
alleged forgery, contend that the action cannot lie
against them.
The land in question is situated in Tanza, Cavite,
and consists of 78,865 square meters. 1 It was
originally purchased on installment from the
government on July 1, 1910 by Florentina Bobadilla,
who allegedly transferred her rights thereto in favor
of Martina, Tomasa, Gregorio and Julio, all
surnamed Cenizal, in 1922. 2 Tomasa and Julio
assigned their shares to Martina, Maria and
Gregorio. 3 In 1971 these three assignees
purportedly signed a joint affidavit which was filed
with the Bureau of Lands to support their claim that
they were entitled to the issuance of a certificate
of title over the said land on which they said they
had already made full payment. 4 On the basis of
this affidavit, the Secretary of Agriculture and
Natural Resources executed Deed No. V-10910
(Sale Certificate No. 1280) on September 10, 1971,
in favor of the said affiants. 5 Subsequently, on
October 13, 1971, TCT No. 55044 (replacing
Bobadilla's OCT No. 180) was issued by the register
of deeds of Cavite in favor of Maria Cenizal,
Gregorio Cenizal, and (in lieu of Martina Cenizal)
Rosalina Naval, Luz Naval, and Enrique Naval. 6
When the complaint for reversion was filed on
October 10, 1985, the registered owners of the
land, following several transfers, were Remedios
Miclat under TCT No. 80392, Juan C. Pulido under
TCT No. 80393, and Rosalina, Luz and Enrique Naval
under TCT No. 80394. 7 They were named as
defendants and asked to return the property to the
State on the aforestated grounds of forgery and
fraud. The plaintiff claimed that Gregorio Cenizal
having died on February 25, 1943, and Maria
Cenizal on January 8, 1959, they could not have
signed the joint affidavit dated August 9, 1971, on
which Deed No. V-10910 (Sale Certificate No. 1280)
was based. 8
In their answer, Pulido and the Navals denied any
participation in the joint affidavit and said they had
all acquired the property in good faith and for
value. By way of affirmative defenses, they invoked
estoppel, laches, prescription and res judicata. 9
For her part, Miclat moved to dismiss the complaint,
contending that the government had no cause of
action against her because there was no
allegation that she had violated the plaintiff's right,
that the government was not the real party-ininterest because the subject land was already
covered by the Torrens system, and that in any
event the action was barred by prescription or

laches. 10
The respondent court, in its order dated October 2,
1987, granted the motion. 11 The petitioner,
contesting this order, now insists that it has a valid
cause of action and that it is not barred by either
prescription or res judicata.
The Court will observe at the outset that the joint
affidavit is indeed a forgery. Apart from the fact
that two of the supposed affiants were already
dead at the time they were supposed to have
signed the sworn statement, even the most cursory
examination of the document will show that the
three signatures affixed thereto were written by one
and the same hand. 12 There is no doubt about it. It
is indeed difficult to understand how such an
obvious forgery could have deceived the people in
the Bureau of Lands who processed the papers of
this case and made possible the fraudulent transfer
of the land.
But given such deception, would the sale itself be
considered null and void from the start, as the
petitioner insists, so as to make all titles derived
therefrom also ineffectual ab initio?
We agree with the contention that there is no
allegation in the complaint 13 filed by the petitioner
that any one of the defendants was privy to the
forged joint affidavit or that they had acquired the
subject land in bad faith. Their status as innocent
transferees for value was never questioned in that
pleading. Not having been disproved, that status
now accords to them the protection of the Torrens
System and renders the titles obtained by them
thereunder indefeasible and conclusive. The rule
will not change despite the flaw in TCT No. 55044.
Section 39 of the Land Registration Act clearly
provided:
Sec. 39. Every person receiving a certificate of title
in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes
a certificate of title for value in good faith shall hold
the same free of all encumbrance except those
noted on said certificate.
The rulings on this provision are indeed as numerous
as they are consistent:
Thus, under Section 44 of P.D. 1529 (then Sec. 39 of
the Land Reg. Act), every registered owner
receiving a certificate of title in pursuance of a
decree of registration, and every subsequent
purchaser of registered land taking a certificate of
title for value and in good faith, shall hold the same
free from all encumbrances except those noted on
the certificate and any of the encumbrances
which may be subsisting, and enumerated in the
law. Under said provision, claims and liens of
Page 26 of 158
whatever character, except those mentioned by

law as existing against the land prior to the
issuance of certificate of title, are cut off by such
certificate if not noted thereon, and the certificate
so issued binds the whole world, including the
government. 14
xxx
xxx
xxx
A holder in bad faith is not entitled to the

protection of Sec. 39 of the Land Registration Act.
15
xxx
xxx
xxx
The real purpose of the Torrens System of land

registration is to quiet title to land; to put a stop
forever to any question of the legality of the title,
except claims which were noted at the time of
registration in the certificate, or which may arise
subsequent thereto. That being the purpose of the
law, it would seem that once the title was
registered, the owner might rest secure, without the
necessity of waiting in the portals of the court, or
sitting in the "mirador de su casa," to avoid the
possibility of losing his land. 16
The decision in Piero v. Director of Lands 17 is not
applicable to the present proceeding because the
lands involved in that case had not yet passed to
the hands of an innocent purchaser for value. They
were still held by the Pineros. The action for
reversion was filed by the government against
them as the original transferees of the properties in
question. They were the direct grantees of the free
patents issued by the government pursuant to
which the corresponding certificates of title were
issued under the Torrens system. The fraud alleged
by the government as a ground for the reversion
sought was imputable directly to the Pineros, who
could not plead the status of innocent purchasers
for value.
The difference between them and the private
respondents is that the latter acquired the land in
question not by direct grant but in fact after several
transfers following the original sale thereof to
Bobadilla in 1910. The presumption is that they are
innocent transferees for value in the absence of
evidence to the contrary. The petitioner contends
that it was Pedro Miclat who caused the
falsification of the joint affidavit, but that is a bare
and hardly persuasive allegation, and indeed,
even if true, would still not prove any collusion
between him and the private respondents. The
mere fact that Remedios Miclat was the daughter
and heiress of Miclat, without more, would not
necessarily visit upon her the alleged sins of her
father.
The Solicitor General also argues that Remedios is
an extension of the juridical personality of her father
and so cannot claim to be an innocent purchaser
for value because she is charged with knowledge

of her father's deceit. Such conclusion has no basis
in fact or law. Moreover, there is evidence that
Remedios did not merely inherit the land but
actually purchased it for valuable consideration
and without knowledge of its original defect. The
agreement to subdivide, 18 which she presented to
show that she had acquired the land for valuable
confederation, is more acceptable than the
conjectures of the petitioner. It is also consonant
with the presumption of good faith.
The land being now registered under the Torrens
system in the names of the private respondents, the
government has no more control or jurisdiction over
it. It is no longer part of the public domain or, as the
Solicitor General contends as if it made any
difference of the Friar Lands. The subject
property ceased to be public land when OCT No.
180 was issued to Florentina Bobadilla in 1910 or at
the latest from the date it was sold to the Cenizals
in 1971 upon full payment of the purchase price. As
private registered land, it is governed by the
provisions of the Land Registration Act, now
denominated the Property Registration Decree,
which applies even to the government.
The pertinent provision of the Land Registration Act
was Section 122, which read as follows:
Sec. 122. Whenever public lands in the Philippine
Islands belonging to the Government of the United
States or to the Government of the Philippine
Islands are alienated, granted, or conveyed to
persons or to public or private corporations, the
same shall be brought forthwith under the
operation of this Act and shall become registered
lands. 19
This should be related to Section 12 of the Friar
Lands Act, providing thus:
Sec. 12. . . . 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 (Sec. 122) of
the Land Registration Act.
The petitioner claims that it is not barred by the
statute of limitations because the original transfer of
the land was null and void ab initio and did not
give rise to any legal right. The land therefore
continued to be part of the public domain and the
action for this reversion could be filed at any time.
The answer to that is the statement made by the
Court in Heirs of Tanak Pangawaran Patiwayan v.
Martinez 20 that "even if respondent Tagwalan
eventually is proven to have procured the patent
and the original certificate of title by means of
fraud, the land would not revert back to the State,"
Page 27 of 158
precisely because it has become private land.

Moreover, the petitioner errs in arguing that the
original transfer was null and void ab initio, for the
fact is that it is not so. It was only voidable. The land
remained private as long as the title thereto had
not been voided, but it is too late to do that now.
As the Court has held in Ramirez vs. Court of
Appeals. 21
was later sustained by this Court. 24 While this is not

to say that the present petition is barred by res
judicata, as the government was not a party in
these cases, it does suggest that the issue it wants
to rake up now has long been settled. It should not
be the subject of further judicial inquiry, especially
at this late hour. Litigation must stop at some point
instead of dragging on interminably.
A certificate of title fraudulently secured is not null

and void ab initio, unless the fraud consisted in
misrepresenting that the land is part of the public
domain, although it is not. In such case the nullity
arises, not from the fraud or deceit, but from the
fact that the land is not under the jurisdiction of the
Bureau of Lands. Inasmuch as the land involved in
the present case does not belong to such
category, OCT No. 282-A would be merely
voidable or reviewable (Vda. de Cuaycong vs.
Vda. de Sengbengco, 110 Phil. 113): (1) upon proof
of actual fraud; (2) although valid and effective,
until annulled or reviewed in a direct proceeding
therefor (Legarda vs. Saleeby, 31 Phil. 590), not
collaterally (Sorongon vs. Makalintal, 80 Phil. 259,
262; Director of Lands vs. Gan Tan, 89 Phil. 184;
Henderson vs. Garrido, 90 Phil. 624,630; Samonte vs.
Sambilon, 107 Phil. 198,200); (3) within the statutory
period therefor (Sec. 38, Act 496; Velasco vs.
Gochuico 33 Phil. 363; Delos Reyes vs. Paterno, 34
Phil. 420; Snyder vs. Provincial Fiscal, 42 Phil. 761,
764; Reyes vs. Borbon, 50 Phil. 791; Clemente vs.
Lukban, 53 Phil. 931; Sugayan vs. Solis, 56 Phil. 276,
279; Heirs of Lichauco vs. Director of Lands, 70 Phil.
69); (4) after which, the title would be conclusive
against the whole world, including the Government
(Legarda vs. Saleeby, 31 Phil. 590, 596; Central
Capiz vs. Ramirez, 40 Phil. 883; J. M. Tuason vs.
Santiago, 99 Phil. 615).
The Torrens system was adopted in this country

because it was believed to be the most effective
measure to guarantee the integrity of land titles
and to protect their indefeasibility once the claim
of ownership is established and recognized. If a
person purchases a piece of land on the assurance
that the seller's title thereto is valid, he should not
run the risk of being told later that his acquisition
was ineffectual after all. This would not only be
unfair to him. What is worse is that if this were
permitted, public confidence in the system would
be eroded and land transactions would have to be
attended by complicated and not necessarily
conclusive investigations and proof of ownership.
The further consequence would be that land
conflicts could be even more numerous and
complex than they are now and possibly also more
abrasive if not even violent. The government,
recognizing the worthy purposes of the Torrens
system, should be the first to accept the validity of
titles issued thereunder once the conditions laid
down by the law are satisfied. As in this case.
And as we declared in Municipality of Hagonoy vs.

Secretary of Agriculture and Natural Resources: 22
ACCORDINGLY, the petition is DENIED, without any

pronouncement as to costs. It is so ordered.
. . . Once a patent is registered and the

corresponding certificate of title is issued, the land
ceases to be part of public domain and becomes
private property over which the director of Lands
has neither control nor jurisdiction. A public land
patent, when registered in the corresponding
Register of Deeds, is a veritable Torrens Title, and
becomes as indefeasible as Torrens Title upon the
expiration of one (1) year from the date of issuance
thereof. Said title is, like one issued pursuant to a
judicial decree, subject to review within one (1)
year from the date of the issuance of the patent.
Beyond said period, the action for the annulment
of the certificate of title issued upon the land grant
can no longer be entertained. (Emphasis supplied).
Narvasa,
Gancayco,
Medialdea, JJ., concur.
It is worth observing here that in two earlier cases,

the private respondents were challenged by the
heirs of Matilde Cenizal Arguson but both were
dismissed and the titles of the registered owners
were confirmed by the trial court. 23 This decision
We find that the private respondents are

transferees in good faith and for value of the
subject property and that the original acquisition
thereof, although fraudulent, did not affect their
own titles. These are valid against the whole world,
including the government.
Grio-Aquino
#8
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171514
July 18, 2012
REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
DOMINGO ESPINOSA, Respondent.
DECISION
REYES, J.:
and
Page 28 of 158
This is a petition for review on certiorari from the

Decision1 dated November 11, 2004 and
Resolution2 dated February 13, 2006 of the Court of
Appeals in CA-G.R. CV No. 72456.
meters and that upon the finality of this decision, let

a corresponding decree of registration be issued in
favor of the herein applicant in accordance with
Section 39, P.D. 1529.
On March 3, 1999, respondent Domingo Espinosa

(Espinosa) tiled with the Municipal Trial Court (MTC)
of Consolacion, Cebu an application3 for land
registration covering a parcel of land with an area
of 5,525 square meters and situated in Barangay
Cabangahan, Consolacion, Cebu. In support of his
application, which was docketed as LRC Case No.
N-81, Espinosa alleged that: (a) the property, which
is more particularly known as Lot No. 8499 of Cad.
545-D (New), is alienable and disposable; (b) he
purchased the property from his mother, Isabel
Espinosa (Isabel), on July 4, 1970 and the latters
other heirs had waived their rights thereto; and (c)
he and his predecessor-in-interest had been in
possession of the property in the concept of an
owner for more than thirty (30) years.
SO ORDERED.10
Espinosa submitted the blueprint of Advanced

Survey Plan 07-0008934 to prove the identity of the
land. As proof that the property is alienable and
disposable, he marked as evidence the annotation
on the advance survey plan made by Cynthia L.
Ibaez, Chief of the Map Projection Section, stating
that "CONFORMED PER L.C. MAP NOTATION L.C.
Map No. 2545 Project No. 28 certified on June 25,
1963, verified to be within Alienable & Disposable
Area".5 Espinosa also presented two (2) tax
declarations for the years 1965 and 1974 in Isabels
name Tax Declaration Nos. 013516 and 06137 to
prove that she had been in possession of the
property since 1965. To support his claim that he
had been religiously paying the taxes due on the
property, Espinosa presented a Certification6
dated December 1, 1998 issued by the Office of
the Treasurer of Consolacion, Cebu and three (3)
tax declarations for the years 1978, 1980 and 1985
Tax Declaration Nos. 14010, 17681 and 010717.8
The Court is likewise convinced that the applicant

and that of predecessor-in-interest have been in
open, actual, public, continuous, adverse and
under claim of title thereto within the time
prescribed by law (Sec. 14, sub-par. 1, P.D. 1529)
and/or in accordance with the Land Registration
Act.11
Petitioner opposed Espinosas application, claiming

that: (a) Section 48(b) of Commonwealth Act No.
141 otherwise known as the "Public Land Act" (PLA)
had not been complied with as Espinosas
predecessor-in-interest possessed the property only
after June 12, 1945; and (b) the tax declarations do
not prove that his possession and that of his
predecessor-in-interest are in the character and for
the length of time required by law.
On August 18, 2000, the MTC rendered a
Judgment9 granting Espinosas petition for
registration, the dispositive portion of which states:
WHEREFORE, and in view of all the foregoing,
judgment is hereby rendered ordering for the
registration and the confirmation of title of Espinosa
over Lot No. 8499, Cad 545-D (New), situated at
Barangay Cabangahan, Consolacion, Cebu,
Philippines, containing an area of 5,525 square
According to the MTC, Espinosa was able to prove

that the property is alienable and disposable and
that he complied with the requirements of Section
14(1) of Presidential Decree (P.D.) No. 1529.
Specifically:
After a careful consideration of the evidence
presented in the above-entitled case, the Court is
convinced, and so holds, that Espinosa was able to
establish his ownership and possession over the
subject lot which is within the area considered by
the Department of Environment and Natural
Resources (DENR) as alienable and disposable land
of the public domain.
Petitioner appealed to the CA and pointed

Espinosas failure to prove that his possession and
that of his predecessor-in-interest were for the
period required by law. As shown by Tax
Declaration No. 013516, Isabels possession
commenced only in 1965 and not on June 12, 1945
or earlier as required by Section 48(b) of the PLA.
On the other hand, Espinosa came into possession
of the property only in 1970 following the sale that
transpired between him and his mother and the
earliest tax declaration in his name was for the year
1978. According to petitioner, that Espinosa and his
predecessor-in-interest
were
supposedly
in
possession for more than thirty (30) years is
inconsequential absent proof that such possession
began on June 12, 1945 or earlier.12
Petitioner also claimed that Espinosas failure to
present the original tracing cloth of the survey plan
or a sepia copy thereof is fatal to his application.
Citing Del Rosario v. Republic of the Philippines13
and Director of Lands v. Judge Reyes,14 petitioner
argued that the submission of the original tracing
cloth is mandatory in establishing the identity of the
land subject of the application.15
Further, petitioner claimed that the annotation on
the advance survey plan is not the evidence
admissible to prove that the subject land is
alienable and disposable.16
By way of the assailed decision, the CA dismissed
petitioners appeal and affirmed the MTC Decision
Page 29 of 158
dated August 18, 2000. The CA ruled that

possession for at least thirty (30) years, despite the
fact that it commenced after June 12, 1945,
sufficed to convert the property to private. Thus:
The contention of petitioner is not meritorious on
the following grounds:
a) The record of the case will show that Espinosa
has successfully established valid title over the
subject land and that he and his predecessor-ininterest have been in continuous, adverse, public
and undisturbed possession of said land in the
concept of an owner for more than 30 years before
the filing of the application. Established
jurisprudence has consistently pronounced that
"open, continuous and exclusive possession for at
least 30 years of alienable public land ipso jure
converts the same into private property (Director of
Lands vs. Intermediate Appellate Court, 214 SCRA
604). This means that occupation and cultivation
for more than 30 years by applicant and his
predecessor-in-interest vests title on such applicant
so as to segregate the land from the mass of public
land (National Power Corporation vs. Court of
Appeals, 218 SCRA 41); and
from the Land Registration Commission for purposes

of comparison, should not militate against the rights
of the applicant. Such is especially true in this case
where no clear, strong, convincing and more
preponderant proof has been shown by the
oppositor to overcome the correctness of said
plans which were found both by the lower court
and the Court of Appeals as conclusive proofs of
the description and identities of the parcels of land
contained therein."
There is no dispute that, in case of Del Rosario vs.
Republic, supra the Supreme Court pronounced
that the submission in evidence of the original
tracing cloth plan, duly approved by the Bureau of
Lands, in cases for application of original
registration of land is a mandatory requirement,
and that failure to comply with such requirement is
fatal to ones application for registration. However,
such pronouncement need not be taken as an iron
clad rule nor to be applied strictly in all cases
without due regard to the rationale behind the
submission of the tracing cloth plan.
x x x:
xxxx
b) It is true that the requirement of possession since

June 12, 1945 is the latest amendment of Section
48(b) of the Public Land Act (C.A. No. 141), but a
strict implementation of the law would in certain
cases result in inequity and unfairness to Espinosa.
As wisely stated by the Supreme Court in the case
of Republic vs. Court of Appeals, 235 SCRA 567:
"Following the logic of the petitioner, any transferee
is thus foreclosed to apply for registration of title
over a parcel of land notwithstanding the fact that
the transferor, or his predecessor-in-interest has
been in open, notorious and exclusive possession
thereof for thirty (30) years or more."17
The CA also ruled that registration can be based on
other documentary evidence, not necessarily the
original tracing cloth plan, as the identity and
location of the property can be established by
other competent evidence.
Again, the aforesaid contention of [the petitioner]
is without merit. While the best evidence to identify
a piece of land for registration purposes may be
the original tracing cloth plan from the Land
Registration Commission, the court may sufficiently
order the issuance of a decree of registration on
the basis of the blue print copies and other
evidence (Republic of the Philippines vs.
Intermediate Appellate Court, G.R. No. L-70594,
October 10, 1986). The said case provides further:
"The fact that the lower court finds the evidence of
the applicant sufficient to justify the registration and
confirmation of her titles and did not find it
necessary to avail of the original tracing cloth plan
As long as the identity of and location of the lot

can be established by other competent evidence
like a duly approved blueprint copy of the
advance survey plan of Lot 8499 and technical
description of Lot 8499, containing and identifying
the boundaries, actual area and location of the lot,
the presentation of the original tracing cloth plan
may be excused.18
Moreover, the CA ruled that Espinosa had duly
proven that the property is alienable and
disposable:
Espinosa has established that Lot 8499 is alienable
and disposable. In the duly approved Advance
Survey Plan As-07-0000893 (sic) duly approved by
the Land Management Services, DENR, Region 7,
Cebu City, it is certified/verified that the subject lot
is inside the alienable and disposable area of the
disposable and alienable land of the public
domain.19
Petitioner moved for reconsideration but this was
denied by the CA in its Resolution20 dated
February 13, 2006.
Petitioners Case
Petitioner entreats this Court to reverse and set
aside the CAs assailed decision and attributes the
following errors: (a) Espinosa failed to prove by
competent evidence that the subject property is
alienable and disposable; (b) jurisprudence
dictates that a survey plan identifies the property in
preparation for a judicial proceeding but does not
Page 30 of 158
convert the property into alienable, much less,

private; (c) under Section 17 of P.D. No. 1529, the
submission of the original tracing cloth plan is
mandatory to determine the exact metes and
bounds of the property; and (d) a blueprint copy of
the survey plan may be admitted as evidence of
the identity and location of the property only if it
bears the approval of the Director of Lands.
(2) Those who have acquired ownership of private

lands by prescription under the provision of existing
laws.
Obviously, the confusion that attended the lower
courts disposition of this case stemmed from their
failure to apprise themselves of the changes that
Section 48(b) of the PLA underwent over the years.
Section 48(b) of the PLA originally states:
Issues
The resolution of the primordial question of whether
Espinosa has acquired an imperfect title over the
subject property that is worthy of confirmation and
registration is hinged on the determination of the
following issues:
a. whether the blueprint of the advanced survey
plan substantially complies with Section 17 of P.D.
No. 1529; and
Sec. 48. The following described citizens of the

Philippines, occupying lands of the public domain
or claiming to own any such lands or an interest
therein, but whose titles have not been perfected
or completed, may apply to the Court of First
Instance of the province where the land is located
for confirmation of their claims and the issuance of
a certificate of title therefor, under the Land
Registration Act, to wit:
xxxx
b. whether the notation on the blueprint copy of

the plan made by the geodetic engineer who
conducted the survey sufficed to prove that the
land applied for is alienable and disposable.
Our Ruling
The lower courts were unanimous in holding that
Espinosas application is anchored on Section 14(1)
of P.D. No. 1529 in relation to Section 48(b) of the
PLA and the grant thereof is warranted in view of
evidence supposedly showing his compliance with
the requirements thereof.
(b) Those who by themselves or through their

predecessors-in-interest have been in the open,
continuous, exclusive and notorious possession and
occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or
ownership, except as against the Government,
since July twenty-sixth, eighteen hundred and
ninety-four, except when prevented by war or
force majeure. These shall be conclusively
presumed to have performed all the conditions
essential to a Government grant and shall be
entitled to a certificate of title under the provisions
of this chapter.
This Court is of a different view.

Based on Espinosas allegations and his supporting
documents, it is patent that his claim of an
imperfect title over the property in question is
based on Section 14(2) and not Section 14(1) of
P.D. No. 1529 in relation to Section 48(b) of the PLA.
Espinosa did not allege that his possession and that
of his predecessor-in-interest commenced on June
12, 1945 or earlier as prescribed under the two (2)
latter provisions. On the contrary, Espinosa
repeatedly alleged that he acquired title thru his
possession and that of his predecessor-in-interest,
Isabel, of the subject property for thirty (30) years, or
through prescription. Therefore, the rule that should
have been applied is Section 14(2) of P.D. No. 1529,
which states:
Sec. 14. Who may apply. The following persons
may file in the proper Court of First Instance an
application for registration of title to land, whether
personally or through their duly authorized
representatives:
xxxx
Thus, the required possession and occupation for

judicial confirmation of imperfect title was since
July 26, 1894 or earlier.
On June 22, 1957, Republic Act (R.A.) No. 1942
amended Section 48(b) of the PLA by providing a
thirty (30)-year prescriptive period for judicial
confirmation of imperfect title. Thus:
ownership, for at least thirty years immediately
preceding the filing of the application for
confirmation of title except when prevented by
war or force majeure. These shall be conclusively
of this chapter.
On January 25, 1977, P.D. No. 1073 was issued,
changing the requirement for possession and
occupation for a period of thirty (30) years to
Page 31 of 158
possession and occupation since June 12, 1945 or

earlier. Section 4 of P.D. No. 1073 states:
Sec. 4. The provisions of Section 48(b) and Section
48(c), Chapter VIII of the Public Land Act are
hereby amended in the sense that these provisions
shall apply only to alienable and disposable lands
of the public domain which have been in open,
occupation by the applicant himself or thru his
predecessor-in-interest, under a bona fide claim of
acquisition of ownership, since June 12, 1945.
On June 11, 1978, P.D. No. 1529 was enacted.
Notably, the requirement for possession and
occupation since June 12, 1945 or earlier was
adopted under Section 14(1) thereof.
P.D. No. 1073, in effect, repealed R.A. No. 1942
such that applications under Section 48(b) of the
PLA filed after the promulgation of P.D. No. 1073
should allege and prove possession and
occupation that dated back to June 12, 1945 or
earlier. However, vested rights may have been
acquired under Section 48(b) prior to its
amendment by P.D. No. 1073. That is, should
petitions for registration filed by those who had
already been in possession of alienable and
disposable lands of the public domain for thirty (30)
years at the time P.D. No. 1073 was promulgated
be denied because their possession commenced
after June 12, 1945? In Abejaron v. Nabasa,21 this
Court resolved this legal predicament as follows:
However, as petitioner Abejarons 30-year period of
possession and occupation required by the Public
Land Act, as amended by R.A. 1942 ran from 1945
to 1975, prior to the effectivity of P.D. No. 1073 in
1977, the requirement of said P.D. that occupation
and possession should have started on June 12,
1945 or earlier, does not apply to him. As the Susi
doctrine holds that the grant of title by virtue of
Sec. 48(b) takes place by operation of law, then
upon Abejarons satisfaction of the requirements of
this law, he would have already gained title over
the disputed land in 1975. This follows the doctrine
laid down in Director of Lands v. Intermediate
Appellate Court, et al., that the law cannot impair
vested rights such as a land grant. More clearly
stated, "Filipino citizens who by themselves or their
predecessors-in-interest have been, prior to the
effectivity of P.D. 1073 on January 25, 1977, in open,
domain, under a bona fide claim of acquisition of
ownership, for at least 30 years, or at least since
January 24, 1947" may apply for judicial
confirmation of their imperfect or incomplete title
under Sec. 48(b) of the Public Land Act.22
(Citations omitted)
Consequently, for one to invoke Section 48(b) and
claim an imperfect title over an alienable and
disposable land of the public domain on the basis

of a thirty (30)-year possession and occupation, it
must be demonstrated that such possession and
occupation commenced on January 24, 1947 and
the thirty (30)-year period was completed prior to
the effectivity of P.D. No. 1073.
There is nothing in Section 48(b) that would suggest
that it provides for two (2) modes of acquisition. It is
not the case that there is an option between
possession and occupation for thirty (30) years and
possession and occupation since June 12, 1945 or
earlier. It is neither contemplated under Section
48(b) that if possession and occupation of an
alienable and disposable public land started after
June 12, 1945, it is still possible to acquire an
imperfect title if such possession and occupation
spanned for thirty (30) years at the time of the filing
of the application.
In this case, the lower courts concluded that
Espinosa complied with the requirements of Section
48(b) of the PLA in relation to Section 14(1) of P.D.
No. 1529 based on supposed evidence that he and
his predecessor-in-interest had been in possession
of the property for at least thirty (30) years prior to
the time he filed his application. However, there is
nothing on record showing that as of January 25,
1977 or prior to the effectivity of P.D. No. 1073, he or
Isabel had already acquired title by means of
possession and occupation of the property for thirty
(30) years. On the contrary, the earliest tax
declaration in Isabels name was for the year 1965
indicating that as of January 25, 1977, only twelve
(12) years had lapsed from the time she first came
supposedly into possession.
The CAs reliance on Director of Lands v.
Intermediate Appellate Court23 is misplaced
considering that the application therein was filed
on October 20, 1975 or before the effectivity of P.D.
No. 1073. The same can be said with respect to
National Power Corporation v. Court of Appeals.24
The petition for registration therein was filed on
August 21, 1968 and at that time, the prevailing rule
was that provided under Section 48(b) as
amended by R.A. No. 1942.
In Republic v. Court of Appeals,25 the applicants
therein entered into possession of the property on
June 17, 1978 and filed their application on
February 5, 1987. Nonetheless, there is evidence
that the individuals from whom the applicant
purchased the property, or their predecessors-ininterest, had been in possession since 1937. Thus,
during the effectivity of Section 48(b) as amended
by R.A. No. 1942, or while the prevailing rule was
possession and occupation for thirty (30) years, or
prior to the issuance of P.D. No. 1073, the thirty (30)year prescriptive period was already completed.
Thus, assuming that it is Section 48(b) of the PLA in
relation to Section 14(1) of P.D. No. 1529 that should
Page 32 of 158
apply in this case, as the lower courts held, it was

incumbent upon Espinosa to prove, among other
things, that Isabels possession of the property
dated back at least to June 12, 1945. That in view
of the established fact that Isabels alleged
possession and occupation started much later, the
lower courts should have dismissed Espinosas
application outright.
In sum, the CA, as well as the MTC, erred in not
applying the present text of Section 48(b) of the
PLA.
That
there
were
instances
wherein
applications were granted on the basis of
possession and occupation for thirty (30) years was
for the sole reason discussed above. Regrettably,
such reason does not obtain in this case.
Being clear that it is Section 14(2) of P.D. No. 1529
that should apply, it follows that the subject
property
being
supposedly
alienable
and
disposable will not suffice. As Section 14(2)
categorically provides, only private properties may
be acquired thru prescription and under Articles
420 and 421 of the Civil Code, only those
properties, which are not for public use, public
service or intended for the development of
national wealth, are considered private. In Heirs of
Mario Malabanan v. Republic,26 this Court held
that there must be an official declaration to that
effect before the property may be rendered
susceptible to prescription:
Nonetheless, Article 422 of the Civil Code states
that "property of public dominion, when no longer
intended for public use or for public service, shall
form part of the patrimonial property of the State."
It is this provision that controls how public dominion
property may be converted into patrimonial
property susceptible to acquisition by prescription.
After all, Article 420(2) makes clear that those
property "which belong to the State, without being
for public use, and are intended for some public
service or for the development of the national
wealth" are public dominion property. For as long
as the property belongs to the State, although
already classified as alienable or disposable, it
remains property of the public dominion if when it is
"intended for some public service or for the
development of the national wealth." (Emphasis
supplied)
Accordingly, there must be an express declaration
by the State that the public dominion property is no
longer intended for public service or the
development of the national wealth or that the
property has been converted into patrimonial.
Without such express declaration, the property,
even if classified as alienable or disposable,
remains property of the public dominion, pursuant
to Article 420(2), and thus incapable of acquisition
by prescription. It is only when such alienable and
disposable lands are expressly declared by the
State to be no longer intended for public service or
for the development of the national wealth that

the period of acquisitive prescription can begin to
run. Such declaration shall be in the form of a law
duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly
authorized by law.27
Thus, granting that Isabel and, later, Espinosa
possessed and occupied the property for an
aggregate period of thirty (30) years, this does not
operate to divest the State of its ownership. The
property, albeit allegedly alienable and disposable,
is not patrimonial. As the property is not held by the
State in its private capacity, acquisition of title
thereto necessitates observance of the provisions
of Section 48(b) of the PLA in relation to Section
14(1) of P.D. No. 1529 or possession and occupation
since June 12, 1945. For prescription to run against
the State, there must be proof that there was an
official declaration that the subject property is no
longer earmarked for public service or the
development of national wealth. Moreover, such
official declaration should have been issued at
least ten (10) or thirty (30) years, as the case may
be, prior to the filing of the application for
registration. The period of possession and
occupation prior to the conversion of the property
to private or patrimonial shall not be considered in
determining completion of the prescriptive period.
Indeed, while a piece of land is still reserved for
public service or the development of national
wealth, even if the same is alienable and
disposable, possession and occupation no matter
how lengthy will not ripen to ownership or give rise
to any title that would defeat that of the States if
such did not commence on June 12, 1945 or
earlier.
At any rate, as petitioner correctly pointed out, the
notation on the survey plan does not constitute
incontrovertible evidence that would overcome
the presumption that the property belongs to the
inalienable public domain.
All lands of the public domain belong to the State,
which is the source of any asserted right to any
ownership of land. All lands not appearing to be
clearly within private ownership are presumed to
belong to the State. Accordingly, public lands not
shown to have been reclassified or released as
alienable agricultural land, or alienated to a
private person by the State, remain part of the
inalienable public domain. The burden of proof in
overcoming the presumption of State ownership of
the lands of the public domain is on the person
applying for registration (or claiming ownership),
who must prove that the land subject of the
application is alienable or disposable. To overcome
this presumption, incontrovertible evidence must
be established that the land subject of the
application (or claim) is alienable or disposable.28
Page 33 of 158
In Republic v. Sarmiento,29 this Court reiterated the

earlier ruling in Menguito v. Republic30 that the
notation made by a surveyor-geodetic engineer
that the property surveyed is alienable and
disposable is not the positive government act that
would remove the property from the inalienable
domain. Neither it is the evidence accepted as
sufficient to controvert the presumption that the
property is inalienable:
To discharge the onus, respondent relies on the
blue print copy of the conversion and subdivision
plan approved by the DENR Center which bears
the notation of the surveyor-geodetic engineer that
"this survey is inside the alienable and disposable
area, Project No. 27-B. L.C. Map No. 2623, certified
on January 3, 1968 by the Bureau of Forestry."
Menguito v. Republic teaches, however, that
reliance on such a notation to prove that the lot is
alienable is insufficient and does not constitute
incontrovertible evidence to overcome the
presumption that it remains part of the inalienable
public domain.
"To prove that the land in question formed part of

the alienable and disposable lands of the public
domain, petitioners relied on the printed words
which read: "This survey plan is inside Alienable and
Disposable Land Area, Project No. 27-B as per L.C.
Map No. 2623, certified by the Bureau of Forestry on
January 3, 1968," appearing on Exhibit "E" (Survey
Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the
1987 Constitution, provides: "All lands of the public
domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the
State. . . ."
For the original registration of title, the applicant
(petitioners in this case) must overcome the
presumption that the land sought to be registered
forms part of the public domain. Unless public land
is shown to have been reclassified or alienated to a
private person by the State, it remains part of the
inalienable public domain. Indeed, "occupation
thereof in the concept of owner, no matter how
long, cannot ripen into ownership and be
registered as a title." To overcome such
presumption, incontrovertible evidence must be
shown by the applicant. Absent such evidence, the
land sought to be registered remains inalienable.
In the present case, petitioners cite a surveyor
geodetic engineers notation in Exhibit "E"
indicating that the survey was inside alienable and
disposable land. Such notation does not constitute
a positive government act validly changing the
classification of the land in question.
Verily, a mere surveyor has no authority to reclassify

lands of the public domain. By relying solely on the
said surveyors assertion, petitioners have not
sufficiently proven that the land in question has
been declared alienable."31 (Citations omitted
and underscoring supplied)
Therefore, even if Espinosas application may not
be dismissed due to his failure to present the
original tracing cloth of the survey plan, there are
numerous grounds for its denial. The blueprint copy
of the advanced survey plan may be admitted as
evidence of the identity and location of the subject
property if: (a) it was duly executed by a licensed
geodetic engineer; (b) it proceeded officially from
the Land Management Services (LMS) of the DENR;
and (c) it is accompanied by a technical
description of the property which is certified as
correct by the geodetic surveyor who conducted
the survey and the LMS of the DENR. As ruled in
Republic v. Guinto-Aldana,32 the identity of the
land, its boundaries and location can be
established by other competent evidence apart
from the original tracing cloth such as a duly
executed blueprint of the survey plan and
technical description:
Yet if the reason for requiring an applicant to
adduce in evidence the original tracing cloth plan
is merely to provide a convenient and necessary
means to afford certainty as to the exact identity of
the property applied for registration and to ensure
that the same does not overlap with the
boundaries of the adjoining lots, there stands to be
no reason why a registration application must be
denied for failure to present the original tracing
cloth plan, especially where it is accompanied by
pieces of evidencesuch as a duly executed
blueprint of the survey plan and a duly executed
technical description of the propertywhich may
likewise substantially and with as much certainty
prove the limits and extent of the property sought
to be registered.33
However, while such blueprint copy of the survey
plan may be offered as evidence of the identity,
location and the boundaries of the property
applied for, the notation therein may not be
admitted as evidence of alienability and
disposability. In Republic v. Heirs of Juan Fabio,34
this Court enumerated the documents that are
deemed relevant and sufficient to prove that the
property is already outside the inalienable public
domain as follows:
In Republic v. T.A.N. Properties, Inc., we ruled that it
is not enough for the Provincial Environment and
Natural Resources Office (PENRO) or CENRO to
certify that a land is alienable and disposable. The
applicant for land registration must prove that the
DENR Secretary had approved the land
classification and released the land of the public
Page 34 of 158
domain as alienable and disposable, and that the

land subject of the application for registration falls
within the approved area per verification through
survey by the PENRO or CENRO. In addition, the
applicant must present a copy of the original
classification of the land into alienable and
disposable, as declared by the DENR Secretary, or
as proclaimed by the President. Such copy of the
DENR Secretarys declaration or the Presidents
proclamation must be certified as a true copy by
the legal custodian of such official record.1wphi1
These facts must be established to prove that the
land is alienable and disposable.35 (Citation
omitted)
Based on the foregoing, it appears that Espinosa
cannot avail the benefits of either Section 14(1) of
P.O. No. 1529 in relation to Section 48(b) of the PLA
or Section 14(2) of P.O. No. 1529. Applying Section
14(1) of P.O. No. 1529 and Section 48(b) of the PLA,
albeit improper, Espinosa failed to prove that: (a)
Isabel's possession of the property dated back to
June 12, 1945 or earlier; and (b) the property is
alienable and disposable. On the other hand,
applying Section 14(2) of P.O. No. 1529, Espinosa
failed to prove that the property is patrimonial. As
to whether Espinosa was able to prove that his
possession and occupation and that of Isabel were
of the character prescribed by law, the resolution
of this issue has been rendered unnecessary by the
foregoing considerations.
GIVEN DUE COURSE and GRANTED. The Decision
dated November 11, 2004 and Resolution dated
February 13, 2006 of the Court of Appeals in CAG.R. CV No. 72456 are REVERSED and SET ASIDE and
Domingo Espinosa's application for registration of
title over Lot No. 8499 of Cad. 545-D (New) located
at Barangay Cabangahan, Consolacion, Cebu is
hereby
DENIED
for
lack
of
merit.
No
pronouncement as to costs.
SO ORDERED.
#9
Supreme Court
Manila
CORONA, C.J., Chairperson,

- versus LEONARDO-DE CASTRO,
BERSAMIN,
SAN MIGUEL CORPORATION,
THE REGISTER OF DEEDS OF
CALOOCAN CITY, and THE
REGISTER OF DEEDS OF
VALENZUELA, METRO
MANILA,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:
Respondents.
February 1, 2012
x------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
Only holders of valid titles can invoke the principle
of indefeasibility of Torrens titles.
Before the Court is a Petition for Review[1] of the
April 21, 2006 Decision of the Court of Appeals (CA)
in CA-G.R. CV No. 59704, as well as its July 7, 2006
Resolution, denying reconsideration of the assailed
Decision. The dispositive portion of the April 21, 2006
Decision reads:
WHEREFORE, the appealed Decision dated August
12, 1997 is affirmed, subject to the modification that
the award of attorneys fees is reduced to
P100,000.00.
SO ORDERED.[2]
FIRST DIVISION
LEONCIO C. OLIVEROS,
represented by his heirs,* MOISES
DE LA CRUZ,** and the HEIRS OF
LUCIO DELA CRUZ, represented
by FELIX DELA CRUZ,
G.R. No. 173531
Present:
Petitioners,
The CA affirmed the trial courts judgment, which

dismissed petitioners complaint for the nullification
of the title of San Miguel Corporations (SMC)
predecessor-in-interest, Ramie Textile (Ramitex),
Inc., over Lot 1131 of the Malinta Estate and
granted Ramitex prayer for the cancellation of
petitioner Leoncio C. Oliveros (Oliveros) title over
the subject property.
Factual Antecedents
This case involves a parcel of land known as Lot
1131 (subject property) of the Malinta Estate
Page 35 of 158
located in Barrio Bagbaguin of Valenzuela, Metro

Manila.
who were judicially ejected by Ramitex from Lot

1127 two years before.[12]
Ramitex bought the subject property from coowners Tomas Soriano (Soriano) and Concepcion
Lozada (Lozada) in 1957. On the basis of such sale,
the Register of Deeds of Bulacan (Bulacan RD)
cancelled the vendors Transfer Certificate of Title
(TCT) No. 29334[3] and issued TCT No. T-18460 on
March 6, 1957 in favor of Ramitex.
Oliveros and his co-petitioners alleged that Ramitex

did not own Lot 1131 and that its individual title to
Lot 1131, TCT No. 18460, was fake and was used by
Ramitex to consolidate Lot 1131 with its other
properties in the Malinta Estate. They further
claimed that the resulting consolidated Lot 4 is not
actually a consolidation of several lots but only
contains Lot 1131, which belongs to Oliveros. Thus,
they asked for the nullification as well of Ramitex
title to consolidated Lot 4,[13] insofar as it unlawfully
included Lot 1131.
Lot 1131 is just one of the 17 lots owned by Ramitex

within the Malinta Estate. In 1986, Ramitex
consolidated and subdivided its 17 lots within the
Malinta Estate into six lots only under Consolidation
Subdivision Plan Pcs-13-000535.[4] Lot 1131, which
contains 8,950 square meters, was consolidated
with portions of Lots 1127-A and 1128-B to become
consolidated Lot No. 4 (consolidated Lot 4). The
consolidated area of Lot 4 is 16,958 square meters.
By virtue of this consolidation, the Register of Deeds
of Caloocan City (Caloocan RD) cancelled
Ramitex individual title to Lot 1131 (TCT No. T-18460)
and issued a new title, TCT No. T-137261, for the
consolidated Lot 4.
Troubles began for Ramitex on February 22, 1989,
when Oliveros filed a petition[5] in Branch 172 of
the Regional Trial Court of Valenzuela (Valenzuela
RTC) for the reconstitution of TCT No. T-17186, his
alleged title over Lot 1131 of the Malinta Estate
(reconstitution case).[6] He claimed that the
original copy was destroyed in the fire that gutted
the office of the Bulacan RD on March 7, 1987.[7]
Ramitex filed its opposition to Oliveros petition[8]
asserting that TCT No. T-17186 never existed in the
records of the Bulacan RD and cannot therefore
be reconstituted.[9] The State, through the
provincial prosecutor, also opposed on the basis
that Oliveros TCT No. T-17186, which is embodied on
a judicial form with Serial Number (Serial No.)
124604, does not come from official sources. The
State submitted a certification from the Land
Registration Authority (LRA) that its Property Section
issued the form with Serial No. 124604 to the
Register of Deeds of Davao City (Davao RD), and
not to the Bulacan RD, as claimed in Oliveros
alleged title.[10]
In light of Ramitex opposition and ownership claims
over Lot 1131, Oliveros filed a complaint for the
declaration of nullity of Ramitex title over Lot 1131
on November 16, 1990 (nullity case).[11] This
complaint was docketed as Civil Case No. 3232-V89 and raffled to Branch 172 of the Valenzuela RTC.
Oliveros claimed that he bought the subject
property sometime in November 1956 from the
spouses Domingo De Leon and Modesta Molina,
and pursuant to such sale, the Bulacan RD issued
TCT No. T-17186 in his favor on November 14, 1956.
He was joined in the suit by his alleged overseers to
Lot 1131, petitioners Moises and Felix Dela Cruz,
Given the prejudicial nature of the nullity case on

the reconstitution case, the latter was held in
abeyance until the resolution of the former.
Ramitex answered that its title over Lot 1131 is valid
and claimed continuous possession and ownership
of the subject property. It prayed for the dismissal of
petitioners complaint against it for lack of merit.[14]
Ramitex counterclaimed that it is Oliveros title, TCT
No. T-17186, that should be cancelled for being
spurious and non-existent.
During trial, [15] Oliveros testified that the Bulacan
RD lost the original of his alleged title when its office
and records were destroyed by fire on March 7,
1987. He presented a certification from the Bulacan
RD to the effect that all its records, titles and
documents were burned.[16] He also presented a
certification from the Caloocan RD to the effect
that it did not receive the original certificate of title
bearing TCT No. T-17186 from the Bulacan RD, after
Presidential
Decree
No.
824[17]
removed
jurisdiction over the Municipality of Valenzuela from
the Province of Bulacan to Caloocan.[18] The
Valenzuela RD likewise certified that it has no
record of the original of TCT No. T-17186.[19]
When questioned why the original of his title was
not transmitted to the Caloocan RD and the
Valenzuela RD when the jurisdiction over the
properties of the Malinta Estate was transferred to
these offices, Oliveros explained that it was only the
titles with new transactions that were transferred.
Since his title was dormant, meaning he did not
make any transaction on it, it was never trasmitted
to the Caloocan or Valenzuela RD.
Notably, Oliveros failed to present his owners
duplicate of TCT No. T-17186 during the entire trial
but only presented a machine copy thereof. He
claimed that he had already sold Lot 1131 to a
certain Nelson Go of DNG Realty and
Development Corporation (DNG Realty) in June of
1991,[20] and that the vendee has possession of
the owners duplicate. Oliveros explained that Go
would not lend to him the owners duplicate for
presentation to the court because of a pending
case for rescission of sale between them.[21] The
complaint for rescission alleged that Oliveros
Page 36 of 158
deceived and defrauded Nelson Go and DNG

Realty by misrepresenting ownership and actual
possession of Lot 1131, which turned out to be
owned and possessed by Ramitex.[22]
Instead of his owners duplicate, Oliveros presented
a lot data computation[23] from the Land
Management Bureau (LMB) as proof that Lot 1131
exists in the public records as comprising 16,958
square meters, not 8,950 as claimed by SMC and
Ramitex.[24] He also showed an undated and
unapproved survey plan[25] to prove that Lot 1131
was surveyed to contain the said area.[26] As
further proof of his ownership, Oliveros presented his
tax declarations covering Lot 1131.
With respect to his allegation that Ramitex title to
Lot 1131 is void, Oliveros pointed out that the title
does not contain the propertys technical
description; it was issued on March 6, 1957, the
same date that 13 other titles over other lots within
the Malinta Estate were issued in favor of Ramitex;
and the signatures of the registrar, Soledad B. De
Jesus, on the said titles were dubious.[27]
On the other hand, SMC (having substituted[28]
Ramitex as party-defendant after buying Ramitex
interests over the subject property[29]) presented
officials from various government offices to prove
that Oliveros purported title to Lot 1131 does not
actually exist in the official records.
Fortunato T. Pascual (Pascual),[30] who heads the
Property Section of the Land Registration
Authority,[31] explained that his office supplies all
the RDs throughout the country with the blank title
forms, called Judicial Form No. 109-D. Starting in
1954, Judicial Forms
No. 109-D became
accountable
forms
bearing
unique
serial
numbers.[32] Once a form is used by a registrar for
issuing a land title, the registrar has to account for
such forms by submitting a report of consumption
(of the title forms) to the LRA.[33] The Property
Section of the LRA maintains a record of all the title
forms already used by the different registers of
deeds.[34] Pascual then testified that, based on the
LRAs Record of Consumption of Judical Forms,[35]
the LRA issued Judicial Form No. 109-D with Serial
No. 124604 to the Davao RD on February 21, 1957,
and not to the Bulacan RD sometime in 1956, as
stated on Oliveros purported title.[36] As further
proof that the Bulacan RD has not been issued a
Judicial Form No. 109-D with Serial No. 124604 in
November 1956 (as stated in Oliveros title), Pascual
presented the record of consumption that was
submitted by the Bulacan RD for the said month
and year. The record states that the Bulacan RD
consumed or issued 52 pieces of Judicial Form No.
109-D, with serial numbers starting from 113292 up
to 113343 only.[37]
Atty. Aludia P. Gadia (Gadia), the Registrar of
Davao RD, confirmed Pascuals testimony. She
personally
conducted
the
research
and
verifications from her office records that Judicial

Form No. 109-D bearing Serial No. 124604 was used
for issuing TCT No. T-7522 on August 8, 1957 in the
name of a certain Consuelo Javellana, married to
Angel Javellana. She presented the cancelled
copy of TCT No. T-7522 to the court.[38] Gadia
likewise attested to the fact that the serial numbers
close to Serial No. 124604 (e.g. 124599, 124600,
124601, etc.) are all accounted for in Book No. 38
of the Davao RD.[39]
SMC then assailed Oliveros Tax Declaration (TD) No.
B-027-01995 over Lot 1131. It presented Cesar
Marquez (Marquez), the municipal assessor of the
Municipality of Valenzuela. Marquez testified that
TD No. B-027-01995, which on its face states that it
covers Lot 1131 with TCT No. T-17186,[40] is actually
a revision of TD No. B-027-01170,[41] which covers
Lot 1134 of the Malinta Estate with TCT No. T193116.[42]
Bartolome Garcia, the acting chief of the Realty
Tax Division of the Office
of the Municipal Treasurer of Valenzuela,[43]
corroborated Marquez testimony that it was only
on September 12, 1983[44] that Oliveros started
paying real estate taxes, but the said payments
were for Lot 1134,[45] not Lot 1131. Per the records
of his office, Oliveros began paying taxes for Lot
1131 only on March 12, 1990. On the other hand,
Ramitex had been paying realty taxes for Lot 1131
since 1967.[46]
Engineer Ernesto Erive (Engineer Erive), chief of the
Surveys Division of the Land Management Sector,
testified that the lot data computation and
unapproved survey plan presented by Oliveros are
used by geodetic engineers for reference purposes
only, not for registration purposes.[47]
Engineer Erive also pointed out that Oliveros title,
which describes Lot 1131 as containing 16,958
square meters, is clearly erroneous. According to
their office records, Lot 1131 of the Malinta Estate
contains 8,950 square meters only. He presented as
proof the approved survey plan for Lot 1131, Plan
SP-2906. Engineer Erive explained that it was only
after the consolidation made by Ramitex that Lot
1131 became a part of consolidated Lot 4 with the
consolidated area of 16,958 square meters.[48]
Thus, Oliveros title, unapproved survey plan and lot
data
computation
all
contain
technical
descriptions of the consolidated Lot 4 of Ramitex
Pcs-13-000-535, and not of Lot 1131 of the Malinta
Estate.[49]
Engineer Erive dispelled doubts regarding the
absence of a technical description on TCT No. (T18460) T-64433, Ramitex title over Lot 1131. He
explained that such was the usual practice with
respect to lots within the Malinta Estate; that titles
there usually include only the lot number and the
case number.[50]
Page 37 of 158
SMC also debunked the alleged parent title, from

which Oliveros title was
derived, TCT No. T-16921. For this purpose, SMC
presented Christian Bautista (Bautista), the land
registration examiner from the Valenzuela RD, who
testified that the only record it has of TCT No. T16921 pertains to Lot 20-D of the Lolomboy Estate in
the name of Beatriz Dela Cruz. It does not pertain
to Lot 1131 of the Malinta Estate and is not in the
name of Oliveros alleged transferors, Domingo De
Leon and Modesta Molina.[51]
In stark contrast, SMC established its claim to Lot
1131. Bautista presented the original copies of
Ramitex individual titles over the 16 parcels of land
within the Malinta Estate, as well as the original titles
of the consolidated lots,[52] which are all properly
recorded in the Valenzuela RD.[53] Bautista also
brought to court TCT No. (T-29334) T-63790, which is
the title of Ramitexs alleged predecessors-in-interest
to Lot 1131, Soriano and Lozada.[54]
29334, was in the name of Ramitex vendors Soriano

and Lozada, and was still in existence in the
Bulacan RD. Moreover, Entry No. 39069 can be
found on the dorsal portion thereof, which
corroborates Ramitex claim that it bought Lot 1131
from the said vendors.[64]
The trial court ruled in favor of SMC, thus:
WHEREFORE, judgment is hereby rendered as
follows:
1). Declaring TCT No. T-17186 of Oliveros as not
genuine and dismissing the above-entitled case for
lack of merit; and
2). Ordering the plaintiffs, jointly and severally, to
pay defendant SMC the amount of P700,000.00 as
attorneys fees, plus the costs of suit.
SO ORDERED.[65]
Ruling of the Court of Appeals[66]
For his rebuttal, Oliveros presented Ramon Vasquez

(Vasquez), a record custodian of the LMB assigned
to the Escolta Branch.[55] Vasquez testified that
their office has a record of an unsigned and
undated lot data computation for Lot 1131 of the
Malinta Estate in the name of Domingo De
Leon.[56] Upon cross examination, however,
Vasquez admitted that the Escolta branch had no
record of survey plans for the Malinta Estate[57]
and that a lot data computation is not used as
basis for the registration of land.[58]
Ruling of the Regional Trial Court[59]
The trial court found sufficient evidence to support
the conclusion that Oliveros TCT No. T-17186 does
not exist. It gave due credence to the certification
of the LRA that Bulacan RD never possessed, hence
could never have issued, Judicial Form No. 109-D
with Serial No. 124604.[60]
It observed that the certification from the Bulacan
RD only proved that its records and documents
were destroyed in the fire of March 1987. It did not,
in the least, prove that TCT No. T-17186 existed prior
to the fire.[61]
Further, Oliveros failed to explain why the parent
title of TCT No. T-17186 refers to a lot in the
Lolomboy Estate.[62] He did not present the deed
of sale allegedly executed in his favor by his
vendors Domingo de Leon and Modesta Molina;
nor could he produce the correct title, from which
his TCT No. T-17186 was derived.[63]
On the other hand, the trial court found
overwhelming evidence supporting SMCs claim as
to the validity of its title to the subject property. The
title from which SMCs predecessor-in-interest
Ramitex derived its own title, TCT No. (T-63790)
Petitioners appealed to the CA. They asked for the

reversal of the finding that Oliveros title over Lot
1131 is spurious and non-existent.[67] Petitioners
averred that TCT No. T-17186 was issued earlier than
Ramitex title, contains the technical description for
Lot 1131 and is signed by Soledad B. De Jesus, the
registrar of the Bulacan RD. Thus, TCT No. T-17186
enjoys the presumption of regularity accorded to
every public instrument and thus, cannot be
collaterally attacked.[68] Petitioners relied heavily
on the alleged conclusiveness of Oliveros title
based on its earlier issuance.[69]
The appellate court affirmed the trial courts
Decision.
After reviewing the factual findings of the trial
court, the CA agreed that there is no evidence
that Oliveros title came from official sources. On the
other hand, SMC adequately established the
existence and validity of its title (TCT No. T-18460), as
well as those of its predecessors titles those of
Ramitex (TCT No. T-137261) and Soriano and
Lozada (TCT No. 29334).[70] Given that these titles
exist in official sources, they are indefeasible unless
and until credible evidence is presented to obtain
their annulment on grounds of fraud. In this
instance, the CA found that Oliveros failed to
present such evidence and thus, sustained the
validity of SMCs title.
The CA however found the trial courts award of
P700,000.00 as attorneys fees excessive, and thus
reduced the same to P100,000.00.[71]
Petitioners filed a Motion for Reconsideration,[72]
which was denied for lack of merit in the appellate
courts July 7, 2006 Resolution.[73]
Hence, this petition.
Page 38 of 158
Petitioners Arguments[74]
Petitioners insist that the mere existence of Oliveros
earlier title negates the conclusiveness of Ramitex
title.[75] Oliveros TCT No. T-17186, as the older title,
should enjoy presumptive conclusiveness of
ownership and indefeasibility of title. Corollarily,
Ramitexs title being a later title should have the
presumption of invalidity. Thus, SMC has the burden
of overcoming this presumption.[76] Oliveros argues
that SMC failed to prove the validity of its title,
which should be cancelled accordingly.
Petitioners then assail the CA Decision for allowing
a collateral attack on Oliveros title. Since the
complaint filed below was for the declaration of
nullity of Ramitexs title, not Oliveros title, what
occurred below when the trial and appellate
courts nullified Oliveros title was a collateral
attack.[77]
Petitioners pray that Oliveros title over Lot 1131 be
declared valid; while that of SMC be declared null
and void.
Respondents Arguments[78]
Respondent SMC argues that the principle of
indefeasibility of titles applies only to an existing
valid title to the litigated property. In the instant
case, SMC showed that Oliveros title, while claiming
priority, is actually spurious; thus, between SMC and
Oliveros, it is only SMC which has a valid title and in
whose favor the doctrine of indefeasibility of title
applies.
SMC further stresses that Oliveros cannot assert a
right by virtue of a title, the existence of which
Oliveros cannot establish. By the best evidence
rule, the contents of a title can only be proved by
presenting the original document. Secondary
evidence, such as the ones presented by Oliveros
(photocopy of TCT No. T-17186, tax declaration,
and unapproved land surveys), are inadmissible
until the offeror has laid the predicate for the
presentation of secondary evidence. In the instant
case, Oliveros failed to lay the predicate for the
presentation
of
secondary
evidence.
The
certifications he presented from the various RDs
attest only that their offices do not have a record
of TCT No. T-17186. They did not certify that TCT No.
T-17186 existed in their records but was destroyed or
transferred to another office.
Moreover, Oliveros admits that his owners duplicate
of TCT No. T-17186 is in the possession of his vendee,
DNG Realty. Since it is not lost or destroyed, Oliveros
is not justified in not presenting it in court. Oliveros
explanation that DNG Realty will not lend him the
title is unacceptable because there is legal
recourse for such recalcitrance, which is to compel
DNG Realty to present the duplicate copy in the
instant case through a subpoena duces tecum.
Lastly, SMC argues against the validity of Oliveros

title by reiterating the evidence they presented
during trial.
Issues
Petitioners present the following issues for this Courts
resolution:[79]
1. Whether the CA erred in applying the doctrines
of indefeasibility and conclusiveness of title in favor
of respondent SMC;
2. Whether the decisions of the CA and the trial
court allowed a collateral attack on Oliveros
certificate of title.
Our Ruling
Petitioners contend that the CA erred in holding
that it was their burden to prove the invalidity of
SMCs title and that they failed to discharge such
burden. They maintain that the mere existence of a
prior title in Oliveros name suffices to create the
presumption that SMCs title, being the later title, is
void.[80] With that presumption, it was incumbent
upon SMC to prove the validity of its alleged title.
Petitioners are oversimplifying the rule. The principle
that the earlier title prevails over a subsequent one
applies when there are two apparently valid titles
over a single property. The existence of the earlier
valid title renders the subsequent title void because
a single property cannot be registered twice. As
stated in Metropolitan Waterworks and Sewerage
Systems v. Court of Appeals,[81] which petitioners
themselves cite, 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. Clearly, a
mere allegation of an earlier title will not suffice.
It is elementary that parties have the burden of
proving their respective allegations.[82] Since
petitioners allege that they have a title which was
issued earlier than SMCs title, it was their burden to
prove the alleged existence and priority of their
title. The trial and appellate courts shared
conclusion that petitioners TCT No. T-17186 does not
exist in the official records is a finding of fact that is
binding on this Court. Petitioners have not offered a
reason or pointed to evidence that would justify
overturning this finding. Neither did they assert that
this factual finding is unsubstantiated by the
records. Without a title, petitioners cannot assert
priority or presumptive conclusiveness.[83]
In contrast to petitioners, SMC adequately proved
its title to Lot 1131. SMC proved that its and its
predecessors titles to Lot 1131 all exist in the official
records, and petitioners failed to present any
convincing evidence to cast doubt on such titles.
Page 39 of 158
Thus, the CA correctly ruled that SMCs title enjoys

presumptive conclusiveness and indefeasibility
under the Torrens system.[84]
Petitioners argument that the ruling of the trial and
appellate courts allowed a collateral attack on his
title is clearly unmeritorious and easily disposed of.
In the first place, the prohibition against collateral
attack does not apply to spurious or non-existent
titles, since such titles do not enjoy indefeasibility.
Well-settled is the rule that the indefeasibility of a
title does not attach to titles secured by fraud and
misrepresentation. In view of these circumstances, it
was as if no title was ever issued in this case to the
petitioner and therefore this is hardly the occasion
to talk of collateral attack against a title.[85]
Moreover, the attack on Oliveros title was not a
collateral attack. An action or proceeding is
deemed an attack on a title when the object of
the action is to nullify the title, and thus challenge
the judgment pursuant to which the title was
decreed. The attack is direct when the object of
the action is to annul or set aside such judgment, or
to enjoin its enforcement. On the other hand, it is
indirect or collateral when, in an action or
proceeding to obtain a different relief, an attack
on the judgment is nevertheless made as an
incident thereof.[86]
Here, SMC/Ramitex assailed the validity of Oliveros
title as part of its counterclaim in an action to
declare SMC/Ramitexs title a nullity. A counterclaim
is essentially a complaint filed by the defendant
against the plaintiff and stands on the same footing
as an independent action.[87] Thus, Ramitexs
counterclaim can be considered a direct attack
on Oliveros title.
DENIED. The April 21, 2006 Decision and the July 7,
2006 Resolution of the Court of Appeals in CA-G.R.
CV No. 59704 are AFFIRMED.
SO ORDERED.
#10
FIRST DIVISION
[G.R. No. 107791. May 12, 2000]
PEPITO BERNARDO, ROSITA BERNARDO and LILY
BERNARDO, petitioners, vs. HON. COURT OF APPEALS
and FRUCTUOSO TORRES, respondents.
SYNOPSIS
Private respondent Fructuoso Torres was the
registered owner of five parcels of land located in
Sta. Rosa, Nueva Ecija. On January 24, 1957, he
mortgaged the land to the PNB. On June 22, 1960,
he again mortgaged the land to the Development
Bank of the Philippines (DBP). Two days after, or on
June 24, 1960, the same land became the subject
of a Deed of Sale with Assumption of Mortgage

executed by private respondent and his wife in
favor of spouses Modesto Bernardo and Cecilia
Buenavides,
the
predecessors-in-interest
of
petitioner. Spouses Bernardo then took possession
of the subject land which remained with them and
their successors-in-interest. However, on June 3,
1970, private respondent obtained another
agricultural loan on the said land from DBP. This
prompted the petitioners to file an Affidavit of
Adverse Claim with the Register of Deeds of Nueva
Ecija on October 16, 1970 and criminal case for
estafa against private respondent on December
28, 1970. On December 6, 1971, private respondent
filed a Complaint for Annulment of Contract,
Reconveyance with Damages against petitioners.
They alleged that they were illiterate and that
neither he nor his wife knew that the document
they signed was one for sale inasmuch as they
were made to believe that what they executed
was a contract of lease for a period of ten years in
favor of spouses Bernardo. Meanwhile, the estafa
case was held in abeyance until after termination
of the instant civil case. After trial, the lower court
dismissed the civil case on the ground that the
verbal allegations of private respondent cannot
overcome the documentary and testimonial
evidence presented by petitioners. On appeal, the
Court of Appeals reversed the decision of the lower
court. Hence, this petition.
The Court ruled that the transaction between
private respondent and the spouses Bernardo was
reduced into writing by way of a document
denominated "Deed of Sale with Assumption of
Mortgage." This document, admitted as signed by
private respondent and his wife, was duly notarized
by Notary Public Pedro B. Binuya and had two
instrumental
witnesses.
Being
a
notarized
document, it had in its favor the presumption of
regularity, and to overcome the same, there must
be evidence that is clear, convincing and more
than
merely
preponderant;
otherwise
the
document should be upheld. Far from being clear
and convincing, all that private respondent offered
by way of evidence was his and his wife's mere
denial that they had intended to sell the subject
land. Such bare and unsubstantiated denial will not
suffice to overcome the positive presumption of the
due execution of the subject Deed, being a
notarized document. Indeed, when the evidence is
conflicting, the public document must still be
upheld.
The instant Petition for Review was GRANTED and
the appealed Decision was REVERSED and SET
ASIDE.
SYLLABUS
1.
REMEDIAL LAW; EVIDENCE; NOTARIZED
DOCUMENT HAD THE PRESUMPTION OF REGULARITY.
It is a fact that the transaction between private
respondent and the spouses Bernardo was
Mortgage." This document, admitted as signed by
Page 40 of 158
private respondent and his wife, was duly notarized

by Notary Public Pedro B. Binuya and had two
instrumental
witnesses.
Being
a
notarized
than
merely
preponderant;
otherwise
the
document should be upheld.
2.
ID.; ID.; CREDIBILITY OF WITNESSES; BARE
AND UNSUBSTANTIATED DENIAL WILL NOT SUFFICE
TO OVERCOME THE POSITIVE PRESUMPTION OF DUE
EXECUTION OF INSTRUMENT. Far from being clear
and convincing, all that private respondent offered
by way of evidence were his and his wife's mere
denial that they had intended to sell the subject
land. Such bare and unsubstantiated denial will not
suffice to overcome the positive presumption of the
due execution of the subject Deed, being a
notarized document. Indeed, when the evidence is
conflicting, the public document must still be
upheld. . . . Again, mere denial by private
respondent cannot refute the contents of the
subject Deed which, from its very title, in no
uncertain terms holds out the transaction covered
as one of "Sale with Assumption of Mortgage."
Further, paragraph 4 of the document clearly and
unequivocally provides "4. That, for and in
consideration of the sum of Four Thousand Eight
Hundred Pesos (P4,800.00), Philippine currency,
receipt of which is hereby acknowledged to have
been received by the Vendors from the Vendees,
the Vendors have sold, transferred and conveyed,
and by these presents do hereby sell, transfer and
convey by way of absolute sale unto the Vendees,
their heirs, successors and assigns, the above
described parcels of land, subject to the mortgage
lien in favor of the Development Bank of the
Philippines."
3.
ID.; ID.; PAROL EVIDENCE; MUST BE CLEAR,
CONVINCING AND SUFFICIENT TO OVERTURN THE
WRITTEN
AGREEMENT. The same strict
requirements apply with respect to the contents of
the subject Deed. As held in Sierra v. Court of
Appeals "The Rules of Court provide that "when
the terms of an agreement have been reduced to
writing, it is to be considered as containing all such
terms, and, therefore, there can be, between the
parties and their successors-in-interest, no evidence
of the terms of the agreement other than the
contents of the writing." It is true that parol
evidence may be admitted to challenge the
contents of such agreement "where a mistake or
imperfection of the writing, or its failure to express
the true intent and agreement of the parties, or the
validity of the agreement is put in issue by the
pleadings." However, such evidence must be clear
and convincing and of such sufficient credibility as
to overturn the written agreement."
4.
ID.; ID.; CREDIBILITY OF WITNESSES; ONE
WHO REACHES GRADE TWO WOULD VERY WELL
KNOW THE IMPORT AND MEANING OF THE WORD
"SALE." [T]he records of the case show that
private respondent was not totally unschooled as
he, himself, testified that he reached Grade Two.

And one who reaches Grade Two would very well
know the import and meaning of the word "sale"
which appears not only in the body of the subject
document but even in its very title in capital letters.
Indeed, we cannot see how private respondent
can recognize the caption "Declaration of Real
Estate Property" and not "Deed of Sale with
Assumption of Mortgage." His knowledge of the
English language is suspiciously selective. The deed
of sale is not the only document in English
language entered into by private respondent. He
and his wife had previously entered into the two
DBP mortgage contracts which were likewise
written in English. Private respondent's own Exhibit
"F", his letter/application to DBP, is entirely written in
the English language. All told, we fail to see how
private respondent could not have known that the
document he signed was one for sale of his
property when the title thereof as well as its
provisions contained the word "sale," a simple word
he would have perfectly recognized and
understood.
5.
ID.; ID.; ID.; KNOWLEDGE OF SPECIFIC
PROVISIONS OF THE SUBJECT DOCUMENT SIGNIFIES
THAT BOTH PARTIES HAD FULL PARTICIPATION IN THE
DRAWING UP THEREOF. [W]e note that the
specific provisions of the subject document
contained details which could have been known
only to private respondent and his wife (i.e., the
mortgage with the DBP, the amount and notarial
incidents thereof, and the balance of the loan
proceeds) these signify that both of them had
full participation in the drawing up of the said
document and knew fully well what it was all
about.
6.
CIVIL LAW; OBLIGATIONS AND CONTRACTS;
ONE WHO SIGNS A CONTRACT IS PRESUMED TO
KNOW ITS CONTENTS HAVE BEEN APPLIED EVEN TO
CONTRACTS OF ILLITERATE PERSONS. [G]ranting,
without conceding, that private respondent and his
wife were both illiterate, this still does not save the
day for them. As stressed in Tan Sua Sia v. Yu Baio
Sontua, 56 Phil. 711, cited in Mata v. Court of
Appeals ". . .. The rule that one who signs a
contract is presumed to know its contents have
been applied even to contracts of illiterate persons
on the ground that if such persons are unable to
read, they are negligent if they fail to have the
contracts read to them. If a person cannot read
the instrument, it is as much his duty to procure
some reliable persons to read and explain it to him,
before he signs it, as it would be to read it before
he signed it if he were able to do so and his failure
to obtain a reading and explanation of it is such
gross negligence as will estop him from avoiding it
on the ground that he was ignorant of its contents."
7.
ID.; SPECIAL CONTRACTS; SALES; HAVING
BEEN
EFFECTED
AS
INDICATED
BY
CONTEMPORANEOUS AND SUBSEQUENT ACTS OF
PARTIES. We also find that the contemporaneous
and subsequent acts of the parties point to sale as
having been effected. Private respondent
Page 41 of 158
admitted turning over the DBP loan passbook to

the spouses Bernardo, an act which was consistent
with the assumption of mortgage referred to in the
subject document. Possession of the subject land
was also transferred to the spouses Bernardo who
by themselves and, later, through petitioners,
cultivated the same. On the part of private
respondent, it is noteworthy that from the time the
document of sale was signed, he never paid realty
taxes on the subject land, a fact inconsistent with
his claim of continued ownership. Private
respondent only paid taxes on the land in June
1970. Coincidentally, his letter/application for
agricultural loan with the DBP on May 22, 1970
contains a notation regarding certification as to
land tax payment and tax declarations, leading us
to conclude that the payment of taxes on the land
was a requirement for any loan to issue or, at the
very least, had some bearing on the loan
application. As for petitioners, we find their failure
to have title to the subject land transferred to their
name adequately explained by paragraph 7 of the
Deed of Sale with Assumption of Mortgage, to wit
"7. That it is further agreed that this instrument
shall not be registered with the office of the
Register of Deeds of Nueva Ecija, until the
obligation with the Development Bank of the
Philippines which is hereby assumed by the
Vendees is fully paid, and the title to the properties
released by the said bank." Stated differently, it was
impossible for petitioners or their predecessors-ininterest to have the title transferred to their name
until the original loan with DBP was paid, since the
said bank retained the title of the property until
such full payment.
DECISION
YNARES-SANTIAGO, J.: Scl-aw
The instant Petition for Review seeks to set aside the
August 11, 1987 Decision of respondent Court of
Appeals in CA-G.R. CV No. 65844[1] which reversed
the December 28, 1978 Decision of the then Court
of First Instance of Nueva Ecija, Branch 2, dismissing
Civil Case No. 5735.[2]
The facts are as follows:
Private respondent Fructuoso Torres was the owner
of five (5) parcels of land, under Transfer Certificate
of Title No. NT-21520 of the Register of Deeds of
Nueva Ecija, with a total area of 23.2922 hectares,
located in Sta. Rosa, Nueva Ecija.
On January 24, 1957, private respondent
mortgaged the subject land to the Philippine
National Bank for P1,500.00, and redeemed the
same on March 23, 1960. Following such
redemption, or on June 22, 1960, the subject land
was again mortgaged for P4,200.00, this time to the
Development Bank of the Philippines. Rtc-spped
Two days after the mortgage, or on June 24, 1960,

the land became the subject of a Deed of Sale
with Assumption of Mortgage[3] executed by
private respondent Fructuoso Torres and his wife,
Maura Jawili, in favor of the spouses Modesto
Bernardo and Cecilia Buenavides (hereinafter
referred to as the spouses Bernardo), predecessorsin-interest of petitioners. The spouses Bernardo
thereafter took possession of the subject land, and
since then possession thereof has remained with
them and their successors-in-interest, petitioners
herein.
On December 6, 1971, private respondent filed a
Complaint
for
Annulment
of
Contract,
Reconveyance with Damages and Preliminary
Injunction[4] against petitioners, as heirs of the
spouses Bernardo, both now deceased, which was
docketed as Civil Case No. 5735 before the Court
of First Instance of Nueva Ecija. He alleged that he
does not know how to read and write; and that
neither he nor his wife knew that the document
they signed was one for sale inasmuch as they
were made to believe that what they had
executed was a contract for the transfer of
possession, or lease, of the subject land to the
spouses Bernardo for a ten (10) year period, in
exchange for P9,000.00. This P9,000.00, which the
spouses
Bernardo
advanced,
supposedly
represented the P4,800.00 private respondent
loaned from the spouses Bernardo sometime in
1960 to redeem the subject land from the PNB; and
the payment for their P4,200.00 loan from DBP,
which the spouses Bernardo were to assume. The
amount of P9,000.00 was to be returned by private
respondent to the spouses Bernardo after ten (10)
years, simultaneous with the return to them of
possession of the subject land. Private respondent
claims that he and his wife thought the document
presented to them by the Bernardo spouses and
which they signed was an agreement for "Hiraman
ng Lupa".
Previously, on June 3, 1970, private respondent
obtained another agricultural loan from DBP in the
amount of P4,900.00, part of which he used to pay
off the remaining balance of P1,600.00 left unpaid
by the spouses Bernardo.
However, instead of returning the subject land to
private respondent after the lapse of ten (10) years,
petitioner Pepito Bernardo filed an Affidavit of
Adverse Claim and a criminal complaint against
private respondent for estafa, both on account of
the additional loan obtained by the latter from the
DBP using the subject land as collateral, despite the
fact that ownership of the same had long been
transferred to the spouses Bernardo. Rtcspped
In their Answer in Civil Case No. 5735,[5] petitioners
insisted that the transaction between private
respondent and their deceased parents was one of
sale with assumption of mortgage. They accused
Page 42 of 158
private respondent of bad faith in securing the

P4,900.00 liquidation loan from DBP after learning
that the remaining balance of the original loan was
only P1,600.00, and even as they had no more right
to derive any benefit from the subject land.
Petitioners claim that this prompted them to file an
Affidavit of Adverse Claim with the Register of
Deeds of Nueva Ecija on October 16, 1970,
followed by a criminal case for estafa[6] filed on
December 28, 1970. Petitioners argued that private
respondent filed the Complaint in reaction to the
criminal case they filed against them after private
respondent admitted the existence of the Deed of
Sale with Assumption of Mortgage. They asserted
that private respondents sole objective in filing the
civil action was to escape criminal liability.
Meanwhile, the estafa case filed by petitioners
against private respondent was held in abeyance
until after the termination of Civil Case No. 5735.
Following trial on the merits in the civil action, the
lower court rendered its Decision of December 28,
1978, dismissing the Complaint upon a finding that
the verbal allegations of private respondent
cannot
overcome
the
documentary
and
testimonial evidence presented by petitioners. In
particular, the court upheld the presumption of
regularity of the subject document which was
notarized by a PNB notary public who would not
have allowed himself to be used as a tool in
deceiving private respondent and his wife. In
dismissing the Complaint, the lower court also took
the following into consideration: (1) the lack of
evidence showing any unusual interest of the
spouses Bernardo over the subject land prior to the
transaction or of circumstances showing private
respondent in dire need of money, which could
have caused spouses Bernardo to take advantage
of his situation; (2) the immediate transfer of the
property to the spouses Bernardo, together with the
DBP loan account passbook; (3) the fact that
private respondent never paid taxes on the land
during the alleged ten year "lending" period; (4) the
fact that the consideration of P9,000.00 for the land
did not appear inadequate as the land was at that
time unirrigated and had a total assessed value of
only P7,000.00; and (5) the lapse of eleven years
from the time the contract was executed until the
time of the filing of the Complaint.
On appeal, respondent Court of Appeals reversed
the lower courts Decision and annulled the subject
Deed of Sale with Assumption of Mortgage.
Petitioners were also ordered to vacate the subject
land and to pay private respondent P5,000.00 as
and for attorneys fees. In so ruling, respondent
Court of Appeals took note of the illiteracy of
private respondent and his wife, following Article 24
of the Civil Code which enjoins the courts to be
vigilant in the protection of the rights of those
disadvantaged in contractual relations by virtue of
their ignorance and mental handicap. The Court of
Appeals also found the failure of petitioners to pay

taxes on the land and to have title to the same
transferred in their name as indicative of their status
as mere lessees of the land and not vendees
thereof. Finally, it found that prescription has not set
in, since the four year period within which to bring
an action for annulment of contract commences
only upon discovery of the mistake or fraud, which
it found to be only in 1970. Sclex
With the denial of their Motion for Reconsideration
on October 28, 1992, petitioners filed the instant
Petition for Review anchored upon the following
grounds
I.......THE
RESPONDENT
COURT
ERRED
AND
EXERCISED GRAVE ABUSE OF DISCRETION IN
DISREGARDING THE LEGAL EFFECTS AND PROBATIVE
VALUE OF A PUBLIC AND DULY NOTARIZED
DOCUMENT THE EXECUTION OF WHICH IS NOT
DISPUTED.
II.......THE
RESPONDENT
COURT
ERRED
AND
FINDING THAT THE PRESUMPTION OF LEGALITY AND
REGULARITY OF A NOTARIAL ACT COULD BE
DEFEATED BY MERE DENIAL OF THE PARTY
EXECUTING THE NOTARIZED INSTRUMENT.
III.......THE RESPONDENT COURT ERRED
AND
RELYING ON THE TESTIMONY OF PRIVATE
RESPONDENT THAT HE DOES NOT KNOW HOW TO
READ AND WRITE DESPITE ADMISSION BY THE LATTER
OF THE CONTENTS OF THE WRITTEN AGREEMENT.
IV.......THE RESPONDENT COURT ERRED AND
REVERSING THE DECISION OF THE TRIAL COURT
BASED SOLELY ON THE TESTIMONY OF THE PRIVATE
RESPONDENT THAT HE DOES NOT KNOW HOW TO
READ AND WRITE IN UTTER DISREGARD OF THE
EVALUATION AND FINDINGS OF THE TRIAL JUDGE OF
THE EVIDENCE PRESENTED BEFORE HIM.
V.......THE RESPONDENT COURT OF APPEALS ERRED
AND EXERCISED ABUSE OF DISCRETION IN NOT
FINDING THAT THE COMPLAINT IS BARRED BY THE
STATUTE OF LIMITATIONS.[7]
Stripped to the core, the issue in the case before us
is simply whether or not the transaction over the
subject land was one of sale or one of lease. On
one hand, we have the stark documentary
evidence entitled "Deed of Sale with Assumption of
Mortgage"; while on the other, we have private
respondents and his wifes denial that they had
intended to sell the subject land. xlaw
It is a fact that the transaction between private
respondent and the spouses Bernardo was
Page 43 of 158
Mortgage".[8] This document, admitted as signed

by private respondent and his wife, was duly
notarized by Notary Public Pedro B. Binuya and had
two instrumental witnesses. Being a notarized
than
merely
preponderant;
otherwise
the
document should be upheld.[9]
The question that must be addressed, therefore, is:
Was the evidence presented by private
respondent against the Deed of Sale with
Assumption of Mortgage clear, convincing and
more than merely preponderant? We do not think
so.
Far from being clear and convincing, all that
private respondent offered by way of evidence
was his and his wifes mere denial that they had
intended to sell the subject land. Such bare and
unsubstantiated denial will not suffice to overcome
the positive presumption of the due execution of
the subject Deed, being a notarized document.
Indeed, when the evidence is conflicting, the
public document must still be upheld.[10]
The same strict requirements apply with respect to
the contents of the subject Deed. As held in Sierra
v. Court of Appeals[11]
The Rules of Court provide that "when the terms of
an agreement have been reduced to writing, it is
to be considered as containing all such terms, and,
therefore, there can be, between the parties and
their successors in interest, no evidence of the terms
of the agreement other than the contents of the
writing." It is true that parol evidence may be
admitted to challenge the contents of such
agreement "where a mistake or imperfection of the
writing, or its failure to express the true intent and
agreement of the parties, or the validity of the
agreement is put in issue by the pleadings."
However, such evidence must be clear and
convincing and of such sufficient credibility as to
overturn the written agreement.
Again, mere denial by private respondent cannot
refute the contents of the subject Deed which,
from its very title, in no uncertain terms holds out the
transaction covered as one of "Sale with
Assumption of Mortgage". Further, paragraph 4 of
the document clearly and unequivocally provides
xsc
"4. That, for and in consideration of the sum of Four
Thousand Eight Hundred Pesos (P4,800.00),
Philippine currency, receipt of which is hereby
acknowledged to have been received by the
Vendors from the Vendees, the Vendors have sold,
transferred and conveyed, and by these presents
do hereby sell, transfer and convey by way of
absolute sale unto the Vendees, their heirs
successors and assigns, the above described

parcels of land, subject to the mortgage lien in
favor of the Development Bank of the Philippines."
(emphasis ours)
Respondent Court of Appeals relied on the claim
by private respondent that neither he nor his wife
could understand English and knew not what the
subject Deed was about. However, the records of
the case show that private respondent was not
totally unschooled as he, himself, testified that he
reached Grade Two.[12] And one who reaches
Grade Two would very well know the import and
meaning of the word "sale" which appears not only
in the body of the subject document but even in its
very title in capital letters. Indeed, we cannot see
how private respondent can recognize the caption
"Declaration of Real Estate Property"[13] and not
"Deed of Sale with Assumption of Mortgage". His
knowledge of the English language is suspiciously
selective. The deed of sale is not the only
document in English language entered into by
private respondent. He and his wife had previously
entered into the two DBP mortgage contracts[14]
which were likewise written in English. Private
respondents own Exhibit "F", his letter/application to
DBP, is entirely written in the English language. All
told, we fail to see how private respondent could
not have known that the document he signed was
one for sale of his property when the very title
thereof as well as its provisions contained the word
"sale", a simple word he would have perfectly
recognized and understood.
Moreover, we note that the specific provisions of
the subject document contained details which
could have been known only to private respondent
and his wife (i.e., the mortgage with the DBP, the
amount and notarial incidents thereof, and the
balance of the loan proceeds) these signify that
both of them had full participation in the drawing
up of the said document and knew fully well what it
was all about.
Finally, granting, without conceding, that private
respondent and his wife were both illiterate, this still
does not save the day for them. As stressed in Tan
Sua Sia v. Yu Baio Sontua, 56 Phil. 711, cited in Mata
v. Court of Appeals[15] -- Sc
"x x x. The rule that one who signs a contract is
presumed to know its contents has been applied
even to contracts of illiterate persons on the
ground that if such persons are unable to read,
they are negligent if they fail to have the contract
read to them. If a person cannot read the
instrument, it is as much his duty to procure some
reliable persons to read and explain it to him,
before he signs it, as it would be to read it before
he signed it if he were able to do so and his failure
to obtain a reading and explanation of it is such
gross negligence as will estop him from avoiding it
on the ground that he was ignorant of its contents."
Page 44 of 158
We also find that the contemporaneous and

subsequent acts of the parties point to sale as
having been effected. Private respondent
admitted turning over the DBP loan passbook to
the spouses Bernardo,[16] an act which was
consistent with the assumption of mortgage
referred to in the subject document. Possession of
the subject land was also transferred to the spouses
Bernardo who by themselves and, later, through
petitioners, cultivated the same. On the part of
private respondent, it is noteworthy that from the
time the document of sale was signed, he never
paid realty taxes on the subject land, a fact
inconsistent with his claim of continued ownership.
Private respondent only paid taxes on the land in
June 1970. Coincidentally, his letter/application for
agricultural loan with the DBP on May 22, 1970[17]
contains a notation regarding certification as to
land tax payment and tax declarations, leading us
to conclude that the payment of taxes on the land
was a requirement for any loan to issue or, at the
very least, had some bearing on the loan
application.
As for petitioners, we find their failure to have title to
the subject land transferred to their name
adequately explained by paragraph 7 of the Deed
of Sale with Assumption of Mortgage, to wit
"7. That it is further agreed that this instrument shall
not be registered with the office of the Register of
Deeds of Nueva Ecija, until the obligation with the
Development Bank of the Philippines which is
hereby assumed by the Vendees is fully paid, and
the title to the properties released by the said
bank."
Stated differently, it was impossible for petitioners or
their predecessors-in-interest to have the title
transferred to their name until the original loan with
DBP was paid, since the said bank retained the title
of the property until such full payment.
Recapitulating, we find that the validity of the
notarized Deed of Sale with Assumption of
Mortgage has not successfully been overthrown,
hence the Complaint for Annulment of Contract
and Reconveyance with Damages must be
dismissed.
Petition for Review is GRANTED. The August 11, 1987
Decision of respondent Court of Appeals in CA-G.R.
CV No. 65844 is REVERSED and SET ASIDE and the
December 28, 1978 Decision of the then Court of
First Instance of Nueva Ecija, Branch II, dismissing
Civil Case No. 5735 is REINSTATED. No
pronouncement as to costs.
SO ORDERED. Scmis
#11
FIRST DIVISION
[G.R. No. 115508. February 15, 2000]
ALEJANDRO AGASEN and FORTUNATA CALONGEAGASEN, petitioners, vs. THE HON. COURT OF
APPEALS and PETRA BILOG, assisted by her husband
FELIPE BILOG, respondents.
SYNOPSIS
Private respondent Petra Bilog, assisted by her
husband Felipe Bilog, filed a complaint for
Recovery of Possession and Ownership against
petitioners Alejandro Agasen and Fortunata
Calonge-Agasen with the Regional Trial Court of
Agoo, La Union involving an 8,474 square meters
parcel of land registered in her name under
Transfer Certificate of Title No. T-16109. In their
Answer, petitioners Alejandro Agasen and
Fortunata Calonge-Agasen asserted that the
subject land used to form part of Lot No. 2192, a
42,372 square meters parcel of land owned in
common by the five Bilog siblings, private
respondent Petra Bilog being one of them.
Petitioners claimed that they became the owners
of the portion of the subject land which belonged
to private respondent as her share therein, by virtue
of: (1) the sale in their favor of 1,785 square meters
thereof by Leonora Calonge, sister of Fortunata
Calonge-Agasen, and (2) the sale in their favor by
private respondent of the remaining 6,717.50
square meters on June 24, 1968, by virtue of a
notarized Partition with Sale. Petitioners also
affirmed that they had been in possession of the
subject land since the time of the abovementioned
sale
transactions. By
way
of
counterclaim,
petitioners
charged
private
respondent with having fraudulently caused title to
the subject land to be issued in her name, following
the subdivision of the original land between her
and her co-heirs/owners, in violation of petitioners'
rights over the subject land. Thus, petitioners prayed
for the annulment of title in private respondent's
name and for the dismissal of the complaint. The
trial court rendered judgment in favor of petitioners.
On appeal, the Court of Appeals reversed the
decision.
The Court ruled that it is not denied that the two
subject documents are notarized documents and,
as such, are considered public documents which
enjoy the presumption of validity as to authenticity
and due execution. The subject documents were
also attached by petitioners to their Answer where
they were alleged as part of the counterclaim. As
such, private respondent should have specifically
denied under oath their genuineness and due
execution. After all, a counterclaim is considered a
complaint, only this time, it is the original defendant
who becomes the plaintiff. It stands on the same
footing and is to be tested by the same rules as if it
were an independent action. Having failed to
specifically deny under oath the genuineness and
Page 45 of 158
due execution of the said documents, private

respondent is deemed to have admitted the same.
The Court of Appeals likewise erred in holding that
private respondent's title was "vested with the
garment
of
indefeasibility."
The
rule
on
indefeasibility of torrens title i.e., that torrens title
can be attacked only for fraud, within one year
after the date of the issuance of the decree of
registration applies only to original titles and not
to subsequent registration. An action for annulment
of title and/or reconveyance which was previously
filed by petitioners and interposed in their
counterclaim is an action open to them to attack
private respondent's fraudulently acquired title.
Neither may the compulsory counterclaim of
petitioners challenging the title of private
respondent be brushed aside as merely a collateral
attack which would bar a ruling on the validity of
the said title. TaHIDS
The decision of the Court of Appeals was SET ASIDE.
SYLLABUS
1.
REMEDIAL LAW; EVIDENCE; ADMISSIBILITY;
PUBLIC DOCUMENTS; ENJOYED THE PRESUMPTION
OF VALIDITY AS TO AUTHENTICITY AND DUE
EXECUTION. It is not denied that the two subject
documents are notarized documents and, as such,
are considered public documents which enjoy the
presumption of validity as to authenticity and due
execution. One of the documents, the Deed of
Absolute Sale, was identified by Assistant Provincial
Fiscal Maximo Quero, the administering officer who
had notarized it. The legal presumption of validity of
petitioners' duly notarized public documents has
not been overcome by preponderant evidence by
private respondent, upon whom the burden of
proof rests, having alleged the contrary.
2.
ID.; ID.; ID.; ID.; AUTHENTICITY AND DUE
EXECUTION; MUST BE SPECIFICALLY DENIED UNDER
OATH BY DEFENDANT, OTHERWISE, IT IS DEEMED
ADMITTED. The subject documents were also
attached by petitioners to their Answer where they
were alleged as part of the counterclaim. As such,
private respondent should have specifically denied
under oath their genuineness and due execution. .
. . Having failed to specifically deny under oath the
genuineness and due execution of the said
documents, private respondent is deemed to have
admitted the same.
3.
ID.;
CIVIL
PROCEDURE;
PLEADINGS;
COUNTERCLAIM; TO BE TESTED BY SAME RULES AS
AN INDEPENDENT ACTION. A counterclaim is
considered a complaint, only this time, it is the
original defendant who becomes the plaintiff. It
stands on the same footing and is to be tested by
the same rules as if it were an independent action.
4.
ID.;
EVIDENCE;
GENUINENESS
OF
SIGNATURE; COMPARISON MAY BE MADE BY
COURT, WITH OR WITHOUT AID OF EXPERT
WITNESSES; CASE AT BAR. While private
respondent denied having signed any document
selling the subject parcels of land, the trial court
found her signature on the subject documents to
be genuine, after a comparison thereof with her
own documentary evidence on record. Indeed, it

has been held that where a comparison is
permissible, it may be made by the court, with or
without the aid of expert witnesses; and evidence
respecting handwriting may be given by a
comparison made by the court with writings
admitted or treated as genuine by the party
against whom the evidence is offered. In the case
at bar, the lower court compared private
respondent's signatures on the subject documents
with that appearing on her own evidence and
found the same identical.
5.
ID.; ID.; ADMISSIBILITY; DOCUMENTARY;
CIRCUMSTANCES TO INDICATE GENUINENESS AND
DUE EXECUTION. The following circumstances all
indicate the genuineness and due execution of the
subject documents: (1) The subject documents
were duly notarized public documents; (2) The
documents enjoy the legal presumption of validity;
(3) Their genuineness and due execution were not
specifically denied under oath by private
respondent; (4) Private respondent's signature
thereon were found genuine by the lower court
upon a comparison of her signature thereon with
that in her own documentary evidence; (5) The
actual identification and positive testimony of
petitioner; and (6) The testimony of the lawyer who
had notarized one of the subject documents.
Private respondent's bare denial of the same
cannot, by any measure, overcome the abovementioned evidence and legal presumptions in
petitioners' favor.
6.
CIVIL LAW; CONTRACTS; MEMORANDUM
OF SALE; SUFFICIENT TO PROVE SALE BETWEEN
PARTIES. The memorandum of sale appearing in
Exhibit "3" is sufficient to prove the sale between
petitioner Fortunata Calonge-Agasen and her late
sister, the previous vendee of the land subject of
the Deed of Absolute Sale from private respondent.
7.
ID.; ID.; OBLIGATORY IN NATURE; NECESSITY
OF PUBLIC DOCUMENT IS ONLY FOR CONVENIENCE,
NOT FOR VALIDITY OF ENFORCEABILITY. After all,
contracts are obligatory in whatever form they may
have been entered into provided all essential
requisites are present. The provision of Article 1358
on the necessity of a public document is only for
convenience, not for validity or enforceability. It is
not a requirement for the validity of a contract of
sale of a parcel of land that this be embodied in a
public instrument. EICSTa
8.
ID.; ID.; PERFECTED BY MERE CONSENT. It
was likewise error for the Court of Appeals to rule
that the transactions were "dented by the failure to
register/annotate the same with the Register of
Deeds" and that due to such failure, the
documents "did not automatically bind the subject
property." First, one of the subject documents, the
Deed of Absolute Sale, was in fact registered.
Second, as elucidated in Fule vs. Court of Appeals
"The Civil Code provides that contracts are
perfected by mere consent. From this moment, the
parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the
Page 46 of 158
consequences which, according to their nature,

may be in keeping with good faith, usage and law.
A contract of sale is perfected at the moment
there is a meeting of the minds upon the thing
which is the object of the contract and upon the
price. Being consensual, a contract of sale has the
force of law between the contracting parties and
they are expected to abide in good faith by their
respective contractual commitments. Article 1358
of the Civil Code which requires the embodiment
of certain contracts in a public instrument, is only
for convenience, and registration of the instrument
only adversely affects third parties. Formal
requirements are, therefore, for the benefit of third
parties. Non-compliance therewith does not
adversely affect the validity of the contract nor the
contractual rights and obligations of the parties
thereunder."
9.
REMEDIAL
LAW;
EVIDENCE;
TAX
DECLARATIONS; BELATED DECLARATION INDICATES
ABSENCE OF REAL CLAIM OF OWNERSHIP OVER THE
SUBJECT LAND PRIOR TO SUCH DECLARATION. As
pointed out by petitioners, however, the tax
declarations in the name of private respondent for
the year 1978 were issued only in 1977, and only
after she had secured title to the property in her
name. Such a belated declaration has been held
to be indicative of an absence of a real claim of
ownership over the subject land prior to the
declaration. On the other hand, the real estate tax
payments certified as paid by the Municipal
Treasurer refers to the entire mother Lot No. 2192
before it was subdivided or partitioned into five (5)
equal lots. Private respondent cannot be said to
have paid taxes on the subject property during the
period when petitioners claimed that the property
had already been sold to them.
10.
CIVIL LAW; PROPERTY; OWNERSHIP; BACKED
BY LONG YEARS OF POSSESSION OF SUBJECT LAND.
We also note that, far from being
unsubstantiated, petitioners' claim of ownership is
backed by their long years of possession of the
subject parcels of land. There is no dispute that
petitioners had occupied the subject land since
the sale in their favor, i.e., since 1964 in the case of
the Deed of Absolute Sale and since 1968 in the
case of the Partition with Sale. They have also built
a concrete house which has long been standing
thereon.
11.
ID.; LAND TITLES AND DEEDS; INDEFEASIBILITY
OF TORRENS TITLE; APPLIES ONLY TO ORIGINAL TITLES
AND NOT TO SUBSEQUENT REGISTRATION. The rule
on indefeasibility of torrens title i.e., that torrens
title can be attacked only for fraud, within one year
to subsequent registration.
12.
REMEDIAL
LAW;
CIVIL
PROCEDURE;
ACTIONS;
ANNULMENT
OF
TITLE
AND/OR
RECONVEYANCE; PROPER ACTION TO ATTACK
FRAUDULENTLY ACQUIRED TITLE. An action for
annulment of title and/or reconveyance which was
previously filed by petitioners and interposed in their

the said title. HIAcCD
DECISION
YNARES-SANTIAGO, J p:
On April 7, 1980, private respondent Petra Bilog,
assisted by her husband Felipe Bilog, filed a
complaint for Recovery of Possession and
Ownership 1 with the Regional Trial Court of Agoo,
La Union, involving an Eight Thousand Four Hundred
Seventy Four (8,474) square meter parcel of land
registered in her name under Transfer Certificate of
Title No. T-16109 of the Registry of Deeds of La
Union. She alleged that sometime in 1964 or 1965,
petitioners took possession and assumed ownership
of the said property, appropriating the fruits
therefrom. She alleged that despite demands on
them to vacate the land, petitioners refused to do
so and even filed a case for Annulment of TCT
and/or Reconveyance with Damages before the
same court, which case was, however, dismissed
on February 12, 1980. Thus, in her complaint, private
respondent prayed that she be declared the true
and absolute owner of the subject land and
petitioners be ordered to turn over possession
thereof to her. Additionally, private respondent
prayed for P300,000.00 as attorney's fees, P2,000.00
as expenses of litigation as well as P60,000.00
representing the value of the land's produce from
1965 to the time of the filing of the case and
P4,000.00 annually until the case is terminated.
In their Answer, 2 petitioners Alejandro Agasen and
Fortunata Calonge-Agasen asserted that the
subject land used to form part of Lot No. 2192, a
forty two thousand three hundred seventy two
(42,372) square meter parcel of land owned in
common by the five (5) Bilog siblings, private
respondent Petra Bilog being one of them.
Petitioners claimed that they became the owners
of the portion of the subject land which belonged
to private respondent as her share therein, by virtue
of: (1) the sale in their favor of 1,785 square meters
thereof by Leonora Calonge, sister of Fortunata
Calonge-Agasen, and (2) the sale in their favor by
private respondent of the remaining 6,717.50
square meters on June 24, 1968, by virtue of a
notarized Partition with Sale. Petitioners also
affirmed that they had been in possession of the
subject land since the time of the abovementioned sale transactions, with a house of strong
materials built thereon. By way of counterclaim,
petitioners charged private respondent with having
fraudulently caused title to the subject land to be
issued in her name, following the subdivision of the
original land between her and her co-heirs/owners,
in violation of their (petitioners') rights over the
subject land. Thus, petitioners prayed for the
annulment of title in private respondent's name
Page 47 of 158
and for the dismissal of the complaint, as well as for

the award of P10,000.00 as exemplary damages,
P25,000.00 as moral damages, P5,000.00 as
litigation expenses and P7,000.00 as attorney's fees
and costs.
On November 19, 1984, the Regional Trial Court of
Agoo, La Union, Branch 3, rendered judgment in
favor of petitioners, dismissing the complaint and
declaring Transfer Certificate of Title No. 16109 in
the name of private respondent null and void. 3
On appeal, the Court of Appeals reversed the
decision of the lower court and private respondent
was declared the true and absolute owner of the
subject land. 4 Accordingly, petitioners were
ordered to turn over the subject land to private
respondent. cdphil
With the denial of petitioners' Motion for
Reconsideration on May 20, 1994, 5 the instant
Petition was filed, anchored upon the following
grounds
I.
THE DECISION (ANNEX A) ERRED IN
DECLARING THE DEED OF PARTITION WITH SALE
(EXH. 1) AND THE DEED OF ABSOLUTE SALE (EXH. 2)
NOT AUTHENTIC AND VALID;
II.
THE DECISION ERRED IN HOLDING THAT
DEFENDANTS FAILED TO SUBSTANTIATE THEIR CLAIM
OF OWNERSHIP AND IN GIVING MORE CREDENCE
TO PLAINTIFF'S TESTIMONIAL EVIDENCE AND TAX
DECLARATION
NO.
21460
(EXH.
B)
AND
CERTIFICATION OF TAX PAYMENTS (EXH. C);
III.
THE DECISION ERRED IN FINDING/HOLDING
THAT THE NON-REGISTRATION OF THE DEED OF
PARTITION WITH SALE AND THE DEED OF ABSOLUTE
SALE WITH THE REGISTER OF DEEDS MADE THE
PURCHASES THEREUNDER "DENTED" AND DID NOT
AUTOMATICALLY VEST TITLE OR OWNERSHIP OVER
THE SUBJECT PROPERTY TO THE BUYERS;
IV.
THE DECISION ERRED IN HOLDING THAT THE
DAILY NOTEBOOK (EXH. 3) CONTAINING THE
MEMORANDUM OF INSTALLMENT SALE BY LEONORA
CALONGE TO DEFENDANT-APPELLEE FORTUNATA
AGASEN (EXH. 3-a TO 3-c) OVER THE PARCEL OF
LAND DESCRIBED IN EXH. 2 WAS NOT A VALID OR
CREDIBLE DOCUMENT OF TRANSFER;
V.
THE DECISION GRAVELY ERRED IN HOLDING
THAT TCT NO. 16109 (EXH. A) CANNOT BE
COLLATERALLY ATTACKED ON THE GROUND THAT IT
IS BARRED BY THE RULE ON INDEFEASIBILITY OF A
TORRENS TITLE AFTER THE LAPSE OF ONE YEAR FROM
THE DECREE OF REGISTRATION. 6
Although the instant case is a petition for review
under Rule 45 which, as a general rule, is limited to
reviewing errors of law, findings of fact being
conclusive as a matter of general principle,
however, considering the conflict between the
factual findings of the trial court and the
respondent Court of Appeals, there is a need to
review the factual issues as an exception to the
general rule. 7
As correctly stated by the lower court, the crucial
question in the instant controversy is whether or not
the two (2) documents, relied upon by petitioners
as basis for their claim of ownership, are valid.
Overthrowing the lower court's finding of validity,

the Court of Appeals ruled that private
respondent's
testimonial
and
documentary
evidence "junked" petitioners' documents (Exhibits
"1" and "2"). cda
We disagree.
To begin with, it is not denied that the two subject
documents are notarized documents and, as such,
are considered public documents which enjoy the
presumption of validity as to authenticity and due
execution. 8 One of the documents, the Deed of
Absolute Sale, was identified by Assistant Provincial
Fiscal Maximo Quero, the administering officer who
had notarized it. The legal presumption of validity of
petitioners' duly notarized public documents has
not been overcome by preponderant evidence by
private respondent, upon whom the burden of
proof rests, having alleged the contrary. 9
The subject documents were also attached by
petitioners to their Answer where they were alleged
as part of the counterclaim. As such, private
respondent should have specifically denied under
oath their genuineness and due execution. 10 After
all, a counterclaim is considered a complaint, only
this time, it is the original defendant who becomes
the plaintiff. It stands on the same footing and is to
be tested by the same rules as if it were an
independent action. 11 Having failed to specifically
deny under oath the genuineness and due
execution of the said documents, private
respondent is deemed to have admitted the same.
And while private respondent denied having
signed any document selling the subject parcels of
land, the trial court found her signature on the
subject documents to be genuine, after a
comparison thereof with her own documentary
evidence on record (Exh. "B"). Indeed, it has been
held that where a comparison is permissible, it may
be made by the court, with or without the aid of
expert witnesses; 12 and evidence respecting
handwriting may be given by a comparison made
by the court with writings admitted or treated as
genuine by the party against whom the evidence is
offered. 13 In the case at bar, the lower court
compared private respondent's signatures on the
subject documents with that appearing on her own
evidence (Exh. "B") and found the same identical.
Cdpr
The following circumstances all indicate the
genuineness and due execution of the subject
documents: (1) The subject documents were duly
notarized public documents; (2) The documents
enjoy the legal presumption of validity; (3) Their
genuineness and due execution were not
specifically denied under oath by private
respondent; (4) Private respondent's signature
thereon were found genuine by the lower court
upon a comparison of her signature thereon with
that in her own documentary evidence; (5) The
actual identification and positive testimony of
petitioner; and (6) The testimony of the lawyer who
had notarized one of the subject documents.
Private respondent's bare denial of the same
Page 48 of 158
cannot, by any measure, overcome the abovementioned evidence and legal presumptions in
petitioners' favor.
As for the sale in petitioners' favor by the original
vendee thereof, Leonora Calonge, the Court of
Appeals accepted private respondent's charges
that there was no valid document of transfer and
that the notebook with memorandum of sale and
record of installment payments, relied upon by
petitioners, was worse than the two subject
documents.
Again, we disagree. The memorandum of sale
appearing in Exhibit "3" is sufficient to prove the sale
between petitioner Fortunata Calonge-Agasen
and her late sister, the previous vendee of the land
subject of the Deed of Absolute Sale from private
respondent. After all, contracts are obligatory in
whatever form they may have been entered into
provided all essential requisites are present. 14 The
provision of Article 1358 on the necessity of a public
document is only for convenience, not for validity
or enforceability. It is not a requirement for the
validity of a contract of sale of a parcel of land
that this be embodied in a public instrument. 15
It was likewise error for the Court of Appeals to rule
that the transactions were "dented by the failure to
register/annotate the same with the Register of
Deeds" and that due to such failure, the
documents "did not automatically bind the subject
property." First, one of the subject documents, the
Deed of Absolute Sale, was in fact registered.
Second, as elucidated in Fule vs. Court of Appeals
16
"The Civil Code provides that contracts are
perfected by mere consent. From this moment, the
parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the
consequences which, according to their nature,
may be in keeping with good faith, usage and law.
A contract of sale is perfected at the moment
there is a meeting of the minds upon the thing
which is the object of the contract and upon the
price. Being consensual, a contract of sale has the
force of law between the contracting parties and
they are expected to abide in good faith by their
respective contractual commitments. Article 1358
of the Civil Code which requires the embodiment
of certain contracts in a public instrument, is only
for convenience, and registration of the instrument
only adversely affects third parties. Formal
requirements are, therefore, for the benefit of third
parties. Non-compliance therewith does not
adversely affect the validity of the contract nor the
contractual rights and obligations of the parties
thereunder."
In the light of the foregoing, we reverse the Court of
Appeals' ruling that the failure of petitioners to
register the Partition with Sale was fatal. llcd
The Court of Appeals also found petitioners' claim
of ownership to be unsubstantiated, in contrast to
that of private respondent who presented tax
declarations and certification of tax payments in
her favor. As pointed out by petitioners, however,
the tax declarations in the name of private

respondent for the year 1978 were issued only in
1977, and only after she had secured title to the
property in her name. Such a belated declaration
has been held to be indicative of an absence of a
real claim of ownership over the subject land prior
to the declaration. 17 On the other hand, the real
estate tax payments certified as paid by the
Municipal Treasurer refers to the entire mother Lot
No. 2192 before it was subdivided or partitioned
into five (5) equal lots. Private respondent cannot
be said to have paid taxes on the subject property
during the period when petitioners claimed that
the property had already been sold to them.
We also note that, far from being unsubstantiated,
petitioners' claim of ownership is backed by their
long years of possession of the subject parcels of
land. There is no dispute that petitioners had
occupied the subject land since the sale in their
favor, i.e., since 1964 in the case of the Deed of
Absolute Sale and since 1968 in the case of the
Partition with Sale. They have also built a concrete
house which has long been standing thereon.
Then, too, petitioners have adequately explained
why they have not pursued their action for
annulment of title against private respondent,
which the Court of Appeals viewed as having
"further darkened the cloud of suspicion which
hovered over the questioned documents." Private
respondent herself admits that petitioners were the
first to assert their right, by filing an action for
annulment of title and/or for reconveyance with
damages against private respondent 18 which
complaint was, however, dismissed without
prejudice. 19 On the other hand, the complaint of
private respondent was filed two months after the
dismissal of their complaint, prompting them to
merely interpose their cause of action as a
compulsory counterclaim in the lower court.
Finally, the Court of Appeals is likewise in error in
holding that private respondent's title was "vested
with the garment of indefeasibility." The rule on
indefeasibility of torrens title i.e., that torrens title
can be attacked only for fraud, within one year
to subsequent registration. An action for annulment
of title and/or reconveyance which was previously
filed by petitioners and interposed in their
the said title. 20
Petition for Review is GRANTED. The Decision of the
Court of Appeals dated January 11, 1994 in CAG.R. CV No. 10309 is SET ASIDE. The decision of the
Regional Trial Court of Agoo, La Union, Branch 3,
dismissing Civil Case No. A-713, annulling Transfer
Certificate of Title No. 16109 in the name of private
Page 49 of 158
respondent and finding petitioners to be the lawful

owners of the land covered by the same, is
REINSTATED. No pronouncement as to costs. cdtai
SO ORDERED.
#12
THIRD DIVISION
VICENTE YU CHANG AND SOLEDAD YU CHANG,
Petitioners,
- versus REPUBLIC OF THE PHILIPPINES,
Respondent.
G.R. No. 171726
Present:
BRION,* J.,
Acting Chairperson,
BERSAMIN,
ABAD,**
VILLARAMA, JR., and
SERENO, JJ.
Promulgated:
February 23, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR. J.:
This petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, as amended,
assails the Decision[1] dated August 26, 2005 and
the Resolution[2] dated February 13, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 67430.
The CA reversed and set aside the April 28, 2000
Decision[3] of the Regional Trial Court of Pili,
Camarines Sur, Branch 31, in LRC No. P-115, LRA
Rec. No. N-68012, which granted petitioners
application for registration of title over two parcels
of land, denominated as Lots 2199 and 2200 of
Cad. 291, Pili Cadastre.
The antecedent facts, as culled from the records,
are as follows:
On March 22, 1949, petitioners father, L. Yu
Chang[4] and the Municipality of Pili, Camarines
Sur, through its then Mayor, Justo Casuncad,
executed an Agreement to Exchange Real
Property[5] wherein the former assigned and
transferred to the Municipality of Pili his 400-squaremeter residential lot in Barrio San Roque, Pili,
Camarines Sur, in exchange for a 400-square-meter
piece of land located in San Juan, Pili. Thereafter, L.
Yu Chang and his family took possession of the
property thus obtained and erected a residential
house and a gasoline station thereon. He also
declared the property in his name under Tax

Declaration No. 01794[6] and 01795[7] and paid
the real property taxes thereon as evidenced by
twenty-eight (28) official receipts from February 21,
1951 up to March 10, 1976. When L. Yu Chang died
on September 30, 1976, his wife, Donata Sta. Ana
and his seven children inherited the property and
succeeded in the possession of the property.
On March 1, 1978, a Deed of Transfer and
Renunciation[8] of their rights over the property was
executed by L. Yu Chang's five children, Rafaela,
Catalina, Flaviana, Esperanza, and Antonio, in
favor of herein petitioners. After the transfer,
petitioners had the subject property surveyed and
subdivided into two lots, Lot 2199[9] and Lot
2200[10] of Plan SWO-05-000888, Pili Cadastre.
Petitioners also declared the lots in their names for
taxation purposes as shown in Tax Declaration No.
02633[11] and paid the real property taxes thereon.
On February 21, 1997, petitioner Soledad Yu
Chang, for herself and in representation of her
brother and co-petitioner, Vicente Yu Chang, filed
a petition[12] for registration of title over the
aforementioned lots under the Property Registration
Decree. In their petition, they declared that they
are the co-owners of the subject lots; that they and
their predecessors-in-interest have been in actual,
physical, material, exclusive, open, occupation
and possession of the above described parcels of
land for more than 100 years[13]; and that
allegedly, they have continuously, peacefully, and
adversely possessed the property in the concept of
owners. Hence, they are entitled to confirmation of
ownership and issuance and registration of title in
their names.
In support of their application, petitioners submitted
the following documents, to wit:
1. Agreement to Exchange Real Property;
2. Deed of Transfer and Renunciation;
3.
Approved Plan of Lot 2199 and Lot 2200, Cad.
291, Pili Cadastre;
4. Approved Technical Description of Lot 2199;
5. Approved Technical Description of Lot 2200;
6.
Field Appraisal and Assessment Sheet (FAAS)
A.R.P. No. 026-044 for Lot 2199 Cad. 291; and
7.
Field Appraisal and Assessment Sheet (FAAS)
A.R.P. No. 026-043 for Lot 2200 Cad. 291 Pili
Cadastre.
The Republic, through the Office of the Solicitor
General (OSG), filed an Opposition[14] to the
application, alleging, inter alia, that: (1) neither the
applicants nor their predecessors-in-interest have
been in open, continuous, exclusive and notorious
possession of the land since June 12, 1945 or prior
thereto; (2) the muniments of title, tax declarations
and tax receipts do not constitute competent and
sufficient evidence of a bona fide acquisition of the
land; and (3) that the parcels of land applied for
are portions of the public domain and are not
subject to private appropriation.
Page 50 of 158
No other parties filed their opposition. Thus, on

December 14, 1998, an Order of General
Default[15] was issued by the trial court.
After hearing, the trial court rendered a Decision
granting petitioners' application. The fallo of the
trial courts decision reads:
WHEREFORE, in view of the foregoing, decision is
hereby rendered as follows:
1. Confirming the imperfect title of the herein
applicants Vicente Yu Chang and Soledad Yu
Chang over the two (2) parcels of land described
in paragraph two (2) page 2 of the Petition,
particularly Lot 2199, Plans S0-05-000888, Cad. 291,
Pili Cadastre and Lot 2200, Plan SWO-05-000888,
Cad. 291, Pili Cadastre; both Filipino citizens,
residents of #14 Joaquin St., Corinthian Garden,
Quezon City and San Juan, Pili, Camarines Sur
respectively;
2. Ordering the dismissal of the application in the
Cadastral proceeding with respect to Lots 2199
and 2200, Cad. 291, Pili Cadastre under CAD Case
No. N-9;
3. After finality of this decision, let the
corresponding decree of registration be issued by
the Administrator, Land Registration Authority to the
herein applicants above-mentioned.
SO ORDERED.[16]
The Republic appealed the decision to the CA on
the ground that the court a quo erred in granting
petitioners application for registration of Lots 2199
and 2200 despite their failure to show compliance
with the requirements of the law. In addition, the
Republic asserted that the land was classified as
public forest land; hence, it could not be subject to
appropriation and alienation.
As aforesaid, the CA reversed the trial court's
decision on August 26, 2005, and dismissed
petitioners application for land registration. The CA
considered the petition to be governed by Section
48(b) of Commonwealth Act (C.A.) No. 141 or the
Public Land Act, as amended, and held that
petitioners
were
not
able
to
present
incontrovertible evidence that the parcels of land
sought to be registered are alienable and
disposable.[17] The CA relied on the testimony of
Lamberto Orcena, Land Management Officer III of
CENRO, Iriga City, who testified that prior to
October 30, 1986, the entire area encompassing
the right side of the Naga-Legaspi Highway,
including the subject properties, was classified as
forest land. According to the CA, even if the area
within which the subject properties are located is
now being used for residential and commercial
purposes, such fact will not convert the subject
parcels of land into agricultural land.[18] The CA
stressed that there must be a positive act from the
government declassifying the land as forest land
before it could be deemed alienable or disposable
land for agricultural or other purposes.[19]
Additionally, the CA noted that the lands sought to
be registered were declared disposable public
land only on October 30, 1986. Thus, it was only
from that time that the period of open, continuous

and notorious possession commenced to toll
against the State.
Aggrieved, petitioners are now before this Court via
the present appeal, raising the sole issue of whether
the appellate court erred in dismissing their
application for registration of title on the ground
that they failed to prove compliance with the
requirements of Section 48(b) of the Public Land
Act, as amended.
Petitioners insist that the subject properties could no
longer be considered and classified as forest land
since there are buildings, residential houses and
even government structures existing and standing
on the land.[20] In their Memorandum,[21]
petitioners point out that the original owner and
possessor of the subject land was the Municipal
Government of Pili which was established in 1930.
The land was originally part of the municipal
ground adjacent to the Municipal Building located
at the right side of the Naga-Legaspi National
Highway.[22] From 1949, when L. Yu Chang
acquired the property through barter and up to the
filing of petitioners application in 1997, petitioners
and their predecessors-in-interest had been in
actual physical and material possession of the land
in the concept of an owner, notorious and known
to the public and adverse to the whole world.
The Republic, through the OSG, for its part,
maintains that petitioners failed to prove their
open, continuous, exclusive and notorious
possession of the subject lots for the period of time
required by law. The OSG also submits that the
subject lands were declared as alienable and
disposable only on October 30, 1986.
We deny the petition for lack of merit.
Section 48(b) of the Public Land Act, as amended
by P.D. 1073, under which petitioners application
was filed, provides:
SEC. 48. The following described citizens of the
or completed, may apply to the Regional Trial
Court of the province or city where the land is
located for confirmation of their claims and the
issuance of a certificate of title therefor, under the
Property Registration Decree, to wit:
xxxx
predecessors[-]in[-]interest have been in the open,
continuous, exclusive, and notorious possession and
occupation
of
alienable
and
disposable
agricultural lands of the public domain, under a
bona fide claim of acquisition or ownership, since
June 12, 1945, except when prevented by war or
force majeure. These shall be conclusively
of this chapter.
Page 51 of 158
x x x x[23]
Under this provision, in order that petitioners
application for registration of title may be granted,
they must first establish the following: (1) that the
subject land forms part of the disposable and
alienable lands of the public domain and (2) that
they have been in open, continuous, exclusive and
notorious possession and occupation of the same
under a bona fide claim of ownership, since June
12, 1945, or earlier.[24] Applicants must overcome
the presumption that the land they are applying for
is part of the public domain and that they have an
interest therein sufficient to warrant registration in
their names arising from an imperfect title.[25]
In the instant case, petitioners did not adduce any
evidence to the effect that the lots subject of their
application are alienable and disposable land of
the public domain. Instead, petitioners contend
that the subject properties could no longer be
considered and classified as forest land since there
are building structures, residential houses and even
government buildings existing and standing on the
area. This, however, is hardly the proof required
under the law. As clarified by this Court in Heirs of
Jose Amunategui v. Director of Forestry,[26] a
forested area classified as forest land of the public
domain does not lose such classification simply
because loggers or settlers may have stripped it of
its forest cover. Parcels of land classified as forest
land may actually be covered with grass or
planted with crops by kaingin cultivators or other
farmers. Forest lands do not have to be on
mountains or in out-of-the-way places. The
classification of land is descriptive of its legal nature
or status and does not have to be descriptive of
what the land actually looks like.[27] Unless and
until the land classified as forest land is released in
an official proclamation to that effect so that it
may form part of the disposable agricultural lands
of the public domain, the rules on confirmation of
imperfect title do not apply.[28] As aptly held by
the appellate court:
[T]he fact that the area within which the subject
parcels of land are located is being used for
residential and commercial purposes does not
serve to convert the subject parcels of land into
agricultural land. It is fundamental that before any
land may be declassified from the forest group and
converted into alienable or disposable land for
agricultural or other purposes, there must be a
positive act from the government. A person cannot
enter into forest land and by the simple act of
cultivating a portion of that land, earn credits
towards an eventual confirmation of imperfect title.
The Government must first declare the forest land
to be alienable and disposable agricultural land
before the year of entry, cultivation and exclusive
and adverse possession can be counted for
purposes of an imperfect title.[29]
Moreover, during the hearing of petitioners'
application, the Republic presented a Report[30] of
Rene Gomez, Land Investigator/Inspector, CENRO
No. V-2-3, which disclosed that the lots applied for
by the petitioners were classified as alienable and

disposable under Project No. 9-E, L.C. Map No. 3393
and released and certified as such only on
October 30, 1986. A Compliance[31] dated
January 19, 1999 submitted by OIC-CENR Officer
Joaquin Ed A. Guerrero to the trial court also stated
that Lots. 2199 and 2200 of Cad. 291 were verified
to be within Alienable and Disposable area under
Project No. 9-E, L.C. Map No. 3393, as certified on
October 30, 1986 by the then Bureau of Forestry.
Evidently, therefore, the subject lots were declared
alienable and disposable only on October 30, 1986.
Prior to that period, the same could not be the
subject of confirmation of imperfect title. Petitioners
possession of the subject forest land prior to the
date when it was classified as alienable and
disposable is inconsequential and should be
excluded from the computation of the period of
possession.[32] To reiterate, it is well settled that
possession of forest land, prior to its classification as
alienable and disposable land, is ineffective since
such possession may not be considered as
possession in the concept of owner.[33] The
adverse possession which can be the basis of a
grant of title in confirmation of imperfect title cases
cannot commence until after forest land has been
declared and alienable.[34]
Much as this Court wants to conform to the States
policy of encouraging and promoting the
distribution of alienable public lands to spur
economic growth and remain true to the ideal of
social justice, our hands are tied by the laws
stringent safeguards against registering imperfect
titles.[35] Here, petitioners failed to present wellnigh incontrovertible evidence necessary to prove
their compliance of the requirements under Section
48(b) of C.A. No. 141. Hence, the Court of Appeals
did not err in dismissing their application for
confirmation and registration of title.
WHEREFORE, the petition is hereby DENIED. The
Decision dated August 26, 2005 and the Resolution
dated February 13, 2006 of the Court of Appeals in
CA-G.R. CV No. 67430 are hereby AFFIRMED.
With costs against the petitioners.
SO ORDERED.
#13
THE HEIRS OF THE LATE FERNANDO S. FALCASANTOS,
namely; MODESTA CANDIDO-SAAVEDRA and
ANGEL F. CANDIDO; and the HEIRS OF THE LATE
JOSE S. FALCASANTOS, namely: FELIX G.
FALCASANTOS, RAMON G. FALCASANTOS,
CORAZON N. FERNANDO, ANASTACIO R. LIMEN, PAZ
CANDIDO-SAYASA and MARIO F. MIDEL;
represented by ANASTACIO R. LIMEN IN HIS BEHALF
AND IN BEHALF OF THE OTHERS AS ATTORNEY-INFACT,
Petitioners,
- versus SPOUSES FIDEL YEO TAN and SY SOC TIU, SPOUSES
NESIQUIO YEO TAN and CHUA YOK HONG, SPOUSES
Page 52 of 158
NERI YEO TAN and MERCEDES UY and SPOUSES ELOY

YEO TAN and EVELYN WEE,
Respondents.
G.R. No. 172680
Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
BRION,
DEL CASTILLO, and
ABAD, JJ.
Promulgated:
August 28, 2009
x-------------------------------------------------x
DECISION
CARPIO MORALES, J.:
The now deceased Policarpio Falcasantos
(Policarpio) was the registered owner of a parcel of
land in Zamboanga City covered by Original
Certificate of Title (OCT) No. 3371[1] issued on
September 10, 1913.
OCT No. 3371 was cancelled and, in its stead,
Transfer Certificate of Title (TCT) No. 5668 was issued
on March 6, 1925[2] in the name of Jose
Falcasantos (Jose), one of his eight children, the
others being Arcadio, Lecadia, Basilisa, Fernando,
Martin, Dorothea, and Maria, all surnamed
Falcasantos.
TCT No. 5668 was in turn cancelled on May 28, 1931
and, in its stead, TCT No. RT-749 (10723) was issued
in the name of one Tan Ning.[3]
Sale, which came to their knowledge only in 2003,

by making it appear that Policarpio sold him (Jose)
one half of the property on account of which Jose
was able to have even the entire area of the
property titled in his name on March 6, 1925.
Petitioners also alleged that while respondents and
their predecessors-in-interest have not taken
possession of the property, they (petitioners) and
their predecessors-in-interest have exercised
exclusive, public, continuous, and adverse
possession of the property for about 82 years since
the supposed sale to Jose in 1922.
In a Motion to Dismiss,[7] respondents contended
that, among other things, petitioners action, which
involves an immovable, had already prescribed in
30 years, citing Article 1141 of the New Civil Code;
and that petitioners were in fact estopped by
laches. To the Motion, petitioners countered that
an action for quieting of title is imprescriptible and
that, in any event, they had already acquired the
property by acquisitive prescription.[8]
By Order[9] of September 30, 2004, Branch 14 of the
Zamboanga City Regional Trial Court (RTC)
dismissed the complaint in this wise:
On the quieting of title [cause of action] . . .
plaintiffs miserably failed to allege in their
complaint that they possess . . . legal ownership [or]
equitable ownership of the litigated property.
Hence, plaintiffs cause of action on quieting of title
has no legal leg to stand on.
As regards plaintiffs cause of action invoking the
declaration of nullity of the aforementioned
certificates of title, they based their claim of
ownership thereof on the alleged fraud and deceit
in the execution of deed of sale between Jose
Falcasantos and his father Policarpio on March 7,
1922.
Still later, TCT No. RT-749 (10723) was cancelled and

TCT No. 3366 was issued in its stead in the name of
one Tan Kim Piao a.k.a. Oscar Tan on August 30,
1950.[4]
It is well-settled that a Torrens certificate is the best

evidence of ownership over registered land.
Finally, TCT No. RT-749 (10723) was cancelled and in

its stead TCT No. T-64,264 was issued on July 27,
1981 in the name of herein respondents spouses
Fidel Yeo Tan and Sy Soc Tin et al.[5]
The certificate serves as evidence of an

indefeasible title to the property in favor of the
persons whose names appear therein (Republic v.
Court of Appeals, Artemio Guido, et al. 204 SCRA
160 (1991), Demausiado v. Velasco, 71 SCRA 105,
112 [1976]).
On January 26, 2004, the heirs of brothers Jose and

Fernando Falcasantos, herein petitioners, filed
before the Regional Trial Court (RTC) of
Zamboanga City a complaint,[6] which was later
amended on July 15, 2004, for quieting of title
and/or declaration of nullity of documents against
respondents, alleging that on March 6, 1922, Jose,
without the knowledge of his seven siblings, through
fraud, deceit and/or undue influence caused their
(Jose and his siblings) father Policarpio, who was
then sick and incapacitated, to sign a Deed of
It may be argued that the certificate of title is not

conclusive of ownership when the issue of fraud
and misrepresentation in obtaining it is raised.
However, this issue must be raised seasonably
(Monticives v. Court of Appeals, 53 SCRA 14, 21
[1973]).
In the present action, TCT No. 5668 was issued on
March 6, 1925 to Jose Falcasantos. Upon the
expiration of one (1) year from and after the date
Page 53 of 158
of entry of the decree of registration, not only such

decree but also the corresponding certificate of
title becomes incontrovertible and indefeasible
(Section 32, P.D. 1529). Otherwise stated, TCT No.
5668 issued to defendant attained the status of
indefeasibility one year after its issuance on March
6, 1925, hence, it is no longer open to review, on
the ground of fraud. Consequently, the filing of
instant complaint on January 27, 2004 or about 79
years after, can no longer re-open or revise or
cancel TCT No. 5668 on the ground of fraud. No
reasonable and plausible excuse has been shown
for such unusual delay. The law serves these who
are vigilant and diligent and not those who sleep
when the law requires them to act.
The same is true with TCT Nos. RT-749 (10723) issued
on May 28, 1931, No. T-3366 issued on August 30,
1950 and T-64,264 issued on July 27, 1981. These
certificates of title became indefeasible one (1)
year after their issuance.
Although complainants may still have the remedy
of reconveyance, assuming that they are the
owners and actual occupants of the litigated Lot
2152, as claimed by them, this remedy, however,
can no longer be availed of by complainants due
to prescription, The prescriptive period for
reconveyance of fraudulently registered real
property is ten (10) years reckoned from the date of
issuance of the certificate of title.
Complainants discovery of the fraud must be
deemed to have taken place from the issuance of
the aforementioned certificates of title because
the registration of the real property is considered a
constructive notice to all persons from the time of
such registering, filing or entering (Serna v. Court of
Appeals, 527 SCRA 537, 536).
Inasmuch the complaint was filed by the
complainants only on January 7, 2004, the ten, year
prescriptive period had elapsed.
On the matter of prescription raised by the
defendants, the Supreme Court, in the case of
Miailhe v. Court of Appeals, 354 SCRA 686, 681-682,
held:
x x x In Gicano v. Gegato, this Court held that a
complaint may be dismissed when the facts
showing the lapse of the prescriptive period are
apparent from the records. In its words:
x x x We have ruled that the trial courts have
authority and discretion to dismiss an action on the
ground of prescription when the parties pleadings
or other facts on record show it to be indeed timebarred; x x x and it may do so on the basis of the
motion to dismiss, or an answer which sets up such
ground as an affirmative defense; or even if the
ground is alleged after judgment on the merits, as
in a motion for reconsideration; or even if the
defense has not been asserted at all, as where no

statement thereof is found in the pleadings, or
where a defendant has been declared in default.
What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period
be otherwise sufficiently and satisfactorily apparent
on the record; either in the averments of the
plaintiffs complaint, or otherwise established by the
evidence.
It should be noted that the fact of prescription is
clear from the very allegations found in paragraph
9 to 10.4 of the amended complaint, which reads:
9. Lately, 2003 last year, the [plaintiffs wanted to
extra-judicially
settle
and
partition among
themselves the real property above-described but
when they went to the Office of the Registry of
Deeds for Zamboanga City, to their dismay and
consternation, they discovered that OCT No. T-3371
has already been cancelled and a certificate of
title for the said real property, TCT No. T-64,264 in
the name of private defendants was issued by the
Registry of Deeds for Zamboanga City on July 27,
1981. By this time also, 2003, they have learned of
the fraud and simulation perpetrated by Jose
Falcasantos in the execution of the 1922 Deed of
Sale. Certified machine copy of CT No, T-64,264 is
hereto attached as Annexes D and D-1
10. The plaintiffs learned that further from the Office
of the Registry of Deeds for Zamboanga City that:
10.1- TCT No, T-64,264 was derived from TCT No. T3366, issued in the name of TAN KIM PIAO a.k.a.
OSCAR TAN, married to Yeo King Hua, by the
Registry of Deeds for Zamboanga City on August
30, 1950. Copy of TCT No. T-3366 is hereto attached
as Annexes F, F-1, F-2, and F-3.
10.2- TCT No, T-3366 was derived from TCT No. RT749 (10723), a reconstituted title issued in the name
of TAN NING, widower and Chinese citizen, by the
Registry of Deeds for the Province of Zamboanga
City on May 28, 1931. Certified machine copy of
TCT No RT-749 (10723) is hereto attached as
Annexes E, E-1, E-2, and E-3.
10.3- Reconstituted TCT No. RT-749 (10723) in the
name of TAN NING was derived from TCT No. 5668
(Annexes C and C-1), issued in the name of Jose
Falcasantos which cancelled OCT No. 3371; and
10.4- Reconstituted TCT No. RT- No. 749 (10723) and
all its derivative certificates of titles, namely TCT
Nos. T-3366 in the name of TAN KIM PIAO a.k.a.
OSCAR TAN and T-64,264 in the name of private
defendants are also void ab initio because the
above-described real property was never sold by
Jose Falcasantos to TAN NING.[10]
Page 54 of 158
Petitioners filed a Motion for Reconsideration[11] of

the dismissal of the complaint which the trial court,
by Order of July 28, 2005, denied. Copy of the July
28, 2005 Order was received by petitioners counsel
on August 18, 2005 who thus had 15 days or up to
September 2, 2005 to appeal. No appeal having
been filed, the trial court issued on September 12,
2005 a Certificate of Finality of Judgment.
On October 18, 2005, petitioners assailed the trial
courts Orders of September 30, 2004 and July 28,
2005 via Certiorari before the Court of Appeals,
relying, in the main, as ground for the allowance
thereof, their alleged deprivation of due process by
the trial court for not giving them the opportunity to
present evidence to prove the causes of action.
By Decision[12] of January 20, 2006, the appellate
court, holding that Certiorari is not the proper
remedy to assail a final order of the trial court and,
in any event, the petition for Certiorari was not only
filed one day late, but was also defective in form
and substance in that
a) The Petition failed to indicate all the material
dates showing the timeliness of the Petition,
pursuant to Section 3 of Rule 46 of the Revised Rules
of Court. It failed to state the date when the notice
of assailed Order dated 30 September 2004 was
received.
b) The Petition and the Certification against Forum
Shopping was only signed and verified by Petitioner
ANASTACIO LIMEN. It was only Petitioner ROMAN
FALCASANTOS who executed a Special Power of
Attorney authorizing Petitioner ANASTACIO LIMEN to
file the instant Petition. The special Power of
Attorney allegedly executed by other heirs was not
presented.
c) The attached copy of the Order dated 30
September 2004 is not legible and a certified true
copy as mandated under Section 1, Rule 65 of the
Revised Rules of Court and worse, it lacks page 5
thereof.
d) The attached copy of Petitioners VEHEMENT
OPPOSITION marked as Annex D is not legible,
(Underscoring supplied),
X X X IN NOT DISREGARDING PROCEDURAL DEFECTS

IN THE DISMISSED PETITION.[13] (Emphasis in the
original)
The trial courts order of dismissal of petitioners

complaint attained finality on September 2, 2005
following their failure to appeal it, which is a final,
not an interlocutory order, within 15 days from
August 18, 2005 when their counsel received a
copy thereof.
Even if procedural rules were to be relaxed by
allowing petitioners availment before the appellate
court of Certiorari, instead of appeal, to assail the
dismissal of their complaint, not only was the
petition for Certiorari filed beyond the 60-day
reglementary period. It glaringly failed to allege
how the trial court committed grave abuse of
discretion in dismissing the complaint. It merely
posited that in dismissing the complaint, petitioners
were deprived of the opportunity to present
evidence to prove the causes of action. Such
position does not lie, however, for petitioners
complaint was dismissed precisely because after
considering respondents Motion to Dismiss and
petitioners 14-page VEHEMENT OPPOSITION to the
Motion to Dismiss in which they proffered and
exhaustively discussed the grounds for the denial of
the Motion to Dismiss, the trial court dismissed the
complaint on the ground of prescription.
While in their Motion for Reconsideration of the
appellate courts decision petitioners explained why
the questioned dismissal by the trial court of their
complaint was issued in grave abuse of discretion,
viz:
The questioned orders were issued in grave abuse
of discretion because the rulings therein violated
the doctrine stare decisis that obliged judges to
follow the principle of law laid down in earlier cases
when the court a quo did not apply the
jurisprudence cited by the petitioners in their
VEHEMENT OPPOSITION dated 21 April 2004 and
Motion for Reconsideration dated October 29,
2004.[14] (Emphasis and italics in the original,
citation omitted),
dismissed the petition.

Hence, the present petition, faulting the appellate
court
I
X X X IN RULING THAT CERTIORARI UNDER RULE 65 OF
THE RULES OF COURT IS NOT APPROPRIATE OR IS AN
UNAVAILABLE
REMEDY
INSTITUTED
BY
THE
PETITIONERS; [AND]
II
the Court finds that just the same, the petition for
Certiorari before the appellate court was doomed
for it failed to allege that the trial court 1) acted
without jurisdiction for not having the legal power
to determine the case; 2) acted in excess of
jurisdiction for, being clothed with the power to
determine the case, it overstepped its authority as
determined by law; and 3) committed grave abuse
of discretion for acting in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its
judgment as to be said to be equivalent to lack of
jurisdiction.[15]
Page 55 of 158
WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.
#14
Supreme Court
Manila
THIRD DIVISION
ANICETO BANGIS substituted by his heirs, namely:

RODOLFO B. BANGIS, RONNIE B. BANGIS, ROGELIO
B. BANGIS, RAQUEL B. QUILLO, ROMULO B. BANGIS,
ROSALINA B. PARAN, ROSARIO B. REDDY, REYNALDO
B. BANGIS, and REMEDIOS B. LASTRE,
Petitioners,
THE ANTECEDENT FACTS
The spouses Serafin, Sr. and Saludada[3]Adolfo

were the original registered owners of a 126,622
square meter lot covered by Original Certificate of
Title (OCT) No. P-489 issued on December 15, 1954
(derived from Homestead Patent No. V-34974),
located in Valencia, Malaybalay, Bukidnon. This
property was mortgaged to the then Rehabilitation
Finance Corporation (now Development Bank of
the Philippines or DBP) on August 18, 1955,[4]and
upon default in the payment of the loan obligation,
was foreclosed and ownership was consolidated in
DBP's name under Transfer Certificate of Title (TCT)
No.
T-1152.[5]Serafin
Adolfo,
Sr.,
however,
repurchased the same and was issued TCT No.
6313[6]on December 1, 1971, a year after his wife
died in 1970.
-versusHEIRS OF SERAFIN AND SALUD ADOLFO, namely: LUZ

A. BANNISTER, SERAFIN ADOLFO, JR., and ELEUTERIO
ADOLFO rep. by his Heirs, namely: MILAGROS, JOEL,
MELCHOR, LEA, MILA, NELSON, JIMMY and MARISSA,
all surnamed ADOLFO,
Respondents.
G.R. No. 190875
Present:
PERALTA, J., *Acting Chairperson,
ABAD,
VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.
Promulgated:
Sometime in 1975, Serafin Adolfo, Sr. (Adolfo)

allegedly mortgaged the subject property for the
sum of P12,500.00 to Aniceto Bangis (Bangis) who
immediately took possession of the land.[7]The said
transaction was, however, not reduced into
writing.[8]
When Adolfo died, his heirs, namely, Luz Adolfo

Bannister, Serafin Adolfo, Jr. and Eleuterio Adolfo
(Heirs of Adolfo), executed a Deed of Extrajudicial
Partition dated December 24, 1997 covering the
subject property and TCT No. T-65152[9]was issued
to them. On May 26, 1998, the said property was
subdivided and separate titles were issued in
names of the Heirs of Adolfo, as follows: TCT Nos. T66562 and T-66563 for Luz Adolfo Banester[10]; TCT
Nos. T-66560 and T-66561 in the name of Serafin
Adolfo, Jr.; and TCT Nos. T-66564 and T-66565 in
favor of Eleuterio Adolfo.[11]
June 13, 2012
x----------------------------------------------------------------------------------------x
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari

under Rule 45 of the Rules of Court is the March 30,
2009 Decision[1]of the Court of Appeals Mindanao
Station (CA) and its December 2, 2009 Resolution[2]
in CA-G.R. CV No. 00722-MIN which declared that
the transaction between the parties was a
mortgage, not a sale, and ordered petitioners to
surrender the possession of the disputed lot upon
respondents' full payment of their indebtedness.
In June 1998, the Heirs of Adolfo expressed their

intention to redeem the mortgaged property from
Bangis but the latter refused, claiming that the
transaction between him and Adolfo was one of
sale. During the conciliation meetings in the
barangay, Bangis' son, Rudy Bangis, showed them
a copy of a deed of sale and a certificate of title to
the disputed lot.[12]The parties having failed to
amicably settle their differences, a certificate to file
action[13]was issued by the barangay.
THE PROCEEDINGS BEFORE THE RTC
On July 26, 2000, the Heirs of Adolfo filed a

complaint[14]before the Regional Trial Court (RTC)
for annulment of deed of sale and declaration of
the purported contract of sale as antichresis,
Page 56 of 158
accounting and redemption of property and

damages against Bangis, docketed as Civil Case
No. 2993-00. The complaint was amended on
September 11, 2001 to include a prayer for the
cancellation of TCT No. T-10567 and the tax
declarations in the name of Bangis in view of the
manifestation[15]filed by Ex-Officio Register of
Deeds, Atty. Phoebe Loyola Toribio of the Registry
of Deeds, Malaybalay City which states that the
said title was of "dubious" origin since there was no
deed of conveyance upon which the said transfer
certificate of title was based and that its derivative
title, TCT No. T-10566, does not exist in the files of the
Registry of Deeds.[16] On November 12, 2001, the
complaint was again amended to reflect the other
certificates of titles issued in the names of the Heirs
of Adolfo and the amount of P12,500.00
representing the mortgage debt,[17]followed by
another amendment on October 13, 2003 to
include the allegation that they have partitioned
the subject lot on December 24, 1997 and that no
copy of the supposed deed of sale in favor of
Bangis can be found in the records of the Provincial
Assessor's Office and the Registrar of Deeds. They
further prayed, in the alternative, to be allowed to
redeem the subject lot under the Homestead Law
and that Bangis be ordered to indemnify them: (a)
P50,000.00 each as moral damages; (b) 20% of the
value of the property as attorney's fees; and (c)
P50,000.00 as litigation expenses as well as the costs
of suit.[18]
In his Answer with Counterclaim,[19]Bangis claimed

to have bought the subject property from Adolfo
for which TCT No. T-10567[20]was issued. He also
alleged to have been in open and adverse
possession of the property since 1972 and that the
cause of action of the Heirs of Adolfo has
prescribed. On November 11, 2001, Bangis died
and was substituted in this suit by his heirs, namely,
Rodolfo B. Bangis, Ronie B. Bangis, Rogelio B.
Bangis, Raquel B. Quillo, Romulo B. Bangis, Rosalina
B. Paran, Rosario B. Reddy, Reynaldo B. Bangis and
Remedios B. Lastre (Heirs of Bangis).[21]
property and had even used the same as collateral

for a loan with a bank.[26]
On rebuttal, one of the Heirs of Adolfo, Luz Adolfo

Bannister, denied the due execution and
genuineness of the foregoing Extra-Judicial
Settlement with Absolute Deed of Sale alleging
forgery.[27]
On December 29, 2005, the RTC rendered a

Decision[28]in favor of the Heirs of Adolfo, the
dispositive portion of which reads:
WHEREFORE, the preponderance of evidence
being strongly in favor of the plaintiffs and against
the defendants, decision is hereby rendered:
1. Declaring the contract between the plaintiffs
and defendants as a mere mortgage or antichresis
and since the defendants have been in the
possession of the property in 1975 up to the present
time enjoying all its fruits or income, the mortgaged
loan of P12,000.00 is deemed fully paid;
2. Ordering the defendants to deliver the
possession of the property in question and all the
improvements thereon to the plaintiffs peacefully;
3. Declaring TCT No. 10567 in the name of Aniceto
Bangis as NULL AND VOID AB INITIO and directing
the Office of the Register of Deeds to cause its
cancellation from its record to avoid confusion
regarding the ownership thereof; and
4. Declaring all the transfer certificates of title issued
in favor of the plaintiffs namely, Luz AdolfoBannister, Serafin Adolfo, Jr. and Eleuterio Adolfo,
as above-mentioned as the ones valid and issued
in accordance with PD 1529.
SO ORDERED.
Aggrieved, the Heirs of Bangis appealed the

foregoing disquisition to the Court of Appeals (CA).
During the trial, one of the Heirs of Bangis, Rodolfo
Bangis, presented a photocopy of an Extra-Judicial
Settlement with Absolute Deed of Sale dated
December 30, 1971[22]for the purpose of proving
the sale of the subject lot by Adolfo and his heirs in
favor of his predecessors-in-interest, Aniceto Bangis
and Segundino Cortel, for the sum of P13,000.00. He
also presented a Promissory Note[23]of even date
purportedly executed by Bangis and Segundino
Cortel undertaking to pay the balance of the
purchase price in the amount of P1,050.00.[24] Both
documents were notarized by Atty. Valentin Murillo
who
testified
to
the
fact
of
their
execution.[25]Rodolfo Bangis likewise testified that
they have been paying the taxes due on the
THE CA RULING
In its assailed Decision, the CA affirmed the RTC

finding that the contract between the parties was
a mortgage, not a sale. It noted that while Bangis
was given possession of the subject property, the
certificate of title remained in the custody of
Adolfo and was never cancelled. The CA also
ordered the Heirs of Adolfo to pay the Heirs of
Bangis the mortgage debt of P12,500.00[29]with
twelve (12%) percent interest reckoned from 1975
until 1998 and to deliver to them the possession of
the property upon full payment.[30]It, however,
Page 57 of 158
deleted the RTC order directing the Register of

Deeds to cancel TCT No. T-10567 in the name of
Bangis for being a collateral attack proscribed
under PD 1529.[31]
Dissatisfied, the Heirs of Bangis filed a Motion for

Reconsideration[32]arguing that the CA erred in
disregarding their testimonial and documentary
evidence, particularly, the Extra-Judicial Settlement
with Absolute Deed of Sale (Exh. 2) which
purportedly established the sale in favor of their
predecessor-in-interest, Aniceto Bangis. The said
motion
was,
however,
denied
in
the
Resolution[33]dated December 2, 2009.
whether certain items of evidence should be

accorded probative value or weight, or rejected as
feeble or spurious, or whether or not the proofs on
one side or the other are clear and convincing and
adequate to establish a proposition in issue, are
without doubt questions of fact."[38]
Nonetheless, the Court perused the records and

found substantial evidence supporting the factual
findings of the RTC, as affirmed by the CA, that the
nature of the transaction between the parties'
predecessors-in-interest was a mortgage and not a
sale. Thus, the maxim that factual findings of the
trial court when affirmed by the CA are final and
conclusive on the Court[39]obtains in this case.
THE ISSUE BEFORE THE COURT

THERE WAS NEITHER AN
ANTICHRESIS NOR SALE
Hence, the instant petition for review on certiorari
based on the lone assignment of error[34]that the
transaction between the parties was one of sale
and not a mortgage or antichresis. In support,
petitioner Heirs of Bangis maintain that the CA
erred in not giving probative weight to the ExtraJudicial Settlement with Absolute Deed of
Sale[35]which supposedly bolsters their claim that
their father, Aniceto Bangis, bought the subject
parcel of land from Adolfo. Hence, the
corresponding title, TCT No. T-10567, issued as a
consequence should be respected.
On their part, respondent Heirs of Adolfo averred

that no reversible error was committed by the CA in
upholding that no sale transpired between the
parties'
predecessors-in-interest.
Moreover,
petitioners' TCT No. T-10567 was not offered in
evidence and worse, certified as of dubious origin
per the Manifestation of the Registrar of Deeds.[36]
THE COURT'S RULING
For the contract of antichresis to be valid, Article

2134 of the Civil Code requires that "the amount of
the principal and of the interest shall be specified in
writing; otherwise the contract of antichresis shall
be void." In this case, the Heirs of Adolfo were
indisputably unable to produce any document in
support of their claim that the contract between
Adolfo and Bangis was an antichresis, hence, the
CA properly held that no such relationship existed
between the parties. [40]
On the other hand, the Heirs of Bangis presented
an Extra-Judicial Settlement with Absolute Deed of
Sale dated December 30, 1971[41]to justify their
claimed ownership and possession of the subject
land. However, notwithstanding that the subject of
inquiry is the very contents of the said document,
only its photocopy[42]was presented at the trial
without providing sufficient justification for the
production of secondary evidence, in violation of
the best evidence rule embodied under Section 3
in relation to Section 5 of Rule 130 of the Rules of
Court, to wit:
The petition must fail.
At the outset, it should be emphasized that a

petition for review on certiorari under Rule 45 of the
Rules of Court involves only questions of law and
not of facts. A question of law exists when there is
doubt as to what the law is on a given set of facts
while a question of fact arises when there is doubt
as to the truth or falsity of the alleged facts.[37]
The Heirs of Bangis, in insisting that both the RTC

and the CA erroneously disregarded the evidence
of sale they presented, are effectively asking the
Court to re-evaluate factual issues which is
proscribed under Rule 45. "Such questions as to
SEC. 3. Original document must be produced;

exceptions. - When the subject of inquiry is the
contents of a document, no evidence shall be
admissible other than the original document itself,
except in the following cases:
(1) When the original has been lost or destroyed, or
cannot be produced in court, without bad faith on
the part of the offeror;
(2) When the original is in the custody or under the
control of the party against whom the evidence is
offered, and the latter fails to produce it after
reasonable notice;
Page 58 of 158
(3) When the original consists of numerous

accounts or other documents which cannot be
examined in court without great loss of time and
the fact sought to be established from them is only
the general result of the whole; and
(4) When the original is a public record in the
custody of a public officer or is recorded in a public
office.
SEC. 5. When original document is unavailable. When the original document has been lost or
destroyed, or cannot be produced in court, the
offeror, upon proof of its execution or existence
and the cause of its unavailability without bad faith
on his part, may prove its contents by a copy, or by
a recital of its content in some authentic
document, or by the testimony of witnesses in the
order stated.
The bare testimony of one of the Heirs of Bangis,

Rodolfo Bangis, that the subject document was
only handed[43]to him by his father, Aniceto, with
the information that the original thereof "could not
be found"[44]was insufficient to justify its
admissibility. Moreover, the identification made by
Notary Public Atty. Valentin Murillo[45]that he
notarized such document cannot be given
credence as his conclusion was not verified against
his own notarial records.[46]Besides, the Heirs of
Bangis could have secured a certified copy of the
deed of sale from the Assessor's Office[47]that
purportedly had its custody in compliance with
Section 7, Rule 130[48]of the Rules of Court.
In sum, the Heirs of Bangis failed to establish the

existence and due execution of the subject deed
on which their claim of ownership was founded.
Consequently, the RTC and CA were correct in
affording no probative value to the said
document.[49]
TCT NO. T-10567 IN THE NAME OF

ANICETO BANGIS CANNOT PREVAIL
OVER THE TITLES OF THE HEIRS OF
ADOLFO
Records reveal that TCT No. T-10567 purportedly

secured as a consequence of the deed of sale
executed by Adolfo and his heirs in favor of Bangis
was not offered in evidence. A perusal of its copy,
however, shows that it was a transfer from TCT No.
T-10566,[50]which title the Heirs of Bangis
unfortunately failed to account for, and bore no
relation at all to either OCT No. P-489 (the original
title of the Spouses Adolfo) or TCT No. T-6313 (issued
to Adolfo when he repurchased the same property
from DBP). The Manifestation[51]of the Register of

Deeds of Malaybalay City regarding the doubtful
origin of TCT No. T-10567 and the regularity of the
titles of the Heirs of Adolfo are insightful, thus:
That the verification from the office of the original
copy of Transfer Certificate of Title No. T-10567 in
the name of Anecito Bangis is existing in the office.
Machine copy of the said title is hereto attached
as annex "A" but nothing in the title whether
annotated or attached, any Deed of Conveyance
or other Documents by which said title was issued
or transferred in the name of Anecito Bangis.
That for the information and guidance of the court
attached herewith is a machine copies [sic]
Original Certificate of Title No. P-489 in the name of
Serafin Adolfo, marked as annex "B" which
supposedly the mother title of Transfer Certificate of
Title No. T-10567 as to how this title was transferred
in the name of Anecito Bangis. Nothing will show
which will validly supports [sic] the said transfer, in
other words the said title is dubious.
This Original Certificate of Title No. P-489 in the
name of Serafin Adolfo was mortgage to the
Development Bank of the Philippines and then it
was consolidated and Transfer Certificate of Title
No. T-1152 was issued in the name of Development
Bank of the Philippines. From the Development
Bank of the Philippines a Deed of Sale was
executed by the Development Bank of the
Philippines in favor of Serafin Adolfo and Transfer
Certificate of Title No. T-6313 marked annex "B-1"
was issued in the name of Serafin Adolfo.
An Extrajudicial Settlement was now [sic] by the
Heirs of Serafin Adolfo and Transfer Certificate of
Title Nos. T-65152 annex "B-2", T-66560 annex "B-3", T66561 annex "B-4", T-66562 annex "B-5", T-66563
annex "B-6", T-66564 annex "B-7", and T-66565 annex
"B-8" were issued to the Heirs.
The titles issued to the Heirs of Serafin Adolfo were
legitimately issued by this office after all its [sic]
requirements and supporting documents were
submitted and proper annotations were reflected
at the back of the title of Serafin Adolfo.
Transfer Certificate of Title No. T-10567 as shown on
the title was derived from Transfer Certificate of Title
No. T-10566 but [sic] title is not existing in this office.
As held in the case of Top Management Programs
Corporation v. Luis Fajardo and the Register of
Deeds of Las Pias City:[52]"if two certificates of title
purport to include the same land, whether wholly or
partly, the better approach is to trace the original
certificates from which the certificates of titles were
derived."
Page 59 of 158
Having, thus, traced the roots of the parties'

respective titles supported by the records of the
Register of Deeds of Malaybalay City, the courts a
quo[53]were correct in upholding the title of the
Heirs of Adolfo as against TCT No. T-10567 of Bangis,
notwithstanding its earlier issuance on August 18,
1976[54]or long before the Heirs of Adolfo secured
their own titles on May 26, 1998. To paraphrase the
Court's
ruling
in
Mathay
v.
Court
of
Appeals:[55]where two (2) transfer certificates of
title have been issued on different dates, the one
who holds the earlier title may prevail only in the
absence of any anomaly or irregularity in the
process of its registration, which circumstance does
not obtain in this case.
CANCELLATION OF
TCT NO. T-10567
The Court cannot sustain the CA's ruling[56]that TCT

No. T-10567 cannot be invalidated because it
constitutes as a collateral attack which is contrary
to the principle of indefeasibility of titles.
It must be noted that Bangis interposed a
counterclaim in his Answer seeking to be declared
as the true and lawful owner of the disputed
property and that his TCT No. T-10567 be declared
as superior over the titles of the Heirs of
Adolfo.[57]Since a counterclaim is essentially a
complaint[58]then, a determination of the validity
of TCT No. T-10567 vis-a-vis the titles of the Heirs of
Adolfo can be considered as a direct, not
collateral, attack on the subject titles.[59]
In Pasio v. Monterroyo, the Court has ruled, thus:

It is already settled that a counterclaim is
considered an original complaint and as such, the
attack on the title in a case originally for recovery
of possession cannot be considered as a collateral
attack on the title. Development Bank of the
Philippines v. Court of Appeals is similar to the case
before us insofar as petitioner in that case filed an
action for recovery of possession against
respondent who, in turn, filed a counterclaim
claiming ownership of the land. In that case, the
Court ruled:
Nor is there any obstacle to the determination of
the validity of TCT No. 10101. It is true that the
indefeasibility of torrens title cannot be collaterally
attacked. In the instant case, the original complaint
is for recovery of possession filed by petitioner
against private respondent, not an original action
filed by the latter to question the validity of TCT No.
10101 on which petitioner bases its right. To rule on
the issue of validity in a case for recovery of
possession is tantamount to a collateral attack.
However, it should not [b]e overlooked that private
respondent filed a counterclaim against petitioner,
claiming ownership over the land and seeking

damages. Hence, we could rule on the question of
the validity of TCT No. 10101 for the counterclaim
can be considered a direct attack on the same. A
counterclaim is considered a complaint, only this
time, it is the original defendant who becomes the
plaintiff... It stands on the same footing and is to be
tested by the same rules as if it were an
independent action. x x x (Citations omitted) [60]
Besides, the prohibition against collateral attack

does not apply to spurious or non-existent titles,
which are not accorded indefeasibility,[61]as in this
case.
THE PRESENT ACTION
HAS NOT PRESCRIBED
The claim of the Heirs of Bangis that since they

have been in possession of the subject land since
1972 or for 28 years reckoned from the filing of the
complaint in 2000 then, the present action has
prescribed is untenable. It bears to note that while
Bangis indeed took possession of the land upon its
alleged mortgage, the certificate of title (TCT No.
6313) remained with Adolfo and upon his demise,
transferred to his heirs, thereby negating any
contemplated transfer of ownership. Settled is the
rule that no title in derogation of that of the
registered owner can be acquired by prescription
or adverse possession.[62]Moreover, even if
acquisitive prescription can be appreciated in this
case, the Heirs of Bangis' possession being in bad
faith is two years shy of the requisite 30-year
uninterrupted adverse possession required under
Article 1137 of the Civil Code.
Consequently, the Heirs of Bangis cannot validly

claim the rights of a builder in good faith as
provided for under Article 449 in relation to Article
448 of the Civil Code. Thus, the order for them to
surrender the possession of the disputed land
together with all its improvements was properly
made.
LIABILITY FOR THE PAYMENT

OF INTEREST
Finally, it is undisputed that the Heirs of Bangis

made no judicial or extrajudicial demand on the
Heirs of Adolfo to pay the mortgage debt. Instead,
it was the latter who signified their intent to pay
their father's loan obligation, admittedly in the
amount of P12,500.00,[63]which was refused. The
mortgage contract therefore continued to subsist
despite the lapse of a considerable number of
Page 60 of 158
years from the time it was constituted in 1975

because the mortgage debt has not been
satisfied.
Following the Court's ruling in the iconic case of

Eastern Shipping Lines, Inc. v. Court of
Appeals,[64]the foregoing liability, which is based
on a loan or forbearance of money, shall be
subject to legal interest of 12% per annum from the
date it was judicially determined by the CA on
March 30, 2009 until the finality of this Decision, and
not from 1975 (the date of the constitution of the
mortgage); nor from 1998 (when an attempt to pay
was made) or in 2000 at the time the complaint
was filed, because it was the Heirs of Adolfo and
not Bangis who filed the instant suit[65]to collect
the indebtedness. Thereafter, the judgment award
inclusive of interest shall bear interest at 12% per
annum until its full satisfaction.[66]
G.R. No. 193443

Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
April 16, 2012
x---------------------------------------------------------------------------------------x
RESOLUTION
REYES, J.:

petition for review on certiorari is DENIED and the
assailed Decision dated March 30, 2009 of the
Court of Appeals Mindanao Station (CA) and its
Resolution dated December 2, 2009 in CA-G.R. CV
No. 00722-MIN are AFFIRMED with MODIFICATION:
(1) cancelling TCT No. T-10567; and (2) ordering
respondent Heirs of Adolfo to pay petitioner Heirs of
Bangis the sum of P12,500.00 with legal interest of
12% per annum reckoned from March 30, 2009 until
the finality of this Decision and thereafter, 12%
annual interest until its full satisfaction.
The rest of the Decision stands.
SO ORDERED.
#15
This is a petition for review under Rule 45 of the

Decision[1] dated July 6, 2009 and Resolution[2]
dated August 12, 2010 Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 88995. The facts
leading to its filing are as follows:
On June 14, 2001, the petitioners filed with the
Regional Trial Court (RTC) of Naic, Cavite, an
application for land registration covering a parcel
of land identified as Lot 9972, Cad-459-D of Indang
Cadastre, situated in Barangay Bancod, Indang,
Cavite and with an area of 6,920 square meters.[3]
The petitioners alleged that they acquired the
subject property from Gregonio Gatdula pursuant
to a Deed of Absolute Sale dated April 25, 1996;
and they and their predecessors-in-interest have
been in open, continuous and exclusive possession
of the subject property in the concept of an owner
for more than 30 years.[4]
#16
Supreme Court
Baguio City
SECOND DIVISION
JEAN TAN, ROSELLER C. ANACINTO, CARLO LOILO
ESPINEDA and DAISY ALIADO MANAOIS,
represented in this act by their Attorney-in-Fact,
MA. WILHELMINA E. TOBIAS,
Petitioners,
- versus
REPUBLIC OF THE PHILIPPINES,

Respondent.
After trial and hearing, the RTC issued a Decision on

July 29, 2006, granting the petitioners application,
thus:
WHEREFORE, in view of the foregoing, this Court
confirming its previous Order of general default,
decrees and adjudges Lot No. 9972 consisting of
6,920 square meters, Cad. 459-D, Indang Cadastre
and its technical description as herein abovedescribed situated in Brgy. Bancod, Indang, Cavite,
pursuant to the provisions of Act 496 as amended
by P.D. 1529, as it is hereby decreed and adjudged
to be confirmed and registered in the names of
Jean Tan, of legal age, Filipino, single, with postal
address at Room 54 T. Pinpin St., Binondo, Manila;
Roseller C. Anaci[n]to, of legal age, Filipino, single,
with postal address at Moncario Villag[e], Ampid-1,
San Mateo, Rizal; Carlo Loilo Espineda, of legal
age, Filipino, with postal address at Cluster F.
Cogeo, Antipolo, Rizal and Daisy Aliado Manaois,
Page 61 of 158
of legal age, Filipino and resident of Panghulo

Road, Malabon, Metro Manila.
Once this decision becomes final, let the
corresponding decree of registration be issued by
the Administrator, Land Registration Authority.
SO ORDERED.[5]
The CA gave due course to the appeal filed by the

Republic of the Philippines. By way of the assailed
Decision, the CA ruled that the petitioners failed to
prove that they and their predecessors-in-interest
have been in possession of the subject property for
the requisite period of 30 years. The CA posit:
We now determine if appellees have the right to
register their title on such land despite the fact that
their possession commenced only after 12 June
1945. Records show that the appellees possession
over the subject property can be reckoned only
from 21 June 1983, the date when according to
evidence, the subject property became alienable
and disposable. From said date up to the filing of
the application for registration of title over the
subject property on 14 June 2001, only eighteen
(18) years had lapsed. Thus, appellees possession of
the subject property fell short of the requirement of
open, continuous and exclusive possession of at
least 30 years.
Moreover, there was no adequate evidence which
would show that appellees and their predecessorsin-interest exercised acts of dominion over the
subject land as to indicate possession in the
concept of owner. The testimonies of appellees
witnesses regarding actual possession are belied by
the absence of evidence on actual use of or
improvements on the subject property. Appellees
presented only various tax declarations to prove
possession. However, except for the Certification,
showing payment of tax due on tax declaration for
the year 2003, there are no other evidence
showing that all the taxes due corresponding to the
rest of the tax declarations were in fact paid by
appellees or their predecessors-in-interest.
In sum, appellees were unable to prove that they
or their predecessors-in-interest have been in
possession of the subject property for more than 30
years, which possession is characterized as open,
continuous, exclusive, and notorious, in the
concept of an owner. Appellees failed to
discharge their duty of substantiating possession
and title to the subject land.
WHEREFORE, the appeal is hereby GRANTED and
the Decision dated 29 July 2006 of the Regional Trial
Court (RTC) of Naic, Cavite, Branch 15 is REVERSED
and SET ASIDE.
SO ORDERED.[6] (citation omitted)
The petitioners moved for reconsideration but this

was denied by the CA in its August 12, 2010
Resolution.[7]
The petitioners question the conclusion arrived at
by the CA, alleging that the evidence they
presented prove that they and their predecessorsin-interest have been in possession and occupation
of the subject property for more than 30 years. The
petitioners claim that the following sufficed to
demonstrate that they acquired title over the
subject property by prescription:
a.
the testimony of their attorney-in-fact,
Ma. Wilhelmina Tobias, stating that:
i.
the
petitioners have been in actual, notorious and
open possession of the subject property since the
time they purchased the same in 1996;
ii.
the
petitioners have regularly paid the taxes due on
the subject property;
iii.
the petitioners
predecessors-in-interest, Victorio Garcia, Felipe
Gatdula and Gregonio Gatdula, had been in
years and had religiously paid the taxes due
thereon; and
iv.
the subject
property is agricultural, alienable and disposable;
b.
the testimony of the caretaker of the
subject property, Margarito Pena, stating that:
i.
he resides
near the subject property;
ii.
he witnessed
the execution of the deed of sale that petitioners
entered into with Gregonio Gatdula; and
iii.
the petitioners
and predecessors-in-interest have been in
years;
c.
the testimony of Ferdinand
Encarnacion, a clerk in the Docket Division of the
Land Registration Authority (LRA), stating that:
i.
no
opposition to the petitioners application was filed
before the LRA;
ii.
an examiner
of the LRA found nothing wrong with the petitioners
application; and
iii.
no title
covering the subject property was previously
issued;
Page 62 of 158
d.
Tax Declaration Nos. 2935, 2405 and
1823 for the years 1961, 1967 and 1974 in the name
of Victorio Garcia;[8]
e.
Tax Declaration Nos. 1534 and 3850 for
the years 1980 and 1985 in the name of Felipe
Gatdula;[9]
f.
Tax Declaration Nos. 22453-A and 2925
for the years 1991 and 1994 in the name of
Gregonio Gatdula;[10]
g.
Tax Declaration Nos. 21956-A, 22096-A,
22097-A and 97-05078 in the name of the
petitioners;[11]
h.
Resolution No. 69, Series of 1998, of the
Sangguniang Bayan of Indang, Cavite, which
approved the reclassification of several lots,
including the subject property, from agricultural to
residential/commercial;[12]
i.
DARCO Conversion Order No.
040210005-(340)-99, Series of 2000, issued by the
Department of Agrarian Reform on July 13, 2000,
which converted several parcels of land, including
the subject property, from agricultural to
residential/commercial;[13]
j.
Certification issued by the Department
of Environment and Natural Resources (DENR)
CALABARZON dated October 29, 2002, stating that
the subject area falls within the Alienable and
Disposable Land Project No. 13-A of Indang, Cavite
per LC Map 3091 certified on June 21, 1983.[14]
Issue
This Court is faced with the lone issue of whether
the petitioners have proven themselves qualified to
the benefits under the relevant laws on the
confirmation of imperfect or incomplete titles.
incomplete title over an alienable and disposable

public land under the Torrens system. Particularly:
Section 14. Who may apply. The following persons
may file in the proper Court of First Instance an
application for registration of title to land, whether
personally
or
through
their
authorized
representatives:
(1) Those who by themselves or through their
predecessors-in-interest have been in open,
occupation of alienable and disposable lands of
the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
lands by prescription under the provision of existing
laws.
lands or abandoned river beds by right of
accession or accretion under the existing laws.
(4) Those who have acquired ownership of land in
any other manner provided for by law.
As this Court clarified in Heirs of Malabanan v.

Republic of the Philippines,[15] and Republic of the
Philippines v. East Silverlane Realty Development
Corporation,[16] Section 14(1) covers alienable
and disposable lands while Section 14(2) covers
private property. Thus, for ones possession and
occupation of an alienable and disposable public
land to give rise to an imperfect title, the same
should have commenced on June 12, 1945 or
earlier. On the other, for one to claim that his
possession and occupation of private property has
ripened to imperfect title, the same should have
been for the prescriptive period provided under the
Civil Code. Without need for an extensive
extrapolation, the private property contemplated
in Section 14(2) is patrimonial property as defined in
Article 421 in relation to Articles 420 and 422 of the
Civil Code.
Our Ruling
Commonwealth Act No. 141, otherwise known as
the Public Land Act governs the classification and
disposition of lands forming part of the public
domain. Section 11 thereof provides that one of the
modes of disposing public lands suitable for
agricultural purposes is by confirmation of
imperfect or incomplete titles. Section 48 thereof
enumerates those who are considered to have
acquired an imperfect or incomplete title over an
alienable and disposable public land.
Presidential Decree No. 1529 (P.D. No. 1529),
otherwise known as the Property Registration
Decree, is a codification of all the laws relative to
the registration of property and Section 14 thereof
specifies those who are qualified to register their
Going further, it was explained in Heirs of

Malabanan and East Silverlane, that possession
and occupation of an alienable and disposable
public land for the periods provided under the Civil
Code will not convert it to patrimonial or private
property. There must be an express declaration that
the property is no longer intended for public service
or the development of national wealth. In the
absence thereof, the property remains to be
alienable and disposable and may not be
acquired by prescription under Section 14(2) of P.D.
No. 1529. Thus:
In Heirs of Malabanan, this Court ruled that
possession and occupation of an alienable and
disposable public land for the periods provided
under the Civil Code do not automatically convert
said property into private property or release it from
Page 63 of 158
the public domain. There must be an express

declaration that the property is no longer intended
for public service or development of national
wealth. Without such express declaration, the
property, even if classified as alienable or
disposable, remains property of the State, and thus,
may not be acquired by prescription.
that [p]roperty of public dominion, when no longer
form part of the patrimonial property of the State. It
is this provision that controls how public dominion
After all, Article 420 (2) makes clear that those
property which belong to the State, without being
wealth are public dominion property. For as long as
the property belongs to the State, although already
classified as alienable or disposable, it remains
property of the public dominion if when it is
intended for some public service or for the
development of the national wealth. (emphasis
supplied)
authorized by law.
In other words, for one to invoke the provisions of
Section 14(2) and set up acquisitive prescription
against the State, it is primordial that the status of
the property as patrimonial be first established.
Furthermore, the period of possession preceding
the classification of the property as patrimonial
cannot be considered in determining the
completion of the prescriptive period.[17]
The petitioners application is obviously anchored

on Section 14(2) of P.D. No. 1529 as they do not
claim to have possessed, by themselves or their
predecessors-in-interest, the subject property since
June 12, 1945 or earlier. That it was thru prescription
that they had acquired an imperfect title over the
subject property is the foundation upon which the

petitioners rest their application.
Unfortunately, this Court finds the evidence
presented by the petitioners to be wanting. The
petitioners failed to demonstrate that they and
their
predecessors-in-interest
possessed
the
property in the requisite manner, which this Court
explained as follows:
It is concerned with lapse of time in the manner
and under conditions laid down by law, namely,
that the possession should be in the concept of an
owner, public, peaceful, uninterrupted and
adverse. Possession is open when it is patent, visible,
apparent, notorious and not clandestine. It is
continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the
adverse possessor can show exclusive dominion
over the land and an appropriation of it to his own
use and benefit; and notorious when it is so
conspicuous that it is generally known and talked
of by the public or the people in the neighborhood.
The party who asserts ownership by adverse
possession must prove the presence of the essential
elements of acquisitive prescription.[18]
Tax declarations per se do not qualify as

competent evidence of actual possession for
purposes of prescription. More so, if the payment of
the taxes due on the property is episodic, irregular
and random such as in this case. Indeed, how can
the petitioners claim of possession for the entire
prescriptive period be ascribed any ounce of
credibility when taxes were paid only on eleven
(11) occasions within the 40-year period from 1961
to 2001? In Wee v. Republic of the Philippines,[19]
this Court stated that:
It bears stressing that petitioner presented only five

tax declarations (for the years 1957, 1961, 1967,
1980 and 1985) for a claimed possession and
occupation of more than 45 years (1945-1993). This
type of intermittent and sporadic assertion of
alleged ownership does not prove open,
occupation. In any event, in the absence of other
competent evidence, tax declarations do not
conclusively
establish
either
possession
or
declarants right to registration of title.[20] (emphasis
supplied and citation omitted)
In East Silverlane, it was emphasized that adverse,

continuous, open, public possession in the concept
of an owner is a conclusion of law and the burden
to prove it by clear, positive and convincing
evidence is on the applicant. A claim of ownership
will not proper on the basis of tax declarations if
unaccompanied by proof of actual possession.[21]
Page 64 of 158
While there was an attempt to supplement the tax

declaration by testimonial evidence, the same is
futile and frivolous. The testimonies of Margarito
Pena and Ma. Wilhelmina Tobias do not merit
consideration and do not make up for the inherent
inadequacy of the eleven (11) tax declarations
submitted by the petitioners. Such witnesses did not
state what specific acts of ownership or dominion
were
performed
by
the
petitioners
and
predecessors-in-interest and simply made that
general assertion that the latter possessed and
occupied the subject property for more than thirty
(30) years, which, by all means, is a mere
conclusion of law. The RTC should have tackled
evidence of such nature with a disposition to
incredulity, if not with an outright rejection.
Furthermore, the petitioners application was filed
after only (1) year from the time the subject
property may be considered patrimonial. DARCO
Conversion Order No. 040210005-(340)-99, Series of
2000, was issued by the DAR only on July 13, 2000,
which means that the counting of the thirty (30)year prescriptive period for purposes of acquiring
ownership of a public land under Section 14(2) can
only start from such date. Before the property was
declared patrimonial by virtue of such conversion
order, it cannot be acquired by prescription. This is
clear from the pronouncements of this Court in
Heirs of Malabanan quoted above and in Republic
of the Philippines v. Rizalvo,[22] which states:
On this basis, respondent would have been eligible
for application for registration because his claim of
ownership and possession over the subject property
even exceeds thirty (30) years. However, it is
jurisprudentially clear that the thirty (30)-year period
of prescription for purposes of acquiring ownership
and registration of public land under Section 14 (2)
of P.D. No. 1529 only begins from the moment the
State expressly declares that the public dominion
property is no longer intended for public service or
the development of the national wealth or that the
property has been converted into patrimonial.[23]

petition is DENIED for lack of merit. The July 6, 2009
Decision and August 12, 2010 Resolution of the
Court of Appeals are AFFIRMED.
SO ORDERED.
#17
FIRST DIVISION
SPOUSES MORRIS CARPO and SOCORRO CARPO,

Petitioners,
- versus AYALA LAND, INCORPORATED,
Respondent.
G.R. No. 166577
Present:
PUNO, C.J.,
Chairperson,
CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
February 3, 2010
x---------------------------------------------------x
DECISION
LEONARDO-DE CASTRO, J.:

In the instant petition for review on certiorari under
Rule 45 of the Rules of Court, petitioners seek to set
aside and annul the Decision[1] dated December
22, 2003 of the Court of Appeals (CA) in CA-G.R.
CV No. 61784, which reversed and set aside the
Summary Judgment[2] dated December 22, 1998
of the Regional Trial Court (RTC) of Las Pias City,
Branch 255. Also subject of the present petition is
the CA Resolution[3] dated December 16, 2004
which denied the motion for reconsideration of the
earlier decision.
A summary of the facts, as culled from the records
of the case, follows:
On February 16, 1995, petitioner spouses Morris and
Socorro Carpo (Carpos) filed a Complaint for
Quieting of Title[4] with the RTC of Makati City
against Ayala Corporation, Ayala Property
Ventures Corporation (APVC), and the Register of
Deeds of Las Pias, docketed as Civil Case No. 95292.
In their Complaint, the Carpos claimed to be the
owners of a 171,209-square meter parcel of land
covered by Transfer Certificate of Title (TCT) No.
296463 issued in their names.[5] They further alleged
that Ayala Corporation was claiming to have titles
(specifically, TCT Nos. 125945, T-4366, T-4367 and T4368) over the property covered by the Carpos TCT
No. 296463 and that Ayala Corporation had made
such property its equity contribution in APVC to be
developed into a residential subdivision. Attached
as annexes to the complaint were photocopies of:
(a) TCT No. 296463 issued on August 13, 1970 in the
name of the Carpos, covering a parcel of land (Lot
Page 65 of 158
3, plan Psu-56007) located in the Barrio of Almanza,

Las Pias with an area of 171,309 square meters;
(b) TCT No. 125945 issued on April 6, 1988 in the
name of Ayala Corporation, covering a parcel of
land (Lot 3, Plan Psu-80886) located in Bo. Tindig na
Manga, Las Pias with an area of 171,309 square
meters;
(c) TCT No. T-4367 issued on May 18, 1988 in the
land (Lot 2, plan Psu-47035) located in the Sitio of
May Kokak, Bo. of Almanza, Las Pias with an area
of 218,523 square meters; and
(d) TCT No. T-4368 issued on May 18, 1988 in the
land (Lot 3, plan Psu-47035) located in the Sitio of
May Kokak, Bo. of Almanza, Las Pias with an area
of 155,345 square meters.
No copy of TCT No. T-4366 was attached to the
complaint.
According to the complaint, TCT Nos. 125945, T4366, T-4367 and T-4368 and their derivatives
appear to have been issued in the name of Ayala
and purport to cover and embrace the Carpos
property or portion thereof duly covered registered
under the already indefeasible and incontrovertible
TCT [No.] 296463 are inherently invalid and
enforceable (sic) for not being the duly issued
derivatives of the Carpos title.[6] The Carpos
additionally applied for a restraining order and writ
of preliminary injunction to enjoin Ayala
Corporation and APVC from doing construction
and development works on the properties in
purported violation of the Carpos rights.
The complaint prayed that the trial court render
judgment:
(1) canceling and declaring void TCT Nos. 125945,
T-4366, T-4367, T-4368 and all alleged derivatives
thereof, issued in the name of Ayala Corporation
and/or APVC over the properties or portion thereof
embraced in the Carpos TCT No. 296463 and
issuing a writ of possession in favor of the Carpos
and/or ordering Ayala Corporation and APVC to
surrender to the Carpos the properties or portion
thereof being occupied by the said corporations
under inherently invalid or void titles; (2) declaring
TCT No. 296463 issued in their names as valid and
the Carpos as the owners of the property described
therein including the parcels of land being claimed
and occupied by Ayala [Corporation] and APVC
withou[t] valid and enforceable titles; and (3)
ordering Ayala Corporation and APVC to pay
jointly and severally the amount of P100,000 as
attorneys fees plus costs of suit and litigation
expenses.[7]
On March 10, 1995, before defendants could file an

answer, petitioners filed an Amended Complaint,
impleading respondent Ayala Land, Incorporated
(ALI) in lieu of Ayala Corporation after purportedly
verifying with the Register of Deeds of Las Pias that
the title to the subject property was registered in
the name of ALI and not Ayala Corporation.[8]
On October 12, 1995 and January 12, 1996, ALI filed
its Answer with Counterclaims and Opposition to
Application for Restraining Order and Writ of
Preliminary Injunction[9] and Pre-trial Brief with
Motion
to
Admit
Amended
Answer,[10]
respectively.
In its Amended Answer, ALI alleged that APVC no
longer exists having been merged with ALI in 1991.
ALI pointed out that the areas covered by TCT Nos.
T-4366, T-4367, and T-4368 do not overlap with the
Carpos claimed property and the dispute
pertained only to the land covered by the Carpos
TCT No. 296463 and TCT No. T-5333 in the name of
Las Pias Ventures, Inc. (LPVI) which was derived
from TCT No. 125945 in the name of Ayala
Corporation. It appeared that Ayala Corporation
contributed the property to LPVI and LPVI had, in
turn, also merged with ALI. Further, ALI alleged that
it is the true owner of the property covered by TCT
No. T-5333 as it traces back its title to Original
Certificate of Title (OCT) No. 242 issued in 1950 while
the Carpos title was derived from OCT No. 8575
issued only in 1970. ALI also claimed the Carpos
complaint was barred by res judicata in view of the
1941 decision of this Court in Guico v. San Pedro[11]
which upheld the ownership of a certain Eduardo
Guico over the subject property as Lot 3, of Psu80886 over the claim of a certain Florentino
Baltazar who was asserting ownership of the same
under his plan, Psu-56007.
During the pendency of the case, ALI secured a
title in its own name, TCT No. T-41262, over the
property previously covered by TCT No. T-5333.[12]
In the Order[13] dated March 6, 1996, the Makati
RTC ruled that the present case was an action in
rem and directed the transfer of the case to the
RTC of Las Pias where the disputed property is
located. The case was thereafter assigned to
Branch 255 of the Las Pias RTC and docketed as
Civil Case No. 96-0082.
On December 17, 1996, ALI filed a Motion for
Summary Judgment on the ground that there was
allegedly no genuine issue as to any material fact
and the only issue for the court to resolve was a
purely legal one which of the two (2) titles should
be accorded priority. According to ALI, the parties
were relying on their respective TCTs, and since ALI
admittedly traces its title to OCT No. 242 which was
issued more than twenty (20) years earlier than the
Carpos predecessors title (OCT No. 8575), its title is,
thus, superior. Expectedly, the Carpos filed an
Page 66 of 158
opposition to the motion for summary judgment,

arguing that there were genuine issues and
controversies to be litigated.
In an Order dated April 7, 1997, the RTC denied ALIs
motion for summary judgment. This denial was
challenged in a petition for certiorari with the CA in
CA-G.R. SP No. 44243.
In a decision[14] dated September 25, 1997, the CA
granted ALIs petition and ordered the RTC to
render a summary judgment. Both parties moved
for reconsideration of the CA Decision. ALI filed a
motion for partial reconsideration, entreating the
CA itself to render the summary judgment in the
interest of judicial economy and on a claim that
the sole issue was legal. The Carpos, in their motion,
insisted that there were genuine issues in this case
that must be threshed out in a trial. Both motions
were denied in the CA Resolution dated January
12, 1998.[15]
Both parties elevated the matter to this Court in
separate petitions for review on certiorari. In G.R.
No. 132259, ALI assailed the CAs refusal to render a
summary judgment, while in G.R. No. 132440, the
Carpos assailed the CAs ruling that trial was
unnecessary.
In separate minute Resolutions,[16] the Court
denied both petitions. Both parties motions for
reconsideration were likewise denied.
Accordingly, the RTC rendered a Summary
Judgment dated December 22, 1998, finding the
Carpos title superior to that of ALI and ruling, thus:
Upon the other hand, this Court is not inclined to
concur with Ayalas claim of the validity of its TCT
No. T-5333 and alleged OCT No. 242 absent of any
admission to that effect by the plaintiffs in their
complaint. A reading of the defendants answer
reveals that OCT No. 242 covers the property
surveyed under SWO, but the pleadings on file fail
to allege that the same was approved by the
Director of the Bureau of Lands, thereby justifying
this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration
cases, it is mandatory that the application should
be accompanied by a survey plan of the property
applied for registration, duly approved by the
Director of the Bureau of Lands. A survey plan
without the approval of the Director of the Bureau
of Lands has the character of being of dubious
origin and it is not therefore worthy of being
accepted as evidence. The property being
claimed by the defendant ALI, allegedly registered
under OCT No. 242, is shown to have been
surveyed under SWO and not bearing the approval
of the Director of the Bureau of Lands. Any title
issued emanating from a survey plan without the
approval of the Director of the Bureau of Lands is
tainted with irregularity and therefore void, as ruled
in Republic Cement Corporation vs. Court of

Appeals, et al., 198 SCRA 734. In the said case, the
Supreme Court held: That unless a survey plan is
duly approved by the Director of Lands the same is
of dubious value and is not acceptable as
evidence. Indubitably, therefore, the reported
survey and its alleged results are not entitled to
credit and should be rejected.
The submission of the plan is a statutory
requirement of mandatory character and unless
the plan and its technical description are duly
approved by the Director of Lands, the same are
not of much value (Republic vs. Vera, 120 SCRA
210). In another case, it was ruled that the Land
Registration Commission has no authority to
approve original survey plans (Director of Lands, et
al. vs. Honorable Salvador Reyes, et al., 68 SCRA
177).
Evidently, the SWO survey of the property which
defendant ALI claimed to have been originated
from OCT No. 242 had not been approved by the
Director of the Bureau of Lands, but was apparently
prepared and approved by the then Land
Registration Commissioner and under the law, the
same is void.
It will also be noted that aside from the admissions
made by defendant ALI in its answer, it clearly
appears in its title TCT No. T-5333 that the date of
survey was on July 28, 1930. Plaintiffs property
covered by TCT No. 296463 was surveyed on
January 4-6, 1927. This means that plaintiffs
predecessor-in-interest had claimed ownership of
the property ahead of that of defendant ALIs
predecessor-in-interest. The principle of prior
registration cannot be applied in this case because
the land previously surveyed cannot anymore be
the subject of another survey, and there is already
a record of a prior survey in the Bureau of Lands.
This is precisely the reason why the survey plan has
to be approved by the Director of the Bureau of
Lands. This must be the reason why the later survey
in favor of Ayalas predecessor-in-interest did not
anymore bear the approval of the Director of
Lands because had it been submitted for approval,
the records of the Bureau of Lands will show that an
earlier survey of the same land had already been
made and approved by the Director of the Bureau
of Lands.
Evidently, Ayalas claim of superiority of its title over
that of the plaintiffs cannot therefore be sustained.
Be that as it may, the fact that cannot be disputed
on the basis of Ayalas answer is its admission that
SWO survey without the approval of the Director of
the Bureau of Lands was submitted in the alleged
registration proceedings, rendering the decree and
the title issued thereunder to be tainted with
irregularity and therefore void.
Page 67 of 158
WHEREFORE, in the light of the foregoing and the

prevailing jurisprudence on the matter, judgment is
hereby rendered:
(a)
Declaring TCT No. 296463 in the name
of the plaintiffs Spouses Morris G. Carpo and
Socorro R. Carpo as valid and legal, and superior to
that of defendant Ayalas TCT No. T-5333;
dated December 16, 2004. Hence, the instant

petition for review filed by Socorro Carpo and the
heirs of Morris Carpo.[21] The Petition contained the
following assignment of errors:
A THE COURT OF APPEALS ERRED IN DECLARING
THAT THE TITLE OF RESPONDENT IS VALID EVEN
WITHOUT THE REQUISITE SURVEY PLAN APPROVED BY
THE DIRECTOR OF LANDS.
(b)
Declaring TCT No. T-5333, TCT No.
125945, TCT No. T-6055, TCT No. 4366, TCT No. 4367
and TCT No. 4368 and their derivatives as null and
void;
B. THE COURT OF APPEALS ERRED IN DECLARING

PETITIONERS GUILTY OF LACHES AND PRESCRIPTION.
(c)
Ordering the defendant Ayala Land,
Inc. to pay the sum of P100,000.00 as attorneys
fees; and
C. THE COURT OF APPEALS ERRED IN DECLARING

THAT THE RTC RELIED HEAVILY ON AN ALLEGED
ADMISSION BY RESPONDENT OF THE VALIDITY OF THE
TITLE OF PETITIONERS OVER THE DISPUTED PARCEL OF
LAND.
(d)
To pay the costs.[17]
On January 5, 1999, ALI filed a notice of appeal but

the same was dismissed by the CA in a
Resolution[18] dated May 14, 1999 for failure to pay
the full amount of docket fees. In its motion for
reconsideration, ALI pointed out that it paid the full
amount assessed by the cash clerk on duty at the
RTC Las Pias. The motion was also denied,
prompting ALI to file with this Court a petition for
review docketed as G.R. No. 140162. Finding ALIs
petition meritorious, the Court, in a Decision[19]
dated November 22, 2000, reversed the CAs
dismissal of ALIs appeal and remanded the same
to the CA for further proceedings.
On December 22, 2003, the CA rendered the
herein challenged decision in favor of ALI, the
dispositive portion of which reads as follows:
FOR THE FOREGOING DISQUISITIONS, the instant
appeal is GRANTED, the assailed Summary
Judgment of the Regional Trial Court of Las Pias,
Branch 255, dated December 22, 1998, is hereby
REVERSED and SET ASIDE, and a new one is
rendered as follows:
(1)
TCT No. 41262, formerly TCT No. T-5333, in
the name of defendant-appellant Ayala Land,
Incorporated is hereby declared to be the VALID
title to the subject property;
(2)
TCT No. 296463 issued in the name of
plaintiffs-appellees is declared to be NULL and
VOID;
(3)
The concerned Register of Deeds is
hereby ORDERED to cancel plaintiffs-appellees TCT
No. 296463, and any and all titles issued covering
the subject property, for being spurious and void,
and of no force and effect.[20]
The Carpos filed their motion for reconsideration
but the same was denied by the CA in its Resolution
D. THE COURT OF APPEALS ERRED IN DECLARING

THAT THERE IS RES JUDICATA AGAINST PETITIONERS
BASED ON THE CASE OF GUICO V. SAN PEDRO, ET
AL., 72 PHIL 415, WITHOUT PROPER DETERMINATION
OF WHETHER THE FACTS IN SAID CASE ARE DIRECTLY
APPLICABLE TO THIS CASE AND WHETHER THE
ELEMENTS OF RES JUDICATA ARE PRESENT.[22]
Petitioners prayed that this Court render a decision:

(a) reversing and setting aside the CA Decision
dated December 22, 2003 and Resolution dated
December 16, 2004; (b) reinstating and affirming in
toto the RTCs Summary Judgment dated
December 22, 1998; or in the alternative (c)
remanding the case to the RTC for further
proceedings.
After a thorough review of the records, we deny
the petition and concur with the CA that the
Summary Judgment rendered by the trial court
should be reversed and set aside.
Preliminary discussion regarding subject matter of
the controversy
At the outset, it should be noted that the trial court

in its Summary Judgment declared null and void (a)
TCT No. T-5333 (and its antecedent, TCT No.
[125945] T-6055A) covering a parcel of land with an
area of 171,309 square meters; (b) TCT No. T-4366
with a land area of 254,085 square meters; (c) TCT
No. T-4367 with a land area of 218,523 square
meters; and (d) TCT No. T-4368 with a land area of
155,345 square meters, despite the lack of
evidence of identity of the properties described in
TCT Nos. T-4366, T-4367 and T-4368 with the property
covered by the Carpos TCT No. 296463 or any
portion of said property claimed by petitioners. This
was grievous and palpable error on the part of the
trial court considering that the property being
claimed by the Carpos under their TCT No. 296463
had an area of only 171,309 square meters and the
Page 68 of 158
total area of the properties in the titles invalidated

by the trial court was 799,262 square meters.
claimed property (Lot 3, PSU-56007) is in fact

identical to ALIs lot (Lot 3, PSU-80886).
It must be emphasized that in CA-G.R. SP No.

44243, involving the same parties, the CA ruled
that:
9.4. The blue, pink and green lines on the Sketch

Plan indicate the boundaries of ALIs TCT Nos. 4366,
4367 and 4368, respectively, and it is clearly shown
that these do not overlap with plaintiffs claimed
property.
On the other hand, defendant ALI, in its responsive

pleading did not deny the existence of a title in the
name of the plaintiffs/private respondents. Instead,
it alleged:
14. The parcel of land described in TCT No. 296463,
issued in the name of the plaintiffs, completely
overlaps the property covered by ALIs TCT No. T5333. But TCT No. T-296463 traces itself to OCT No.
8575 which was issued on August 12, 1970, long
after OCT No. 242 (the title from which ALIs TCT No.
T-5333 was derived) was issued on May 9, 1950 (on
the basis of Decree of Registration No. 2917,
Record No. 43516). Hence, ALIs TCT No. T-5333 is
superior to TCT No. 296463. xxx.
This is an admission that the private respondents
have a title to the property in question, and that
the property described in private respondents TCT
No. 296463 completely overlaps the title of
petitioner ALI. This fact is further substantiated by an
affidavit of Jose Rizal Mercado, a Geodetic
Engineer who, after attesting to his qualifications,
competence and experience, declared under
oath:
9. In connection with the subject case, Affiant was
requested to find out, based on the technical
descriptions in their respective titles, if the lots
described in the title of plaintiffs, TCT No. 296463,
overlaps the lots of ALI covered by TCT No. 41262
(formerly, TCT No. T-5333 of LPVI, and, more
previously, TCT No. T (125945) 6055-A, in the name
of Ayala Corporation), TCT No. 4366, TCT No. 4367
and TCT No. 4368, x x x.
9.1. To accomplish this task, Affiant resorted to the
plotting of the technical descriptions found in the
plaintiffs and ALIs respective titles. The standard
operating procedure, adopted by Affiant in this
particular instance, in plotting properties is to study
the technical description in the titles and at the
same time, to get all the available survey plans
described in the titles for reference.
9.2. To evidence this plotting that Affiant
conducted, Affiant prepared a Sketch Plan
reflecting Plaintiffs title vis-a-vis ALIs title. Attached
hereto as Annex G is an original copy of the Sketch
Plan prepared by the Affiant.
9.3. The orange-shaded portion on the Sketch Plan
indicates the area covered by the title of the
plaintiffs and it is clearly shown in this plan that
plaintiffs claimed property entirely overlaps ALIs
property delineated in TCT No. T-41262. Plaintiffs
The Sketch Plan attached thereto clearly indicates

the overlapping and identical boundaries between
the private respondents TCT No. 296463 and
petitioners TCT No. 125945, (formerly TCT No. T5333).[23] In addition to the affidavit of the
Geodetic Engineer, the petitioner likewise attached
to its Motion for Summary Judgment copies of the
following titles:
xxxx
In contrast, the private respondents never
controverted the petitioners allegation that their
(private respondents) title, TCT No. 296463 traces its
origin to OCT No. 8575, issued on August 12, 1970,
while that of the petitioner has its origin in OCT No.
242, issued on May 9, 1950. Moreover, the private
respondents attached no supporting document to
its Opposition to the Motion for Summary
Judgment.
Thus, as matters stand, the requisites for the grant of
summary judgment appear to have been satisfied
xxx.
xxxx
Since the existence of two titles over the same
property, as well as the fact of overlapping of the
technical descriptions of the two titles are admitted
in the pleadings, and substantiated by the
supporting documents attached by the defendantmovant (petitioner herein) to its Motion for
Summary Judgment, there is no genuine issue as to
any material fact. If at all, the sole issue is a legal
one, to wit: whose title (as to the conflicting ones) is
superior and must be upheld. This issue may be
decided on the basis of the affidavits and
supporting documents submitted by the parties, as
well as the applicable law and jurisprudence on
the matter. In other words, there need not be a
protracted trial thereon, since all that the trial court
should do is to apply the law to the issue, taking
into consideration the documents attached by the
parties in their respective pleadings and/or
submitted together with the motion or the
opposition thereto. The same is true with the other
defenses raised by the petitioner in its responsive
pleading, to wit: res judicata, prescription and
laches which may likewise be resolved without
going to trial.[24] (Emphasis and underscoring
supplied.)
Page 69 of 158
The foregoing CA decision became final and

executory after the separate petitions for review
filed with this Court by the parties were denied with
finality. The parties, and even the trial court, were
bound by the CAs factual finding therein that the
only lots whose technical descriptions overlap are
those covered by the Carpos TCT No. 296463 and
ALIs TCT No. T-5333 which later became TCT No. T41262. There was simply no basis for the trial court to
invalidate all the ALI titles mentioned in the
complaint.
The incorrectness of this sweeping invalidation of
ALI titles in the Summary Judgment is even more
evident in the case of TCT No. T-4367 (Lot 2, plan
Psu-47035) and TCT No. T-4368 (Lot 3, plan Psu47035). Petitioners claims with respect to these
properties are already barred by res judicata. In
Realty Sales Enterprise, Inc. v. Intermediate
Appellate Court,[25]petitioner Morris Carpo already
asserted his purported ownership of these two
properties based on a transfer certificate of title
with the same survey plan number (Psu-56007) as
TCT No. 296463. However, in Realty, his claim was
discredited by the Court when it held that Realty
Sales Enterprise, Inc. (Realty), ALIs predecessor in
interest,[26] is the one with valid title to these
properties. The relevant portions of the Realty
Decision are quoted here:
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 (N6217), 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. x x x.
xxxx
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 are the
subject of the instant litigation among Carpo,
Realty 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.
xxxx
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. x x
x.
xxxx
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 Psu-47035
"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 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 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 x x x.[27]
(Emphasis and underscoring ours; citations
omitted.)
We now discuss each assignment of error raised in

the petition.
First Assignment of Error
Petitioners alleged that the CA erred in declaring
that the title of respondent is valid even without the
Page 70 of 158
requisite survey plan approved by the Director of

the Bureau of Lands.
Petitioners clearly misunderstood or deliberately
misread the CAs ruling on this point. It is the CAs
view that the trial courts pronouncement that OCT
No. 242 was issued without an approved survey
plan was unwarranted in view of the presumption
of regularity that said title enjoys.
We cannot but agree with the CA on this point
upon perusing the following portion of the Summary
Judgment:
complaint. A reading of the defendants answer
reveals that OCT No. 242 covers the property
surveyed under SWO, but the pleadings on file fail
to allege that the same was approved by the
Director of the Bureau of Lands, thereby justifying
this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration
cases, it is mandatory that the application should
be accompanied by a survey plan of the property
applied for registration, duly approved by the
Director of the Bureau of Lands. A survey plan
without the approval of the Director of the Bureau
of Lands has the character of being of dubious
origin and it is not therefore worthy of being
accepted as evidence. The property being
claimed by the defendant ALI, allegedly registered
under OCT No. 242, is shown to have been
surveyed under SWO and not bearing the approval
of the Director of the Bureau of Lands. Any title
issued emanating from a survey plan without the
approval of the Director of the Bureau of Lands is
tainted with irregularity and therefore void, as ruled
in Republic Cement Corporation vs. Court of
Appeals, et al., 198 SCRA 734. In the said case, the
Supreme Court held: That unless a survey plan is
duly approved by the Director of Lands the same is
of dubious value and is not acceptable as
evidence. Indubitably, therefore, the reported
survey and its alleged results are not entitled to
credit and should be rejected.
The submission of the plan is a statutory
requirement of mandatory character and unless
the plan and its technical description are duly
approved by the Director of Lands, the same are
not of much value (Republic vs. Vera, 120 SCRA
210). In another case, it was ruled that the Land
Registration Commission has no authority to
approve original survey plans (Director of Lands, et
al. vs. Honorable Salvador Reyes, et al., 68 SCRA
177).
Evidently, the SWO survey of the property which
defendant ALI claimed to have been originated
from OCT No. 242 had not been approved by the
Director of the Bureau of Lands, but was apparently

prepared and approved by the then Land
Registration Commissioner and under the law, the
same is void.[28]
To begin with, a perusal of the defendants answer

or amended answer would show that, contrary to
the trial courts allusions thereto, there is no
admission on the part of ALI that OCT No. 242 was
issued without a survey plan that was duly
approved by the Director of the Bureau of Lands.
There is likewise no evidence on record to support
the trial courts finding that the survey plan
submitted to support the issuance of OCT No. 242 in
the 1950 land registration proceedings was
approved only by the Land Registration
Commissioner and not by the Director of the
Bureau of Lands.
It would appear the trial court came to the
conclusion that OCT No. 242 was issued without a
duly approved survey plan simply because the
notation SWO appeared in the technical
description of the said title which was attached to
the answer and due to ALIs failure to allege in its
pleadings that the survey plan submitted in support
of the issuance of OCT No. 242 was approved by
the Director of the Bureau of Lands.[29]
It is incomprehensible how the trial court could
conclude that the survey plan mentioned in OCT
No. 242 was unapproved by the appropriate
authority all from the notation SWO which
appeared beside the survey plan number on the
face of the title or from a failure to allege on the
part of ALI that a duly approved survey plan exists.
We quote with approval the discussion of the CA
on this point:
Pursuant to the foregoing, the court a quo erred
when, in ruling that the validity of OCT No. 242 is
dubious, it gave emphasis to defendant-appellants
failure to allege that the survey plan of OCT No. 242
was duly approved by the Director of the Bureau of
Lands. It is admitted that a survey plan is one of the
requirements for the issuance of decrees of
registration, but upon the issuance of such decree,
it can most certainly be assumed that said
requirement was complied with by ALIs original
predecessor-in-interest at the time the latter sought
original registration of the subject property.
Moreover, the land registration court must be
assumed to have carefully ascertained the
propriety of issuing a decree in favor of ALIs
predecessor-in-interest, under the presumption of
regularity in the performance of official functions by
public officers. The court upon which the law has
conferred jurisdiction, is deemed to have all the
necessary powers to exercise such jurisdiction, and
to have exercised it effectively. This is as it should
be, because once a decree of registration is made
under the Torrens system, and the time has passed
Page 71 of 158
within which that decree may be questioned the

title is perfect and cannot later on be questioned.
There would be no end to litigation if every litigant
could, by repeated actions, compel a court to
review a decree previously issued by another court
forty-five (45) years ago. The very purpose of the
Torrens system would be destroyed if the same land
may be subsequently brought under a second
action for registration, as what the court a quo did
when it faulted ALIs failure to allege that its
predecessor-in-interest submitted a survey plan
approved by the Director of the Bureau of Lands in
the original land registration case.
The Court need not emphasize that it is not for ALI
to allege in its pleadings, much less prove, that its
predecessor-in-interest
complied
with
the
requirements for the original registration of the
subject property. A party dealing with a registered
land need not go beyond the Certificate of Title to
determine the true owner thereof so as to guard or
protect his or her interest. Hence, ALI was not
required to go beyond what appeared in the
transfer certificate of title in the name of its
immediate transferor. It may rely solely, as it did, on
the correctness of the certificate of title issued for
the subject property and the law will in no way
oblige it to go behind the certificate of title to
determine the condition of the property. This is the
fundamental nature of the Torrens System of land
registration, to give the public the right to rely upon
the face of a Torrens certificate of title and to
dispense with the need of inquiring further.[30]
(Underscoring ours; citations omitted.)
It cannot be gainsaid that the issuance of OCT No.

242 was a result of the registration decree of the
Court of First Instance of Rizal, pursuant to land
registration proceedings in Case No. 976. In the
absence of proof to the contrary, OCT No. 242 and
its derivatives, including ALIs TCT No. T-41262, enjoy
the presumption of regularity and ALI need not
allege or prove that its title was regularly issued.
That is precisely the nature of such a presumption, it
dispenses with proof. Rule 131, Section 3 of the
Rules of Court provides:
Section 3. Disputable presumptions. The following
presumptions are satisfactory if uncontradicted, but
may be contradicted and overcome by other
evidence:
xxxx
(m) That official duty has been regularly performed;
(n) That a court, or judge acting as such, whether in
the Philippines or elsewhere, was acting in the
lawful exercise of jurisdiction;
(o) That all the matters within an issue raised in a
case were laid before the court and passed upon
by it; and in like manner that all matters within an
issue raised in a dispute submitted for arbitration
were laid before the arbitrators and passed upon

by them; x x x.
Thus, we held in Herce, Jr. v. Municipality of

Cabuyao, Laguna[31]:
In the absence of evidence to the contrary, the
Ordinary Decree Book, LRC (CLR) Rec. No. 6763,
showing that Decree No. 4244 was issued on March
3, 1911, is presumed to have been regularly issued
by the accountable public officers who enjoy the
legal presumption of regularity in the performance
of their functions. Thus, the proceedings that led to
the issuance of Decree No. 4244 in favor of the
Municipality of Cabuyao cannot be overturned
without any countervailing proof to the contrary. In
the words of Tichangco v. Enriquez:[32]
To overturn this legal presumption carelessly more
than 90 years since the termination of the case will
not only endanger judicial stability, but also violate
the underlying principle of the Torrens system.
Indeed, to do so would reduce the vaunted legal
indefeasibility of Torrens titles to meaningless
verbiage. (Emphasis supplied.)
The presumption of regularity enjoyed by the

registration decree issued in Case No. 976 and OCT
No. 242 includes the presumption that all the
requisites for the issuance of a valid title had been
complied with. ALI need not allege or prove that a
duly approved survey plan accompanied the
issuance of OCT No. 242 in 1950 because it is
presumed. It is the party who seeks to overcome
the presumption who would have the burden to
present adequate and convincing evidence to the
contrary. This, petitioners did not even attempt to
do.
We cannot accept petitioners proposition that they
did not have the burden of proof of showing the
irregularity of ALIs title since the burden of proof
purportedly did not shift to them since no full-blown
trial was conducted by the RTC.
This specious argument deserves scant credit. Rule
131, Section 1 of the Rules of Court provides:
Section 1. Burden of proof. Burden of proof is the
duty of a party to present evidence on the facts in
issue necessary to establish his claim or defense by
the amount of evidence required by law.
With the filing of the complaint, petitioners should

already have alleged all the bases of their cause of
action, particularly their allegation that ALIs title is
null and void and that such title should be
cancelled. However, a scrutiny of the complaint
would show that petitioners never alleged the
purported lack of an approved survey plan as a
Page 72 of 158
defect of ALIs title. All that the complaint alleged is

that ALIs titles should be declared void for not
being derivatives of the Carpos title. Implicit in that
allegation is that petitioners were relying solely on
the supposed priority of their own title over ALIs. It
stands to reason then that ALI did not have to
allege in its Answer that its mother title, OCT No.
242, was supported by a duly approved survey
plan when petitioners did not raise the same as an
issue in their complaint or in any other pleading
filed with the trial court.
Indubitably, in view of the CAs Decision in CA-G.R.
SP No. 44243, this controversy has been reduced to
the sole substantive issue of which between the
two titles, purporting to cover the same property,
deserves priority. This is hardly a novel issue. As
petitioners themselves are aware, in Realty, it was
held that:
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 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 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 x x x."[33]
(Emphasis supplied.)
In Degollacion v. Register of Deeds of Cavite,[34]

we held that [w]here two certificates of title purport
to include the same land, whether wholly or partly,
the better approach is to trace the original
certificates from which the certificates of title were
derived.
In all, we find that the CA committed no reversible
error when it applied the principle Primus Tempore,
Portior Jure (First in Time, Stronger in Right) in this
case and found that ALIs title was the valid title
having been derived from the earlier OCT.
Second Assignment of Error
Petitioners contend that it is error on the part of the
CA to rule that their cause of action has been
barred by prescription and laches. According to
them, since the OCT from which ALI derived its title
is void for want of a duly approved survey plan,
their cause of action did not prescribe. However, as
discussed above, the conclusion of the trial court
that OCT No. 242 is void was not sufficiently borne
out by the evidence on record. Verily, the premise
upon which petitioners build their theory of
imprescriptibility of their action did not exist.
In sum, we find no reason to disturb the CAs finding

that:
As previously emphasized, OCT No. 242 of ALIs
predecessor-in-interest was issued on May 7, 1950,
or forty-five (45) years before plaintiffs-appellees
filed their complaint on March 10, 1995. As such, it is
the Courts firmly held view that plaintiffs-appellees
claim is barred not only by prescription, but also by
laches.
Aside from the fact that OCT No. 242 had become
incontrovertible after the lapse of one (1) year from
the time a decree of registration was issued, any
action for reconveyance that plaintiffs-appellees
could have availed of is also barred. Although
plaintiffs-appellees complaint was for quieting of
title, it is in essence an action for reconveyance
based on an implied or constructive trust,
considering that plaintiffs-appellees were alleging
in said complaint that there was a serious mistake, if
not fraud, in the issuance of OCT No. 242 in favor of
ALIs predecessor-in-interest. It is now well-settled
that an action for reconveyance, which is a legal
remedy granted to a landowner whose property
has been wrongfully or erroneously registered in
anothers name, must be filed within ten years from
the issuance of the title, since such issuance
operates as a constructive notice. Since ALIs title is
traced to an OCT issued in 1950, the ten-year
prescriptive period expired in 1960.
By laches is meant 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. It
does not involve mere lapse or passage of time,
but is principally an impediment to the assertion or
enforcement of a right, which has become under
the circumstances inequitable or unfair to permit. In
the instant case, plaintiffs-appellees, as well as their
predecessor-in-interest, have not shown that they
have taken judicial steps to nullify OCT No. 242,
from which ALIs title was derived, for forty-five (45)
years. To allow them to do so now, and if
successful, would be clearly unjust and inequitable
to those who relied on the validity of said OCT, the
innocent purchasers for value, who are protected
by the precise provisions of P.D. 1529, thus:
SECTION 32. Review of decree of registration;
Innocent purchaser for value The decree of
registration shall not be reopened or revised xxx
subject, however, to the right of any person xxx to
file in the proper Court of First Instance a petition for
reopening and review of the decree of registration
not later than one year from and after the date of
entry of such decree of registration, but in no case
shall such petition be entertained by the court
where an innocent purchaser for value has
acquired the land or an interest therein, whose
rights may be prejudiced. Whenever the phrase
innocent purchaser for value or an equivalent
Page 73 of 158
phrase occurs in this Decree, it shall be deemed to

include and innocent lessee, mortgagee or other
encumbrances for value.[35]
Third Assignment of Error
The next assigned error involves the question of
whether the trial court, in rendering the Summary
Judgment, indeed relied heavily on the alleged
admission made by ALI on the validity of Carpos
title, as declared by the CA. Specifically, the CA
stated as follows:
In its assailed decision, the court a quo relied
heavily on the alleged admission by ALI in it[s]
Answer of the existence and validity of plaintiffsappellees title. We have read the pertinent
pleading and We find ALIs statement to be of no
moment.
Nowhere in ALIs statement was there an admission
of the validity of plaintiffs-appellees title. x x x.
The Court cannot comprehend where and how the
court a quo could have gotten the impression that
ALI was admitting not only the existence, but also
the validity of plaintiffs-appellees certificate of title.
x x x.[36]
An examination of the Summary Judgment of the

trial court would readily show that indeed the trial
court relied on ALIs supposed admission of the
existence of Carpos title in ruling which of the
conflicting titles was valid. Pertinently, the trial court
merely declared:
The existence of plaintiffs TCT No. 296463 has been
admitted by defendant Ayala in its answer to have
been originated from OCT No. 8575 which was
issued on August 12, 1970. It is very significant that
defendant ALI admitted it in its answer that OCT
No. 8575 and plaintiffs TCT No. 296463 both
originated from Decree No. 131141 issued on
October 15, 1969 in the name of Apolonio Sabater
as Annex G to defendant ALIs answer. This
admission made by the defendant in its answer is
conclusive upon it. It cannot therefore take position
contrary to or inconsistent with its answer, and the
facts are to be taken as true (Westminister High
School vs. Sto. Domingo, et al., G.R. No. 12666 RJuly 5, 1955; McDaniel vs. Apacible, 44 Phil. 248255).
complaint. x x x.[37]
Although the Summary Judgment did not expressly

state that ALI admitted the validity of Carpos title
with its admission of the said titles existence, that is

the unmistakable import of the trial courts
statements that ALIs admission of the existence of
Carpos title are conclusive upon it and bars ALI
from taking a position contrary to or inconsistent
with its answer followed by the statement that the
trial court is not inclined to concur with Ayalas
claim of validity of its TCT No. T-5333 and alleged
OCT No. 242, absent of (sic) any admission to that
effect by the plaintiffs. This is yet another non
sequitur argument on the part of the trial court
which the CA correctly pointed out in its own
Decision.
Fourth Assignment of Error
As to the issue of res judicata, the Court of Appeals
ruled that the decision in the case of Guico v. San
Pedro[38] was binding on the Carpos as it
proceeded to discuss, thus:
In Guico vs. San Pedro, the Supreme Court resolved
the conflicting claims over a tract of land situated
in barrio Tindig na Manga, Paraaque, Rizal, which
was subdivided into eleven (11) lots. The subject
land was sought to be registered by a certain
Eduardo C. Guico on the basis of an
accompanying plan Psu-80886, which interestingly
is also the basis of ALIs TCT No. T-5333, now TCT No.
41262. Guicos application was opposed by, among
others, Florentino Baltazar, on the basis of plan Psu
56007, under which plaintiffs-appellees title was
derived.
It appears that Lots 2 and 3 were adjudicated to
Guico on the basis of Psu-80886 (Lot 3 is the subject
matter of the instant case), Lot 10 in favor of
Baltazar on the basis of Psu 56007, under which
plaintiffs-appellees title was based, and the rest to
the heirs of Narciso Mayuga. While Baltazar
claimed Lot 3 on the basis of his Psu-56007, his claim
was rejected and the Lot was adjudicated to
Guico on the basis of his Psu-80886.
It is clear, therefore, that whatever claim plaintiffsappellees have on the subject property on the
basis of Lot 3 Psu-56007, through their predecessorin-interest, Florentino Baltazar, the same had been
clearly and finally denied by the Supreme Court in
Guico vs. San Pedro.
For res judicata to apply, four requisites must be
met: (1) the former judgment or order must be final;
(2) it must be a judgment or an order on the merits;
(3) it must have been rendered by a court having
jurisdiction over the subject matter and the parties;
and (4) there must be, between the first and the
second actions, identity of parties, of subject
matter and of cause of action. Plaintiffs-appellees
only have objections with respect to the fourth
requisite, offering the lame excuse that it is not
bound by such decision, there being no identity of
Page 74 of 158
parties in Guico vs. San Pedro and the instant

case.[39]
20, Cebu City, in Land Registration Case No. 1421N/LRA Rec. No. N-67272.
We agree with petitioners that it is not apparent

from an examination of Guico and the evidence
on record that indeed the predecessors-in-interest
of ALI and the Carpos with respect to the subject
property are Eduardo Guico and Florentino
Baltazar, especially since the parties respective
OCTs were not issued in these persons names but
rather a certain Alberto Yaptinchay and Apolonio
Sabater. It cannot be categorically said that there
was identity of parties between the Guico case
and the instant case. Clearly, one of the elements
of res judicata, i.e., that there must be, between
the first and the second actions, identity of parties,
is lacking. In any event, the CAs questioned
Decision had sufficient basis in fact and law even
without relying on the Guico case.
On October 22, 1996, Gloria Jaralve,5 Edgardo

Jaralve, Serafin Uy, Jr., Shella Uy, Nimfa Lagnada,
Pantaleon Saya-Ang, Starglad International and
Development Corporation, Annie Tan, Teotimo
Cabarrubias, Jessica Daclan, and Ma. Emma
Ramas filed an Application6 with Branch 20 of the
RTC of Cebu City, for the registration in their names
of Lot Sgs-07-000307 (subject property), under
Presidential Decree No. 1529. On November 29,
1996 and November 7, 1997, they filed their
Amended7 and Second Amended8 Applications,
respectively, to conform to the procedural
requirements of the law, as per Order9 of the RTC,
and to join Danilo Deen and Eric Anthony Deen as
applicants10 (for brevity, we will refer to all the
foregoing applicants as respondents). This was
docketed as LRC Case No. 1421-N/LRA Rec. No. N67272.
In conclusion, we find that the Court of Appeals

committed no reversible error in setting aside the
patently erroneous Summary Judgment of the trial
court.
WHEREFORE, the petition is DENIED. The Court of
Appeals Decision dated December 22, 2003 and
the Resolution dated December 16, 2004 are
hereby AFFIRMED.
SO ORDERED.
#18
SUPREME COURT
Manila
In their original and amended applications,

respondents declared that they were the coowners in fee simple of the subject property, a
parcel of land with an area of 731,380 square
meters, belonging to Cadastral Lot 18590, and
situated in Barangay Quiot, City of Cebu, and all
the improvements thereon. They alleged that they
occupied the subject property and to the best of
their knowledge, there was no mortgage or
encumbrance affecting it, and no one was in
possession thereof.11 Respondents further averred
that the subject property was not covered by any
certificate of title or any pending case before the
RTC of Cebu City.12 Respondents also identified
the names and complete postal addresses of the
owners of the adjoining lots.13
FIRST DIVISION
G.R. No. 175177
October 24, 2012

vs.
GLORIA JARALVE substituted by ALAN JESS JARALVE
DOCUMENTO, JR., EDGARDO JARALVE, SERAFIN UY,
JR., SHELLA UY, NIMFA LAGNADA, PANTALEON SAY
A-ANG, STARG LAD INTERNATIONAL AND
DEVELOPMENT CORPORATION, ANNIE TAN, TEOTIMO
CABARRUBIAS, JESSICA DACLAN, MA. EMMA
RAMAS, DANILO DEEN, and ERIC ANTHONY DEEN.
Respondents.
The respondents claimed that they had acquired

ownership over the subject property by way of
purchase from predecessors-in-interest who had
been in continuous, open, adverse, public,
uninterrupted, exclusive, and notorious possession
thereof for more than thirty (30) years, or from June
12, 1945.14
In support of their application,
submitted the following:
respondents
1. Sepia Plan;15
2. Blue Print Copy of Survey Plan;16
DECISION
3. Technical Description of SGS-07-000307;17
This is a Petition for Review on Certiorari1 assailing
the June 28, 2006 Decision2 and October 27, 2006
Resolution3 of the Court of Appeals in CA-G.R. CV
No. 78633, which affirmed the November 15, 2002
Decision4 of the Regional Trial Court (RTC), Branch
4. Geodetic Engineers Certificate (of the survey of

the subject property);18
5. Certificate of Community Environment and
Natural Resources Office (CENRO) dated March 20,
1996, signed by CENR and Provincial Environmental
and Natural Resources (PENR) Officers (CENRO
Page 75 of 158
Certificate) that the subject property is within the

alienable and disposable portion of Lot 18590;19
6. Deeds of Sale;20
7. Tax Clearances;21 and
8. Department of Environment and Natural
Resources (DENR), Region 7 Certification that
subject property is not covered by any subsisting
land application.22
The respondents application was opposed by the
following parties:
1. Gertrudes N. Tabanas-Singson, Lourdes N.
Tabanas, Francisco N. Tabanas, Vicente N.
Tabanas, Heirs of Enrique N. Tabanas, Heirs of
Mercedes N. Tabanas-Raganas, and Heirs of
Primitiva N. Tabanas-Nadera, who claimed that
they owned portions of the subject property,
containing an area of 406,810 square meters, as
described and bounded under Tax Declaration No.
97GR-11-075-00581, issued in the name of their
father Agaton Tabanas; and that they and their
predecessors-in-interest had been in peaceful,
open, continuous, exclusive, and notorious
possession and occupation of their alleged
property since time immemorial. They prayed that
the respondents application be dismissed with
respect to the portion they were claiming, and that
their title be confirmed (Opposition was filed on
March 3, 1997).23
2. Petitioner Republic of the Philippines, represented
by the Director of Lands, who argued that: a)
neither the respondents nor their predecessors-ininterest had been in open, continuous, exclusive,
and notorious possession and occupation of the
subject property since June 12, 1945 or prior
thereto; b) that the muniments of title and/or the
tax declarations and tax payment receipts
submitted in evidence appeared to be of recent
vintage and did not constitute competent and
sufficient proof of a bona fide acquisition of the
subject property; c) that the period for an
application based on a Spanish title or grant had
already lapsed; and d) that the subject property
was part of the public domain, which belonged to
the State and not subject to private appropriation
(Opposition was filed on March 4, 1997).24
3. The Aznar Brothers Realty Co. and Aznar
Enterprises, Inc., that opposed the application
insofar as it might affect the fifteen-hectare portion
they claimed and owned (Opposition was filed on
March 7, 1997).25
4. Ponciano Tabanas Ybiernas, for himself and for
the other heirs of Esteban Tabanas and Ciriaca
Gabuya, who alleged that he, his co-owners, and
their predecessors-in-interest, had been occupying
portions of the subject property in the concept of
owners, exclusively, openly, continuously, and

peacefully for many years. He prayed that the
respondents application for registration be denied
with respect to the portions he and his co-owners
claimed (Opposition was filed on March 10,
1997).26
5. Rufina and Julia Ragasajo, who contended that
the respondents application was without legal
basis as the respondents were not the true owners
of the subject property, which also encroached on
their own land (Opposition was filed on March 10,
1997).27
6. The National Power Corporation (NPC), that
opposed the respondents application with respect
to a six-hectare portion of the subject property.
NPC alleged that it was in the process of finalizing
with DENR its permit/grant to occupy as a
substation office, six hectares of the subject
property, which was a public forest land in
Antuanga Hills, Quiot, Pardo, Cebu City. NPC
added that the grant of respondents application
would cause the government great prejudice
(Opposition was filed on March 11, 1997).28
7. Amelia and Delia Dionaldo, who opposed the
respondents application on the ground that they
had interests in the subject property (Opposition
was filed on March 11, 1997).29
8. Jeremias L. Dolino, in his official capacity as
Regional Executive Director of the DENR, Region VII,
Banilad, Mandaue City, who averred that the
subject property fell within Timberland Block 3-C
and was within the Cebu City Reforestation project,
formerly known as the Osmea Reforestation
Project.30 Dolino said that there was an implied
admission on the part of the respondents of this
assertion as their predecessors-in-interest had
previously filed a Petition for Reclassification of
Land31 of the subject property before the DENR.
Dolino added that the CENRO Certificate relied on
by the respondents was discovered to have been
inadvertently and erroneously issued as it was
based on a mistaken projection (Opposition was
filed on April 10, 1997).32 The CENRO Certificate
was subsequently recalled, cancelled, and
revoked by the Regional Executive Director of
DENR via a Memorandum dated March 12, 1998.33
During the trial, respondents presented the
testimony of the following witnesses in support of
their application: Estanislao Nacorda, Leoncio
Llamedo, Rodolfo Amancia, Melecio Joboneita,
Regino Gabuya, Constancio Llamedo, Teotimo
Cabarrubias, Andres Alfanta, Efren Binolirao, Sergio
Paran, Gloria Jaralve, Ma. Emma Ramas, Shella Uy
Coca, Danilo Deen, and Edgardo Jaralve.34
The foregoing witnesses testified on how the
respondents acquired their respective portions of
the subject property and how they and their
Page 76 of 158
predecessors-in-interest had been in actual, open,

continuous, exclusive, peaceful, and notorious
possession and occupation of the subject property
in the concept of owners since before the war and
for more than 30 years.35
The respondents also presented Forester III
Anastacio Cabalejo, a duly licensed and registered
forester connected with the CENRO, and Geodetic
Engineer Celso P. Mayol, the CENRO-DENR Chief of
Survey Unit to testify that upon the request of
Carmelina Cuizon, one of the predecessors-ininterest of the respondents, they, with other
members of the Land Evaluation Party of the
Bureau of Forestry, using Administrative Order No. 4642 and the Bureau of Forestry Land Classification
Map No. 2124 as references, conducted an actual
survey of Cadastral Lot 18590 on November 4, 1995,
and found that the subject property was within its
alienable and disposable portion.36 Engineer
Mayol further testified that in connection with the
foregoing survey, he had prepared a plan,37 which
was the subject of the CENRO Certificate made at
its dorsal side.
Forestry Administrative Order No. 4-642 dated July
31, 1957 declared certain portions of the public
domain situated in Cebu City under Project No. 3-C
as alienable and disposable lands. The Bureau of
Forestry Land Classification Map No. 212438
contains the bearings and distances of the areas in
Cebu City declared as alienable and disposable
lands.39
Finding the testimonial and documentary evidence
of the respondents sufficient to show that they had
acquired ownership over the subject property, the
RTC ruled in their favor in its Decision dated
November 15, 2002. The dispositive portion reads:
WHEREFORE, from all the foregoing undisputed
facts supported by oral and documentary
evidence, the Court finds and so holds that the
applicants have a registerable title to the parcel of
land herein applied for original registration of title,
and thereby confirming the same and ordering its
registration under CA 141, as amended by
Presidential Decree No. 1529 over the land,
denominated as SGS-07-000307, in accordance
with the respective technical descriptions of herein
applicants.
Once this decision becomes final, let the decree
and original certificate of title be issued in the
names of the applicants as follows:
Names
(addresses deleted)
in Lot Sgs-07-000307
1. GLORIA JARALVE
meters;
2. EDGARDO JARALVE
meters;
Extent of Interest
74,940
square
44,700
square
3. SERAFIN UY, JR.
61,210
square
meters;
4. SHELLA UY
62,632 square meters;
5.NIMFA LAGNADA
26,972
square
meters;
6. PANTALEON SAYA-ANG
44,700
square meters;
7. ATTY. DANILO DEEN AND ZENAIDA DEEN
106,903 square meters;
8. ERIC ANTHONY DEEN
110,660
square
meters;
9. MA. EMMA RAMAS
23,060
square
meters;
10. STARGLAD
INTERNATIONAL AND
DEVELOPMENT
CORPORATION 82,023 square meters;
11. ANNIE TAN 10,000 square meters;
12. TEOTIMO CABARRUBIAS
5,000
square meters;
13. MA. EMMA RAMAS
68,580
square
meters;
14. JESSICA DACLAN
10,000
square
meters.40
The RTC held that according to jurisprudence and
under Section 48(b) of Commonwealth Act No. 141
or the Public Land Act, as amended by Republic
Act No. 194241 and Republic Act No. 3872,42
"alienable public land held by a possessor
personally or through his predecessors-in-interest,
openly, continuously, and exclusively for the
prescribed period of 30 years x x x is converted to
private property by mere lapse or completion of
said period ipso jure, and without need of judicial
or other sanction, ceases to be public land and
becomes private property."43
The RTC also granted Starglad International and
Development Corporations application despite
the constitutional prohibition on acquisition of
public lands of private corporations or associations,
explaining that such prohibition does not apply
when the corporations predecessors-in-interesthad
satisfied the requirements in acquiring ownership
over public lands before such land was transferred
to the corporation.44
The RTC stated that the private oppositors were not
able to present any convincing evidence and/or
approved survey plan that clearly identified the
portions of the subject property they were
claiming.45 Likewise, the RTC held that the DENR
Region VII failed to controvert the fact that the
subject property was within the alienable and
disposable portion of the public domain. The RTC
added that its witnesses did not even conduct an
actual relocation or verification survey of the
subject property to determine its relative position to
the timberland area. Thus, the RTC stated, the DENR
Region VIIs conclusion with respect to the subject
propertys
position
was
inaccurate
and
unreliable.46 In giving more credit to respondents
Page 77 of 158
evidence, particularly the CENRO Certificate, the

RTC explained:
CARMELINA CUIZON, et al. (Cebu City) March 20,

1996
As against the approved plan of [the subject

property] which has been thoroughly verified under
the Land Classification Map No. 2124 (Exhibit JNAMRIA) and which merely conformed to the
actual verification/relocation surveys (Exhibits K, K1) of the Land Evaluation Party of CENRO and
PENRO, specifically conducted by CENRO Chief of
Survey Unit Engr. Celso Mayol and the Chief of the
Land Evaluation Party Anastacio Cabalejo and
Forester Justicio Nahid (Exhibits L, L-1), the
relocation survey and map prepared by Engineer
Icoy are simply undeserving of any weight. DENR-7
Regional Executive Director Jeremias Dolino and
Director Estanislao Galano of the Regional
Management Services of DENR-7, themselves,
admitted that the task of determining whether a
parcel of land is within the alienable and
disposable area of the public domain falls within
the Land Evaluation Party of the Forest
Management Services of CENRO and PENRO of the
DENR. In this case, the CENRO/PENRO Land
Evaluation Party headed by Forester Anastacio
Cabalejo, together with the Chief of the Survey Unit
of CENRO, Engr. Celso Mayol, actually conducted
a segregation survey of Cadastral Lot 18590 on
November 4, 1995 to determine the alienable and
disposable portion of Cadastral Lot 18590 and on
the ground that they located three (3) Forest
Reserve (FR) monuments marked as FR 67, FR 69
and FR 70. Thus, after the said verification survey, a
survey plan was prepared by Engr. Celso Mayol
and at the back portion thereof, he certified to the
following, x x x.
CERTIFIC ATI ON
xxxx
[signed]
ILUMINADO C. LUCAS
Community Environment and
Natural Resources Officer
ISABELO R. MONTEJO
Provincial Environment and
Natural Resources Officer
SWORNSTATEMENT
The [CENRO Certificate], having been issued by the

proper government officers tasked with the duty of
certifying as to land classifications in the region, the
same should be given weight and believed,
especially so that the results of the actual ground
survey of
November 4, 1996 were re-verified and re-checked
upon the order of PENRO Isabelo Montejo.47
The CENRO Certificate relied on by the respondents
and given much weight by the RTC reads as
follows:
Department of Environment and Natural Resources
COMMUNITY
ENVIRONMENT
AND
NATURAL
RESOURCES
OFFICE
Cebu City
CENRO, Cebu City/Lands Verification
TO WHOM IT MAY CONCERN:

This is to certify that per projection and verification
conducted by Forester Anastacio C. Cabalejo, a
tract of land lot No. 18590, Cebu Cadastre 12
Extension, situated at Quiot, Pardo, Cebu City. As
shown and described in the Plan at the back
hereof, as surveyed by Geodetic Engineer Celso P.
Mayol for Carmelina Cuizon, et al. The same was
found as here-under indicated:
Lot A containing an area of SEVEN HUNDRED
THIRTY-SEVEN THOUSAND THREE HUNDRED FIVE (737,
305) square meters, more or less, is within the
Alienable
and
Disposable,
block-1,
land
classification project 3-C, per Map 2124 of Cebu
City. Certified under Forestry Administrative Order
No. 4-642 dated July 31, 1957.
Lot B containing an area of TWO HUNDRED SIX
THOUSAND FIVE HUNDRED FIFTY[-]TWO (206,552)
square meters, more or less, is within the Timberland
block-C, land classification project 3-C, per Map
2124 of Cebu City. Certified under Forestry
Administrative Order No. 4-642 dated July 31, 1957.
This certification is issued upon the request of the
interested party for the purpose of ascertaining the
land classification status only and does not entitle
him/her preferential priority rights of possession until
determined by competent authorities.
[signed]
I, Anastacio C. Cabalejo, forest officer, after having

been duly sworn to under oath according to the
law do hereby depose and say that I personally
projected and verified the area and the result is the
basis of the aforementioned certification.
[signed]
ANASTACIO C. CABALEJO
FORESTER III
SUBSCRIBED AND SWORN to before me this 12[th]
day of
April 1996, at Cebu City, Philippines.
[signed]
ILUMINADO C. LUCAS
Community Environment and
Page 78 of 158
Natural Resources Officer48

Aggrieved, the petitioner and three of the private
oppositors appealed the decision of the RTC to the
Court of Appeals in CA-G.R. CV No. 78633, positing
the following assignment of errors:
1. Raised by private oppositors Gertrudes N.
Tabanas-Singson, Lourdes N. Tabanas, Francisco N.
Tabanas, and Vicente N. Tabanas (Heirs of Agaton
Tabanas):
such permit, to occupy a public land, duly

endorsed by the DENR official, but PONCIANO
YBIERNAS has duly complied with all the
requirements, plus possession of more than 30 years
of the land applied for by him, and yet PONCIANO
YBIERNAS, the poorest among all the oppositorsapplicants, was not given a single square meter by
the trial court. Hence this shows that money talks.51
4. Raised by private oppositors Aznar Enterprises,
Inc. and Aznar Brothers Realty Co.:
I.
I.
THE LOWER COURT ERRED IN HOLDING THAT

APPLICANTS HAVE A REGISTERABLE TITLE TO THE
PARCEL OF LAND HEREIN APPLIED FOR ORIGINAL
REGISTRATION OF TITLE AND CONFIRMING THE SAME
AND ORDERING ITS REGISTRATION UNDER CA 141,
AS AMENDED BY P.D. 1529 OVER THE LAND
DENOMINATED
AS
SGS-07-000307,
IN
ACCORDANCE WITH THE RESPECTIVE TECHNICAL
DESCRIPTIONS.
THE HONORABLE LOWER COURT HAS ERRED IN

HOLDING THAT RESPONDENTS HAVE REGISTRABLE
TITLE OVER THE SUBJECT PARCEL OF LAND
DESCRIBED AS LOT SGS-07-000307, PORTION OF LOT
18590 AND ORDERING ITS REGISTRATION IN THE
NAMES
OF
THE
APPLICANTS
UNDER
COMMONWEALTH ACT NO. 141 AS AMENDED BY
PRESIDENTIAL DECREE NO. 1529.
II.
II.
THE LOWER COURT ERRED IN ORDERING THAT ONCE
THE DECISION BECOMES FINAL, THE DECREE AND
ORIGINAL CERTIFICATE OF TITLE BE ISSUED IN THE
NAME OF THE APPLICANTS x x x.49
THE LOWER COURT HAS GRAVELY ERRED IN

INCLUDING THE PORTIONS OF 41.2092 HECTARES OF
THE LOT WHICH BELONGS TO THE APPELLANTS
AZNAR ENTERPRISES, INC. AND AZNAR BROTHERS
REALTY CO., IN ITS DECISION AND ORDERING ITS
REGISTRATION IN THE NAMES OF THE RESPONDENTS.
2. Raised by petitioner Republic of the Philippines:

III.
THE COURT A QUO ERRED IN GRANTING
RESPONDENTSAPPLICATION FOR REGISTRATION
DESPITE THE FACT THAT THE AREA COVERED BY THE
APPLICATION IS CLASSIFIED AS TIMBERLAND AND
THEREFORE UNALIENABLE.50
3. Raised by private oppositors Heirs of Ponciano
Ybiernas:
Error No. 1 That the trial court erred in disposing all
the area of Lot 18590 to the [respondents], but
none to the oppositors-applicants, contrary to the
Magsaysay Credo: THAT THOSE WHO HAVE LESS IN
LIFE SHOULD HAVE MORE IN LAW;
Error No. 2 That under Art. 24 of the Civil Code,
judges are enjoined by law to protect the
underdog, which provides as follows:
"Art. 24. In all contractual, property or other
relations, when one of the parties is at a
disadvantage
on
account
of
his
moral
dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the
courts must be vigilant for his protection."
Error No. 3 That none of the respondents have
complied with the requirement as alluded to in Error
No. 1, which is the procurement of a permit from
the government agency in charge of issuance of
THE LOWER COURT HAS GRAVELY ERRED IN

DENYING THE MOTION FILED BY [THE] AZNARS DATED
MARCH 31, 1998, TO ALLOW THEM TO RELOCATE
THE PORTION THEY CLAIMED OUT OF THE AREA
APPLIED FOR BY THE RESPONDENTS.52
Finding for the respondents, the Court of Appeals
affirmed the RTC in its Decision dated June 28,
2006.
The Court of Appeals stated that the private
oppositors failed to prove that the parcels of land
they were claiming were identical to the respective
portions of the subject property the respondents
sought to register.53
As for the petitioners appeal, the Court of Appeals
agreed with the RTCs findings that the petitioner
failed to controvert the fact that the subject
property was within the alienable and disposable
portion of the public domain. It added that it was a
great blunder that petitioners own witness, for his
failure to conduct an actual relocation or
verification survey, could not even categorically
identify the relative position of the subject property
to the timberland area.54
Undaunted, the Heirs of Agaton Tabanas,55 Aznar
Enterprises, Inc. and Aznar Brothers Realty Co.,56
Page 79 of 158
and the petitioner57 each moved to have the

Court of Appeals reconsider its Decision.
The Court of Appeals, however, denied these
motions on October 27, 2006 for lack of merit.58
The same oppositors filed their separate Petitions for
Review on Certiorari before this Court, to wit:
1. Private oppositors Aznar Enterprises, Inc. and
Aznar Brothers Realty Co.s Petition for Review on
Certiorari was docketed as G.R. No. 175568 and
was denied by this Court in its February 26, 2007
Resolution59 for the following reasons:
a. as the petition was filed beyond the extended
period pursuant to Section 5[a], Rule 56;
b. for failure to accompany the petition with a
clearly legible duplicate original, or a certified true
copy of the assailed resolution in violation of
Sections 4[d] and 5, Rule 45 in relation to Section
5[d], Rule 56; and
c. for insufficient or defective verification, the same
being based "on knowledge and belief" in violation
of Section 4, Rule 7, as amended by Administrative
Matter No. 00-2-10-SC.
In any event, the petition failed to sufficiently show
that the appellate court committed any reversible
error in the challenged decision and resolution as
to warrant the exercise by this Court of its
discretionary appellate jurisdiction and the issues
raised therein are factual in nature.
This Court likewise denied with finality the Motion for
Reconsideration60 of Aznar Enterprises, Inc. and
Aznar Brothers Realty Co. in a Resolution61 dated
July 2, 2007.
2. Private oppositors Heirs of Agaton Tabanass
Petition for Review on Certiorari62 was docketed as
G.R. No. 175397 and in a Resolution63 dated March
14, 2007, was denied by this Court "for the Heirs
failure to sufficiently show that the Court of Appeals
committed any reversible error in the challenged
decision and resolution as to warrant the exercise
of this Courts discretionary appellate jurisdiction,"
and for raising issues, which were factual in nature.
THE COURT OF APPEALS ERRED ON A QUESTION OF

LAW WHEN IT AFFIRMED THE JUDGMENT OF THE
TRIAL COURT THAT THE SUBJECT LOTS ARE ALIENABLE
LAND DESPITE THE CLEAR EVIDENCE TO THE
CONTRARY.68
The petitioner avers that the Court of Appeals
ignored the long-standing rule that in land
registration proceedings, the applicants have the
burden of overcoming the presumption that the
land sought to be registered is inalienable land of
the public domain when it affirmed the RTCs
decision to grant the respondents application for
original registration over the subject property
despite their failure to prove that it was alienable
and disposable.69
The petitioner argues that the CENRO Certificate
the respondents relied on was erroneously issued;
thus, it did not afford them any vested right. The
petitioner adds: "at any rate, being the
government department charged with the duty to
conduct survey and classification of lands, the
DENRs recall of the certification that the subject
property is alienable and disposable should have
been accorded respect."70
The respondents, in their Comment,71 contend that
the findings of the RTC, as affirmed by the Court of
Appeals, that the subject property falls within the
alienable and disposable portion of the public
domain, is duly supported by substantial evidence.
Moreover, they asseverate, that the issue posed by
the petitioner is a factual issue, which had been
thoroughly discussed and resolved by the lower
courts.
Issue
The crux of the controversy in the case at bar boils
down to whether the grant of respondents
application for registration of title to the subject
property was proper under the law and
jurisprudence.
This Courts Ruling
This Court finds the petition to be meritorious.
Procedural Issue: Nature of Issue
This Court similarly denied with finality the Heirs of

Agaton Tabanass Motion for Reconsideration64 in
a Resolution dated June 18, 2007.65
On October 1, 2007, this Court denied for lack of
merit the Heirs of Agaton Tabanass motion to file a
second motion for reconsideration, and added
that no further pleadings would be entertained.66
The Petition for Review on Certiorari67 now before
us is the one filed by the petitioner Republic of the
Philippines, which presented the following ground:
At the outset, this Court would like to address

respondents concern that the petition involves an
issue purely factual in nature; thus, it cannot be
subject of a petition for review under Rule 45.
This Court, in New Rural Bank of Guimba (N.E.), Inc.
v. Abad,72 reiterated the distinction between a
question of law and a question of fact, viz:
We reiterate the distinction between a question of
law and a question of fact. A question of law exists
Page 80 of 158
when the doubt or controversy concerns the

correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call
for an examination of the probative value of the
evidence presented, the truth or falsehood of facts
being admitted. A question of fact exists when the
doubt or difference arises as to the truth or
falsehood of facts or when the query invites
calibration of the whole evidence considering
mainly the credibility of the witnesses, the existence
and
relevancy
of
specific
surrounding
circumstances, as well as their relation to each
other and to the whole, and the probability of the
situation. (Citation omitted.)
The petitioner herein is not calling for an
examination of the probative value or truthfulness
of the evidence presented.73 What it wants to
know is whether the lower courts correctly applied
the law and jurisprudence when they granted the
respondents application for registration of title to
the subject property.
Main Issue: Nature and Character of Subject
Property
Going to the merits of the case, this Court agrees
with the petitioner that the respondents failed to
prove in accordance with law that the subject
property is within the alienable and disposable
portion of the public domain.
The Public Land Act or Commonwealth Act No.
141, until this day, is the existing general law
governing the classification and disposition of lands
of the public domain, except for timber and
mineral lands. "Under the Regalian doctrine
embodied in our Constitution, land that has not
been acquired from the government, either by
purchase, grant, or any other mode recognized by
law, belongs to the State as part of the public
domain."74 Thus, it is indispensable for a person
claiming title to a public land to show that his title
was acquired through such means.75
Section 48(b) of Commonwealth Act No. 141, as
amended by Presidential Decree No. 1073,76
provides:
Registration Act, to wit:
xxxx
predecessors in interest have been in the open,

the public domain, under a bona fide claim of
acquisition or ownership, since June 12, 1945,
except when prevented by war or force majeure.
These shall be conclusively presumed to have
performed all the conditions essential to a
Government grant and shall be entitled to a
certificate of title under the provisions of this
chapter.
Section 14(1) of Presidential Decree No. 1529 or the
Property Registration Decree, likewise provides:
SECTION 14. Who may apply. - The following
persons may file in the proper Court of First Instance
an application for registration of title to land,
whether personally or through their duly authorized
representatives:
Based on the foregoing parameters, applicants for
registration under Section 14(1) of Presidential
Decree No. 1529 must sufficiently establish the
following:
1. that the subject land forms part of the disposable
and alienable lands of the public domain;
2. that the applicant and his predecessors-ininterest have been in open, continuous, exclusive
and notorious possession and occupation of the
same; and
3. that it is under a bona fide claim of ownership
since June 12, 1945, or earlier.77
Land classification or reclassification cannot be
assumed. It must be proved.78 To prove that the
subject property is alienable and disposable land
of the public domain, respondents presented the
CENRO Certificate dated March 20, 1996 signed by
CENR Officer Iluminado C. Lucas and PENR Officer
Isabelo R. Montejo, and verified by Forester
Anastacio C. Cabalejo.
However, this Court, in Republic v. T.A.N. Properties,
Inc.,79 ruled that a CENRO or PENRO Certification is
not enough to certify that a land is alienable and
disposable:
Further, it is not enough for the PENRO or CENRO to
Page 81 of 158

applicant for land registration must present a copy
of the original classification approved by the DENR
Secretary and certified as a true copy by the legal
custodian of the official records. These facts must
be established to prove that the land is alienable
and disposable. Respondent failed to do so
because
the
certifications
presented
by
respondent do not, by themselves, prove that the
land is alienable and disposable. (Emphasis ours.)
Although the survey and certification were done in
accordance with Forestry Administrative Order No.
4-642, issued by the then Secretary of Agriculture
and Natural Resources declaring certain portions of
the public domain situated in Cebu City as
alienable and disposable, an actual copy of such
classification, certified as true by the legal
custodian of the official records, was not presented
in evidence. This was a crucial mistake. What was
presented was the certification80 of Nicomedes R.
Armilla, the Land Evaluation Party Coordinator, that
the Cebu CENRO had on file a certified photocopy
of the administrative order. In fact, one of the
private oppositors objected to its submission in
evidence for violating the best evidence rule.81
Moreover, DENR Administrative Order (DAO) No. 20
dated May 30, 1988,82 delineated the functions
and authorities of the offices within the DENR.
Under Section G(1) of the above DAO, CENROs
issue certificates of land classification status for
areas below 50 hectares. For those falling above 50
hectares, the issuance of such certificates is within
the function of the PENROs, as per Section F(1) of
the same DAO. This delineation, with regard to the
offices authorized to issue certificates of land
classification status, was retained in DAO No. 3883
dated April 19, 1990.84
In the case at bar, the subject property has an
area of 731,380 square meters or 73.138
hectares.1wphi1 Clearly, under DAO No. 38, series
of 1990, the subject property is beyond the
authority of the CENRO to certify as alienable and
disposable.85
It is undisputed that while PENR Officer Montejos
signature appears on the CENRO Certificate, it was
under the CENRO that the survey of the subject
property was conducted. The certificate was
likewise issued under the CENRO, and not the
PENRO. The respondents admit and even
emphasize that it was the CENRO that was involved
in the conduct of the survey and issuance of the
certification with respect to the land classification
status of the subject property.
This Court x x x holds that the alienability and

disposability of land are not among the matters
that can be established by mere admissions, or
even the agreement of parties. The law and
jurisprudence provide stringent requirements to
prove such fact. Our Constitution, no less,
embodies the Regalian doctrine that all lands of
the public domain belong to the State, which is the
source of any asserted right to ownership of land.
The courts are then empowered, as we are dutybound, to ensure that such ownership of the State is
duly protected by the proper observance by
parties of the rules and requirements on land
registration.
Unfortunately, respondents were not able to
discharge the burden of overcoming the
presumption that the land they sought to be
registered forms part of the public domain.
WHEREFORE, the petition is hereby GRANTED. The
June 28, 2006 Decision and October 27, 2006
Resolution of the Court of Appeals in CA-G.R. CV
No. 78633, are REVERSED and SET ASIDE. The
respondents application for registration and
issuance of title to Lot SGS-07-000307, Cebu Cad.
12 Extension, Barangay Quiot, Cebu City, in Land
Registration Case No. 1421-N/LRA Rec. No. N-67272
filed with the Regional Trial Court of Cebu City,
Branch 20 is accordingly DISMISSED.
SO ORDERED.
#19
STA. LUCIA REALTY & DEVELOPMENT, INC.,
Petitioner,
- versus CITY OF PASIG,
Respondent,
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL,
Intervenor.
G.R. No. 166838
Present:
VELASCO, JR .,*
Acting Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,**
DEL CASTILLO, and
PEREZ, JJ.
Promulgated:
June 15, 2011
x---------------------------------------------------x
In Republic v. Medida,86 this Court said:

DECISION
Page 82 of 158

For review is the June 30, 2004 Decision[1] and the
January 27, 2005 Resolution[2] of the Court of
Appeals in CA-G.R. CV No. 69603, which affirmed
with modification the August 10, 1998 Decision[3]
and October 9, 1998 Order[4] of the Regional Trial
Court (RTC) of Pasig City, Branch 157, in Civil Case
No. 65420.
Petitioner Sta. Lucia Realty & Development, Inc.
(Sta. Lucia) is the registered owner of several
parcels of land with Transfer Certificates of Title
(TCT) Nos. 39112, 39110 and 38457, all of which
indicated that the lots were located in Barrio
Tatlong Kawayan, Municipality of Pasig[5] (Pasig).
The parcel of land covered by TCT No. 39112 was
consolidated with that covered by TCT No. 518403,
which was situated in Barrio Tatlong Kawayan,
Municipality of Cainta, Province of Rizal (Cainta).
The two combined lots were subsequently
partitioned into three, for which TCT Nos. 532250,
598424, and 599131, now all bearing the Cainta
address, were issued.
TCT No. 39110 was also divided into two lots,
becoming TCT Nos. 92869 and 92870.
The lot covered by TCT No. 38457 was not
segregated, but a commercial building owned by
Sta. Lucia East Commercial Center, Inc., a separate
corporation, was built on it.[6]
Upon Pasigs petition to correct the location stated
in TCT Nos. 532250, 598424, and 599131, the Land
Registration Court, on June 9, 1995, ordered the
amendment of the TCTs to read that the lots with
respect to TCT No. 39112 were located in Barrio
Tatlong Kawayan, Pasig City.[7]
On January 31, 1994, Cainta filed a petition[8] for
the settlement of its land boundary dispute with
Pasig before the RTC, Branch 74 of Antipolo City
(Antipolo RTC). This case, docketed as Civil Case
No. 94-3006, is still pending up to this date.
On November 28, 1995, Pasig filed a Complaint,[9]
docketed as Civil Case No. 65420, against Sta.
Lucia for the collection of real estate taxes,
including penalties and interests, on the lots
covered by TCT Nos. 532250, 598424, 599131, 92869,
92870 and 38457, including the improvements
thereon (the subject properties).
Sta. Lucia, in its Answer, alleged that it had been
religiously paying its real estate taxes to Cainta, just
like what its predecessors-in-interest did, by virtue of
the demands and assessments made and the Tax
Declarations issued by Cainta on the claim that the
subject properties were within its territorial
jurisdiction. Sta. Lucia further argued that since
1913, the real estate taxes for the lots covered by

the above TCTs had been paid to Cainta.[10]
Cainta was allowed to file its own Answer-inIntervention when it moved to intervene on the
ground that its interest would be greatly affected
by the outcome of the case. It averred that it had
been collecting the real property taxes on the
subject properties even before Sta. Lucia acquired
them. Cainta further asseverated that the
establishment of the boundary monuments would
show that the subject properties are within its metes
and bounds.[11]
Sta. Lucia and Cainta thereafter moved for the
suspension of the proceedings, and claimed that
the pending petition in the Antipolo RTC, for the
settlement of boundary dispute between Cainta
and Pasig, presented a prejudicial question to the
resolution of the case.[12]
The RTC denied this in an Order dated December
4, 1996 for lack of merit. Holding that the TCTs were
conclusive evidence as to its ownership and
location,[13] the RTC, on August 10, 1998, rendered
a Decision in favor of Pasig:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered in favor of [Pasig], ordering Sta.
Lucia Realty and Development, Inc. to pay [Pasig]:
1)
P273,349.14 representing unpaid real estate
taxes and penalties as of 1996, plus interest of 2%
per month until fully paid;
2)
and
3)
P50,000.00 as and by way of attorneys fees;
The costs of suit.
Judgment is likewise rendered against the

intervenor Municipality of Cainta, Rizal, ordering it
to refund to Sta. Lucia Realty and Development,
Inc. the realty tax payments improperly collected
and received by the former from the latter in the
aggregate amount of P358, 403.68.[14]
After Sta. Lucia and Cainta filed their Notices of

Appeal, Pasig, on September 11, 1998, filed a
Motion for Reconsideration of the RTCs August 10,
1998 Decision.
The RTC, on October 9, 1998, granted Pasigs motion
in an Order[15] and modified its earlier decision to
include the realty taxes due on the improvements
on the subject lots:
WHEREFORE, premises considered, the plaintiffs
motion for reconsideration is hereby granted.
Accordingly, the Decision, dated August 10, 1998 is
hereby modified in that the defendant is hereby
ordered to pay plaintiff the amount of
Page 83 of 158
P5,627,757.07 representing the unpaid taxes and

penalties on the improvements on the subject
parcels of land whereon real estate taxes are
adjudged as due for the year 1996.[16]
no prejudicial question when the cases involved

are both civil.[23] The Court of Appeals further held
that the elements of litis pendentia and forum
shopping, as alleged by Cainta to be present, were
not met.
Accordingly, Sta. Lucia filed an Amended Notice of

Appeal to include the RTCs October 9, 1998 Order
in its protest.
Sta. Lucia and Cainta filed separate Motions for

Reconsideration, which the Court of Appeals
denied in a Resolution dated January 27, 2005.
On October 16, 1998, Pasig filed a Motion for

Execution Pending Appeal, to which both Sta.
Lucia and Cainta filed several oppositions, on the
assertion that there were no good reasons to
warrant the execution pending appeal.[17]
Undaunted, Sta. Lucia and Cainta filed separate

Petitions for Certiorari with this Court. Caintas
petition, docketed as G.R. No. 166856 was denied
on April 13, 2005 for Caintas failure to show any
reversible error. Sta. Lucias own petition is the one
subject of this decision.[24]
On April 15, 1999, the RTC ordered the issuance of a

Writ of Execution against Sta. Lucia.
On May 21, 1999, Sta. Lucia filed a Petition for
Certiorari under Rule 65 of the Rules of Court with
the Court of Appeals to assail the RTCs order
granting the execution. Docketed as CA-G.R. SP
No. 52874, the petition was raffled to the First
Division of the Court of Appeals, which on
September 22, 2000, ruled in favor of Sta. Lucia, to
wit:
WHEREFORE, in view of the foregoing, the instant
petition is hereby GIVEN DUE COURSE and
GRANTED by this Court. The assailed Order dated
April 15, 1999 in Civil Case No. 65420 granting the
motion for execution pending appeal and ordering
the issuance of a writ of execution pending appeal
is hereby SET ASIDE and declared NULL and
VOID.[18]
In praying for the reversal of the June 30, 2004

judgment of the Court of Appeals, Sta. Lucia
assigned the following errors:
ASSIGNMENT OF ERRORS
I
THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING [WITH MODIFICATION] THE DECISION OF
THE REGIONAL TRIAL COURT IN PASIG CITY
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT
SUSPENDING THE CASE IN VIEW OF THE PENDENCY
OF THE BOUNDARY DISPUTE WHICH WILL FINALLY
DETERMINE THE SITUS OF THE SUBJECT PROPERTIES
III.
The Court of Appeals added that the boundary

dispute case presented a prejudicial question
which must be decided before x x x Pasig can
collect the realty taxes due over the subject
properties.[19]
Pasig sought to have this decision reversed in a
Petition for Certiorari filed before this Court on
November 29, 2000, but this was denied on June
25, 2001 for being filed out of time.[20]
Meanwhile, the appeal filed by Sta. Lucia and
Cainta was raffled to the (former) Seventh Division
of the Court of Appeals and docketed as CA-G.R.
CV No. 69603. On June 30, 2004, the Court of
Appeals rendered its Decision, wherein it agreed
with the RTCs judgment:
WHEREFORE, the appealed Decision is hereby
AFFIRMED with the MODIFICATION that the award
of P50,000.00 attorneys fees is DELETED.[21]
In affirming the RTC, the Court of Appeals declared
that there was no proper legal basis to suspend the
proceedings.[22] Elucidating on the legal meaning
of a prejudicial question, it held that there can be

HOLDING THAT THE PAYMENT OF REALTY TAXES
THROUGH THE MUNICIPALITY OF CAINTA WAS VALID
PAYMENT OF REALTY TAXES
IV.
HOLDING THAT IN THE MEANTIME THAT THE
BOUNDARY DISPUTE CASE IN ANTIPOLO CITY
REGIONAL TRIAL COURT IS BEING FINALLY
RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE
PAYING THE REALTY TAXES ON THE SUBJECT
PROPERTIES THROUGH THE INTERVENOR CAINTA TO
PRESERVE THE STATUS QUO.[25]
Pasig, countering each error, claims that the lower

courts correctly decided the case considering that
the TCTs are clear on their faces that the subject
properties are situated in its territorial jurisdiction.
Pasig contends that the principles of litis pendentia,
forum shopping, and res judicata are all
inapplicable, due to the absence of their requisite
elements. Pasig maintains that the boundary
Page 84 of 158
dispute case before the Antipolo RTC is

independent of the complaint for collection of
realty taxes which was filed before the Pasig RTC. It
avers that the doctrine of prejudicial question,
which has a definite meaning in law, cannot be
invoked where the two cases involved are both
civil. Thus, Pasig argues, since there is no legal
ground to preclude the simultaneous hearing of
both cases, the suspension of the proceedings in
the Pasig RTC is baseless.
Cainta also filed its own comment reiterating its
legal authority over the subject properties, which
fall within its territorial jurisdiction. Cainta claims that
while it has been collecting the realty taxes over
the subject properties since way back 1913, Pasig
only covered the same for real property tax
purposes in 1990, 1992, and 1993. Cainta also insists
that there is a discrepancy between the locational
entries and the technical descriptions in the TCTs,
which further supports the need to await the
settlement of the boundary dispute case it initiated.
The errors presented before this Court can be
narrowed down into two basic issues:
1) Whether the RTC and the CA were correct in
deciding Pasigs Complaint without waiting for the
resolution of the boundary dispute case between
Pasig and Cainta; and
2) Whether Sta. Lucia should continue paying its
real property taxes to Cainta, as it alleged to have
always done, or to Pasig, as the location stated in
Sta. Lucias TCTs.
We agree with the First Division of the Court of
Appeals in CA-G.R. SP No. 52874 that the resolution
of the boundary dispute between Pasig and Cainta
would determine which local government unit is
entitled to collect realty taxes from Sta. Lucia.[26]
The Local Government Unit entitled
To Collect Real Property Taxes
The Former Seventh Division of the Court of Appeals
held that the resolution of the complaint lodged
before the Pasig RTC did not necessitate the
assessment of the parties evidence on the metes
and bounds of their respective territories. It cited
our ruling in Odsigue v. Court of Appeals[27]
wherein we said that a certificate of title is
conclusive evidence of both its ownership and
location.[28] The Court of Appeals even referred to
specific provisions of the 1991 Local Government
Code and Act. No. 496 to support its ruling that
Pasig had the right to collect the realty taxes on the
subject properties as the titles of the subject
properties show on their faces that they are
situated in Pasig.[29]
Under Presidential Decree No. 464 or the Real
Property Tax Code, the authority to collect real
property taxes is vested in the locality where the

property is situated:
Sec. 5. Appraisal of Real Property. All real property,
whether taxable or exempt, shall be appraised at
the current and fair market value prevailing in the
locality where the property is situated.
xxxx
Sec. 57. Collection of tax to be the responsibility of
treasurers. The collection of the real property tax
and all penalties accruing thereto, and the
enforcement of the remedies provided for in this
Code or any applicable laws, shall be the
responsibility of the treasurer of the province, city or
municipality where the property is situated.
(Emphases ours.)
This requisite was reiterated in Republic Act No.

7160, also known as the 1991 the Local
Government Code, to wit:
Section 201. Appraisal of Real Property. All real
property, whether taxable or exempt, shall be
appraised at the current and fair market value
prevailing in the locality where the property is
situated. The Department of Finance shall
promulgate the necessary rules and regulations for
the classification, appraisal, and assessment of real
property pursuant to the provisions of this Code.
Section 233. Rates of Levy. A province or city or a

municipality within the Metropolitan Manila Area
shall fix a uniform rate of basic real property tax
applicable to their respective localities as follows: x
x x. (Emphases ours.)
The only import of these provisions is that, while a

local government unit is authorized under several
laws to collect real estate tax on properties falling
under its territorial jurisdiction, it is imperative to first
show that these properties are unquestionably
within its geographical boundaries.
Accentuating on the importance of delineating
territorial boundaries, this Court, in Mariano, Jr. v.
Commission on Elections[30] said:
The importance of drawing with precise strokes the
territorial boundaries of a local unit of government
cannot be overemphasized. The boundaries must
be clear for they define the limits of the territorial
jurisdiction of a local government unit. It can
legitimately exercise powers of government only
within the limits of its territorial jurisdiction. Beyond
these limits, its acts are ultra vires. Needless to state,
any uncertainty in the boundaries of local
government units will sow costly conflicts in the
exercise of governmental powers which ultimately
will prejudice the people's welfare. This is the evil
sought to be avoided by the Local Government
Code in requiring that the land area of a local
Page 85 of 158
government unit must be spelled out in metes and

bounds, with technical descriptions.[31] (Emphasis
ours.)
The significance of accurately defining a local

government units boundaries was stressed in City of
Pasig v. Commission on Elections,[32] which
involved the consolidated petitions filed by the
parties herein, Pasig and Cainta, against two
decisions of the Commission on Elections
(COMELEC) with respect to the plebiscites
scheduled by Pasig for the ratification of its
creation of two new Barangays. Ruling on the
contradictory reliefs sought by Pasig and Cainta,
this Court affirmed the COMELEC decision to hold
in abeyance the plebiscite to ratify the creation of
Barangay Karangalan; but set aside the COMELECs
other decision, and nullified the plebiscite that
ratified the creation of Barangay Napico in Pasig,
until the boundary dispute before the Antipolo RTC
had been resolved. The aforementioned case held
as follows:
1.
The Petition of the City of Pasig in G.R. No.
125646 is DISMISSED for lack of merit; while
2.
The Petition of the Municipality of Cainta in
G.R. No. 128663 is GRANTED. The COMELEC Order in
UND No. 97-002, dated March 21, 1997, is SET ASIDE
and the plebiscite held on March 15, 1997 to ratify
the creation of Barangay Napico in the City of
Pasig is declared null and void. Plebiscite on the
same is ordered held in abeyance until after the
courts settle with finality the boundary dispute
between the City of Pasig and the Municipality of
Cainta, in Civil Case No. 94-3006.[33]
Clearly therefore, the local government unit

entitled to collect real property taxes from Sta.
Lucia must undoubtedly show that the subject
properties are situated within its territorial
jurisdiction; otherwise, it would be acting beyond
the powers vested to it by law.
Certificates of Title as
Conclusive Evidence of Location
While we fully agree that a certificate of title is

conclusive as to its ownership and location, this
does not preclude the filing of an action for the
very purpose of attacking the statements therein. In
De
Pedro
v.
Romasan
Development
Corporation,[34] we proclaimed that:
We agree with the petitioners that, generally, a
certificate of title shall be conclusive as to all
matters contained therein and conclusive
evidence of the ownership of the land referred to
therein. However, it bears stressing that while
certificates of title are indefeasible, unassailable
and binding against the whole world, including the

government itself, they do not create or vest title.
They merely confirm or record title already existing
and vested. They cannot be used to protect a
usurper from the true owner, nor can they be used
as a shield for the commission of fraud; neither do
they permit one to enrich himself at the expense of
other.[35]
In Pioneer Insurance and Surety Corporation v. Heirs

of Vicente Coronado,[36] we set aside the lower
courts ruling that the property subject of the case
was not situated in the location stated and
described in the TCT, for lack of adequate basis.
Our decision was in line with the doctrine that the
TCT is conclusive evidence of ownership and
location. However, we refused to simply uphold the
veracity of the disputed TCT, and instead, we
remanded the case back to the trial court for the
determination of the exact location of the property
seeing that it was the issue in the complaint filed
before it.[37]
In City Government of Tagaytay v. Guerrero,[38]
this Court reprimanded the City of Tagaytay for
levying taxes on a property that was outside its
territorial jurisdiction, viz:
In this case, it is basic that before the City of
Tagaytay may levy a certain property for sale due
to tax delinquency, the subject property should be
under its territorial jurisdiction. The city officials are
expected to know such basic principle of law. The
failure of the city officials of Tagaytay to verify if the
property is within its jurisdiction before levying taxes
on the same constitutes gross negligence.[39]
(Emphasis ours.)
Although it is true that Pasig is the locality stated in

the TCTs of the subject properties, both Sta. Lucia
and Cainta aver that the metes and bounds of the
subject properties, as they are described in the
TCTs, reveal that they are within Caintas
boundaries.[40] This only means that there may be
a conflict between the location as stated and the
location as technically described in the TCTs. Mere
reliance therefore on the face of the TCTs will not
suffice as they can only be conclusive evidence of
the subject properties locations if both the stated
and described locations point to the same area.
The Antipolo RTC, wherein the boundary dispute
case between Pasig and Cainta is pending, would
be able to best determine once and for all the
precise metes and bounds of both Pasigs and
Caintas respective territorial jurisdictions. The
resolution of this dispute would necessarily ascertain
the extent and reach of each local governments
authority, a prerequisite in the proper exercise of
their powers, one of which is the power of taxation.
This was the conclusion reached by this Court in
Page 86 of 158
City of Pasig v. Commission on Elections,[41] and by

the First Division of the Court of Appeals in CA-G.R.
SP No. 52874. We do not see any reason why we
cannot adhere to the same logic and reasoning in
this case.
The Prejudicial Question Debate
It would be unfair to hold Sta. Lucia liable again for
real property taxes it already paid simply because
Pasig cannot wait for its boundary dispute with
Cainta to be decided. Pasig has consistently
argued that the boundary dispute case is not a
prejudicial question that would entail the
suspension of its collection case against Sta. Lucia.
This was also its argument in City of Pasig v.
Commission on Elections,[42] when it sought to
nullify the COMELECs ruling to hold in abeyance
(until the settlement of the boundary dispute case),
the plebiscite that will ratify its creation of Barangay
Karangalan. We agreed with the COMELEC therein
that the boundary dispute case presented a
prejudicial question and explained our statement in
this wise:
To begin with, we agree with the position of the
COMELEC that Civil Case No. 94-3006 involving the
boundary dispute between the Municipality of
Cainta and the City of Pasig presents a prejudicial
question which must first be decided before
plebiscites for the creation of the proposed
barangays may be held.
The City of Pasig argues that there is no prejudicial
question since the same contemplates a civil and
criminal action and does not come into play where
both cases are civil, as in the instant case. While this
may be the general rule, this Court has held in
Vidad v. RTC of Negros Oriental, Br. 42, that, in the
interest of good order, we can very well suspend
action on one case pending the final outcome of
another case closely interrelated or linked to the
first.
In the case at bar, while the City of Pasig vigorously
claims that the areas covered by the proposed
Barangays Karangalan and Napico are within its
territory, it can not deny that portions of the same
area are included in the boundary dispute case
pending before the Regional Trial Court of Antipolo.
Surely, whether the areas in controversy shall be
decided as within the territorial jurisdiction of the
Municipality of Cainta or the City of Pasig has
material bearing to the creation of the proposed
Barangays Karangalan and Napico. Indeed, a
requisite for the creation of a barangay is for its
territorial jurisdiction to be properly identified by
metes and bounds or by more or less permanent
natural boundaries. Precisely because territorial
jurisdiction is an issue raised in the pending civil
case, until and unless such issue is resolved with
finality, to define the territorial jurisdiction of the
proposed barangays would only be an exercise in
futility. Not only that, we would be paving the way

for potentially ultra vires acts of such barangays. x x
x.[43] (Emphases ours.)
It is obvious from the foregoing, that the term

prejudicial question, as appearing in the cases
involving the parties herein, had been used loosely.
Its usage had been more in reference to its ordinary
meaning, than to its strict legal meaning under the
Rules of Court.[44] Nevertheless, even without the
impact of the connotation derived from the term,
our own Rules of Court state that a trial court may
control its own proceedings according to its sound
discretion:
POWERS AND DUTIES OF COURTS AND JUDICIAL
OFFICERS
Rule 135
SEC. 5. Inherent powers of courts. Every court shall
have power:
xxxx
(g) To amend and control its process and orders so
as to make them comformable to law and justice.
Furthermore, we have acknowledged and affirmed

this inherent power in our own decisions, to wit:
The court in which an action is pending may, in the
exercise of a sound discretion, upon proper
application for a stay of that action, hold the
action in abeyance to abide the outcome of
another pending in another court, especially where
the parties and the issues are the same, for there is
power inherent in every court to control the
disposition of causes (sic) on its dockets with
economy of time and effort for itself, for counsel,
and for litigants. Where the rights of parties to the
second action cannot be properly determined until
the questions raised in the first action are settled
the second action should be stayed.
The power to stay proceedings is incidental to the
power inherent in every court to control the
disposition of the cases on its dockets, considering
its time and effort, that of counsel and the litigants.
But if proceedings must be stayed, it must be done
in order to avoid multiplicity of suits and prevent
vexatious
litigations,
conflicting
judgments,
confusion between litigants and courts. It bears
stressing that whether or not the RTC would
suspend the proceedings in the SECOND CASE is
submitted to its sound discretion.[45]
In light of the foregoing, we hold that the Pasig RTC

should have held in abeyance the proceedings in
Civil Case No. 65420, in view of the fact that the
outcome of the boundary dispute case before the
Page 87 of 158
Antipolo RTC will undeniably affect both Pasigs and

Caintas rights. In fact, the only reason Pasig had to
file a tax collection case against Sta. Lucia was not
that Sta. Lucia refused to pay, but that Sta. Lucia
had already paid, albeit to another local
government unit. Evidently, had the territorial
boundaries of the contending local government
units herein been delineated with accuracy, then
there would be no controversy at all.
In the meantime, to avoid further animosity, Sta.
Lucia is directed to deposit the succeeding real
property taxes due on the subject properties, in an
escrow account with the Land Bank of the
Philippines.
WHEREFORE, the instant petition is GRANTED. The
June 30, 2004 Decision and the January 27, 2005
Resolution of the Court of Appeals in CA-G.R. CV
No. 69603 are SET ASIDE. The City of Pasig and the
Municipality of Cainta are both directed to await
the judgment in their boundary dispute case (Civil
Case No. 94-3006), pending before Branch 74 of
the Regional Trial Court in Antipolo City, to
determine which local government unit is entitled
to exercise its powers, including the collection of
real property taxes, on the properties subject of the
dispute. In the meantime, Sta. Lucia Realty and
Development, Inc. is directed to deposit the
succeeding real property taxes due on the lots and
improvements covered by TCT Nos. 532250, 598424,
599131, 92869, 92870 and 38457 in an escrow
account with the Land Bank of the Philippines.
SO ORDERED.
#20
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 154486
December 1, 2010
FEDERICO JARANTILLA, JR., Petitioner,

vs.
ANTONIETA JARANTILLA, BUENAVENTURA
REMOTIGUE, substituted by CYNTHIA REMOTIGUE,
DOROTEO JARANTILLA and TOMAS JARANTILLA,
Respondents.
DECISION
This petition for review on certiorari1 seeks to modify
the Decision2 of the Court of Appeals dated July
30, 2002 in CA-G.R. CV No. 40887, which set aside
the Decision3 dated December 18, 1992 of the
Regional Trial Court (RTC) of Quezon City, Branch
98 in Civil Case No. Q-50464.
The pertinent facts are as follows:

The spouses Andres Jarantilla and Felisa Jaleco
were survived by eight children: Federico, Delfin,
Benjamin, Conchita, Rosita, Pacita, Rafael and
Antonieta.4 Petitioner Federico Jarantilla, Jr. is the
grandchild of the late Jarantilla spouses by their son
Federico Jarantilla, Sr. and his wife Leda Jamili.5
Petitioner also has two other brothers: Doroteo and
Tomas Jarantilla.
Petitioner was one of the defendants in the
complaint before the RTC while Antonieta
Jarantilla, his aunt, was the plaintiff therein. His corespondents before he joined his aunt Antonieta in
her complaint, were his late aunt Conchita
Jarantillas husband Buenaventura Remotigue, who
died during the pendency of the case, his cousin
Cynthia Remotigue, the adopted daughter of
Conchita Jarantilla and Buenaventura Remotigue,
and his brothers Doroteo and Tomas Jarantilla.6
In 1948, the Jarantilla heirs extrajudicially
partitioned amongst themselves the real properties
of their deceased parents.7 With the exception of
the real property adjudicated to Pacita Jarantilla,
the heirs also agreed to allot the produce of the
said real properties for the years 1947-1949 for the
studies of Rafael and Antonieta Jarantilla.8
In the same year, the spouses Rosita Jarantilla and
Vivencio Deocampo entered into an agreement
with the spouses Buenaventura Remotigue and
Conchita Jarantilla to provide mutual assistance to
each other by way of financial support to any
commercial and agricultural activity on a joint
business arrangement. This business relationship
proved to be successful as they were able to
establish a manufacturing and trading business,
acquire real properties, and construct buildings,
among other things.9 This partnership ended in
1973 when the parties, in an "Agreement,"10
voluntarily agreed to completely dissolve their "joint
business relationship/arrangement."11
On April 29, 1957, the spouses Buenaventura and
Conchita Remotigue executed a document
wherein they acknowledged that while registered
only in Buenaventura Remotigues name, they
were not the only owners of the capital of the
businesses Manila Athletic Supply (712 Raon Street,
Manila), Remotigue Trading (Calle Real, Iloilo City)
and Remotigue Trading (Cotabato City). In this
same "Acknowledgement of Participating Capital,"
they stated the participating capital of their coowners as of the year 1952, with Antonieta
Jarantillas stated as eight thousand pesos
(P8,000.00) and Federico Jarantilla, Jr.s as five
thousand pesos (P5,000.00).12
The present case stems from the amended
complaint13 dated April 22, 1987 filed by Antonieta
Jarantilla
against
Buenaventura
Remotigue,
Page 88 of 158
Cynthia Remotigue, Federico Jarantilla, Jr., Doroteo

Jarantilla and Tomas Jarantilla, for the accounting
of the assets and income of the co-ownership, for
its partition and the delivery of her share
corresponding to eight percent (8%), and for
damages. Antonieta claimed that in 1946, she had
entered into an agreement with Conchita and
Buenaventura Remotigue, Rafael Jarantilla, and
Rosita and Vivencio Deocampo to engage in
business. Antonieta alleged that the initial
contribution of property and money came from the
heirs inheritance, and her subsequent annual
investment of seven thousand five hundred pesos
(P7,500.00) as additional capital came from the
proceeds of her farm. Antonieta also alleged that
from 1946-1969, she had helped in the
management of the business they co-owned
without receiving any salary. Her salary was
supposedly rolled back into the business as
additional investments in her behalf. Antonieta
further
claimed
co-ownership
of
certain
properties14 (the subject real properties) in the
name of the defendants since the only way the
defendants could have purchased these properties
were through the partnership as they had no other
source of income.
The respondents, including petitioner herein, in their
Answer,15 denied having formed a partnership with
Antonieta in 1946. They claimed that she was in no
position to do so as she was still in school at that
time. In fact, the proceeds of the lands they
partitioned were devoted to her studies. They also
averred that while she may have helped in the
businesses that her older sister Conchita had
formed with Buenaventura Remotigue, she was
paid her due salary. They did not deny the
existence and validity of the "Acknowledgement of
Participating Capital" and in fact used this as
evidence to support their claim that Antonietas 8%
share was limited to the businesses enumerated
therein. With regard to Antonietas claim in their
other corporations and businesses, the respondents
said these should also be limited to the number of
her shares as specified in the respective articles of
incorporation. The respondents denied using the
partnerships income to purchase the subject real
properties and said that the certificates of title
should be binding on her.16
During the course of the trial at the RTC, petitioner
Federico Jarantilla, Jr., who was one of the original
defendants,
entered
into
a
compromise
agreement17 with Antonieta Jarantilla wherein he
supported Antonietas claims and asserted that he
too was entitled to six percent (6%) of the supposed
partnership in the same manner as Antonieta was.
He prayed for a favorable judgment in this wise:
Defendant Federico Jarantilla, Jr., hereby joins in
plaintiffs prayer for an accounting from the other
defendants, and the partition of the properties of
the co-ownership and the delivery to the plaintiff
and to defendant Federico Jarantilla, Jr. of their

rightful share of the assets and properties in the coownership.181avvphi1
The RTC, in an Order19 dated March 25, 1992,
approved
the
Joint
Motion
to
Approve
Compromise Agreement20 and on December 18,
1992, decided in favor of Antonieta, to wit:
WHEREFORE, premises above-considered, the Court
renders judgment in favor of the plaintiff Antonieta
Jarantilla and against defendants Cynthia
Remotigue, Doroteo Jarantilla and Tomas Jarantilla
ordering the latter:
1. to deliver to the plaintiff her 8% share or its
equivalent amount on the real properties covered
by TCT Nos. 35655, 338398, 338399 & 335395, all of
the Registry of Deeds of Quezon City; TCT Nos.
(18303)23341, 142882 & 490007(4615), all of the
Registry of Deeds of Rizal; and TCT No. T-6309 of the
Registry of Deeds of Cotabato based on their
present market value;
2. to deliver to the plaintiff her 8% share or its
equivalent amount on the Remotigue AgroIndustrial Corporation, Manila Athletic Supply, Inc.,
MAS Rubber Products, Inc. and Buendia Recapping
Corporation based on the shares of stocks present
book value;
3. to account for the assets and income of the coownership and deliver to plaintiff her rightful share
thereof equivalent to 8%;
4. to pay plaintiff, jointly and severally, the sum of
P50,000.00 as moral damages;
5. to pay, jointly and severally, the sum of
P50,000.00 as attorneys fees; and
6. to pay, jointly and severally, the costs of the
suit.21
Both the petitioner and the respondents appealed
this decision to the Court of Appeals. The petitioner
claimed that the RTC "erred in not rendering a
complete judgment and ordering the partition of
the co-ownership and giving to [him] six per
centum (6%) of the properties."22
While the Court of Appeals agreed to some of the
RTCs factual findings, it also established that
Antonieta Jarantilla was not part of the partnership
formed in 1946, and that her 8% share was limited
to
the
businesses
enumerated
in
the
Acknowledgement of Participating Capital. On July
30, 2002, the Court of Appeals rendered the herein
challenged decision setting aside the RTCs
decision, as follows:
Page 89 of 158
WHEREFORE, the decision of the trial court, dated

18 December 1992 is SET ASIDE and a new one is
hereby entered ordering that:
(1) after accounting, plaintiff Antonieta Jarantilla
be given her share of 8% in the assets and profits of
Manila Athletic Supply, Remotigue Trading in Iloilo
City and Remotigue Trading in Cotabato City;
(2) after accounting, defendant Federico Jarantilla,
Jr. be given his share of 6% of the assets and profits
of the above-mentioned enterprises; and, holding
that
(3) plaintiff Antonieta Jarantilla is a stockholder in
the following corporations to the extent stated in
their Articles of Incorporation:
(a) Rural Bank of Barotac Nuevo, Inc.;
(b) MAS Rubber Products, Inc.;
(c) Manila Athletic Supply, Inc.; and
(d) B. Remotigue Agro-Industrial Development
Corp.
(4) No costs.23
The respondents, on August 20, 2002, filed a Motion
for Partial Reconsideration but the Court of Appeals
denied this in a Resolution24 dated March 21, 2003.
Antonieta Jarantilla filed before this Court her own
petition for review on certiorari25 dated September
16, 2002, assailing the Court of Appeals decision
on "similar grounds and similar assignments of errors
as this present case"26 but it was dismissed on
November 20, 2002 for failure to file the appeal
within the reglementary period of fifteen (15) days
in accordance with Section 2, Rule 45 of the Rules
of Court.27
Petitioner filed before us this petition for review on
the sole ground that:
THE HONORABLE COURT OF APPEALS SERIOUSLY
ERRED IN NOT RULING THAT PETITIONER FEDERICO
JARANTILLA, JR. IS ENTITLED TO A SIX PER CENTUM
(6%) SHARE OF THE OWNERSHIP OF THE REAL
PROPERTIES ACQUIRED BY THE OTHER DEFENDANTS
USING COMMON FUNDS FROM THE BUSINESSES
WHERE HE HAD OWNED SUCH SHARE.28
Petitioner asserts that he was in a partnership with
the Remotigue spouses, the Deocampo spouses,
Rosita Jarantilla, Rafael Jarantilla, Antonieta
Jarantilla and Quintin Vismanos, as evidenced by
the Acknowledgement of Participating Capital the
Remotigue spouses executed in 1957. He contends
that
from
this
partnership,
several
other
corporations and businesses were established and
several real properties were acquired. In this
petition, he is essentially asking for his 6% share in

the subject real properties. He is relying on the
Acknowledgement of Participating Capital, on his
own testimony, and Antonieta Jarantillas testimony
to support this contention.
The core issue is whether or not the partnership
subject of the Acknowledgement of Participating
Capital funded the subject real properties. In other
words, what is the petitioners right over these real
properties?
It is a settled rule that in a petition for review on
certiorari under Rule 45 of the Rules of Civil
Procedure, only questions of law may be raised by
the parties and passed upon by this Court.29
A question of law arises when there is doubt as to
what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as
to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not
involve an examination of the probative value of
the evidence presented by the litigants or any of
them. The resolution of the issue must rest solely on
what the law provides on the given set of
circumstances. Once it is clear that the issue invites
a review of the evidence presented, the question
posed is one of fact. Thus, the test of whether a
question is one of law or of fact is not the
appellation given to such question by the party
raising the same; rather, it is whether the appellate
court can determine the issue raised without
reviewing or evaluating the evidence, in which
case, it is a question of law; otherwise it is a
question of fact.30
Since the Court of Appeals did not fully adopt the
factual findings of the RTC, this Court, in resolving
the questions of law that are now in issue, shall look
into the facts only in so far as the two courts a quo
differed in their appreciation thereof.
The RTC found that an unregistered partnership
existed since 1946 which was affirmed in the 1957
document, the "Acknowledgement of Participating
Capital." The RTC used this as its basis for giving
Antonieta Jarantilla an 8% share in the three
businesses listed therein and in the other businesses
and real properties of the respondents as they had
supposedly acquired these through funds from the
partnership.31
The Court of Appeals, on the other hand, agreed
with the RTC as to Antonietas 8% share in the
business enumerated in the Acknowledgement of
Participating Capital, but not as to her share in the
other corporations and real properties. The Court of
Appeals ruled that Antonietas claim of 8% is based
on the "Acknowledgement of Participating
Capital," a duly notarized document which was
specific as to the subject of its coverage. Hence,
there was no reason to pattern her share in the
Page 90 of 158
other corporations from her share in the

partnerships businesses. The Court of Appeals also
said that her claim in the respondents real
properties was more "precarious" as these were all
covered by certificates of title which served as the
best evidence as to all the matters contained
therein.32 Since petitioners claim was essentially
the same as Antonietas, the Court of Appeals also
ruled that petitioner be given his 6% share in the
same businesses listed in the Acknowledgement of
Participating Capital.
Factual findings of the trial court, when confirmed
by the Court of Appeals, are final and conclusive
except in the following cases: (1) when the
inference made is manifestly mistaken, absurd or
impossible; (2) when there is a grave abuse of
discretion; (3) when the finding is grounded entirely
on speculations, surmises or conjectures; (4) when
the judgment of the Court of Appeals is based on
misapprehension of facts; (5) when the findings of
fact are conflicting; (6) when the Court of Appeals,
in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of
both appellant and appellee; (7) when the findings
of the Court of Appeals are contrary to those of the
trial court; (8) when the findings of fact are
conclusions without citation of specific evidence
on which they are based; (9) when the Court of
Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if
properly considered, would justify a different
conclusion; and (10) when the findings of fact of
the Court of Appeals are premised on the absence
of evidence and are contradicted by the evidence
on record.33
In this case, we find no error in the ruling of the
Court of Appeals.
Both the petitioner and Antonieta Jarantilla
characterize their relationship with the respondents
as a co-ownership, but in the same breath, assert
that a verbal partnership was formed in 1946 and
was affirmed in the 1957 Acknowledgement of
There is a co-ownership when an undivided thing or
right belongs to different persons.34 It is a
partnership when two or more persons bind
themselves to contribute money, property, or
industry to a common fund, with the intention of
dividing the profits among themselves.35 The Court,
in Pascual v. The Commissioner of Internal
Revenue,36 quoted the concurring opinion of Mr.
Justice Angelo Bautista in Evangelista v. The
Collector of Internal Revenue37 to further elucidate
on the distinctions between a co-ownership and a
partnership, to wit:
I wish however to make the following observation:
Article 1769 of the new Civil Code lays down the
rule for determining when a transaction should be
deemed a partnership or a co-ownership. Said

article paragraphs 2 and 3, provides;
(2) Co-ownership or co-possession does not itself
establish a partnership, whether such co-owners or
co-possessors do or do not share any profits made
by the use of the property;
(3) The sharing of gross returns does not of itself
establish a partnership, whether or not the persons
sharing them have a joint or common right or
interest in any property from which the returns are
derived;
From the above it appears that the fact that those
who agree to form a co- ownership share or do not
share any profits made by the use of the property
held in common does not convert their venture into
a partnership. Or the sharing of the gross returns
does not of itself establish a partnership whether or
not the persons sharing therein have a joint or
common right or interest in the property. This only
means that, aside from the circumstance of profit,
the presence of other elements constituting
partnership is necessary, such as the clear intent to
form a partnership, the existence of a juridical
personality different from that of the individual
partners, and the freedom to transfer or assign any
interest in the property by one with the consent of
the others.
It is evident that an isolated transaction whereby
two or more persons contribute funds to buy
certain real estate for profit in the absence of other
circumstances showing a contrary intention cannot
be considered a partnership.
Persons who contribute property or funds for a
common enterprise and agree to share the gross
returns of that enterprise in proportion to their
contribution, but who severally retain the title to
their respective contribution, are not thereby
rendered partners. They have no common stock or
capital, and no community of interest as principal
proprietors in the business itself which the proceeds
derived.
A joint purchase of land, by two, does not
constitute a co-partnership in respect thereto; nor
does an agreement to share the profits and losses
on the sale of land create a partnership; the parties
are only tenants in common.
Where plaintiff, his brother, and another agreed to
become owners of a single tract of realty, holding
as tenants in common, and to divide the profits of
disposing of it, the brother and the other not being
entitled to share in plaintiffs commission, no
partnership existed as between the three parties,
whatever their relation may have been as to third
parties.
Page 91 of 158
In order to constitute a partnership inter sese there

must be: (a) An intent to form the same; (b)
generally participating in both profits and losses; (c)
and such a community of interest, as far as third
persons are concerned as enables each party to
make contract, manage the business, and dispose
of the whole property. x x x.
The common ownership of property does not itself
create a partnership between the owners, though
they may use it for the purpose of making gains;
and they may, without becoming partners, agree
among themselves as to the management, and
use of such property and the application of the
proceeds therefrom.38 (Citations omitted.)
Under Article 1767 of the Civil Code, there are two
essential elements in a contract of partnership: (a)
an agreement to contribute money, property or
industry to a common fund; and (b) intent to divide
the profits among the contracting parties. The first
element is undoubtedly present in the case at bar,
for, admittedly, all the parties in this case have
agreed to, and did, contribute money and
property to a common fund. Hence, the issue
narrows down to their intent in acting as they did.39
It is not denied that all the parties in this case have
agreed to contribute capital to a common fund to
be able to later on share its profits. They have
admitted this fact, agreed to its veracity, and even
submitted one common documentary evidence to
prove such partnership - the Acknowledgement of
As this case revolves around the legal effects of the
Acknowledgement of Participating Capital, it
would be instructive to examine the pertinent
portions of this document:
ACKNOWLEDGEMENT OF
PARTICIPATING CAPITAL
KNOW ALL MEN BY THESE PRESENTS:
That we, the spouses Buenaventura Remotigue and
Conchita Jarantilla de Remotigue, both of legal
age, Filipinos and residents of Loyola Heights,
Quezon City, P.I. hereby state:
That the Manila Athletic Supply at 712 Raon,
Manila, the Remotigue Trading of Calle Real, Iloilo
City and the Remotigue Trading, Cotabato Branch,
Cotabato, P.I., all dealing in athletic goods and
equipments, and general merchandise are
recorded
in
their
respective
books
with
Buenaventura Remotigue as the registered owner
and are being operated by them as such:
That they are not the only owners of the capital of
the three establishments and their participation in
the capital of the three establishments together
with the other co-owners as of the year 1952 are
stated as follows:
1.
Buenaventura
Remotigue
THOUSAND)P25,000.00
(TWENTY-FIVE
2. Conchita Jarantilla de Remotigue (TWENTY-FIVE

THOUSAND) 25,000.00
3. Vicencio Deocampo (FIFTEEN THOUSAND)
15,000.00
4. Rosita J. Deocampo (FIFTEEN THOUSAND)....
15,000.00
5. Antonieta Jarantilla (EIGHT THOUSAND)..
8,000.00
6. Rafael Jarantilla (SIX THOUSAND).. ...
6,000.00
7. Federico Jarantilla, Jr. (FIVE THOUSAND)..
5,000.00
8. Quintin Vismanos (TWO THOUSAND)...
2,000.00
That aside from the persons mentioned in the next
preceding paragraph, no other person has any
interest
in
the
above-mentioned
three
establishments.
IN WITNESS WHEREOF, they sign this instrument in the
City of Manila, P.I., this 29th day of April, 1957.
[Sgd.]
BUENAVENTURA REMOTIGUE
[Sgd.]
CONCHITA JARANTILLA DE REMOTIGUE40
The Acknowledgement of Participating Capital is a
duly notarized document voluntarily executed by
Conchita Jarantilla-Remotigue and Buenaventura
Remotigue in 1957. Petitioner does not dispute its
contents and is actually relying on it to prove his
participation in the partnership. Article 1797 of the
Civil Code provides:
Art. 1797. The losses and profits shall be distributed
in conformity with the agreement. If only the share
of each partner in the profits has been agreed
upon, the share of each in the losses shall be in the
same proportion.
In the absence of stipulation, the share of each
partner in the profits and losses shall be in
proportion to what he may have contributed, but
the industrial partner shall not be liable for the
losses. As for the profits, the industrial partner shall
receive such share as may be just and equitable
under the circumstances. If besides his services he
has contributed capital, he shall also receive a
share in the profits in proportion to his capital.
(Emphases supplied.)
Page 92 of 158
It is clear from the foregoing that a partner is

entitled only to his share as agreed upon, or in the
absence of any such stipulations, then to his share
in proportion to his contribution to the partnership.
The petitioner himself claims his share to be 6%, as
stated in the Acknowledgement of Participating
Capital. However, petitioner fails to realize that this
document specifically enumerated the businesses
covered by the partnership: Manila Athletic Supply,
Remotigue Trading in Iloilo City and Remotigue
Trading in Cotabato City. Since there was a clear
agreement that the capital the partners
contributed went to the three businesses, then
there is no reason to deviate from such agreement
and go beyond the stipulations in the document.
Therefore, the Court of Appeals did not err in
limiting petitioners share to the assets of the
businesses enumerated in the Acknowledgement
of Participating Capital.
In Villareal v. Ramirez,41 the Court held that since a
partnership is a separate juridical entity, the shares
to be paid out to the partners is necessarily limited
only to its total resources, to wit:
Since it is the partnership, as a separate and distinct
entity, that must refund the shares of the partners,
the amount to be refunded is necessarily limited to
its total resources. In other words, it can only pay
out what it has in its coffers, which consists of all its
assets. However, before the partners can be paid
their shares, the creditors of the partnership must
first be compensated. After all the creditors have
been paid, whatever is left of the partnership assets
becomes available for the payment of the
partners shares.42
There is no evidence that the subject real
properties were assets of the partnership referred to
in the Acknowledgement of Participating Capital.
The petitioner further asserts that he is entitled to
respondents properties based on the concept of
trust. He claims that since the subject real
properties were purchased using funds of the
partnership, wherein he has a 6% share, then "law
and equity mandates that he should be
considered as a co-owner of those properties in
such proportion."43 In Pigao v. Rabanillo,44 this
Court explained the concept of trusts, to wit:
Express trusts are created by the intention of the
trustor or of the parties, while implied trusts come
into being by operation of law, either through
implication of an intention to create a trust as a
matter of law or through the imposition of the trust
irrespective of, and even contrary to, any such
intention. In turn, implied trusts are either resulting or
constructive trusts. Resulting trusts are based on the
equitable doctrine that valuable consideration and
not legal title determines the equitable title or
interest and are presumed always to have been
contemplated by the parties. They arise from the

nature or circumstances of the consideration
involved in a transaction whereby one person
thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the
benefit of another.45
On proving the existence of a trust, this Court held
that:
Respondent has presented only bare assertions that
a trust was created. Noting the need to prove the
existence of a trust, this Court has held thus:
"As a rule, the burden of proving the existence of a
trust is on the party asserting its existence, and such
proof must be clear and satisfactorily show the
existence of the trust and its elements. While
implied trusts may be proved by oral evidence, the
evidence must be trustworthy and received by the
courts with extreme caution, and should not be
made to rest on loose, equivocal or indefinite
declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated."
46
The petitioner has failed to prove that there exists a
trust over the subject real properties. Aside from his
bare allegations, he has failed to show that the
respondents used the partnerships money to
purchase the said properties. Even assuming
arguendo that some partnership income was used
to acquire these properties, the petitioner should
have successfully shown that these funds came
from his share in the partnership profits. After all, by
his own admission, and as stated in the
Acknowledgement of Participating Capital, he
owned a mere 6% equity in the partnership.
In essence, the petitioner is claiming his 6% share in
the subject real properties, by relying on his own
self-serving testimony and the equally biased
testimony of Antonieta Jarantilla. Petitioner has not
presented
evidence,
other
than
these
unsubstantiated testimonies, to prove that the
respondents did not have the means to fund their
other businesses and real properties without the
partnerships income. On the other hand, the
respondents have not only, by testimonial
evidence, proven their case against the petitioner,
but have also presented sufficient documentary
evidence to substantiate their claims, allegations
and defenses. They presented preponderant proof
on how they acquired and funded such properties
in addition to tax receipts and tax declarations.47 It
has been held that "while tax declarations and
realty tax receipts do not conclusively prove
ownership, they may constitute strong evidence of
ownership when accompanied by possession for a
period sufficient for prescription."48 Moreover, it is a
rule in this jurisdiction that testimonial evidence
cannot prevail over documentary evidence.49 This
Court had on several occasions, expressed our
Page 93 of 158
disapproval on using mere self-serving testimonies

to support ones claim. In Ocampo v. Ocampo,50
a case on partition of a co-ownership, we held
that:
Petitioners assert that their claim of co-ownership of
the property was sufficiently proved by their
witnesses -- Luisa Ocampo-Llorin and Melita
Ocampo. We disagree. Their testimonies cannot
prevail over the array of documents presented by
Belen. A claim of ownership cannot be based
simply on the testimonies of witnesses; much less on
those of interested parties, self-serving as they
are.51
It is true that a certificate of title is merely an
evidence of ownership or title over the particular
property described therein. Registration in the
Torrens system does not create or vest title as
registration is not a mode of acquiring ownership;
hence, this cannot deprive an aggrieved party of a
remedy in law.52 However, petitioner asserts
ownership over portions of the subject real
properties on the strength of his own admissions
and
on
the
testimony
of
Antonieta
Jarantilla.1avvphi1 As held by this Court in Republic
of the Philippines v. Orfinada, Sr.53:
between a direct and an indirect or collateral

attack, as follows:
A collateral attack transpires when, in another
action to obtain a different relief and as an
incident to the present action, an attack is made
against the judgment granting the title. This manner
of attack is to be distinguished from a direct attack
against a judgment granting the title, through an
action whose main objective is to annul, set aside,
or enjoin the enforcement of such judgment if not
yet implemented, or to seek recovery if the
property titled under the judgment had been
disposed of. x x x.
Petitioners only piece of documentary evidence is
the Acknowledgement of Participating Capital,
which as discussed above, failed to prove that the
real properties he is claiming co-ownership of were
acquired out of the proceeds of the businesses
covered by such document. Therefore, petitioners
theory has no factual or legal leg to stand on.
WHEREFORE, the Petition is hereby DENIED and the
Decision of the Court of Appeals in CA-G.R. CV No.
40887, dated July 30, 2002 is AFFIRMED.
SO ORDERED.
Indeed, a Torrens title is generally conclusive

evidence of ownership of the land referred to
therein, and a strong presumption exists that a
Torrens title was regularly issued and valid. A Torrens
title is incontrovertible against any informacion
possessoria, of other title existing prior to the
issuance thereof not annotated on the Torrens title.
Moreover, persons dealing with property covered
by a Torrens certificate of title are not required to
go beyond what appears on its face.54
As we have settled that this action never really was
for partition of a co-ownership, to permit
petitioners claim on these properties is to allow a
collateral, indirect attack on respondents
admitted titles. In the words of the Court of
Appeals, "such evidence cannot overpower the
conclusiveness of these certificates of title, more so
since plaintiffs [petitioners] claims amount to a
collateral attack, which is prohibited under Section
48 of Presidential Decree No. 1529, the Property
Registration Decree."55
SEC. 48. Certificate not subject to collateral attack.
A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in
accordance with law.
This Court has deemed an action or proceeding to
be "an attack on a title when its objective is to
nullify the title, thereby challenging the judgment
pursuant to which the title was decreed."56 In
Aguilar v. Alfaro,57 this Court further distinguished
#21
#22
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-36897 June 26, 1980
SPOUSES FLORENTINO S. TOMAS and FRANCISCA
CARIO, plaintiffs-appellees,
vs.
EUSEBIA TOMAS, defendant, PHILIPPINE NATIONAL
BANK, SANTIAGO, ISABELA BRANCH, defendantappellant.
DE CASTRO, J.:
Plaintiff spouses, Florentino S. Tomas and Francisca
Cario, are the owners of a parcel of land located
in Malasian, Santiago, Isabela (now Saguday,
Nueva Vizcaya) since 1929, which they obtained
through a homestead patent with Original
Certificate of Title No. I-4620. Through fraud and
misrepresentation, one Eusebia Tomas succeeded
in having OCT No. I-4620 cancelled, and obtained
in her name TCT No. 8779, Isabela now TCT-350
Nueva Vizcaya, with which she obsessed a loan
from the Philippine National Bank branch in
Santiago, Isabela, as a security, mortgaging the
land with the bank for the load of P2,500.00.
Page 94 of 158
Florentino Tomas discovered the fraudulent acts of

Eusebia Tomas when he himself applied for a loan
from the Philippine National Bank, and offered as a
collateral the same land already mortgaged by
Eusebia Tomas to the bank.
In the action plaintiffs filed on April 14, 1964 to
declare TCT-350, Nueva Vizcaya, null and void,
against Eusebia Tomas, it was found by the court
(Court of First Instance of Nueva Vizcaya) that
Eusebia Tomas succeeded in having plaintiffs' OCT
No. I-4620 (Isabela) 1 cancelled and having TCT
No. 8779 (Isabela) 2 issued in her name, by
executing a deed of extra-judicial settlement 3 in
which she made it appear that she is the lone heir
of the registered owner, Florentino Tomas, to whom
she was not even known before, and who was at
the time very much alive. She then petitioned for
the issuance of another owner's duplicate of OCT
No. I-4620, alleging loss of said owner's duplicate.
On Order of the court (Court of First Instance of
Isabela) where the petition was filed, a new owner's
duplicate was issued to Eusebia Tomas as the
petitioner. Upon the registration of the deed of
extra-judicial settlement (Exhibit "J" OCT No. I-4620
was cancelled, and TCT No. 8779, now TCT-350
Nueva Vizcaya was issued in the name of Eusebia
Tomas on March 14,1957.
In the same action, the Philippine National Bank
was made a co-defendant as the mortgagee of
the land, the plaintiffs alleging that the mortgage is
null and void, the mortgagor not being the owner
of the property mortgaged. After trial in which
Eusebia Tomas never appeared to present any
evidence, the court a quo rendered judgment
dated June 9, 1967, the dispositive portion 4 of
which reads:
IN VIEW OF ALL THE FOREGOING CONSIDERATIONS,
decision is hereby rendered in favor of the plaintiffs
and against the defendants: (a) declaring transfer
Certificate of Title No. T-8779, now Transfer
Certificate of Title No. T-350 in the name of
defendant Eusebia Tomas null and void; (b)
declaring the deed of extra-judicial settlement
executed by defendant Eusebia Tomas null and
void, (c) declaring Original Certificate of Title No. I4620 and its file and owner's copy revived (d)
condemning defendant Eusebia Tomas to pay the
plaintiffs in the amount of P950.00 as attorney's fee
and P 55.80 representing the actual expenses of
the plaintiffs; (e) declaring the mortgage in favor of
the Philippine National Bank without force and
effect against the plaintiffs, and ordering
defendant Eusebia Tomas to pay the costs of this
proceedings.
From the portion of the foregoing judgment
declaring the mortgage, in its favor without force
and effect, the Philippine National Bank appealed
to the Court of Appeals, 5 which, however, certified
the appeal to this Court, this issue presented being

purely legal. 6
The only issue to be resolved is whether the
mortgage of the land in favor of the appellant
bank is valid or not as against appellees.
There is no dispute that the mortgagor Eusebia
Tomas is not the owner of the land in question, the
true owner being the appellees, who had always
been in possession of said land since they applied
for it by way of homestead patent. The owner's
duplicate of OCT No. I-4620 covering the land in
favor of appellee Florentino Tomas had always
been with the latter, and was never lost as falsely
and fraudulently misrepresented by Eusebia Tomas
in her petition for a new owner's duplicate of OCT
No. I-4620. Alleging however, good faith so as to
invoke the protective provision of the Land
Registration Act (Section 39, Act 496), pointing to
the fact that the certificate of title, TCT-350 Nueva
Vizcaya presented by Eusebia Tomas as mortgagor
was in her name, and showed no encumbrance
over the land, the appellant bank contends that its
right as mortgagee must be fully rated as a
mortgagee in good faith.
Verily, the resolution of the issue raised in this
appeal hinges on whether the appellant is a
mortgagee in good faith and for value, for if it is,
and without anything to excite suspension as it
claims, it is protected in the same way as a
purchaser in good faith and for value is protected
under Section 39 of Act 496, otherwise known as
the Land Registration Act.
In claiming good faith as a mortgagee, and for
value, appellant bank claims that no proof to the
contrary was presented by appellees in the trial
court. 7 It is a fact, however, that incontrovertible
proofs have seen adduced showing that Eusebia
Tomas, the mortgagor, was not the owner of the
property mortgaged. This is an that appellees had
to prove that would place appellant bank on
obligation to show good faith, as in fact, it was the
bank that alleged good faith as its defense. 8 It
would be more legally correct, therefore, to say
that it was incumbent on appellant to prove its
affirmative allegation of good faith rather than
appellee to show the contrary. In any case, to the
statement in appellees' brief that appellant bank
"did not object when appellees presented
evidence in the lower court regarding negligence
of appellant, like their failure to send field inspector
to the land to discover who is the real owner of the
land being offered as Atty. to the loan of impostor
Eusebia Tomas," no denial was made in a reply
brief which appellant should have filed if it wanted
to deny this assertion of appellees. The allegation
that appellate presented no proof of lack of good
faith on the part of appellant bank may, therefore,
not altogether be accurate.
Page 95 of 158
The facts as properly taken note of by the lower

court would seem to bring the instant case within
the ruling of the case of Pichay vs. Celestino, 9 the
essence of which is as between two innocent
persons, the mortgagee and the owner of the
mortgaged property, one of whom must suffer the
consequence of a breach of trust, the one who
made it possible by his act of confidence must
bear the loss. This is a principle that accords more
with justice and equity, in the light of the common
practice of banking institution, which is a matter of
public knowledge, as observed by the trial court in
the case aforecited, with which this Court agreed,
before approving a loan, to send representatives to
the premises of the land offered as collateral and
investigate who are the true owners thereof.
Incidentally, the ruling cited herein was against the
same appellant bank, the Philippine National Bank,
with reference to a mortgage entered into under
solar circumstances. Banks, indeed, should exercise
more care and prudence in dealing even with
registered lands, than private individuals, for their
business is one affected with public interest,
keeping in trust money belonging to their
depositors, which they should guard against loss by
not committing any act of negligence which
amount to lack of good faith by which they would
be denied the protective mantle of the land
registration statute, Act 496, extended only to
purchasers for value and in good faith, as well as to
mortgagees of the same character and
description. This is evidently the rationale of the
doctrine laid down in the case of Pichay vs.
Celestino, supra, which as in the instant suit,
involved also a mortgage of a land covered by a
certificate of title, mortgaged by the defendant
who was not the owner. The latter, however,
succeeded in cancelling the original certificate of
title in the name of the real owner, by forging a
deed of sale, purportedly executed by the said
registered owner in his favor, upon the registration
of which, he obtained a transfer certificate of title
in his name, presenting a new owner's duplicate
certificate he obtained by falsely alleging that the
first owner's duplicate was burned in an ex-parte
petition with prayer for the issuance of another
owner's duplicate which the court granted.
very infrequently sold or alienated, the policy of the

law being against sale or alienation.
Thus, the facts of the instant case so closely

resemble, if they are not exactly the same as, those
in the Pichay vs. Celestino case, as to make the
application of the ruling in said case to the one at
bar unavoidable and compelling. There were only
12 days between the cancellation of OCT No. I4620 on March 14, 1957 and the constitution of the
mortgage on March 26, 1957, which shows that the
application for the loan must have been filed within
days only from the receipt of the new TCT No. 8779
by Eusebia Tomas. This fact should have aroused
suspicion for appellant bank to send representative
to the premises to ascertain who the true owner is,
considering that homestead patents are generally
applied for by male appellant applicants, and are
WHEREFORE, the judgement appealed from is

hereby affirmed, without pronouncement to cost.
The decision of this Court in the aforecited case

promulgated on May 30, 1967 preceded the
decision of the lower court in this case dated June
7, 1967, by only a few days. However, the court a
quo went along the doctrine as laid down in the
Pichay vs. Celestino case even perhaps without
having actually read the decision, although a
similar rule had earlier been laid down in Blondeau,
et al. vs. Nano, et al. 10 We, therefore, find no error
in the holding of the court a quo that the mortgage
executed
by
Eusebia
Tomas,
appellant's
codefendant in favor of said appellant bank over
the land in question which the former never owned,
is without effect as against appellees herein.
We, indeed, find more weight and vigor in a
doctrine which recognizes a better right for the
innocent original registered owner who obtained
his certificate of title through perfectly legal and
regular proceedings, than one who obtains his
certificate from a totally void one, as to prevail
over judicial pronouncements to the effect that
one dealing with a registered land, such as a
purchaser, is under no obligation to look beyond
the certificate of title of the vendor, for in the latter
case, good faith has yet to be established by the
vendee or transferee, being the most essential
condition, coupled with valuable consideration, to
entitle him to respect for his newly acquired title
even as against the holder of an earlier and
perfectly valid title. There might be circumstances
apparent on the face of the certificate of title
which could excite suspicion as to prompt inquiry,
such as when the transfer is not by virtue of a
voluntary act of the original registered owner, as in
the instant case, where it was by means of a selfexecuted deed of extra-judicial settlement, a fact
which should be noted on the face of Eusebia
Tomas' certificate of title. Failing to make such
inquiry would hardly be consistent with any
pretense of good faith, which the appellant bank
invokes to claim the right to be protected as a
mortgagee, and for the reversal of the judgment
rendered against it by the lower court.
SO ORDERED.
#23
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 172338
December 10, 2012
Page 96 of 158
vs.
CONCEPCION LORENZO, ORLANDO FONTANILLA,
SAMUEL FONTANILLA, JULIET FONTANILLA, ELIZABETH
FONTANILLA, ROSELA FONTANILLA, RENATO
FONTANILLA AND EVELYN FONTANILLA,
Respondents.
DECISION
Before the Court is a petition for review under Rule
45 of the 1997 Rules of Civil Procedure assailing the
Decision 1 dated April 17, 2006 of the Court of
Appeals in CA-G.R. CV No. 80132, entitled
"Concepcion Lorenzo, Orlando Fontanilla, Samuel
Fontanilla, Juliet Fontanilla, Elizabeth Fontanilla.
RosPln Fontanilla, Renato Fontanilla and Evelyn
Fontanilla v. Republic of the Philippines." Said Court
of Appeals Decision affirmed the Decision2 dated
August 26, 2003 in LRC Case No. 24-2692 of Branch
24, Regional Trial Court (RTC), Echague, Isabela.
The genesis of the present case can be traced
back to the filing before the trial court on February
11, 2002 of a Petition3 for the reconstitution of
Original Certificate of Title (OCT) No. 3980 covering
a parcel of land measuring 811 square meters,
situated in Echague, Isabela.
In seeking the reconstitution of OCT No. 3980,
respondents averred before the trial court:
3. That during the lifetime of Pedro Fontanilla and
herein petitioner Concepcion Lorenzo, husband
and wife, respectively, they acquired a parcel of
residential land, x x x;
4. That subject parcel of land is identical to Lot 18
of Echague Cadastre 210, covered by and
embraced under ORIGINAL CERTIFICATE OF TITLE
NO. 3980 of the Land Records of Isabela, in the
name of Antonia Pascua as her paraphernal
property and being the mother of Pedro Fontanilla;
5. That because of the death of Pedro Fontanilla
the lot as covered by the aforesaid title was settled
and adjudicated among the herein petitioners, x x
x;
6. That the OWNERS DUPLICATE COPY OF OCT NO.
3980 was handed and delivered unto the spouses
Pedro Fontanilla and Concepcion Lorenzo which
they have been keeping only to find out thereafter
that it was eaten by white ants (Anay);
7. That the original and office file copy of said OCT
NO. 3980 kept and to be on file in the Registry of
Deeds of Isabela is not now available, utmost same
was included burned and lost beyond recovery
when the office was razed by fire sometime in 1976,
a certification to this effect as issued by the office is
hereto marked as ANNEX "D";
8. That for taxation purposes, the lot as covered by

OCT NO. 3980, still in the name of Antonia Pascua
for Lot 18, Cad. 210, with an assessed value of
P16,920.00, x x x;
9. That no mortgagees and/or lessees co-owners
copy to the subject OCT NO. 3980 was ever issued,
and likewise no related documents affecting the
land covered thereby is presented and pending for
registration in favor of any person whomsoever,
and henceforth, it is free from lien and
encumbrance;
xxxx
11. That in support for the reconstitution of [OCT]
No. 3980, the following documents which may
constitute as source or basis for the purpose are
herewith submitted:
(a) S[E]PIA PLAN with Blue Prints x x x;
(b) Certified technical description of Lot 18, Cad.
210 x x x;
(c) Certification by LRA as to the non-availability of
a copy of DECREE NO. 650254 x x x[.]4
During the trial, the testimony of co-respondent
Evelyn Fontanilla- Gozum was offered in order to
prove the above-mentioned allegations in the
petition. In her testimony, she declared that she is
the daughter of the late Pedro Fontanilla and corespondent Concepcion Lorenzo who, during their
marriage, acquired a parcel of land covered and
embraced by OCT No. 3890 from her grandmother
Antonia Pascua as evidenced by a Deed of Sale.
She also averred that the owners duplicate of the
said Torrens certificate of title was later discovered
to have been eaten by termites and that the
original copy of the said Torrens certificate of title
on file with the Register of Deeds of Isabela was
certified to be burned and lost beyond recovery
when the office was razed by fire of unknown origin
on December 4, 1976 as certified to by the Register
of Deeds. Since both the original copy on file and
the owners duplicate copy are non-existent, she
and her co-heirs, who are also co-respondents in
this case, instituted the petition for reconstitution of
lost or destroyed Torrens certificate of title.5
In its Decision dated August 26, 2003, the trial court
granted respondents petition and directed the
Register of Deeds of Isabela to reconstitute OCT
No. 3980 in the name of Antonia Pascua on the
basis of the deed of sale, the technical description
and the sketch plans, and to issue another owners
duplicate copy of the said Torrens certificate of
title. The dispositive portion of the said ruling states:
WHEREFORE, premises considered, judgment is
hereby rendered ordering the Register of Deeds of
Page 97 of 158
Isabela to reconstitute the original copy of OCT No.

3980 in the name of Antonia Pascua, on the basis
of the deed of sale, the technical description and
the sketch plans, and to issue another Owners
Duplicate of the said title after payment of the
necessary legal fees.
Furnish copy of this Order to the Land Registration
Authority, The Register of Deeds of Isabela and the
Office of the Solicitor General.6
Petitioner Republic of the Philippines, through the
Office of the Solicitor General, appealed the ruling
to the Court of Appeals arguing that the trial court
erred in granting respondents petition for
reconstitution of Torrens title since they failed to
present substantial proof that the purported original
certificate of title was valid and existing at the time
of its alleged loss or destruction, and that they
failed to present sufficient basis or source for
reconstitution.
The Court of Appeals dismissed petitioners appeal
in the assailed Decision dated April 17, 2006, the
dispositive portion of which states:
WHEREFORE, premises considered, the appeal is
hereby DISMISSED for lack of merit.7
Hence, the petitioner sought relief before this Court
and relied on the following grounds to support its
petition:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE
TRIAL COURTS ORDER GRANTING RECONSTITUTION
OF ORIGINAL CERTIFICATE OF TITLE NO. 3980.
by the evidence on record. Lastly, petitioner insists

that, contrary to respondents assertion, the
government of the Republic of the Philippines is not
estopped by the mistakes, negligence or omission
of its agents.
For their part, respondents maintain that they have
complied with Section 2 of Republic Act No. 26
considering that there was no opposition from the
Office of the Solicitor General (OSG); that the OSG
is guilty of estoppel; that there was a valid basis for
reconstitution of OCT No. 3980; that there was
compliance with jurisdictional requirements; that
both the original file copy and the owners copy of
the subject OCT for reconstitution were lost or
destroyed beyond discovery; and that questions of
fact are not subject to review by this Court.
In essence, the focal issue of the present case is
whether or not the reconstitution of OCT No. 3980
was in accordance with the pertinent law and
jurisprudence on the matter.
The petition is impressed with merit.
The relevant law that governs the reconstitution of
a lost or destroyed Torrens certificate of title is
Republic Act No. 26. Section 2 of said statute
enumerates the following as valid sources for
judicial reconstitution of title:
SECTION 2. Original certificates of title shall be
reconstituted from such of the sources hereunder
enumerated as may be available, in the following
order:
(a) The owners duplicate of the certificate of title;
II
(b) The co-owners, mortgagees,

duplicate of the certificate of title;
THE COURT OF APPEALS ERRED IN ITS APPLICATION

OF PARAGRAPH F, SECTION 2 OF REPUBLIC ACT NO.
26.8
(c) A certified copy of the certificate of title,

previously issued by the register of deeds or by a
legal custodian thereof;
On the other hand, respondents put forward the

following issues for consideration:
(d) An authenticated copy of the decree of

registration or patent, as the case may be,
pursuant to which the original certificate of title was
issued;
(a) HAS THERE BEEN SUFFICIENT COMPLIANCE OF

ACT 26, REQUIREMENTS RECONSTITUTING OCT NO.
3890 AND ISSUANCE OF ANOTHER OWNERS
DUPLICATE COPY?
(b) DID THE HONORABLE COURT OF APPEALS
CORRECTLY SUSTAIN THE RENDERED DECISION OF
THE COURT OF ORIGIN?9
Petitioner argues that the alleged loss or
destruction of the owners duplicate copy of OCT
No. 3980 has no evidentiary basis and that there is
no sufficient basis for the reconstitution of OCT No.
3980. Petitioner likewise maintains that the findings
of fact of the Court of Appeals are not supported
or
lessees
(e) A document, on file in the Registry of Deeds, by

which the property, the description of which is
given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said
document showing that its original had been
registered; and
(f) Any other document which, in the judgment of
the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of
title.
Page 98 of 158
As borne out by the records of this case,

respondents were unable to present any of the
documents mentioned in paragraphs (a) to (e)
above. Thus, the only documentary evidence the
respondents were able to present as possible
sources for the reconstitution of OCT No. 3980 are
those that they believed to fall under the class of
"any other document" described in paragraph (f).
In the assailed April 17, 2006 Decision of the Court
of Appeals, the appellate court affirmed the trial
courts ruling by granting respondents petition for
reconstitution of OCT No. 3980 merely on the bases
of a purported deed of sale,10 sketch plan,11 and
technical description.12 The relevant portion of said
Decision reads:
The appeal is bereft of merit.
In granting the petition, the trial court ratiocinated:
"As basis for the reconstitution of the lost title, the
deed of sale, Exh "M", evidencing transaction over
the property, in addition to the sketch plan, Exh. "E"
and the technical description, Exh. "D", duly
approved under (LRA) PR-02-00022-R pursuant to
the provisions (of) Section 12 of Republic Act No.
26, as embodied in the report filed by the Land
Registration Authoriy, Exh. "J", would be sufficient
basis for the reconstitution of the lost title." (p. 3,
Rollo, p. 38)
Appellees presented the approved sketch plan
with its blue print, the certified technical description
of the subject lot, the Deed of Sale executed by
Antonia Pascua, the Tax Declaration, and Tax
Payment Receipts. To the mind of this Court, there
was sufficient and preponderant evidence thus
presented to warrant the reconstitution of the
original of OCT No. 3980 and the issuance of
another Owners Duplicate Copy thereof. The
enumeration of the preferential documents to be
produced, as provided under Section 2 of Republic
Act 26 had been substantially complied with.
Certifications of loss of documents were attested to
by the custodian thereof, the Land Registration
Authority of Ilagan, Isabela and Quezon City (Exh.
"F", Supra & Annex "H", Record, p. 13, respectively).
It is on this premise that paragraph (f) of Section 2,
RA 26 comes to the fore, viz: "Any other document
which, in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or destroyed
certificate of title."13
As correctly pointed out by petitioner, we had
emphasized in Republic v. Holazo14 that the term
"any other document" in paragraph (f) refers to
reliable documents of the kind described in the
preceding enumerations and that the documents
referred to in Section 2(f) may be resorted to only in
the absence of the preceding documents in the
list. Therefore, the party praying for the
reconstitution of a title must show that he had, in
fact, sought to secure such documents and failed

to find them before presentation of "other
documents" as evidence in substitution is allowed.
Thus, we stated in Holazo that:
When Rep. Act No. 26, Section 2(f), or 3(f) for that
matter, speaks of "any other document," it must
refer to similar documents previously enumerated
therein or documents ejusdem generis as the
documents earlier referred to. The documents
alluded to in Section 3(f) must be resorted to in the
absence of those preceding in order. If the
petitioner for reconstitution fails to show that he
had, in fact, sought to secure such prior documents
(except with respect to the owners duplicate copy
of the title which it claims had been, likewise,
destroyed) and failed to find them, the
presentation of the succeeding documents as
substitutionary evidence is proscribed.15 (Citation
omitted.)
Furthermore, in a more recent case, this Court
enumerated what should be shown before an
order for reconstitution can validly issue, namely:
(a) that the certificate of title had been lost or
destroyed; (b) that the documents presented by
petitioner are sufficient and proper to warrant
reconstitution of the lost or destroyed certificate of
title; (c) that the petitioner is the registered owner
of the property or had an interest therein; (d) that
the certificate of title was in force at the time it was
lost or destroyed; and (e) that the description, area
and boundaries of the property are substantially
the same and those contained in the lost or
destroyed certificate of title.16
In the case at bar, the respondents were unable to
discharge the burden of proof prescribed by law
and jurisprudence for the reconstitution of lost or
destroyed Torrens certificate of title. First,
respondents failed to prove that the owners
duplicate copy of OCT No. 3980 was indeed eaten
by termites while in the custody of respondent
Concepcion Lorenzo and her late husband Pedro
Fontanilla who, inexplicably, did not execute an
affidavit of loss as required by Section 10917 of
Presidential Decree No. 1529. Second, The
Certification18 dated April 23, 2001 issued by the
Register of Deeds of Ilagan, Isabela did not
categorically state that the original copy of OCT
No. 3980, which respondents alleged to be on file
with said office, was among those destroyed by the
fire that gutted the premises of said office on
December 4, 1976. The document only stated that
said office "could not
give any information/data involving the existence
of Original/Transfer Certificate of Title No. Lot No.
18, area 770 sq. m., located at Taggapan,
Echague, Isabela." Third, a comparison between
the aforementioned certification and the technical
description and sketch plan will reveal that there
was a discrepancy in the land area of the lot
Page 99 of 158
allegedly covered by OCT No. 3980. What was

reflected on the former was a land area of 770 sq.
m. while the latter two documents pertained to a
land area of 811 sq. m. Furthermore, respondents
were not able to show adequate proof that a
Torrens certificate of title was issued covering the
subject parcel of land or that the same piece of
land is what is covered by the allegedly lost or
destroyed OCT No. 3980. The Certification19 dated
December 3, 2001 issued by the Land Registration
Authority (LRA) which indicates that Decree No.
650254 issued on September 1, 1937 is not among
the salvaged decrees on file in the LRA and is
presumed to have been lost or destroyed as a
consequence of World War II does not support
respondents assertion that OCT No. 3980 did exist
prior to its loss or destruction because said
document failed to show a connection between
Decree No. 650254 and OCT No. 3980. From the
foregoing, it is apparent that the conclusion of the
Court of Appeals that "(t)he enumeration of the
preferential documents to be produced as
provided under Section 2 of Republic Act 26 had
been substantially complied with" had no
foundation based on the evidence on record.
Likewise, the deed of sale purportedly between
Antonia Pascua, as seller, and Pedro Fontanilla, as
buyer, which involves OCT No. 3980 cannot be
relied upon as basis for reconstitution of Torrens
certificate of title. An examination of the deed of
sale would reveal that the number of the OCT
allegedly covering the subject parcel of land is
clearly indicated, however, the date when said
OCT was issued does not appear in the document.
This circumstance is fatal to respondents cause as
we have reiterated in Republic v. El Gobierno de
las Islas Filipinas20 that the absence of any
document, private or official, mentioning the
number of the certificate of title and the date
when the certificate of title was issued, does not
warrant the granting of a petition for reconstitution.
We held that:
We also find insufficient the index of decree
showing that Decree No. 365835 was issued for Lot
No. 1499, as a basis for reconstitution. We noticed
that the name of the applicant as well as the date
of the issuance of such decree was illegible. While
Decree No. 365835 existed in the Record Book of
Cadastral Lots in the Land Registration Authority as
stated in the Report submitted by it, however, the
same report did not state the number of the
original certificate of title, which is not sufficient
evidence in support of the petition for
reconstitution. The deed of extrajudicial declaration
of heirs with sale executed by Aguinaldo and
Restituto Tumulak Perez and respondent on
February 12, 1979 did not also mention the number
of the original certificate of title but only Tax
Declaration No. 00393. As we held in Tahanan
Development Corp. v. Court of Appeals, the
absence of any document, private or official,
mentioning the number of the certificate of title

and the date when the certificate of title was
issued, does not warrant the granting of such
petition.21 (Citation omitted, emphasis supplied.)
Lastly, on the peripheral issue of whether or not the
OSG should be faulted for not filing an opposition
to respondents petition for reconstitution before
the trial court, we rule that such an apparent
oversight has no bearing on the validity of the
appeal which the OSG filed before the Court of
Appeals. This Court has reiterated time and again
that the absence of opposition from government
agencies is of no controlling significance because
the State cannot be estopped by the omission,
mistake or error of its officials or agents.22 Neither is
the Republic barred from assailing the decision
granting the petition for reconstitution if, on the
basis of the law and the evidence on record, such
petition has no merit.23
GRANTED. The Decision dated April 17, 2006 of the
Court of Appeals in CA-G.R. CV No. 80132 and the
August 26, 2003 Decision of the Regional Trial Court,
Branch 24 of Echague, Isabela are hereby
REVERSED and SET ASIDE. The petition for
reconstitution is DENIED.
SO ORUERED.
#24
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 193517
January 15, 2014
THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A.

SARILI,* MELENCIA** S. MAXIMO, ALBERTO A. SARILI,
IMELDA S. HIDALGO, all herein represented by
CELSO A. SARILI, Petitioners,
vs.
PEDRO F. LAGROSA, represented in this act by his
Attorney-in-Fact LOURDES LABIOS MOJICA,
Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on Certiorari1 are
the Decision2 dated May 20, 2010 and Resolution3
dated August 26, 2010 of the Court of Appeals (CA)
in CA-G.R. CV No. 76258 which: (a) set aside the
Decision4 dated May 27, 2002 of the Regional Trial
Court of Caloocan City, Branch 131 (RTC) in Civil
Case No. C-19152; (b) cancelled Transfer
Certificate of Title (TCT) No. 2622185 in the name of
Victorino Sarili (Victorino) married to Isabel Amparo
(Sps. Sarili); (c) reinstated TCT No. 559796 in the
Page 100 of 158
name
of
respondent
Pedro
F.
Lagrosa
(respondent); and (d) awarded respondent moral
damages, attorneys fees and litigation expenses.
The Facts
On February 17, 2000, respondent, represented by
his attorney-in-fact Lourdes Labios Mojica (Lourdes)
via a special power of attorney dated November
25, 19997 (November 25, 1999 SPA), filed a
complaint8 against Sps. Sarili and the Register of
Deeds of Caloocan City (RD) before the RTC,
alleging, among others, that he is the owner of a
certain parcel of land situated in Caloocan City
covered by TCT No. 55979 (subject property) and
has been religiously paying the real estate taxes
therefor since its acquisition on November 29, 1974.
Respondent claimed that he is a resident of
California, USA, and that during his vacation in the
Philippines, he discovered that a new certificate of
title to the subject property was issued by the RD in
the name of Victorino married to Isabel Amparo
(Isabel), i.e., TCT No. 262218, by virtue of a falsified
Deed of Absolute Sale9 dated February 16, 1978
(February 16, 1978 deed of sale) purportedly
executed by him and his wife, Amelia U. Lagrosa
(Amelia). He averred that the falsification of the
said deed of sale was a result of the fraudulent,
illegal, and malicious acts committed by Sps. Sarili
and the RD in order to acquire the subject property
and, as such, prayed for the annulment of TCT No.
262218, and that Sps. Sarili deliver to him the
possession of the subject property, or, in the
alternative, that Sps. Sarili and the RD jointly and
severally pay him the amount of P1,000,000.00,
including moral damages as well as attorneys
fees.10
In their answer,11 Sps. Sarili maintained that they
are innocent purchasers for value, having
purchased the subject property from Ramon B.
Rodriguez (Ramon), who possessed and presented
a Special Power of Attorney12 (subject SPA) to
sell/dispose of the same, and, in such capacity,
executed a Deed of Absolute Sale13 dated
November 20, 1992 (November 20, 1992 deed of
sale) conveying the said property in their favor. In
this relation, they denied any participation in the
preparation of the February 16, 1978 deed of sale,
which may have been merely devised by the "fixer"
they hired to facilitate the issuance of the title in
their names.14 Further, they interposed a
counterclaim for moral and exemplary damages,
as well as attorneys fees, for the filing of the
baseless suit.15
On May 27, 2002, the RTC rendered a Decision18

finding respondents signature on the subject SPA
as "the same and exact replica"19 of his signature
in the November 25, 1999 SPA in favor of Lourdes.20
Thus, with Ramons authority having been
established, it declared the November 20, 1992
deed of sale21 executed by the latter as "valid,
genuine, lawful and binding"22 and, as such, had
validly conveyed the subject property in favor of
Sps. Sarili. It further found that respondent "acted
with evident bad faith and malice" and was,
therefore, held liable for moral and exemplary
damages.23 Aggrieved, respondent appealed to
the CA.
The CA Ruling
In a Decision24 dated May 20, 2010, the CA
granted respondents appeal and held that the
RTC erred in its ruling since the November 20, 1992
deed of sale, which the RTC found "as valid and
genuine," was not the source document for the
transfer of the subject property and the issuance of
TCT No. 262218 in the name of Sps. Sarili25 but
rather the February 16, 1978 deed of sale, the fact
of which may be gleaned from the Affidavit of Late
Registration26 executed by Isabel (affidavit of
Isabel). Further, it found that respondent w as "not
only able to preponderate his claim over the
subject property, but [has] likewise proved that his
and his wifes signatures in the [February 16, 1978
deed of sale] x x x were forged."27 "[A] comparison
by the naked eye of the genuine signature of
[respondent] found in his [November 25, 1999 SPA]
in favor of [Lourdes], and those of his falsified
signatures in [the February 16, 1978 deed of sale]
and [the subject SPA] shows that they are not
similar."28 It also observed that "[t]he testimony of
[respondent] denying the authenticity of his
purported signature with respect to the [February
16, 1978 deed of sale] was not rebutted x x x."29 In
fine, the CA declared the deeds of sale dated
February 16, 1978 and November 20, 1992, as well
as the subject SPA as void, and consequently
ordered the RD to cancel TCT No. 262218 in the
name of Victorino married to Isabel, and
consequently reinstate TCT No. 55979 in
respondents name. Respondents claims for moral
damages and attorneys fees/litigation expenses
were also granted by the CA.30
Dissatisfied, petitioners moved for reconsideration
which was, however, denied in a Resolution31
dated August 26, 2010, hence, the instant petition.
The Issues Before the Court
During the pendency of the proceedings, Victorino

passed away16 and was substituted by his heirs,
herein petitioners.17
The RTC Ruling
The main issue in this case is whether or not there

was a valid conveyance of the subject property to
Sps. Sarili. The resolution of said issue would then
determine, among others, whether or not: (a) TCT
No. 262218 in the name of Victorino married to
Page 101 of 158
Isabel should be annulled; and (b) TCT No. 55979 in

respondents name should be reinstated.
dealing with and the latters legal authority to

convey the property.36
The Courts Ruling
The strength of the buyers inquiry on the sellers

capacity or legal authority to sell depends on the
proof of capacity of the seller. If the proof of
capacity consists of a special power of attorney
duly notarized, mere inspection of the face of such
public document already constitutes sufficient
inquiry. If no such special power of attorney is
provided or there is one but there appears to be
flaws in its notarial acknowledgment, mere
inspection of the document will not do; the buyer
must show that his investigation went beyond the
document and into the circumstances of its
execution.37
The petition lacks merit.

Petitioners essentially argue that regardless of the
fictitious February 16, 1978 deed of sale, there was
still a valid conveyance of the subject property to
Sps. Sarili who relied on the authority of Ramos (as
per the subject SPA) to sell the same. They posit
that the due execution of the subject SPA between
respondent and Ramon and, subsequently, the
November 20, 1992 deed of sale between Victorino
and Ramon were duly established facts and that
from the authenticity and genuineness of these
documents, a valid conveyance of the subject
land from respondent to Victorino had leaned
upon.32
The Court is not persuaded.
It is well-settled that even if the procurement of a
certificate of title was tainted with fraud and
misrepresentation, such defective title may be the
source of a completely legal and valid title in the
hands of an innocent purchaser for value. Where
innocent third persons, relying on the correctness of
the certificate of title thus issued, acquire rights over
the property, the court cannot disregard such rights
and order the total cancellation of the certificate.
The effect of such an outright cancellation would
be to impair public confidence in the certificate of
title, for everyone dealing with property registered
under the Torrens system would have to inquire in
every instance whether the title has been regularly
or irregularly issued. This is contrary to the evident
purpose of the law.33
The general rule is that every person dealing with
registered land may safely rely on the correctness
of the certificate of title issued therefor and the law
will in no way oblige him to go beyond the
certificate to determine the condition of the
property. Where there is nothing in the certificate of
title to indicate any cloud or vice in the ownership
of the property, or any encumbrance thereon, the
purchaser is not required to explore further than
what the Torrens Title upon its face indicates in
quest for any hidden defects or inchoate right that
may subsequently defeat his right thereto.34
However, a higher degree of prudence is required
from one who buys from a person who is not the
registered owner, although the land object of the
transaction is registered. In such a case, the buyer is
expected to examine not only the certificate of title
but all factual circumstances necessary for him to
determine if there are any flaws in the title of the
transferor.35 The buyer also has the duty to
ascertain the identity of the person with whom he is
In the present case, it is undisputed that Sps. Sarili

purchased the subject property from Ramos on the
strength of the latters ostensible authority to sell
under the subject SPA. The said document,
however, readily indicates flaws in its notarial
acknowledgment
since
the
respondents
community tax certificate (CTC) number was not
indicated thereon. Under the governing rule on
notarial acknowledgments at that time,38 i.e.,
Section 163(a) of Republic Act No. 7160, otherwise
known as the "Local Government Code of 1991,"
when an individual subject to the community tax
acknowledges any document before a notary
public, it shall be the duty of the administering
officer to require such individual to exhibit the
community
tax
certificate.39
Despite
this
irregularity, however, Sps. Sarili failed to show that
they conducted an investigation beyond the
subject SPA and into the circumstances of its
execution as required by prevailing jurisprudence.
Hence, Sps. Sarili cannot be considered as
innocent purchasers for value.
The defective notarization of the subject SPA also
means that the said document should be treated
as a private document and thus examined under
the parameters of Section 20, Rule 132 of the Rules
of Court which provides that "before any private
document offered as authentic is received in
evidence, its due execution and authenticity must
be proved either: (a) by anyone who saw the
document executed or written; or (b) by evidence
of the genuineness of the signature or handwriting
of the maker x x x." Settled is the rule that a
defective notarization will strip the document of its
public character and reduce it to a private
instrument, and the evidentiary standard of its
validity shall be based on preponderance of
evidence.40
The due execution and authenticity of the subject
SPA are of great significance in determining the
validity of the sale entered into by Victorino and
Ramon since the latter only claims to be the agent
of the purported seller (i.e., respondent). Article
1874 of the Civil Code provides that "[w]hen a sale
Page 102 of 158
of a piece of land or any interest therein is through

an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void." In other
words, if the subject SPA was not proven to be duly
executed and authentic, then it cannot be said
that the foregoing requirement had been
complied with; hence, the sale would be void.
After a judicious review of the case, taking into
consideration the divergent findings of the RTC and
the CA on the matter,41 the Court holds that the
due execution and authenticity of the subject SPA
were not sufficiently established under Section 20,
Rule 132 of the Rules of Court as above-cited.
While Ramon identified the signature of respondent
on the subject SPA based on his alleged familiarity
with the latters signature,42 he, however, stated no
basis for his identification of the signatures of
respondents wife Amelia and the witness,
Evangeline F. Murral,43 and even failed to identify
the other witness,44 who were also signatories to
the said document. In other words, no evidence
was presented to authenticate the signatures of
the other signatories of the subject SPA outside
from respondent.45
Besides,
as
the
CA
correctly
observed,
respondents signature appearing on the subject
SPA is not similar46 to his genuine signature
appearing in the November 25, 1999 SPA in favor of
Lourdes,47 especially the signature appearing on
the left margin of the first page.48
Unrebutted too is the testimony of respondent who,
during trial, attested to the fact that he and his
wife, Amelia, had immigrated to the USA since 1968
and therefore could not have signed the subject
SPA due to their absence.49
Further, records show that the notary public, Atty.
Ramon S. Untalan, failed to justify why he did not
require the presentation of respondents CTC or
any other competent proof of the identity of the
person who appeared before him to acknowledge
the subject SPA as respondents free and voluntary
act and deed despite the fact that he did not
personally know the latter and that he met him for
the first time during the notarization.50 He merely
relied on the representations of the person before
him51 and the bank officer who accompanied the
latter to his office,52 and further explained that the
reason for the omission of the CTC was "because in
[a] prior document, [respondent] has probably
given us already his residence certificate."53 This
"prior document," was not, however, presented
during the proceedings below, nor the CTC number
ever identified.
Thus, in light of the totality of evidence at hand, the
Court agrees with the CAs conclusion that
respondent was able to preponderate his claims of
forgery against the subject SPA.54 In view of its
invalidity, the November 20, 1992 sale relied on by

Sps. Sarili to prove their title to the subject property
is therefore void.1wphi1
At this juncture, it is well to note that it was, in fact,
the February 16, 1978 deed of sale which as the
CA found was actually the source of the issuance
of TCT No. 262218. Nonetheless, this document was
admitted to be also a forgery.55 Since Sps. Sarilis
claim over the subject property is based on forged
documents, no valid title had been transferred to
them (and, in turn, to petitioners). Verily, when the
instrument
presented
is
forged,
even
if
accompanied by the owners duplicate certificate
of title, the registered owner does not thereby lose
his title, and neither does the assignee in the forged
deed acquire any right or title to the property.56
Accordingly, TCT No. 262218 in the name of
Victorino married to Isabel should be annulled,
while TCT No. 55979 in the name of respondent
should be reinstated.
Anent the award of moral damages, suffice it to
say that the dispute over the subject property had
caused respondent serious anxiety, mental anguish
and sleepless nights, thereby justifying the aforesaid
award.57
Likewise,
since
respondent
was
constrained to engage the services of counsel to
file this suit and defend his interests, the awards of
attorneys fees and litigation expenses are also
sustained.58
The Court, however, finds a need to remand the
case to the court a quo in order to determine the
rights and obligations of the parties with respect to
the house Sps. Sarili had built59 on the subject
property in bad faith in accordance with Article
449 in relation to Articles 450, 451, 452, and the first
paragraph of Article 546 of the Civil Code which
respectively read as follows:
ART. 449. He who builds, plants or sows in bad faith
on the land of another, loses what is built, planted
or sown without right to indemnity.
ART. 450. The owner of the land on which anything
has been built, planted or sown in bad faith may
demand the demolition of the work, or that the
planting or sowing be removed, in order to replace
things in their former condition at the expense of
the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of
the land, and the sower the proper rent.
ART. 451. In the cases of the two preceding articles,
the landowner is entitled to damages from the
builder, planter or sower.
ART. 452. The builder, planter or sower in bad faith is
entitled to reimbursement for the necessary
expenses of preservation of the land.
xxxx
Page 103 of 158
ART. 546. Necessary expenses shall be refunded to

every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed
therefor. (Emphases and underscoring supplied)
xxxx
To be deemed a builder in good faith, it is essential
that a person asserts title to the land on which he
builds, i.e. , that he be a possessor in concept of
owner, and that he be unaware that there exists in
his title or mode of acquisition any flaw which
invalidates it.60 Good faith is an intangible and
abstract quality with no technical meaning or
statutory definition, and it encompasses, among
other things, an honest belief, the absence of
malice and the absence of design to defraud or to
seek an unconscionable advantage. It implies
honesty of intention, and freedom from knowledge
of circumstances which ought to put the holder
upon inquiry.61 As for Sps. Sarili, they knew or at
the very least, should have known from the very
beginning that they were dealing with a person
who possibly had no authority to sell the subject
property considering the palpable irregularity in the
subject SPAs acknowledgment. Yet, relying solely
on said document and without any further
investigation on Ramoss capacity to sell Sps. Sarili
still chose to proceed with its purchase and even
built a house thereon. Based on the foregoing it
cannot be seriously doubted that Sps. Sarili were
actually aware of a flaw or defect in their title or
mode of acquisition and have consequently built
the house on the subject property in bad faith
under legal contemplation. The case is therefore
remanded to the court a quo for the proper
application of the above-cited Civil Code
provisions.
WHEREFORE, the petition is DENIED. The Decision
dated May 20, 2010 and Resolution dated August
26, 2010 of the Court of Appeals in CA-G.R. CV No.
76258 are AFFIRMED. However the case is
REMANDED to the court a quo for the proper
application of Article 449 in relation to Articles 450
451 452 and the first paragraph of Article 546 of the
Civil Code with respect to the house Spouses
Victorino Sarili and Isabel Amparo had built on the
subject property as herein discussed.
SO ORDERED.
#25
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 189477
February 26, 2014
HOMEOWNERS SAVINGS AND LOAN
BANK, Petitioner-Appellant,
vs.
ASUNCION P. FELONIA and LYDIA C. DE GUZMAN,
represented by MARIBEL FRIAS, RespondentsAppellees.

MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS
OF LAS PINAS CITY and RHANDOLFO B. AMANSEC,
in his capacity as Clerk of Court Ex-Officio Sheriff,
Office of the Clerk of Court, Las Pias
City, Respondents-Defendants.
DECISION
PEREZ, J.:
Assailed in this Petition for Review on Certiorari is the
Decision1 and Resolution2 of the Court of Appeals
(CA), in CA-G.R. CV No. 87540, which affirmed with
modifications, the Decision3 of the Regional Trial
Court (RTC), reinstating the title of respondents
Asuncion Felonia (Felonia) and Lydia de Guzman
(De Guzman) and cancelling the title of Marie
Michelle Delgado (Delgado).
The facts as culled from the records are as follows:
Felonia and De Guzman were the registered
owners of a parcel of land consisting of 532 square
meters with a five-bedroom house, covered by
Transfer of Certificate of Title (TCT) No. T-402 issued
by the register of deeds of Las Pias City.
Sometime in June 1990, Felonia and De Guzman
mortgaged the property to Delgado to secure the
loan in the amount of P1,655,000.00. However,
instead of a real estate mortgage, the parties
executed a Deed of Absolute Sale with an Option
to Repurchase.4
On 20 December 1991, Felonia and De Guzman
filed an action for Reformation of Contract
(Reformation case), docketed as Civil Case No. 9159654, before the RTC of Manila. On the findings
that it is "very apparent that the transaction had
between the parties is one of a mortgage and not
a deed of sale with right to repurchase,"5 the RTC,
on 21 March 1995 rendered a judgment favorable
to Felonia and De Guzman. Thus:
WHEREFORE, judgment is hereby rendered directing
the [Felonia and De Guzman] and the [Delgado] to
execute a deed of mortgage over the property in
question taking into account the payments made
and the imposition of the legal interests on the
principal loan.
On the other hand, the counterclaim is hereby
dismissed for lack of merit.
No pronouncements as to attorneys fees and
damages in both instances as the parties must bear
their respective expenses incident to this suit.6
Aggrieved, Delgado elevated the case to the CA
where it was docketed as CA-G.R. CV No. 49317.
The CA affirmed the trial court decision. On 16
October 2000, the CA decision became final and
executory.7
Inspite of the pendency of the Reformation case in
which she was the defendant, Delgado filed a
"Petition for Consolidation of Ownership of Property
Sold with an Option to Repurchase and Issuance of
a New Certificate of Title" (Consolidation case) in
the RTC of Las Pias, on 20 June 1994.8 After an exparte hearing, the RTC ordered the issuance of a
new title under Delgados name, thus:
Page 104 of 158
WHEREFORE, judgment is rendered1. Declaring [DELGADO] as absolute owner

of the subject parcel of land covered by
Transfer Certificate of Title No. T-402 of the
Register of Deeds of Las Pias, Metro
Manila;
2. Ordering the Register of Deeds of Las
Pias, Metro Manila to cancel Transfer
Certificate of Title No. T-402 and issue in lieu
thereof a new certificate of title and
owners duplicate copy thereof in the
name of [DELGADO].9
By virtue of the RTC decision, Delgado transferred
the title to her name. Hence, TCT No. T-402,
registered in the names of Felonia and De Guzman,
was canceled and TCT No. 44848 in the name of
Delgado, was issued.
Aggrieved, Felonia and De Guzman elevated the
case to the CA through a Petition for Annulment of
Judgment.10
Meanwhile, on 2 June 1995, Delgado mortgaged
the subject property to Homeowners Savings and
Loan Bank (HSLB) using her newly registered title.
Three (3) days later, or on 5 June 1995, HSLB caused
the annotation of the mortgage.
On 14 September 1995, Felonia and De Guzman
caused the annotation of a Notice of Lis Pendens
on Delgados title, TCT No. 44848. The Notice states:
Entry No. 8219/T-44848 NOTICE OF LIS PENDENS
filed by Atty. Humberto A. Jambora, Counsel for
the Plaintiff, that a case been commenced in the
RTC, Branch 38, Manila, entitled ASUNCION P.
FELONIA and LYDIA DE GUZMAN thru VERONICA P.
BELMONTE, as Atty-in-fact (Plaintiffs) v.s. MARIE
MICHELLE DELGADO defendant in Civil Case No.
91-59654 for Reformation of Instrument.
Copy on file in this Registry.
Date of Instrument Sept. 11, 1995
Date of Inscription Sept. 14, 1995 at 9:55 a.m.11
On 20 November1997, HSLB foreclosed the subject
property and later consolidated ownership in its
favor, causing the issuance of a new title in its
name, TCT No. 64668.
On 27 October 2000, the CA annulled and set
aside the decision of the RTC, Las Pias City in the
Consolidation case. The decision of the CA,
declaring Felonia and De Guzman as the absolute
owners of the subject property and ordering the
cancellation of Delgados title, became final and
executory on 1 December 2000.12 Thus:
WHEREFORE, the petition is GRANTED and the
subject judgment of the court a quo is ANNULLED
and SET ASIDE.13
On 29 April 2003, Felonia and De Guzman,
represented by Maribel Frias (Frias), claiming to be
the absolute owners of the subject property,
instituted the instant complaint against Delgado,
HSLB, Register of Deeds of Las Pias City and
Rhandolfo B. Amansec before the RTC of Las Pias
City for Nullity of Mortgage and Foreclosure Sale,
Annulment of Titles of Delgado and HSLB, and
finally, Reconveyance of Possession and Ownership
of the subject property in their favor.
As defendant, HSLB asserted that Felonia and De

Guzman are barred from laches as they had slept
on their rights to timely annotate, by way of Notice
of Lis Pendens, the pendency of the Reformation
case. HSLB also claimed that it should not be
bound by the decisions of the CA in the
Reformation and Consolidation cases because it
was not a party therein.
Finally, HSLB asserted that it was a mortgagee in
good faith because the mortgage between
Delgado and HSLB was annotated on the title on 5
June 1995, whereas the Notice of Lis Pendens was
annotated only on 14 September 1995.
After trial, the RTC ruled in favor of Felonia and De
Guzman as the absolute owners of the subject
property. The dispositive portion of the RTC decision
reads:
WHEREFORE, premises considered, the Court
hereby finds for the [Felonia and De Guzman] with
references to the decision of the Court of Appeals
in CA-G.R. CV No. 49317 and CA-G.R. SP No. 43711
as THESE TWO DECISIONS CANNOT BE IGNORED
and against [Delgado] and [HSLB], Register of
Deeds of Las Pias City ordering the (sic) as follows:
1. The Register of Deeds of Las Pias City to
cancel Transfer Certificate of Title Nos.
44848 and T-64668 as null and void and
reinstating Transfer Certificate of Title No. T402 which shall contain a memorandum of
the fact and shall in all respect be entitled
to like faith and credit as the original
certificate of title and shall, thereafter be
regarded as such for all intents and
purposes under the law;
2. Declaring the Mortgage Sheriffs Sale
and the Certificate of Sale issued in favor
of HSLB null and void, without prejudice to
whatever rights the said Bank may have
against [Delgado];
3. Ordering [Delgado] to pay [Felonia and
De Guzman] the amount of PHP500,000.00
for compensatory damages;
for exemplary damages;
for moral damages;
6. Ordering [Delgado] to pay 20% of the
total obligations as and by way of
attorneys fees;
7. Ordering [Delgado] to pay cost of suit.14
On appeal, the CA affirmed with modifications the
trial court decision. The dispositive portion of the
appealed Decision reads:
WHEREFORE, in the light of the foregoing, the
decision appealed from is AFFIRMED with the
MODIFICATIONS that the awards of actual
damages and attorneys fees are DELETED, moral
and
exemplary
damages
are
REDUCED
to P50,000.00 each, and Delgado is ordered to pay
the appellees P25,000.00 as nominal damages.15
Hence, this petition.
Page 105 of 158
Notably, HSLB does not question the affirmance by

the CA of the trial courts ruling that TCT No. 44848,
the certificate of title of its mortgagor-vendor, and
TCT No. 64668, the certificate of title that was
secured by virtue of the Sheriffs sale in its favor,
should be cancelled "as null and void" and that TCT
No. T-402 in the name of Felonia and De Guzman
should be reinstated.
Recognizing the validity of TCT No. T-402 restored in
the name of Felonia and De Guzman, petitioners
pray that the decision of the CA be modified "to
the effect that the mortgage lien in favor of
petitioner HSLB annotated as entry No. 4708-12 on
TCT No. 44848 be [ordered] carried over on TCT No.
T-402 after it is reinstated in the name of [Felonia
and De Guzman]."16
Proceeding from the ruling of the CA that it is a
mortgagee in good faith, HSLB argues that a denial
of its prayer would run counter to jurisprudence
giving protection to a mortgagee in good faith by
reason of public policy.
We cannot grant the prayer of petitioner. The
priorly registered mortgage lien of HSLB is now
worthless.
Arguably, HSLB was initially a mortgagee in good
faith. In Bank of Commerce v. San Pablo, Jr.,17 the
doctrine of mortgagee in good faith was
explained:
There is, however, a situation where, despite the
fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the
mortgage contract and any foreclosure sale arising
there from are given effect by reason of public
policy. This is the doctrine of "the mortgagee in
good faith" based on the rule that all persons
dealing with property covered by the Torrens
Certificates of Title, as buyers or mortgagees, are
not required to go beyond what appears on the
face of the title. The public interest in upholding
indefeasibility of a certificate of title, as evidence of
lawful ownership of the land or of any
encumbrance thereon, protects a buyer or
mortgagee who, in good faith, relied upon what
appears on the face of the certificate of title.
When the property was mortgaged to HSLB, the
registered owner of the subject property was
Delgado who had in her name TCT No. 44848. Thus,
HSLB cannot be faulted in relying on the face of
Delgados title. The records indicate that Delgado
was at the time of the mortgage in possession of
the subject property and Delgados title did not
contain any annotation that would arouse HSLBs
suspicion. HSLB, as a mortgagee, had a right to rely
in good faith on Delgados title, and in the
absence of any sign that might arouse suspicion,
HSLB had no obligation to undertake further
investigation. As held by this Court in Cebu
International Finance Corp. v.
CA:18
The prevailing jurisprudence is that a mortgagee
has a right to rely in good faith on the certificate of
title of the mortgagor of the property given as
security and in the absence of any sign that might
arouse suspicion, has no obligation to undertake

further investigation. Hence, even if the mortgagor
is not the rightful owner of, or does not have a valid
title to, the mortgaged property, the mortgagee or
transferee in good faith is nonetheless entitled to
protection.
However, the rights of the parties to the present
case are defined not by the determination of
whether or not HSLB is a mortgagee in good faith,
but of whether or not HSLB is a purchaser in good
faith. And, HSLB is not such a purchaser.
A purchaser in good faith is defined as one who
buys a property without notice that some other
person has a right to, or interest in, the property and
pays full and fair price at the time of purchase or
before he has notice of the claim or interest of
other persons in the property.19
When a prospective buyer is faced with facts and
circumstances as to arouse his suspicion, he must
take precautionary steps to qualify as a purchaser
in good faith. In Spouses Mathay v. CA,20 we
determined the duty of a prospective buyer:
Although it is a recognized principle that a person
dealing on a registered land need not go beyond
its certificate of title, it is also a firmly settled rule
that where there are circumstances which would
put a party on guard and prompt him to
investigate or inspect the property being sold to
him, such as the presence of occupants/tenants
thereon, it is of course, expected from the
purchaser of a valued piece of land to inquire first
into the status or nature of possession of the
occupants, i.e., whether or not the occupants
possess the land en concepto de dueo, in the
concept of the owner. As is the common practice
in the real estate industry, an ocular inspection of
the premises involved is a safeguard a cautious
and prudent purchaser usually takes. Should he find
out that the land he intends to buy is occupied by
anybody else other than the seller who, as in this
case, is not in actual possession, it would then be
incumbent upon the purchaser to verify the extent
of the occupants possessory rights. The failure of a
prospective buyer to take such precautionary steps
would mean negligence on his part and would
thereby preclude him from claiming or invoking the
rights of a purchaser in good faith.
In the case at bar, HSLB utterly failed to take the
necessary precautions.1wphi1 At the time the
subject property was mortgaged, there was yet no
annotated Notice of Lis Pendens. However, at the
time HSLB purchased the subject property, the
Notice of Lis Pendens was already annotated on
the title.21
Lis pendens is a Latin term which literally means, "a
pending suit or a pending litigation" while a notice
of lis pendens is an announcement to the whole
world that a real property is in litigation, serving as a
warning that anyone who acquires an interest over
the property does so at his/her own risk, or that
he/she gambles on the result of the litigation over
the property.22 It is a warning to prospective buyers
Page 106 of 158
to take precautions and investigate the pending

litigation.
The purpose of a notice of lis pendens is to protect
the rights of the registrant while the case is pending
resolution or decision. With the notice of lis pendens
duly recorded and remaining uncancelled, the
registrant could rest secure that he/she will not lose
the property or any part thereof during litigation.
The doctrine of lis pendens is founded upon reason
of public policy and necessity, the purpose of
which is to keep the subject matter of the litigation
within the Courts jurisdiction until the judgment or
the decree have been entered; otherwise, by
successive alienations pending the litigation, its
judgment or decree shall be rendered abortive
and impossible of execution.23
Indeed, at the time HSLB bought the subject
property, HSLB had actual knowledge of the
annotated Notice of Lis Pendens. Instead of
heeding the same, HSLB continued with the
purchase knowing the legal repercussions a notice
of lis pendens entails. HSLB took upon itself the risk
that the Notice of Lis Pendens leads to.1wphi1 As
correctly found by the CA, "the notice of lis
pendens was annotated on 14 September 1995,
whereas the foreclosure sale, where the appellant
was declared as the highest bidder, took place
sometime in 1997. There is no doubt that at the time
appellant purchased the subject property, it was
aware of the pending litigation concerning the
same property and thus, the title issued in its favor
was subject to the outcome of said litigation."24
This ruling is in accord with Rehabilitation Finance
Corp. v. Morales,25 which underscored the
significance of a lis pendens, then defined in Sec.
24, Rule 7 now Sec. 14 of Rule 13 in relation to a
mortgage priorly annotated on the title covering
the property. Thus:
The notice of lis pendens in question was
annotated on the back of the certificate of title as
a necessary incident of the civil action to recover
the ownership of the property affected by it. The
mortgage executed in favor of petitioner
corporation was annotated on the same title prior
to the annotation of the notice of lis pendens; but
when petitioner bought the property as the highest
bidder at the auction sale made as an aftermath
of the foreclosure of the mortgage, the title already
bore the notice of lis pendens. Held: While the
notice of lis pendens cannot affect petitioners right
as mortgagee, because the same was annotated
subsequent to the mortgage, yet the said notice
affects its right as purchaser because notice of lis
pendens simply means that a certain property is
involved in a litigation and serves as a notice to the
whole world that one who buys the same does so
at his own risk.26
The subject of the lis pendens on the title of HSLBs
vendor, Delgado, is the "Reformation case" filed
against Delgado by the herein respondents. The
case was decided with finality by the CA in favor of
herein respondents. The contract of sale in favor of
Delgado was ordered reformed into a contract of
mortgage. By final decision of the CA, HSLBs

vendor, Delgado, is not the property owner but
only a mortgagee. As it turned out, Delgado could
not have constituted a valid mortgage on the
property. That the mortgagor be the absolute
owner of the thing mortgaged is an essential
requisite of a contract of mortgage. Article 2085 (2)
of the Civil Code specifically says so:
Art. 2085. The following requisites are essential to
the contracts of pledge and mortgage:
xxxx
(2) That the pledgor or mortagagor be the absolute
owner of the thing pledged or mortgaged.
Succinctly, for a valid mortgage to exist, ownership
of the property is an essential requisite.27
Reyes v. De Leon28 cited the case of Philippine
National Bank v. Rocha29 where it was pronounced
that "a mortgage of real property executed by one
who is not an owner thereof at the time of the
execution of the mortgage is without legal
existence." Such that, according to DBP v.
Prudential Bank,30 there being no valid mortgage,
there could also be no valid foreclosure or valid
auction sale.
We go back to Bank of Commerce v. San Pablo,
Jr.31 where the doctrine of mortgagee in good
faith, upon which petitioner relies, was clarified as
"based on the rule that all persons dealing with
property covered by the Torrens Certificate of Title,
as buyers or mortgagees, are not required to go
beyond what appears on the face of the title. In
turn, the rule is based on "x x x public interest in
upholding the indefeasibility of a certificate of title,
as evidence of lawful ownership of the land or of
any encumbrance thereon."32
Insofar as the HSLB is concerned, there is no longer
any public interest in upholding the indefeasibility
of the certificate of title of its mortgagor, Delgado.
Such title has been nullified in a decision that had
become final and executory. Its own title, derived
from the foreclosure of Delgado's mortgage in its
favor, has likewise been nullified in the very same
decision that restored the certificate of title in
respondents' name. There is absolutely no reason
that can support the prayer of HSLB to have its
mortgage lien carried over and into the restored
certificate of title of respondents.
WHEREFORE, the Petition is DENIED. The Decision of
the Court of Appeals in CA-G.R. CV No. 87540 is
AFFIRMED.
SO ORDERED.
#26
FIRST DIVISION
G.R. No. 182128, February 19, 2014
PHILIPPINE NATIONAL BANK, Petitioner, v. TERESITA
TAN DEE, ANTIPOLO PROPERTIES, INC., (NOW PRIME
EAST PROPERTIES, INC.) AND AFPRSBS,
INC., Respondents.
DECISION
REYES, J.:
This is a Petition for Review1 under Rule 45 of the
Rules of Court, assailing the Decision2 dated August
Page 107 of 158
13, 2007 and Resolution3 dated March 13, 2008

rendered by the Court of Appeals (CA) in CAG.R.
SP No. 86033, which affirmed the Decision4 dated
August 4, 2004 of the Office of the President (OP) in
O.P. Case No. 04D182 (HLURB Case No. REMA
0307240186).
Facts of the Case
Some time in July 1994, respondent Teresita Tan
Dee (Dee) bought from respondent Prime East
Properties Inc.5 (PEPI) on an installment basis a
residential lot located in Binangonan, Rizal, with an
area of 204 square meters6 and covered by
Transfer Certificate of Title (TCT) No. 619608.
Subsequently, PEPI assigned its rights over a
213,093sq m property on August 1996 to
respondent Armed Forces of the Philippines
Retirement and Separation Benefits System, Inc.
(AFPRSBS),
which
included
the
property
purchased
by
Dee.
Thereafter, or on September 10, 1996, PEPI
obtained a P205,000,000.00 loan from petitioner
Philippine National Bank (petitioner), secured by a
mortgage over several properties, including Dees
property. The mortgage was cleared by the
Housing and Land Use Regulatory Board (HLURB) on
September
18,
1996.7cralawred
After Dees full payment of the purchase price, a
deed of sale was executed by respondents PEPI
and AFPRSBS on July 1998 in Dees favor.
Consequently, Dee sought from the petitioner the
delivery of the owners duplicate title over the
property, to no avail. Thus, she filed with the HLURB
a complaint for specific performance to compel
delivery of TCT No. 619608 by the petitioner, PEPI
and AFPRSBS, among others. In its Decision8 dated
May 21, 2003, the HLURB ruled in favor of Dee and
disposed as follows:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is
hereby
rendered
as
follows:chanroblesvirtuallawlibrary
1. Directing [the petitioner] to cancel/release
the mortgage on Lot 12, Block 21A, Village
East Executive Homes covered by Transfer
Certificate of Title No. 619608 (TCT No.
619608),
and
accordingly,
surrender/release the title thereof to [Dee];
2. Immediately upon receipt by [Dee] of the
owners duplicate of Transfer Certificate of
Title No. 619608 (TCT No. 619608),
respondents PEPI and AFPRSBS are hereby
ordered to deliver the title of the subject lot
in the name of [Dee] free from all liens and
encumbrances;
3. Directing respondents PEPI and AFPRSBS
to pay [the petitioner] the redemption
value of Lot 12, Block 21A, Village East
Executive Homes covered by Transfer
Certificate of Title No. 619608 (TCT No.
619608) as agreed upon by them in their
Real Estate Mortgage within six (6) months
from the time the owners duplicate of

Transfer Certificate of Title No. 619608
(TCT No. 619608) is actually surrendered
and released by [the petitioner] to [Dee];
4. In the alternative, in case of legal and
physical impossibility on the part of [PEPI,
AFPRSBS, and the petitioner] to comply
and perform their respective obligation/s,
as abovementioned, respondents PEPI
and AFPRSBS are hereby ordered to jointly
and severally pay to [Dee] the amount
of FIVE HUNDRED TWENTY THOUSAND PESOS
([P]520,000.00) plus twelve percent (12%)
interest to be computed from the filing of
complaint on April 24, 2002 until fully paid;
and
5. Ordering [PEPI, AFPRSBS, and the
petitioner] to pay jointly and severally
[Dee] the following sums:
a) The amount of TWENTY FIVE THOUSAND PESOS
([P]25,000.00) as attorneys fees;
b) The cost of litigation[;] and
c) An administrative fine of TEN THOUSAND PESOS
([P]10,000.00) payable to this Office fifteen (15)
days upon receipt of this decision, for violation of
Section 18 in relation to Section 38 of PD 957.
SO ORDERED.9ChanRoblesVirtualawlibrary
The HLURB decision was affirmed by its Board of
Commissioners per Decision dated March 15, 2004,
with modification as to the rate of interest.10
On appeal, the Board of Commissioners decision
was affirmed by the OP in its Decision dated August
4, 2004, with modification as to the monetary
award.11cralawred
Hence, the petitioner filed a petition for review with
the CA, which, in turn, issued the assailed Decision
dated August 13, 2007, affirming the OP decision.
The
dispositive
portion
of
the
decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, the petition is
DENIED. The Decision dated August 4, 2004
rendered by the Office of the President in O. P.
Case No. 04D182 (HLURB Case No. REMA
0307240186)
is
hereby AFFIRMED.chanroblesvirtualawlibrary
SO ORDERED. 12ChanRoblesVirtualawlibrary
Its motion for reconsideration having been denied
by the CA in the Resolution dated March 13, 2008,
the petitioner filed the present petition for review
on
the
following
grounds:chanRoblesvirtualLawlibrary
I.
THE HONORABLE COURT OF APPEALS ERRED
IN ORDERING OUTRIGHT RELEASE OF TCT
NO. 619608 DESPITE PNBS DULY REGISTERED
AND HLURB[] APPROVED MORTGAGE ON
TCT NO. 619608.
II.
THE HONORABLE COURT OF APPEALS ERRED
IN
ORDERING
CANCELLATION
OF
MORTGAGE/RELEASE OF TITLE IN FAVOR OF
RESPONDENT DEE DESPITE THE LACK OF
Page 108 of 158
PAYMENT
OR
SETTLEMENT
BY
THE
MORTGAGOR (API/PEPI and AFPRSBS) OF
ITS EXISTING LOAN OBLIGATION TO PNB, OR
THE PRIOR EXERCISE OF RIGHT OF
REDEMPTION BY THE MORTGAGOR AS
MANDATED BY SECTION 25 OF PD 957 OR
DIRECT PAYMENT MADE BY RESPONDENT
DEE TO PNB PURSUANT TO THE DEED OF
UNDERTAKING WHICH WOULD WARRANT
RELEASE OF THE SAME.13
The petitioner claims that it has a valid mortgage
over Dees property, which was part of the
property mortgaged by PEPI to it to secure its loan
obligation, and that Dee and PEPI are bound by
such mortgage. The petitioner also argues that it is
not privy to the transactions between the
subdivision project buyers and PEPI, and has no
obligation to perform any of their respective
undertakings
under
their
contract.14
The petitioner also maintains that Presidential
Decree (P.D.) No. 95715 cannot nullify the subsisting
agreement between it and PEPI, and that the
petitioners rights over the mortgaged properties
are protected by Act 313516 . If at all, the petitioner
can be compelled to release or cancel the
mortgage only after the provisions of P.D. No. 957
on redemption of the mortgage by the
owner/developer (Section 25) are complied with.
The petitioner also objects to the denomination by
the CA of the provisions in the Affidavit of
Undertaking as stipulations pour autrui,17 arguing
that the release of the title was conditioned on
Dees
direct
payment
to
it.18
Respondent AFPRSBS, meanwhile, contends that it
cannot be compelled to pay or settle the
obligation under the mortgage contract between
PEPI and the petitioner as it is merely an investor in
the subdivision project and is not privy to the
mortgage.19
Respondent PEPI, on the other hand, claims that
the title over the subject property is one of the
properties due for release by the petitioner as it has
already been the subject of a Memorandum of
Agreement and dacion en pago entered into
between them.20 The agreement was reached
after PEPI filed a petition for rehabilitation, and
contained the stipulation that the petitioner
agreed to release the mortgage lien on fully paid
mortgaged properties upon the issuance of the
certificates of title over thedacioned properties.21
For her part, respondent Dee adopts the arguments
of the CA in support of her prayer for the denial of
the petition for review.22
Ruling of the Court
The
petition
must
be DENIED.
The petitioner is correct in arguing that it is not

obliged to perform any of the undertaking of
respondent PEPI and AFPRSBS in its transactions

with Dee because it is not a privy thereto. The basic
principle of relativity of contracts is that contracts
can only bind the parties who entered into it,23 and
cannot favor or prejudice a third person, even if he
is aware of such contract and has acted with
knowledge thereof.24Where there is no privity of
contract, there is likewise no obligation or liability to
speak
about.25cralawred
The petitioner, however, is not being tasked to
undertake the obligations of PEPI and AFPRSBS. In
this case, there are two phases involved in the
transactions between respondents PEPI and Dee
the first phase is the contract to sell, which
eventually became the second phase, the
absolute sale, after Dees full payment of the
purchase price. In a contract of sale, the parties
obligations are plain and simple. The law obliges
the vendor to transfer the ownership of and to
deliver the thing that is the object of sale.26 On the
other hand, the principal obligation of a vendee is
to pay the full purchase price at the agreed
time.27Based on the final contract of sale between
them, the obligation of PEPI, as owners and vendors
of Lot 12, Block 21A, Village East Executive Homes,
is to transfer the ownership of and to deliver Lot 12,
Block 21A to Dee, who, in turn, shall pay, and has
in fact paid, the full purchase price of the property.
There is nothing in the decision of the HLURB, as
affirmed by the OP and the CA, which shows that
the petitioner is being ordered to assume the
obligation of any of the respondents. There is also
nothing in the HLURB decision, which validates the
petitioners claim that the mortgage has been
nullified. The order of cancellation/release of the
mortgage is simply a consequence of Dees full
payment of the purchase price, as mandated by
Section
25
of
P.D.
No.
957,
to
wit:chanRoblesvirtualLawlibrary
Sec. 25. Issuance of Title. The owner or developer
shall deliver the title of the lot or unit to the buyer
upon full payment of the lot or unit. No fee, except
those required for the registration of the deed of
sale in the Registry of Deeds, shall be collected for
the issuance of such title. In the event a mortgage
over the lot or unit is outstanding at the time of the
issuance of the title to the buyer, the owner or
developer shall redeem the mortgage or the
corresponding portion thereof within six months
from such issuance in order that the title over any
fully paid lot or unit may be secured and delivered
to the buyer in accordance herewith.
It must be stressed that the mortgage contract
between PEPI and the petitioner is merely an
accessory contract to the principal threeyear loan
takeout from the petitioner by PEPI for its expansion
project. It need not be belaboured that [a]
mortgage is an accessory undertaking to secure
the fulfillment of a principal obligation,28 and it
does not affect the ownership of the property as it
is nothing more than a lien thereon serving as
security
for
a
debt.29
Page 109 of 158
Note that at the time PEPI mortgaged the property

to the petitioner, the prevailing contract between
respondents PEPI and Dee was still the Contract to
Sell, as Dee was yet to fully pay the purchase price
of the property. On this point, PEPI was acting fully
well within its right when it mortgaged the property
to the petitioner, for in a contract to sell, ownership
is retained by the seller and is not to pass until full
payment of the purchase price.30 In other words, at
the time of the mortgage, PEPI was still the owner of
the property. Thus, in China Banking Corporation v.
Spouses Lozada,31 the Court affirmed the right of
the owner/developer to mortgage the property
subject of development, to wit: [P.D.] No. 957
cannot totally prevent the owner or developer from
mortgaging the subdivision lot or condominium unit
when the title thereto still resides in the owner or
developer awaiting the full payment of the
purchase
price
by
the
installment
buyer.32 Moreover, the mortgage bore the
clearance of the HLURB, in compliance with
Section 18 of P.D. No. 957, which provides that
[n]o mortgage on any unit or lot shall be made by
the owner or developer without prior written
approval
of
the
[HLURB].
Nevertheless, despite the apparent validity of the
mortgage between the petitioner and PEPI, the
former is still bound to respect the transactions
between respondents PEPI and Dee. The petitioner
was well aware that the properties mortgaged by
PEPI were also the subject of existing contracts to
sell with other buyers. While it may be that the
petitioner is protected by Act No. 3135, as
amended, it cannot claim any superior right as
against the installment buyers. This is because the
contract between the respondents is protected by
P.D. No. 957, a social justice measure enacted
primarily to protect innocent lot buyers.33Thus,
in Luzon Development Bank v. Enriquez,34 the Court
reiterated the rule that a bank dealing with a
property that is already subject of a contract to sell
and is protected by the provisions of P.D. No. 957, is
bound by the contract to sell.35
However, the transferee BANK is bound by the
Contract to Sell and has to respect Enriquezs rights
thereunder. This is because the Contract to Sell,
involving a subdivision lot, is covered and
protected
by
PD
957.
x
x
x.
x
x x x Under these circumstances, the BANK knew or

should have known of the possibility and risk that
the assigned properties were already covered by
existing contracts to sell in favor of subdivision lot
buyers. As observed by the Court in another case
involving a bank regarding a subdivision lot that
was already subject of a contract to sell with a third
party:chanRoblesvirtualLawlibrary
[The Bank] should have considered that it was
dealing with a property subject of a real estate
development project. A reasonable person,

particularly a financial institution x x x, should have
been aware that, to finance the project, funds
other than those obtained from the loan could
have been used to serve the purpose, albeit
partially. Hence, there was a need to verify
whether any part of the property was already
intended to be the subject of any other contract
involving buyers or potential buyers. In granting the
loan, [the Bank] should not have been content
merely with a clean title, considering the presence
of circumstances indicating the need for a
thorough investigation of the existence of buyers x x
x. Wanting in care and prudence, the [Bank]
cannot be deemed to be an innocent mortgagee.
x x x36 (Citation omitted)chanroblesvirtualawlibrary
More so in this case where the contract to sell has
already ripened into a contract of absolute sale.
Moreover, PEPI brought to the attention of the
Court the subsequent execution of a Memorandum
of Agreement dated November 22, 2006 by PEPI
and the petitioner. Said agreement was executed
pursuant to an Order dated February 23, 2004 by
the Regional Trial Court (RTC) of Makati City,
Branch 142, in SP No. 021219, a petition for
Rehabilitation under the Interim Rules of Procedure
on Corporate Rehabilitation filed by PEPI. The RTC
order approved PEPIs modified Rehabilitation Plan,
which included the settlement of the latters
unpaid obligations to its creditors by way
of dacion of real properties. In said order, the RTC
also incorporated certain measures that were not
included in PEPIs plan, one of which is that [t]itles
to the lots which have been fully paid shall be
released to the purchasers within 90 days after
the dacion to the secured creditors has been
completed.37 Consequently,
the
agreement
stipulated that as partial settlement of PEPIs
obligation with the petitioner, the former absolutely
and irrevocably conveys by way of dacion en
pago the properties listed therein,38 which
included the lot purchased by Dee. The petitioner
also committed to
[R]elease its mortgage lien on fully paid Mortgaged
Properties upon issuance of the certificates of title
over the Dacioned Properties in the name of the
[petitioner]. The request for release of a Mortgaged
Property shall be accompanied with: (i) proof of full
payment by the buyer, together with a certificate
of full payment issued by the Borrower x x x. The
[petitioner] hereby undertakes to cause the transfer
of the certificates of title over the Dacioned
Properties and the release of the Mortgaged
Properties
with
reasonable
dispatch.39ChanRoblesVirtualawlibrary
Dacion en pago or dation in payment is the
delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted
equivalent
of
the
performance
of
the
obligation.40 It is a mode of extinguishing an existing
obligation41 and partakes the nature of sale as the
creditor is really buying the thing or property of the
Page 110 of 158
debtor, the payment for which is to be charged

against the debtors debt.42Dation in payment
extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed upon
by the parties or as may be proved, unless the
parties by agreement express or implied, or by
their silence consider the thing as equivalent to
the obligation, in which case the obligation is
totally
extinguished.43
There is nothing on record showing that the
Memorandum of Agreement has been nullified or is
the subject of pending litigation; hence, it carries
with it the presumption of validity.44 Consequently,
the execution of the dation in payment effectively
extinguished respondent PEPIs loan obligation to
the petitioner insofar as it covers the value of the
property purchased by Dee. This negates the
petitioners claim that PEPI must first redeem the
property before it can cancel or release the
mortgage. As it now stands, the petitioner already
stepped into the shoes of PEPI and there is no more
reason for the petitioner to refuse the cancellation
or release of the mortgage, for, as stated by the
Court in Luzon Development Bank, in accepting
the assigned properties as payment of the
obligation, [the bank] has assumed the risk that
some of the assigned properties are covered by
contracts to sell which must be honored under PD
957.45 Whatever claims the petitioner has against
PEPI and AFPRSBS, monetary or otherwise, should
not prejudice the rights and interests of Dee over
the property, which she has already fully paid for.
As between these small lot buyers and the gigantic
financial institutions which the developers deal with,
it is obvious that the lawas an instrument of social
justicemust
favor
the
weak.46 (Emphasis
omitted)chanroblesvirtualawlibrary
Finally, the Court will not dwell on the arguments of
AFPRSBS given the finding of the OP that [b]y its
nonpayment of the appeal fee, AFPRSBS is
deemed to have abandoned its appeal and
accepts the decision of the HLURB.47 As such, the
HLURB decision had long been final and executory
as regards AFPRSBS and can no longer be altered
or
modified.48
WHEREFORE, the petition for review is DENIED for
lack of merit. Consequently, the Decision dated
August 13, 2007 and Resolution dated March 13,
2008 of the Court of Appeals in CAG.R. SP No.
86033
are AFFIRMED.
Petitioner Philippine National Bank and respondents
Prime East Properties Inc. and Armed Forces of the
PhilippinesRetirement and Separation Benefits
System, Inc. are hereby ENJOINED to strictly comply
with the Housing and Land Use Regulatory Board
Decision dated May 21, 2003, as modified by its
Board of Commissioners Decision dated March 15,
2004 and Office of the President Decision dated
August
4,
2004.ChanRoblesVirtualawlibrary
SO ORDERED.
#27
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 179597
February 3, 2014
IGLESIA FILIPINA INDEPENDIENTE, Petitioner,
vs.
HEIRS of BERNARDINO TAEZA, Respondents.
DECISION
PERALTA, J.:
This deals with the Petition for Review on Certiorari
under Rule 45 of the Rules of Court praying that the
Decision1of
the
Court
of
Appeals
(CA),
promulgated on June 30, 2006, and the
Resolution2 dated August 23, 2007, denying
petitioner's motion for reconsideration thereof, be
reversed and set aside.
The CA's narration of facts is accurate, to wit:
The plaintiff-appellee Iglesia Filipina Independiente
(IFI, for brevity), a duly registered religious
corporation, was the owner of a parcel of land
described as Lot 3653, containing an area of 31,038
square meters, situated at Ruyu (now Leonarda),
Tuguegarao, Cagayan, and covered by Original
Certificate of Title No. P-8698. The said lot is
subdivided as follows: Lot Nos. 3653-A, 3653-B, 3653C, and 3653-D.
Between 1973 and 1974, the plaintiff-appellee,
through its then Supreme Bishop Rev. Macario Ga,
sold Lot 3653-D, with an area of 15,000 square
meters, to one Bienvenido de Guzman.
On February 5, 1976, Lot Nos. 3653-A and 3653-B,
with a total area of 10,000 square meters, were
likewise sold by Rev. Macario Ga, in his capacity as
the Supreme Bishop of the plaintiff-appellee, to the
defendant Bernardino Taeza, for the amount
of P100,000.00, through installment, with mortgage
to secure the payment of the balance.
Subsequently, the defendant allegedly completed
the payments.
In 1977, a complaint for the annulment of the
February 5, 1976 Deed of Sale with Mortgage was
filed by the Parish Council of Tuguegarao,
Cagayan, represented by Froilan Calagui and
Dante Santos, the President and the Secretary,
respectively, of the Laymen's Committee, with the
then Court of First Instance of Tuguegarao,
Cagayan, against their Supreme Bishop Macario
Ga and the defendant Bernardino Taeza.
The said complaint was, however, subsequently
dismissed on the ground that the plaintiffs therein
lacked the personality to file the case.
After the expiration of Rev. Macario Ga's term of
office as Supreme Bishop of the IFI on May 8, 1981,
Bishop Abdias dela Cruz was elected as the
Supreme Bishop. Thereafter, an action for the
declaration of nullity of the elections was filed by
Page 111 of 158
Rev. Ga, with the Securities and Exchange

Commission (SEC).
In 1987, while the case with the SEC is (sic) still
pending, the plaintiff-appellee IFI, represented by
Supreme Bishop Rev. Soliman F. Ganno, filed a
complaint for annulment of the sale of the subject
parcels of land against Rev. Ga and the defendant
Bernardino Taeza, which was docketed as Civil
Case No. 3747. The case was filed with the Regional
Trial Court of Tuguegarao, Cagayan, Branch III,
which in its order dated December 10, 1987,
dismissed the said case without prejudice, for the
reason that the issue as to whom of the Supreme
Bishops could sue for the church had not yet been
resolved by the SEC.
On February 11, 1988, the Securities and Exchange
Commission issued an order resolving the
leadership issue of the IFI against Rev. Macario Ga.
Meanwhile, the defendant Bernardino Taeza
registered
the
subject
parcels
of
land.
Consequently, Transfer Certificate of Title Nos. T77995 and T-77994 were issued in his name.
The defendant then occupied a portion of the
land. The plaintiff-appellee allegedly demanded
the defendant to vacate the said land which he
failed to do.
In January 1990, a complaint for annulment of sale
was again filed by the plaintiff-appellee IFI, this time
through Supreme Bishop Most Rev. Tito Pasco,
against the defendant-appellant, with the Regional
Trial Court of Tuguegarao City, Branch 3.
On November 6, 2001, the court a quo rendered
judgment
in
favor
of
the
plaintiffappellee.1wphi1 It held that the deed of sale
executed by and between Rev. Ga and the
defendant-appellant is null and void.3
The dispositive portion of the Decision of Regional
Trial Court of Tuguegarao City (RTC) reads as
follows:
WHEREFORE, judgment is hereby rendered:
1) declaring plaintiff to be entitled to the
claim in the Complaint;
2) declaring the Deed of Sale with
Mortgage dated February 5, 1976 null and
void;
3) declaring Transfer Certificates of Title
Numbers T-77995 and T-77994 to be null
and void ab initio;
4) declaring the possession of defendant
on that portion of land under question and
ownership thereof as unlawful;
5) ordering the defendant and his heirs and
successors-in-interest
to
vacate
the
premises in question and surrender the
same to plaintiff; [and]
6) condemning defendant and his heirs
pay (sic) plaintiff the amount of P100,000.00
as
actual/consequential
damages
and P20,000.00 as lawful attorney's fees
and costs of the amount (sic).4
Petitioner appealed the foregoing Decision to the
CA. On June 30, 2006, the CA rendered its Decision
reversing and setting aside the RTC Decision,
thereby dismissing the complaint.5 The CA ruled

that petitioner, being a corporation sole, validly
transferred ownership over the land in question
through its Supreme Bishop, who was at the time
the administrator of all properties and the official
representative of the church. It further held that
"[t]he authority of the then Supreme Bishop Rev. Ga
to enter into a contract and represent the plaintiffappellee cannot be assailed, as there are no
provisions in its constitution and canons giving the
said authority to any other person or entity."6
Petitioner then elevated the matter to this Court via
a petition for review on certiorari, wherein the
following issues are presented for resolution:
A.) WHETHER OR NOT THE COURT OF
APPEALS ERRED IN NOT FINDING THE
FEBRUARY 5, 1976 DEED OF SALE WITH
MORTGAGE AS NULL AND VOID;
B.) ASSUMING FOR THE SAKE OF ARGUMENT
THAT IT IS NOT VOID, WHETHER OR NOT THE
COURT OF APPEALS ERRED IN NOT FINDING
THE FEBRUARY 5, 1976 DEED OF SALE WITH
MORTGAGE AS UNENFORCEABLE, [and]
C.) WHETHER OR NOT THE COURT OF
APPEALS
ERRED
IN
NOT
FINDING
RESPONDENT TAEZA HEREIN AS BUYER IN
BAD FAITH.7
The first two issues boil down to the question of
whether then Supreme Bishop Rev. Ga is authorized
to enter into a contract of sale in behalf of
petitioner.
Petitioner maintains that there was no consent to
the contract of sale as Supreme Bishop Rev. Ga
had no authority to give such consent. It
emphasized that Article IV (a) of their Canons
provides that "All real properties of the Church
located or situated in such parish can be disposed
of only with the approval and conformity of the
laymen's committee, the parish priest, the Diocesan
Bishop, with sanction of the Supreme Council, and
finally with the approval of the Supreme Bishop, as
administrator of all the temporalities of the Church."
It is alleged that the sale of the property in question
was done without the required approval and
conformity of the entities mentioned in the Canons;
hence, petitioner argues that the sale was null and
void.
In the alternative, petitioner contends that if the
contract is not declared null and void, it should
nevertheless be found unenforceable, as the
approval and conformity of the other entities in
their church was not obtained, as required by their
Canons.
Section 113 of the Corporation Code of the
Philippines provides that:
Sec. 113. Acquisition and alienation of property. Any corporation sole may purchase and hold real
estate and personal property for its church,
charitable, benevolent or educational purposes,
and may receive bequests or gifts for such
purposes. Such corporation may mortgage or sell
real property held by it upon obtaining an order for
that purpose from the Court of First Instance of the
Page 112 of 158
province where the property is situated; x x x

Provided, That in cases where the rules, regulations
and discipline of the religious denomination, sect or
church, religious society or order concerned
represented by such corporation sole regulate the
method of acquiring, holding, selling and
mortgaging real estate and personal property,
such rules, regulations and discipline shall control,
and the intervention of the courts shall not be
necessary.8
Pursuant to the foregoing, petitioner provided in
Article IV (a) of its Constitution and Canons of the
Philippine Independent Church,9 that "[a]ll real
properties of the Church located or situated in such
parish can be disposed of only with the approval
and conformity of the laymen's
committee, the parish priest, the Diocesan Bishop,
with sanction of the Supreme Council, and finally
with the approval of the Supreme Bishop, as
administrator of all the temporalities of the Church."
Evidently, under petitioner's Canons, any sale of
real property requires not just the consent of the
Supreme Bishop but also the concurrence of the
laymen's committee, the parish priest, and the
Diocesan Bishop, as sanctioned by the Supreme
Council. However, petitioner's Canons do not
specify in what form the conformity of the other
church entities should be made known. Thus, as
petitioner's witness stated, in practice, such consent
or approval may be assumed as a matter of fact,
unless some opposition is expressed.10
Here, the trial court found that the laymen's
committee indeed made its objection to the sale
known to the Supreme Bishop.11 The CA, on the
other hand, glossed over the fact of such
opposition from the laymen's committee, opining
that the consent of the Supreme Bishop to the sale
was sufficient, especially since the parish priest and
the Diocesan Bishop voiced no objection to the
sale.12
The Court finds it erroneous for the CA to ignore the
fact that the laymen's committee objected to the
sale of the lot in question. The Canons require that
ALL the church entities listed in Article IV (a) thereof
should give its approval to the transaction. Thus,
when the Supreme Bishop executed the contract
of sale of petitioner's lot despite the opposition
made by the laymen's committee, he acted
beyond his powers.
This case clearly falls under the category of
unenforceable contracts mentioned in Article 1403,
paragraph (1) of the Civil Code, which provides,
thus:
Art.
1403.
The
following
contracts
are
unenforceable, unless they are ratified:
(1) Those entered into in the name of another
person by one who has been given no authority or
legal representation, or who has acted beyond his
powers;
In Mercado v. Allied Banking Corporation,13 the
Court explained that:
x x x Unenforceable contracts are those which
cannot be enforced by a proper action in court,
unless they are ratified, because either they are

entered into without or in excess of authority or they
do not comply with the statute of frauds or both of
the contracting parties do not possess the required
legal capacity. x x x.14
Closely analogous cases of unenforceable
contracts are those where a person signs a deed of
extrajudicial partition in behalf of co-heirs without
the latter's authority;15 where a mother as judicial
guardian of her minor children, executes a deed of
extrajudicial partition wherein she favors one child
by giving him more than his share of the estate to
the prejudice of her other children;16 and where a
person, holding a special power of attorney, sells a
property of his principal that is not included in said
special power of attorney.17
In the present case, however, respondents'
predecessor-in-interest, Bernardino Taeza, had
already obtained a transfer certificate of title in his
name over the property in question. Since the
person supposedly transferring ownership was not
authorized to do so, the property had evidently
been acquired by mistake. In Vda. de Esconde v.
Court of Appeals,18 the Court affirmed the trial
court's ruling that the applicable provision of law in
such cases is Article 1456 of the Civil Code which
states that "[i]f 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." Thus, in Aznar Brothers Realty Company v.
Aying,19 citing Vda. de Esconde,20 the Court
clarified the concept of trust involved in said
provision, to wit:
Construing this provision of the Civil Code, in
Philippine National Bank v. Court of Appeals, the
Court stated:
A deeper analysis of Article 1456 reveals that it is
not a trust in the technical sense for in a typical
trust, confidence is reposed in one person who is
named a trustee for the benefit of another who is
called the cestui que trust, respecting property
which is held by the trustee for the benefit of the
cestui que trust. A constructive trust, unlike an
express trust, does not emanate from, or generate
a fiduciary relation. While in an express trust, a
beneficiary and a trustee are linked by confidential
or fiduciary relations, in a constructive trust, there is
neither a promise nor any fiduciary relation to
speak of and the so-called trustee neither accepts
any trust nor intends holding the property for the
beneficiary.
The concept of constructive trusts was further
elucidated in the same case, as follows:
. . . implied trusts are those which, without being
expressed, are deducible from the nature of the
transaction as matters of intent or which are
superinduced on the transaction by operation of
law as matters of equity, independently of the
particular intention of the parties. In turn, implied
trusts are either resulting or constructive trusts. These
two are differentiated from each other as follows:
Page 113 of 158
Resulting trusts are based on the equitable doctrine

that valuable consideration and not legal title
determines the equitable title or interest and are
presumed always to have been contemplated by
the parties. They arise from the nature of
circumstances of the consideration involved in a
transaction whereby one person thereby becomes
invested with legal title but is obligated in equity to
hold his legal title for the benefit of another. On the
other hand, constructive trusts are created by the
construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment.
They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or
holds the legal right to property which he ought
not, in equity and good conscience, to hold. (Italics
supplied)
A constructive trust having been constituted by law
between respondents as trustees and petitioner as
beneficiary of the subject property, may
respondents acquire ownership over the said
property? The Court held in the same case of
Aznar,21 that unlike in express trusts and resulting
implied trusts where a trustee cannot acquire by
prescription any property entrusted to him unless he
repudiates the trust, in constructive implied trusts,
the trustee may acquire the property through
prescription even if he does not repudiate the
relationship. It is then incumbent upon the
beneficiary to bring an action for reconveyance
before prescription bars the same.
In Aznar,22 the Court explained the basis for the
prescriptive period, to wit:
x x x under the present Civil Code, we find that just
as an implied or constructive trust is an offspring of
the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property
and the title thereto in favor of the true owner. In
this context, and vis--vis prescription, Article 1144
of the Civil Code is applicable.
Article 1144. The following actions must be brought
within ten years from the time the right of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx
xxx
xxx
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 wellsettled 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.
It has also been ruled that the ten-year prescriptive
period begins to run from the date of registration of
the deed or the date of the issuance of the
certificate of title over the property, x x x.23
Here, the present action was filed on January 19,
1990,24 while the transfer certificates of title over the
subject lots were issued to respondents'
predecessor-in-interest, Bernardino Taeza, only on

February 7, 1990.25
Clearly, therefore, petitioner's complaint was filed
well within the prescriptive period stated above,
and it is only just that the subject property be
returned to its rightful owner.
WHEREFORE, the petition is GRANTED. The Decision
of the Court of Appeals, dated June 30, 2006, and
its Resolution dated August 23, 2007, are REVERSED
and SET ASIDE. A new judgment is hereby entered:
(1) DECLARING petitioner Iglesia Filipina
Independiente as the RIGHTFUL OWNER of
the lots covered by Transfer Certificates of
Title Nos. T-77994 and T-77995;
(2) ORDERING respondents to execute a
deed reconveying the aforementioned lots
to petitioner;
(3) ORDERING respondents and successorsin-interest to vacate the subject premises
and surrender the same to petitioner; and
(4) Respondents to PAY costs of suit.
SO ORDERED.
#28
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 200468
March 19, 2014
MACARIA ARGUELLES and the HEIRS OF THE
DECEASED PETRONIO ARGUELLES, Petitioners,
vs.
MALARAYAT RURAL BANK, INC., Respondent.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari
assailing the Decision1 dated December 19, 2011
and Resolution2dated February 6, 2012 of the Court
of Appeals (CA) in CA-G.R . CV No. 92555. The CA
had reversed and set aside the July 29, 2008
Decision3 of the Regional Trial Court (RTC) Branch
86, of Taal, Batangas, in Civil Case No. 66.
The facts, as culled from the records, follow:
The late Fermina M. Guia was the registered owner
of Lot 3, a parcel of agricultural land in Barrio
Pinagkurusan, Alitagtag, Batangas, with an area of
4,560 square meters, as evidenced by Original
Certificate of Title (OCT) No. P-129304 of the
Register of Deeds of Batangas. On December 1,
1990, Fermina M. Guia sold the south portion of the
land with an approximate area of 1,350 square
meters to the spouses Petronio and Macaria
Arguelles.5 Although
the
spouses
Arguelles
immediately acquired possession of the land, the
Deed of Sale was neither registered with the
Register of Deeds nor annotated on OCT No. P12930. At the same time, Fermina M. Guia ordered
her son Eddie Guia and the latter's wife Teresita
Guia to subdivide the land covered by OCT No. P12930 into three lots and to apply for the issuance
of separate titles therefor, to wit: Lot 3-A, Lot 3-B,
and Lot 3-C. Thereafter, she directed the delivery of
Page 114 of 158
the Transfer Certificate of Title (TCT) corresponding

to Lot 3-C to the vendees of the unregistered sale
or the spouses Arguelles. However, despite their
repeated demands, the spouses Arguelles claimed
that they never received the TCT corresponding to
Lot 3-C from the spouses Guia.
Nevertheless, in accordance with the instructions of
Fermina M. Guia, the spouses Guia succeeded in
cancelling OCT No. P-12930 on August 15, 1994 and
in subdividing the lot in the following manner:
Lot No.
TCT No.
Registered Owner
3-A
T-83943
Fermina M. Guia
3-B
T-83945
Spouses Datingaling
3-C
T-83944
Fermina M. Guia6
On August 18, 1997, the spouses Guia obtained a

loan in the amount of P240,000 from the
respondent Malarayat Rural Banlc and secured the
loan with a Deed of Real Estate Mortgage7 over Lot
3-C. The loan and Real Estate Mortgage were
made pursuant to the Special Power of
Attorney8 purportedly executed by the registered
owner of Lot 3-C, Fermina M. Guia, in favor of the
mortgagors, spouses Guia. Moreover, the Real
Estate
Mortgage and Special Power of Attorney were duly
annotated in the memorandum of encumbrances
of TCT No. T-83944 covering Lot 3-C.
The spouses Arguelles alleged that it was only in
1997 or after seven years from the date of the
unregistered sale that they discovered from the
Register of Deeds of Batangas City the following
facts: (1) subdivision of Lot 3 into Lots 3-A, 3-B, and
3-C; (2) issuance of separate TCTs for each lot; and
(3) the annotation of the Real Estate Mortgage and
Special Power of Attorney over Lot 3-C covered by
TCT No. T-83944. Two years thereafter, or on June
17, 1999, the spouses Arguelles registered their
adverse claim9 based on the unregistered sale
dated December 1, 1990 over Lot 3-C.
On July 22, 1999, the spouses Arguelles filed a
complaint10 for Annulment of Mortgage and
Cancellation of Mortgage Lien with Damages
against the respondent Malarayat Rural Banlc with
the RTC, Branch 86, of Taal, Batangas. In asserting
the nullity of the mortgage lien, the spouses
Arguelles alleged ownership over the land that had
been mortgaged in favor of the respondent
Malarayat Rural Bank. On August 16, 1999, the
respondent Malarayat Rural Bank filed an Answer
with Counterclaim and Cross-claim11 against crossclaim-defendant spouses Gui a wherein it argued
that the failure of the spouses Arguelles to register
the Deed of Sale dated December 1, 1990 was
fatal to their claim of ownership.
On July 29, 2008, the RTC rendered a Decision, the
dispositive portion of which reads as follows:
WHEREFORE, premises considered judgment is
hereby rendered:
1) declaring the mortgage made by the

defendants spouses Eddie Guia and
Teresita Guia in favor of defendant
Malarayat Rural Bank null and void;
2) setting aside the foreclosure sale had on
December 6, 1999 and the corresponding
certificate of sale issued by this Court
dated May 12, 2000;
3) ordering the Register of Deeds of the
Province of Batangas to cancel the
annotation pertaining to the memorandum
of encumbrances (entries no. 155686 and
155688) appearing in TCT No. T-839[4]4;
4) ordering cross defendants spouses Eddie
and Teresita Guia to pay the amount of
Php240,000.00 to cross claimant Malarayat
Rural [B]ank corresponding to the total
amount of the loan obligation, with interest
herein modified at 12% per annum
computed from default;
5) ordering defendants spouses Eddie and
Teresita Guia to pay plaintiffs Arguelles the
amount of Php100,000.00 as moral
damages. However, the prayer of the
plaintiffs to order the registration of the
deed of sale in their favor as well as the
subsequent issuance of a new title in their
names as the registered owners is denied
considering that there are other acts that
the plaintiffs ought to do which are
administrative
in
nature,
and
are
dependent upon compliance with certain
requirements pertaining to land acquisition
and transfer.
SO ORDERED.12
The RTC found that the spouses Guia were no
longer the absolute owners of the land described
as Lot 3-C and covered by TCT No. T-83944 at the
time they mortgaged the same to the respondent
Malarayat Rural Bank in view of the unregistered
sale in favor of the vendee spouses Arguelles. Thus,
the RTC annulled the real estate mortgage, the
subsequent
foreclosure
sale,
and
the
corresponding issuance of the certificate of title.
Moreover, the RTC declared that the respondent
Malarayat Rural Bank was not a mortgagee in
good faith as it failed to exercise the exacting
degree of diligence required from banking
institutions.
On September 16, 2008, the respondent filed a
notice of appeal with the CA.
On December 19, 2011, the CA reversed and set
aside the decision of the court a quo:
IN LIGHT OF THE FOREGOING, premises considered,
the instant appeal is GRANTED. Accordingly, the
Decision of the RTC of Taal, Batangas, Branch 86
promulgated on July 29, 2008 in Civil Case No. 66 is
hereby REVERSED AND SET ASIDE and the
complaint below dismissed.
SO ORDERED.13
In granting the appeal, the CA held that because
of the failure of the spouses Arguelles to register
their deed of sale, the unregistered sale could not
Page 115 of 158
affect the respondent Malarayat Rural Bank. Thus,

the respondent Malarayat Rural Bank has a better
right to the land mortgaged as compared to
spouses Arguelles who were the vendees in the
unregistered sale. In addition, the CA found that
the respondent Malarayat Rural Bank was a
mortgagee in good faith as it sufficiently
demonstrated due diligence in approving the loan
application of the spouses Guia. Aggrieved, the
petitioners filed the instant petition raismg the
following issues for resolution:
A
THE COURT OF APPEALS ERRED IN HOLDING
THAT THE DEED OF SALE EXECUTED BY
FERMINA GUIA IN FAVOR OF THE SPOUSES
PETRONIO AND MACARIA ARGUELLES
CANNOT
BE
ENFORCED
AGAINST
APPELLANT
BANK
FOR
NOT
BEING
REGISTERED AND ANNOTATED IN THE
CERTIFICATE OF TITLE, DESPITE THE FACT
THAT THE BANK HAD ACTUAL KNOWLEDGE
THEREOF.
B
THE COURT OF APPEALS COMMITTED A
MISTAKE IN FINDING THAT APPELLANT BANK
IS A MORTGAGEE IN GOOD FAITH
NOTWITHSTANDING CONCLUSIVE EVIDENCE
ON RECORD THAT IT WAS GROSSLY
NEGLIGENT IN NOT ASCERTAINING THE REAL
CONDITION OF THE PROPERTY IN THE
POSSESSION OF THE SPOUSES ARGUELLES
BEFORE ACCEPTING IT AS COLLATERAL FOR
THE LOAN APPLIED FOR BY A MERE
ATTORNEY-IN-FACT.
C
THE COURT OF APPEALS COMMITTED AN
ERROR IN DECLARING APPELLANT BANK
HAS BECOME THE ABSOLUTE OWNER OF THE
SUBJECT PROPERTY NOTWITHSTANDING THE
NULLITY OF THE REAL ESTATE MORTGAGE
EXTRAJUDICIALL Y FORECLOSED BY IT.
D
THE COURT OF APPEALS ERRED IN HOLDING
THAT THE SPOUSES ARGUELLES DID NOT PUT
IN ISSUE THAT APPELLANT BANK HAD
CONSTRUCTIVE NOTICE AND POSSESSION
OF THE SUBJECT LOT.14
In fine, the issue in this case is whether the
respondent Malarayat Rural Bank is a mortgagee in
good faith who is entitled to protection on its
mortgage lien.
Petitioners imputed negligence on the part of
respondent Malarayat Rural Bank when it
approved the loan application of the spouses
Guia. They pointed out that the bank failed to
conduct a thorough ocular inspection of the land
mortgaged and an extensive investigation of the
title of the registered owner. And since the
respondent Malarayat Rural Bank cannot be
considered a mortgagee in good faith, petitioners
argued that the unregistered sale in their favor
takes precedence over the duly registered
mortgage lien. On the other hand, respondent
Malarayat Rural Bank claimed that it exercised the

required degree of diligence before granting the
loan application. In particular, it asserted the
absence of any facts or circumstances that can
reasonably arouse suspicion in a prudent person.
Thus, the respondent Malarayat Rural Bank argued
that it is a mortgagee in good faith with a better
right to the mortgaged land as compared to the
vendees to the unregistered sale.
The petition is meritorious.
At the outset, we note that the issue of whether a
mortgagee is in good faith generally cannot be
entertained in a petition filed under Rule 45 of the
1997 Rules of Civil Procedure, as amended.15 This is
because the ascertainment of good faith or the
lack thereof, and the determination of negligence
are factual matters which lay outside the scope of
a petition for review on certiorari.16 However, a
recognized exception to this rule is when the RTC
and the CA have divergent findings of fact17 as in
the case at bar. We find that the respondent
Malarayat Rural Bank is not a mortgagee in good
faith. Therefore, the spouses Arguelles as the
vendees to the unregistered sale have a superior
right to the mortgaged land.
In Cavite Development Bank v. Spouses Lim,18 the
Court explained the doctrine of mortgagee in
good faith, thus:
There is, however, a situation where, despite the
fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the
mortgage contract and any foreclosure sale arising
therefrom are given effect by reason of public
policy. This is the doctrine of "mortgagee in good
faith" based on the rule that all persons dealing with
the property covered by a Torrens Certificate of
Title, as buyers or mortgagees, are not required to
go beyond what appears on the face of the title.
The public interest in upholding the indefeasibility of
a certificate of title, as evidence of lawful
ownership of the land or of any encumbrance
thereon, protects a buyer or mortgagee who, in
good faith, relied upon what appears on the face
of the certificate of title.
In Bank of Commerce v. Spouses San Pablo,
Jr.,19 we declared that indeed, a mortgagee has a
right to rely in good faith on the certificate of title of
the mortgagor of the property offered as security,
and in the absence of any sign that might arouse
suspicion, the mortgagee has no obligation to
undertake further investigation.
However, in Bank of Commerce v. Spouses San
Pablo, Jr.,20 we also ruled that "[i]n cases where the
mortgagee does not directly deal with the
registered owner of real property, the law requires
that a higher degree of prudence be exercised by
the mortgagee." Specifically, we cited Abad v. Sps.
Guimbci21 where we held, "x x x While one who
buys from the registered owner does not need to
look behind the certificate of title, one who buys
from one who is not the registered owner is
expected to examine not only the certificate of title
but all factual circumstances necessary for [one] to
Page 116 of 158
determine if there are any flaws in the title of the

transferor, or in [the] capacity to transfer the land. "
Although the instant case does not involve a sale
but only a mortgage, the same rule applies
inasmuch as the law itself includes a mortgagee in
the term "purchaser."
Thus, where the mortgagor is not the registered
owner of the property but is merely an attorney-infact of the same, it is incumbent upon the
mortgagee to exercise greater care and a higher
degree of prudence in dealing with such
mortgagor.22 Recently, in Land Bank of the
Philippines v. Poblete,23 we affirmed Bank of
Commerce v. Spouses San Pablo, Jr.:
Based on the evidence, Land Bank processed
Maniego's loan application upon his presentation
of OCT No. P-12026, which was still under the name
of Poblete. Land Bank even ignored the fact that
Kapantay previously used Poblete's title as
collateral in its loan account with Land Bank. In
Bank of Commerce v. San Pablo, Jr., we held that
when "the person applying for the loan is other than
the registered owner of the real property being
mortgaged, [such fact] should have already raised
a red flag and which should have induced the
Bank xx x to make inquiries into and confirm x x x
[the] authority to mortgage x x x. A person who
deliberately ignores a significant fact that could
create suspicion in an otherwise reasonable person
is not an innocent purchaser for value."
Moreover, in a long line of cases, we have
consistently enjoined banks to exert a higher
degree of diligence, care, and prudence than
individuals in handling real estate transactions.
In Cruz v. Bancom Finance Corporation,24 we
declared:
Respondent, however, is not an ordinary
mortgagee; it is a mortgagee-bank. As such, unlike
private individuals, it is expected to exercise
greater care and prudence in its dealings,
including those involving registered lands. A
banking institution is expected to exercise due
diligence before entering into a mortgage
contract. The ascertainment of the status or
condition of a property offered to it as security for a
loan must be a standard and indispensable part of
its operations.
In Ursal v. Court of Appeals,25 we held that where
the mortgagee is a bank, it cannot rely merely on
the certificate of title offered by the mortgagor in
ascertaining the status of mortgaged properties.
Since its business is impressed with public interest,
the mortgagee-bank is duty-bound to be more
cautious even in dealing with registered
lands.26Indeed, the rule that person dealing with
registered lands can rely solely on the certificate of
title does not apply to banks. Thus, before
approving a loan application, it is a standard
operating practice for these institutions to conduct
an ocular inspection of the property offered for
mortgage and to verify the genuineness of the title
to determine the real owners thereof. The apparent
purpose of an ocular inspection is to protect the
"true owner" of the property as well as innocent

third parties with a right, interest or claim thereon
from a usurper who may have acquired a
fraudulent certificate of title thereto.27
In Metropolitan Bank and Trust Co. v. Cabilzo,28 we
explained the socio-economic role of banks and
the reason for bestowing public interest on the
banking system:
We never fail to stress the remarkable significance
of a banking institution to commercial transactions,
in particular, and to the country's economy in
general. The banking system is an indispensable
institution in the modem world and plays a vital role
in the economic life of every civilized nation.
Whether as mere passive entities for the
safekeeping and saving of money or as active
instruments of business and commerce, banks have
become an ubiquitous presence among the
people, who have come to regard them with
respect and even gratitude and, most of all,
confidence.
In this case, we find that the respondent Malarayat
Rural Bank fell short of the required degree of
diligence, prudence, and care in approving the
loan application of the spouses Guia.
Respondent should have diligently conducted an
investigation
of
the
land
offered
as
collateral.1wphi1 Although
the
Report
of
Inspection and Credit Investigation found at the
dorsal portion of the Application for Agricultural
Loan29proved that the respondent Malarayat Rural
Bank inspected the land, the respondent turned a
blind eye to the finding therein that the "lot is
planted [with] sugarcane with annual yield (crops)
in the amount of P15,000."30
We disagree with respondent's stance that the
mere planting and harvesting of sugarcane cannot
reasonably trigger suspicion that there is adverse
possession over the land offered as mortgage.
Indeed, such fact should have immediately
prompted the respondent to conduct further
inquiries, especially since the spouses Guia were
not the registered owners of the land being
mortgaged. They merely derived the authority to
mortgage the lot from the Special Power of
Attorney allegedly executed by the late Fermina M.
Guia. Hence, it was incumbent upon the
respondent Malarayat Rural Bank to be more
cautious in dealing with the spouses Guia, and
inquire further regarding the identity and possible
adverse claim of those in actual possession of the
property.
Pertinently, in Land Bank of the Philippines v.
Poblete,31 we ruled that "[w]here the mortgagee
acted with haste in granting the mortgage loan
and did not ascertain the ownership of the land
being mortgaged, as well as the authority of the
supposed agent executing the mortgage, it
cannot be considered an innocent mortgagee."
Since the subject land was not mortgaged by the
owner thereof and since the respondent Malarayat
Rural Bank is not a mortgagee in good faith, said
bank is not entitled to protection under the law. The
Page 117 of 158
unregistered sale in favor of the spouses Arguelles

must prevail over the mortgage lien of respondent
Malarayat Rural Bank.
WHEREFORE, the petition for review on certiorari is
GRANTED. The Decision dated December 19, 2011
and Resolution dated February 6, 2012 of the Court
of Appeals in CA-G.R. CV No. 92555 are REVERSED
and SET ASIDE. The Decision dated July 29, 2008 of
the Regional Trial Court, Branch 86, of Taal,
Batangas, in Civil Case No. 66 is REINSTATED and
UPHELD.
No pronouncement as to costs.
SO ORDERED.
#29
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 183448
June 30, 2014
SPOUSES DOMINADOR PERALTA AND OFELIA
PERALTA, Petitioners,
vs.
HEIRS OF BERNARDINA ABALON, represented by
MANSUETO ABALON, Respondents.
x-----------------------x
G.R. No. 183464
HEIRS OF BERNARDINA ABALON, represented by
MANSUETO ABALON, Petitioners,
vs.
MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL,
SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA,
and HEIRS of RESTITUTO RELLAMA, represented by his
children ALEX, IMMANUEL, JULIUS and SYLVIA, all
surnamed RELLAMA.
DECISION
SERENO, CJ:
Before us are the consolidated Petitions for Review
on Certiorari under Rule 45 of the Rules of Court
assailing the 30 May 2007 Decision1 of the Court of
Appeals (CA) Seventeenth Division in CA-G.R. CV
No. 85542. The CA had reversed the 14 April 2005
Decision2 of the Regional Trial Court (RTC), Fifth
Judicial Region of Legaspi City, Branch 5, in Civil
Case No. 9243.
The civil case before the RTC of Legaspi City
involved a parcel of land registered under the
name of Bernardina Abalon and fraudulently
transferred to Restituto Rellama and who, in turn,
subdivided the subject property and sold it
separately to the other parties to this case
Spouses Dominador and Ofelia Peralta; and
Marissa, Leonil and Arnel, all surnamed Andal.
Thereafter, Spouses Peralta and the Andals
individually registered the respective portions of the
land they had bought under their names. The heirs
of Bernardina were claiming back the land,
alleging that since it was sold under fraudulent
circumstances, no valid title passed to the buyers.
On the other hand, the buyers, who were now title
holders of the subject parcel of land, averred that
they were buyers in good faith and sought the

protection accorded to them under the law.
THE FACTS
The RTC and the CA have the same findings of
fact, but differ in their legal conclusions. There
being no factual issues raised in the Petitions, we
adopt the findings of fact of the CA in CA-G.R. No.
85542, as follows:
The subject parcel of land, described as Lot 1679 of
the Cadastral Survey of Legaspi, consisting of 8,571
square meters, was originally covered by Original
Certificate of Title (OCT) No. (O) 16 and registered
in the name of Bernardina Abalon (Abalon). It
appears that a Deed of Absolute Sale was
executed over the subject property in favor of
Restituto M. Rellama (Rellama) on June 10, 1975. By
virtue of such conveyance OCT No. (O) 16 was
cancelled and in lieu thereof Transfer Certificate of
Title (TCT) No. 42108 was issued in the name of
Rellama. The subject property was then subdivided
into three (3) portions: Lot 1679-A, Lot 1679-B, Lot
1679-C. Lot 1679-A was sold to Spouses Dominador
P. Peralta, Jr. and Ofelia M. Peralta (Spouses
Peralta) for which reason TCT No. 42254 was issued
in their names. Lot 1679-B, on the other hand, was
first sold to Eduardo Lotivio (Lotivio) who thereafter
transferred his ownership thereto to Marissa Andal,
Arnel Andal, and Leonil Andal (the Andals) through
a Deed of Absolute Sale dated October 9, 1995.
On even date, TCT No. 42482 was issued in the
name of the Andals. The Andals likewise acquired
Lot 1679-C as evidenced by the issuance of TCT No.
42821 in their favor on December 27, 1995.
Claiming that the Deed of Absolute Sale executed
by Abalon in favor of Rellama was a forged
document, and claiming further that they acquired
the subject property by succession, they being the
nephew and niece of Abalon who died without
issue, plaintiff-appellees Mansueta Abalon and
Amelia Abalon filed the case below against
Rellama, Spouses Peralta, and the Andals, the
herein defendants-appellants and the Bank of the
Philippines [sic] Islands which was later dropped as
a party defendant.
It was alleged in their Complaint and subsequent
Amended Complaint, under five separate causes
of action, that Rellama was able to cause the
cancellation of OCT No. (O) 16, and in lieu thereof
the issuance of TCT No. 42108 in his own name from
which the defendants-appellants derived their own
titles, upon presentation of a xerox copy of the
alleged forged deed of absolute sale and the
order granting the issuance of a second owners
duplicate copy of OCT No. (O) 16 in his favor in
Miscellaneous Cadastral Case No. 10648, which he
had filed on the pretext that Lot 1679 covered by
OCT No. (O) 16 was sold to him and that the
owners duplicate copy of the said title got lost in
1976 after the same was delivered to him. They
averred that the owners duplicate copy of Oct
NO. (O) 16 had always been with Abalon and that
upon her death, it was delivered to them. Likewise,
they alleged that Abalon had always been in
Page 118 of 158
possession of the subject property through her

tenant Pedro Bellen who was thereafter
succeeded by his wife, Ruperta Bellen, and then his
son, Godofredo Bellen. On the other hand, they
said that Rellama had never set foot on the land he
was claiming. They further alleged that after the
ownership over the subject property was
transferred to them upon the death of Abalon, they
took possession thereof and retained Godofredo as
their own tenant. However, they averred that in
1995 the defendants-appellants were able to wrest
possession of the subject property from Godofredo
Bellen. They alleged that the defendantsappellants are not buyers in good faith as they
were aware that the subject land was in the
possession of the plaintiffs-appellees at the time
they made the purchase. They thus claim that the
titles issued to the defendants-appellants are null
and void.
In his answer, Rellama alleged that the deed of
absolute sale executed by Abalon is genuine and
that the duplicate copy of OCT No. (O) 16 had
been delivered to him upon the execution of the
said deed of transfer.
As for Spouses Peralta and the Andals, who filed
their separate answers to the complaint, they
mainly alleged that they are buyers in good faith
and for value.
During the trial, Rellama passed away. He was
substituted by his heirs.
After the plaintiffs-appellees rested their case,
instead of presenting their own evidence, the
defendants-appellants and the Heirs of Restituto
Rellama, on different occasions, filed a demurrer to
evidence.
On April 14, 2005, the court a quo rendered
judgment in favor of the plaintiffs-appellees and
ordered the restoration of OCT No. (O) 16 in the
name of Abalon and the cancellation of the titles
issued to the defendants-appellants. The fact that
only a xerox copy of the purported deed of sale
between Rellama and Abalon was presented
before the Register of Deeds for registration and
the absence of such xerox copy on the official files
of the said Office made the court a quo conclude
that the said document was a mere forgery. On the
other hand, the court a quo noted that the
duplicate copy of OCT No. (O) 16 in the hands of
the plaintiffs-appellees bears [sic] the perforated
serial number B 221377, which it held is a
convincing proof of its authenticity and
genuineness. It thus stated that "Miscellaneous
Cadastral Case No. 10648 is a (mere) strategem
[sic] fraudulently concocted ... for the issuance of a
fabricated (second) owners duplicate certificate
of Oct No. (O) 16" since the owners duplicate
copy of OCT No. (O) 16 has not been lost at all. It
said that any subsequent registration procured by
the presentation of such forged instrument is null
and void. The dispositive portion of the court a
quos decision reads: WHEREFORE, [p]remises
[c]onsidered, judgment is rendered as follows, to
wit:
1. Ordering the restoration of Original

Certificate of Title No. (O) 16 embracing
Lot 1679 in the name of Bernardina Abalon
into the official files of the Registry of Deeds
of Legaspi City a copy of the owners
duplicate certificate embodying the
technical description of Lot 1679 forming
official part of the record as Exhibit "D" as
well as ordering the cancellation of any
and all transfer certificates of title
succeeding Original Certificate of title No.
(O) 16 including Transfer Certificates (sic)
of Title Nos. 42108, 42254, 42255, 42256,
42821 [,] and 42482;
2. Ordering the defendants Marissa Andal,
Leonil Andal, Arnel Andal[,] and the
spouses Dominador and Ofelia Peralta to
vacate Lot 1679 and to peacefully
surrender such lot to the plaintiffs;
3. Ordering the defendants to pay the
plaintiffs the amount of P50,000.00 as
litigation expenses; and
4. Ordering the defendants to pay the
costs of suit.
The counterclaims by [sic] the defendants are all
dismissed.
SO ORDERED.
Spouses Peralta and the Andals filed their separate
Notices of Appeal and thereafter, upon approval,
filed their respective Defendants-Appellants Briefs.
The Heirs of Rellama, on the other hand, opted not
to challenge the ruling of the lower court.3
The Andals and Spouses Peralta appellants in CAG.R. CV No. 85542 raised several issues, which the
CA summarized as follows:
1. Whether the Deed of Absolute Sale
executed by Abalon in favor of Rellama
was spurious
2. Whether the Andals and Spouses Peralta
were buyers in good faith and for value
3. Who among the parties were entitled to
their claims for damages.4
THE RULING OF THE COURT OF APPEALS
On 30 May 2007, the Seventeenth Division of the
Court of Appeals promulgated its assailed
judgment setting aside the RTC Decision. The CA
ruled that the circumstances surrounding the sale
of the subject property showed badges of fraud or
forgery against Rellama. It found that Abalon had
not parted with her ownership over the subject
property despite the claim of Rellama that they
both executed a Deed of Absolute Sale. As proof,
the CA pointed out the existence of a notarized
contract of leasehold executed by Abalon with
Ruperta Bellen on 11 June 1976. The genuineness
and due execution of the said leasehold
agreement was uncontroverted by the parties. On
this basis, the appellate court concluded that
Abalon could not have leased the subject parcel
of land to Bellen if the former had parted with her
ownership thereof.5
The CA also found no evidence to show that
Rellama exercised dominion over the subject
Page 119 of 158
property, because he had not introduced

improvements on the property, despite claiming to
have acquired it in 1975.6 Further, the CA noted
that he did not cause the annotation of the Deed
of Sale, which he had executed with Abalon, on
OCT No. (O) 16. It observed that when the original
copy of OCT No. (O) 16 was allegedly lost in 1976,
while Rellama was on his way to Legaspi City to
register the title to his name, it took him almost 20
years to take steps to judicially reconstitute a copy
thereof.
To
the
appellate
court,
these
circumstances cast doubt on the veracity of
Rellamas claim of ownership over such a
significant property, which was almost a hectare.7
The CA also ruled that the heirs of Bernardina
Abalon had the legal standing to question the sale
transaction
between
Rellama
and
their
predecessor-in-interest. It concluded that the heirs
of Abalon had acquired the subject property by
ordinary acquisitive prescription and thus had every
right to attack every document that intended to
divest them of ownership thereof,8 which in this
case was the Deed of Sale that Bernardina
executed in favor of Rellama. Lastly, the appellate
court considered the Spouses Peralta as buyers in
bad faith for relying on a mere photocopy of TCT
No. 42108 when they bought the property from
Rellama.9 On the other hand, it accorded the
Andals the presumption of good faith, finding no
evidence that would rebut this presumption.10
The dispositive portion of the assailed CA Decision
in CA-G.R. CV No. 85542 is as follows:
WHEREFORE, the assailed decision is SET ASIDE and
a new judgment is rendered as follows:
1. Transfer Certificate of Title No. 42482 and
Transfer Certificate of Title No. 42821, both
in the names of Andals, are held legal and
valid.
2. Transfer Certificate of Title No. 42254
registered in the names of Spouses Peralta
is cancelled for being null and void. Hence,
they are ordered to vacate the land
covered thereby and to surrender
possession thereof in favor of the plaintiffsappellees.
SO ORDERED.11
The heirs of Abalon filed a Motion for
Reconsideration of the 30 May 2007 Decision,
insofar as the CA declared the Andals to be buyers
in good faith of the subject property and, thus, that
the land title issued in their favor was valid. Spouses
Peralta, for their part, filed a Motion for Partial
Reconsideration of the said CA Decision pertaining
to the portion that declared them as buyers in bad
faith which accordingly nullified the title issued to
them.
On 10 June 2008, the CA denied the Motions for
Partial Reconsideration of the movants for lack of
merit.12
On 11 August 2008, Spouses Peralta filed with this
Court a Petition for Review under Rule 45 of the
Rules of Court assailing the 30 May 2007 Decision in
CA-G.R. CV No. 85542.13 On the same day, the heirs
of Bernardina Abalon, represented by Mansueto

Abalon, filed a similar Petition questioning the
portion of the mentioned CA Decision declaring
the validity of the title issued to the Andals, who
were adjudged by the appellate court as buyers in
good faith.14 THE ISSUES
The Petition filed by Spouses Peralta, docketed as
G.R. No. 183448, lists the following issues:
a) The case for annulment should have
been dismissed because the purported
Deed of Sale executed by Abalon and
Rellama was not introduced in evidence
and thus, forgery was not proven.
b) The heirs of Abalon are notforced heirs
of Bernardina Abalon; hence, they do not
have the legal personality to file the action
to annul the subject Deed of Sale.
c) The heirs of Abalon failed to prove that
they had inherited the subject property.
d) Spouses Peralta are buyers in good faith
and, thus title to their portion of the subject
property must be upheld15
As for the heirs of Abalon, their Petition, docketed
as G.R. No. 183464, raises the following issues:
a) The Andals cannot be considered as
buyers in good faith by simply applying the
ordinary presumption in the absence of
evidence showing the contrary.
b) The CA erred in applying in favor of the
Andals, the doctrine that a forged
instrument may become the root of a valid
title in the hands of an innocent purchaser
for value, because Abalon never parted
with her possession of the valid and
uncancelled title over the subject property
c) The CA erred in declaring the validity of
the title issued in the names of the Andals,
because Rellama was bereft of any
transmissible right over the portion of the
property he had sold to them.16
THE COURTS RULING
We deny the Petitions and affirm the ruling of the
CA.
The main issue to be resolved in this case is whether
a forged instrument may become the root of a
valid title in the hands of an innocent purchaser for
value, even if the true owner thereof has been in
possession of the genuine title, which is valid and
has not been cancelled.
It is well-settled that "a certificate of title serves as
evidence of an indefeasible and incontrovertible
title to the property in favor of the person whose
name appears therein. The real purpose of the
Torrens system of land registration is to quiet title to
land and put a stop forever to any question as to
the legality of the title."17
In Tenio-Obsequio v. Court of Appeals,18 we
explained the purpose of the Torrens system and its
legal implications to third persons dealing with
registered land, as follows:
The main purpose of the Torrens system is to avoid
possible conflicts of title to real estate and to
facilitate transactions relative thereto by giving the
Page 120 of 158
public the right to rely upon the face of a Torrens

certificate of title and to dispense with the need of
inquiring further, except when the party concerned
has actual knowledge of facts and circumstances
that should impel a reasonably cautious man to
make such further inquiry. Where innocent third
persons, relying on the correctness of the certificate
of title thus issued, acquire rights over the property,
the court cannot disregard such rights and order
the total cancellation of the certificate. The effect
of such an outright cancellation would be to impair
public confidence in the certificate of title, for
everyone dealing with property registered under
the Torrens system would have to inquire in every
instance as to whether the title has been regularly
or irregularly issued by the court. Every person
dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor
and the law will in no way oblige him to go beyond
the certificate to determine the condition of the
property.
The Torrens system was adopted in this country
because it was believed to be the most effective
measure to guarantee the integrity of land titles
and to protect their indefeasibility once the claim
of ownership is established and recognized. If a
person purchases a piece of land on the assurance
that the seller's title thereto is valid, he should not
run the risk of being told later that his acquisition
was ineffectual after all. This would not only be
unfair to him. What is worse is that if this were
permitted, public confidence in the system would
be eroded and land transactions would have to be
attended by complicated and not necessarily
conclusive investigations and proof of ownership.
The further consequence would be that land
conflicts could be even more numerous and
complex than they are now and possibly also more
abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens
system, should be the first to accept the validity of
titles issued thereunder once the conditions laid
down by the law are satisfied.
The Torrens system was intended to guarantee the
integrity and conclusiveness of the certificate of
registration, but the system cannot be used for the
perpetration of fraud against the real owner of the
registered land. The system merely confirms
ownership and does not create it. It cannot be
used to divest lawful owners of their title for the
purpose of transferring it to another one who has
not acquired it by any of the modes allowed or
recognized by law. Thus, the Torrens system cannot
be used to protect a usurper from the true owner or
to shield the commission of fraud or to enrich
oneself at the expense of another.19
It is well-established in our laws and jurisprudence
that a person who is dealing with a registered
parcel of land need not go beyond the face of the
title. A person is only charged with notice of the
burdens and claims that are annotated on the
title.20 This rule, however, admits of exceptions,
which we explained in Clemente v. Razo:21
Any buyer or mortgagee of realty covered by a

Torrens certificate of title, in the absence of any
suspicion, is not obligated to look beyond the
certificate to investigate the titles of the seller
appearing on the face of the certificate. And, he is
charged with notice only of such burdens and
claims as are annotated on the title.
We do acknowledge that the rule thus enunciated
is not cast in stone. For, indeed, there are
exceptions thereto. Thus, in Sandoval vs. CA, we
made clear the following:
The aforesaid principle admits of an unchallenged
exception: that a person dealing with registered
land has a right to rely on the Torrens certificate of
title and to dispense with the need of inquiring
further except when the party has actual
inquiry or when the purchaser has knowledge ofa
defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent
man to inquire into the status of the title of the
property in litigation. The presence of anything
which excites or arouses suspicion should then
prompt the vendee to look beyond the certificate
and investigate the title of the vendor appearing
on the face of said certificate. One who falls within
the exception can neither be denominated an
innocent purchaser for value nor a purchaser in
good faith; and hence does not merit the
protection of the law.22
Thus, the determination whether one is a buyer in
good faith or can be considered an innocent
purchaser for value becomes imperative. Section
55 of the Land Registration Act provides protection
to an innocent purchaser for value23 by allowing
him to retain the parcel of land bought and his title
is considered valid. Otherwise, the title would be
cancelled and the original owner of the parcel of
land is allowed to repossess it.
Jurisprudence has defined an innocent purchaser
for value as one who buys the property of another
without notice that some other person has a right
to or interest therein and who then pays a full and
fair price for it at the time of the purchase or before
receiving a notice of the claim or interest of some
other persons in the property. Buyers in good faith
buy a property with the belief that the person from
whom they receive the thing is the owner who can
convey title to the property. Such buyers do not
close their eyes to facts that should put a
reasonable person on guard and still claim that
they are acting in good faith.24
The assailed Decision of the CA held that the
Andals were buyers in good faith, while Spouses
Peralta were not. Despite its determination that
fraud marred the sale between Bernardina Abalon
and Rellama, a fraudulent or forged document of
sale may still give rise to a valid title. The appellate
court reasoned that if the certificate of title had
already been transferred from the name of the true
owner to that which was indicated by the forger
and remained as such, the land is considered to
Page 121 of 158
have been subsequently sold to an innocent

purchaser, whose title is thus considered valid.25 The
CA concluded that this was the case for the
Andals.
The appellate court cited Fule v. Legare26 as basis
for its ruling. In the said case, the Court made an
exception to the general rule that a forged or
fraudulent deed is a nullity and conveys no title. A
fraudulent document may then become the root
of a valid title, as it held in Fule:
Although the deed of sale in favor of John W.
Legare was fraudulent, the fact remains that he
was able to secure a registered title to the house
and lot. It was this title which he subsequently
conveyed to the herein petitioners. We have
indeed ruled that a forged or fraudulent deed is a
nullity and conveys no title (Director of Lands vs.
Addison, 49 Phil., 19). However, we have also laid
down the doctrine that there are instances when
such a fraudulent document may become the root
of a valid title. One such instance is where the
certificate of title was already transferred from the
name of the true owner to the forger, and while it
remained that way, the land was subsequently sold
to an innocent purchaser. For then, the vendee
had the right to rely upon what appeared in the
certificate (Inquimboy vs. Cruz, G.R. No. L-13953,
July 28, 1960).
We have been constrained to adopt the
conclusion here set forth because under the Torrens
system, "registration is the operative act that gives
validity to the transfer or creates a lien upon the
land (Secs. 50 and 51, Land Registration Act).
Consequently, where there was nothing in the
certificate of title to indicate any cloud or vice in
the ownership of the property, or any
encumbrance thereon, the purchaser is not
required to explore farther than what the Torrens
title upon its face indicates in quest for any hidden
defect or inchoate right that may subsequently
defeat his right thereto. If the rule were otherwise,
the efficacy and conclusiveness of the certificate
of title which the Torrens system seeks to insure
would entirely be futile and nugatory. (Reynes vs.
Barrera, 68 Phil., 656; De Lara and De Guzman vs.
Ayroso, 50 O.G. No 10, 4838). The public shall then
be denied of its foremost motivation for respecting
and observing the Land Registration Act. In the
end, the business community stands to be
inconvenienced and prejudiced immeasurably.
Furthermore, when the Register of Deeds issued a
certificate of title in the name of John W. Legare,
and thereafter registered the same, John W.
Legare, insofar as third parties were concerned,
acquired valid title to the house and lot here
disputed. When, therefore, he transferred this title to
the herein petitioners, third persons, the entire
transaction fell within the purview of Article 1434 of
the Civil Code. The registration in John W. Legare's
name effectively operated to convey the
properties to him.
After executing the Deed of Sale with Bernardina
Abalon under fraudulent circumstances, Rellama
succeeded in obtaining a title in his name and

selling a portion of the property to the Andals, who
had no knowledge of the fraudulent circumstances
involving the transfer from Abalon to Rellama. In
fact, the Decisions of the RTC and the CA show no
factual findings or proof that would rebut the
presumption in favor of the Andals as buyers in
good faith. Thus, the CA correctly considered them
as buyers in good faith and upheld their title.
The Abalons counter this ruling and allege that the
CA erred in relying on Fuleto justify its assailed
Decision. They argue that Torres v. Court of
Appeals27 is the applicable ruling, because the
facts therein are on all fours with the instant case.28
In Torres, the subject property was covered by TCT
No. 53628 registered in the name of Mariano Torres.
His
brother-in-law
Francisco
Fernandez,
misrepresenting that the copy of the title had been
lost, succeeded in obtaining a court Order for the
issuance of another copy of TCT No. 53628. He then
forged a simulated deed of sale purportedly
showing that Torres had sold the property to him
and caused the cancellation of TCT No. 53628, as
well as the issuance of TCT No. 86018 in his name.
Soon, Fernandez mortgaged the property to Mota.
Upon learning of the fraud committed by
Fernandez, Torres caused the annotation of an
adverse claim on the formers copy and
succeeded in having Fernandezs title declared
null and void. Meanwhile, Mota was able to
foreclose on Fernandezs real estate mortgage, as
well as to cause the cancellation of TCT No. 86018
and the issuance of a new one TCT No. 105953 in
her name. The issue to be resolved in Torres was
whether Mota can be considered an innocent
mortgagee for value, and whether her title can be
deemed valid. Ruling in the negative, the Court
explained:
There is nothing on the records which shows that
Torres performed any act or omission which could
have jeopardized his peaceful dominion over his
realties. The decision under review, however, in
considering Mota an innocent mortgagee
protected under Section 65 of the Land
Registration Law, held that Torres was bound by the
mortgage. Inevitably, it pronounced that the
foreclosure sale, where Mota was the highest
bidder, also bound Torres and concluded that the
certificate of title issued in the name of Mota
prevails over that of Torres'. As correctly pointed out
by Torres, however, his properties were sold on
execution, and not on foreclosure sale, and hence,
the purchaser thereof was bound by his notice of
adverse claim and lis pendens annotated at the
back of Fernandez' TCT. Moreover, even if We
grant Mota the status of an innocent mortgagee,
the doctrine relied upon by the appellate court
that a forged instrument may become the root of a
valid title, cannot be applied where the owner still
holds a valid and existing certificate of title
covering the same interest in a realty. The doctrine
would apply rather when, as in the cases for
example of De la Cruz v. Fabie, 35 Phil. 144 [1916],
Page 122 of 158
Fule v. De Legare, No. L-17951, February 28, 1963, 7

SCRA 351, and Republic v. Umali, G.R. No. 80687,
April 10, 1989, the forger thru insidious means
obtains the owners duplicate certificate of title,
converts it in his name, and subsequently sells or
otherwise encumbers it to an innocent holder for
value, for in such a case the new certificate is
binding upon the owner (Sec.55, Act 496; Sec. 53,
P.D. No. 1529). But if the owner holds a valid and
existing certificate of title, his would be indefeasible
as against the whole world, and not that of the
innocent holder's. "Prior tempore potior jure" as We
have said in Register of Deeds v. Philippine National
Bank, No. L-17641, January 30, 1965, 13 SCRA 46,
citing Legarda v. Saleeby, 31 Phil.590, Roman
Catholic Bishop v. Philippine Railway, 49 Phil. 546,
Reyes v. Borbon, 50 Phil. 791.29 (Emphasis and
underscoring supplied)
We do not agree with the contention of the
Abalons that the ruling in Torresis controlling in this
case. They quoted a portion in the said case that is
clearly an obiter. In Torres, it was shown that
Mariano had annotated an adverse claim on the
title procured by Fernandez prior to the execution
sale, in which Mota was the highest bidder. This
Court declared her as a mortgagee in bad faith
because, at the back of Fernandezs title, Torres
made an annotation of the adverse claim and the
notice of lis pendens. The annotation of the
adverse claim was made while the forged
document was still in the name of the forger, who in
this case is Fernandez. That situation does not
obtain in the instant case.
The records of the RTC and the CA have a finding
that when Rellama sold the properties to the
Andals, it was still in his name; and there was no
annotation that would blight his clean title. To the
Andals, there was no doubt that Rellama was the
owner of the property being sold to them, and that
he had transmissible rights of ownership over the
said property. Thus, they had every right to rely on
the face of his title alone.
The established rule is that a forged deed is
generally null and cannot convey title, the
exception thereto, pursuant to Section 55 of the
Land Registration Act, denotes the registration of
titles from the forger to the innocent purchaser for
value. Thus, the qualifying point here is that there
must be a complete chain of registered titles.30This
means that all the transfers starting from the original
rightful owner to the innocent holder for value
and that includes the transfer to the forger must
be duly registered, and the title must be properly
issued to the transferee. Contrary to what the
Abalons would like to impress on us, Fuleand
Torresdo not present clashing views. In Fule, the
original owner relinquished physical possession of
her title and thus enabled the perpetrator to
commit the fraud, which resulted in the
cancellation of her title and the issuance of a new
one. The forged instrument eventually became the
root of a valid title in the hands of an innocent
purchaser for value. The new title under the name
of the forger was registered and relied upon by the

innocent purchaser for value. Hence, it was clear
that there was a complete chain of registered titles.
On the other hand in Torres, the original owner
retained possession of the title, but through fraud,
his brother-in-law secured a court order for the
issuance of a copy thereof. While the title was in
the name of the forger, the original owner
annotated the adverse claim on the forged
instrument. Thus, before the new title in the name of
the forger could be transferred to a third person, a
lien had already been annotated on its back. The
chain of registered titles was broken and sullied by
the original owners annotation of the adverse
claim. By this act, the mortgagee was shown to be
in bad faith.
In the instant case, there is no evidence that the
chain of registered titles was broken in the case of
the Andals. Neither were they proven to have
knowledge of anything that would make them
suspicious of the nature of Rellamas ownership
over the subject parcel of land. Hence, we sustain
the CAs ruling that the Andals were buyers in good
faith. Consequently, the validity of their title to the
parcel of the land bought from Rellama must be
upheld.
As for Spouses Peralta, we sustain the ruling of the
CA that they are indeed buyers in bad faith. The
appellate court made a factual finding that in
purchasing the subject property, they merely relied
on the photocopy of the title provided by Rellama.
The CA concluded that a mere photocopy of the
title should have made Spouses Peralta suspicious
that there was some flaw in the title of Rellama,
because he was not in possession of the original
copy. This factual finding was supported by
evidence.
The CA pointed out Spouses Peraltas Answer to the
Complaint of the Abalons in Case No. 9243 in the
RTC of Legaspi City, Branch 5. In their Answer, they
specifically alleged as follows:
2- These defendants [Spouses Peralta]
acquired lot No. 1679-A by purchase in
good faith and for value from Restituto
Rellama under Doc. No. 11212, page No.
26, Book No. 60, Series of 1996 of Notary
Public Atty. Otilio Bongon, Legaspi City on
March 2, 1995 copy of which is attached
as and made part of this answer as Exhibit
"1;"
3- That these defendants were handed
over by Rellama xerox [sic] copy of the
Transfer Certificate of Title No. 42103 issued
by the Register of Deed of Legaspi City on
the 2nd day of August 1995 copy attached
and made integral part as Exhibit "1-A" and
also Original Certificate of Title No. (O) 16
as Exhibit "1-B"31
We have no reason to disturb this factual finding of
the CA because it is supported by the evidence on
record. Spouses Peralta filed a Petition for Review
on Certiorari under Rule 45, which allows only
questions of law to be raised. It is a settled rule that
Page 123 of 158
questions of fact are not reviewable in this kind of

appeal. Under Rule 45, Section 1, "petitions for
review on certiorari shall raise only questions of law
which must be distinctly set forth."32 A question of
fact arises when there is "as to the truth or
falsehood of facts or when there is a need to
calibrate the whole evidence considering mainly
the credibility of the witnesses, the existence and
relevancy of specific surrounding circumstances, as
well as their relation to each other and to the
whole, and the probability of the situation."33 It is
further pointed out that "the determination of
whether one is a buyer in good faith is a factual
issue, which generally is outside the province of this
Court to determine in a petition for review."34
Whether or not Spouses Peralta are buyers in good
faith, is without a doubt, a factual issue. Although
this rule admits of exceptions,35 none of these
applies to their case. There is no conflict between
the factual findings and legal conclusions of the
RTC and those of the CA, both of which found
them to be buyers in bad faith. The fact that they
did not participate in the proceedings before the
lower court does not help their case either.
On the issue of the legal standing of the Abalons to
file this case, we find that the CA correctly upheld
their standing as heirs of the deceased Bernardina
Abalon. The appellate court ruled that during her
lifetime, Bernardina Abalon had promised her heirs
- siblings Mansueto and Amelia - that she would
give them the subject property. A duplicate copy
of OCT No. (0) 16 was delivered to them upon her
death. Thus, the CA concluded that the two siblings
acquired the subject property by ordinary
prescription. Further, it deduced that the mode of
transmission of the property from Bernardina to her
nephew and niece was a form of donation mortis
causa, though without the benefit of a
will.36 Despite this omission, it still held that Mansueto
and Amelia acquired the subject property through
ordinary acquisitive prescription because, since the
death of their aunt Bernardina, they had been in
possession of the property for more than 10 years
that ripened into full ownership.37
Under Article 97538 of the Civil Code, siblings
Mansueto and Amelia Abalon are the legal heirs of
Bernardina, the latter having had no issue during
her marriage. As such, they succeeded to her
estate when she passed away. While we agree
with the CA that the donation mortis causa was
invalid in the absence of a will, it erred in
concluding that the heirs acquired the subject
property through ordinary acquisitive prescription.
The subject parcel of land is a titled property; thus,
acquisitive prescription is not applicable.39 Upon
the death of Bernardina, Mansueto and Amelia,
being her legal heirs, acquired the subject property
by virtue of succession, and not by ordinary
acquisitive prescription.
WHEREFORE, the petitions in G.R. Nos. 183448 and
183464 are DENIED for lack of merit. The Decision in
CA-G.R. CV No. 85542 is hereby AFFIRMED.
SO ORDERED.
#30
FIRST DIVISION
G.R. No. 160107, October 22, 2014
SPOUSES JAIME SEBASTIAN AND EVANGELINE
SEBASTIAN, Petitioners, v. BPI FAMILY BANK, INC.,
CARMELITA ITAPO AND BENJAMIN
HAO, Respondents.
DECISION
BERSAMIN, J.:
The protection of Republic Act No. 6552 (Realty
Installment Buyer Protection Act) does not cover a
loan extended by the employer to enable its
employee to finance the purchase of a house and
lot. The law protects only a buyer acquiring the
property by installment, not a borrower whose rights
are governed by the terms of the loan from the
employer.
The Case
Under appeal is the decision promulgated on
November 21, 2002,1 whereby the Court of Appeals
(CA) affirmed the dismissal of the action for
injunction filed by the petitioners against the
respondents to prevent the foreclosure of the
mortgage constituted on the house and lot
acquired out of the proceeds of the loan from
respondent BPI Family Bank (BPI Family), their
employer.
Antecedents
The petitioners are spouses who used to work for BPI
Family. At the time material to this case, Jaime was
the Branch Manager of BPI Familys San Francisco
del Monte Branch in Quezon City and Evangeline
was a bank teller at the Blumentritt Branch in
Manila. On October 30, 1987, they availed
themselves of a housing loan from BPI Family as one
of the benefits extended to its employees. Their
loan amounted to P273,000.00, and was covered
by a Loan Agreement,2 whereby they agreed that
the loan would be payable in 108 equal monthly
amortizations of P3,277.57 starting on January 10,
1988 until December 10, 1996;3 and that the
monthly amortizations would be deducted from his
monthly salary.4 To secure the payment of the loan,
they executed a real estate mortgage in favor of
BPI Family5 over the property situated in Bo. Ibayo,
Marilao, Bulacan and covered by TCT No. T-30.827
(M) of the Register of Deeds of Bulacan.6
Apart from the loan agreement and the real estate
mortgage, Jaime signed an undated lettermemorandum addressed to BPI Family,7 stating as
follows:chanRoblesvirtualLawlibrary
In connection with the loan extended to me by BPI
Family Bank, I hereby authorize you to
automatically deduct an amount from my salary or
any money due to me to be applied to my loan,
more
particularly
described
as
Page 124 of 158
This authority is irrevocable and shall continue to

exist until my loan is fully paid. I hereby declare
that I have signed this authority fully aware of the
circumstances leading to the loan extended to me
by BPI Family Bank and with full knowledge of the
rights, obligations, and liabilities of a borrower
under
the
law.
I am an employee of BPI Family Bank and I
acknowledge that BPI Family Bank has granted to
me the above-mentioned loan in consideration of
this relationship. In the event I leave, resign or am
discharged from the service of BPI Family Bank or
my employment with BPI Family Bank is otherwise
terminated, I also authorize you to apply any
amount due me from BPI Family Bank to the
payment of the outstanding principal amount of the
aforesaid loan and the interest accrued thereon
which shall thereupon become entirely due and
demandable on the effective date of such
discharge, resignation or termination without need
of notice of demand, and to do such other acts as
may be necessary under the circumstances. (Bold
emphasis
added)
x x x x.
The petitioners monthly loan amortizations were
regularly deducted from Jaimes monthly salary
since January 10, 1988. On December 14, 1989,
however, Jaime received a notice of termination
from BPI Familys Vice President, Severino P.
Coronacion,8 informing him that he had been
terminated from employment due to loss of trust
and confidence resulting from his wilful nonobservance of standard operating procedures and
banking laws. Evangeline also received a notice of
termination dated February 23, 1990,9 telling her of
the cessation of her employment on the ground of
abandonment. Both notices contained a demand
for the full payment of their outstanding loans from
BPI Family, viz:chanRoblesvirtualLawlibrary
Demand is also made upon you to pay in full
whatever outstanding obligations by way of
Housing Loans, Salary Loans, etc. that you may
have with the bank. You are well aware that said
obligations become due and demandable upon
your separation from the service of the
bank.10 (Emphasis supplied.)
Immediately, the petitioners filed a complaint for
illegal dismissal against BPI Family in the National
Labor
Relations
Commission
(NLRC).11
About a year after their termination from
employment, the petitioners received a demand
letter dated January 28, 1991 from BPI Familys
counsel requiring them to pay their total
outstanding obligation amounting to P221,534.50.12
The demand letter stated that their entire
outstanding balance had become due and
demandable upon their separation from BPI

Family. They replied through their counsel on
February
12,
1991.13
In the meantime, BPI Family instituted a petition for
the foreclosure of the real estate mortgage.14 The
petitioners received on March 6, 1991 the notice of
extrajudicial foreclosure of mortgage dated
February
21,
1991.
To prevent the foreclosure of their property, the
petitioners filed against the respondents their
complaint for injunction and damages with
application
for
preliminary
injunction
and
restraining order15 in the Regional Trial Court (RTC)
in Malolos, Bulacan.16 They therein alleged that
their obligation was not yet due and demandable
considering that the legality of their dismissal was
still pending resolution by the labor court; hence,
there was yet no basis for the foreclosure of the
mortgaged property; and that the property sought
to be foreclosed was a family dwelling in which
they
and
their
four
children
resided.
In its answer with counterclaim,17 BPI Family
asserted that the loan extended to the petitioners
was a special privilege granted to its employees;
that the privilege was coterminous with the tenure
of the employees with the company; and that the
foreclosure of the mortgaged property was justified
by the petitioners failure to pay their past due loan
balance.
Judgment of the RTC
On
June
27,
1995,
the
RTC
rendered
judgment,18 disposing
thusly:chanRoblesvirtualLawlibrary
IN VIEW OF THE FOREGOING CONSIDERATIONS, the
Court hereby renders judgment DISMISSING the
instant case as well as defendant banks
counterclaim without any pronouncement as to
costs.
SO ORDERED.19
Decision
of
the
CA
The petitioners appealed upon the following

assignment
of
errors,
namely:chanRoblesvirtualLawlibrary
I. THE TRIAL COURT ERRED IN FINDING THAT APPELLEE
BANKS FORECLOSURE OF THE REAL ESTATE
MORTGAGE CONSTITUTED ON APPELLANTS FAMILY
HOME WAS IN ORDER.
A. Appellants cannot be considered as
terminated from their employment with
appellee bank during the pendency of
their complaint for illegal dismissal with the
NLRC.
B. Appellee bank wrongfully refused to
accept the payments of appellants
monthly amortizations.
Page 125 of 158
II. THE TRIAL COUT ERRED IN DENYING APPELLANTS

PRAYER FOR INJUNCTION.
A. The foreclosure of appellants mortgage
was premature.
B. Appellants are entitled to damages.20
On November 21, 2002, the CA promulgated its
assailed decision affirming the judgment of the
RTC in
toto.21
The petitioners then filed their motion for
reconsideration,22 in which they contended for the
first timethat their rights under Republic Act No.
6552 (Realty Installment Buyer Protection Act) had
been disregarded, considering that Section 3 of the
law entitled them to a grace period within which to
settle their unpaid installments without interest; and
that the loan agreement was in the nature of a
contract of adhesion that must be construed strictly
against the one who prepared it, that is, BPI Family
itself.
On September 18, 2003, the CA denied the
petitioners motion for reconsideration.23
Issues
In this appeal, the petitioners submit for our
consideration and resolution the following issues, to
WHETHER OR NOT RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN DECLARING THE FORECLOSURE
OF THE REAL ESTATE MORTGAGE ON PETITIONERS
FAMILY
HOME
IN
ORDER.
WHETHER OR NOT RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN DENYING PETITIONERS MOTION
FOR
RECONSIDERATION
DESPITE
JUSTIFIABLE
REASONS THEREFOR.24
Ruling
The
petition
for
review
has
no
merit.
When the petitioners appealed the RTC decision to

the CA, their appellants brief limited the issues to
the following:chanRoblesvirtualLawlibrary
(a) Whether or not appellee bank wrongfully
refused to accept payments by appellants of their
monthly
amortizations.
(b) Whether or not the foreclosure of appellants
real estate mortgage was premature. 25cralawred
The CA confined its resolution to these issues.
Accordingly, the petitioners could not raise the
applicability of Republic Act No. 6552, or the strict
construction of the loan agreement for being a
contract of adhesion as issues for the first time
either in their motion for reconsideration or in their
petition filed in this Court. To allow them to do so
would violate the adverse parties right to fairness
and due process. As the Court held in S.C.
Megaworld
Construction
and
Development
Corporation v. Parada:26
It is well-settled that no question will be entertained
on appeal unless it has been raised in the
proceedings below. Points of law, theories, issues
and arguments not brought to the attention of the
lower court, administrative agency or quasi-judicial
body, need not be considered by the viewing
court, as they cannot be raised for the first time at
that late stage. Basic considerations of fairness and
due process impel this rule. Any issue raised for the
first time on appeal is barred by estoppel.
The procedural misstep of the petitioners
notwithstanding, the Court finds no substantial basis
to reverse the judgments of the lower courts.
Republic Act No. 6552 was enacted to protect
buyers of real estate on installment payments
against onerous and oppressive conditions.27 The
protections accorded to the buyers were
embodied in Sections 3, 4 and 5 of the law, to
Section 3. In all transactions or contracts, involving
the sale or financing of real estate on installment
payments, including residential condominium
apartments
but
excluding
industrial
lots,
commercial buildings and sales to tenants under
Republic Act Numbered Thirty-Eight hundred fortyfour as amended by Republic Act Sixty-three
hundred eighty-nine, where the buyer has paid at
least two years of installments, the buyer is entitled
to the following rights in case he defaults in the
payment
of
succeeding
installments:chanRoblesvirtualLawlibrary
(a) To pay, without additional interest, the unpaid
installments due within the total grace period
earned by him which is hereby fixed at that rate of
one month grace period for every one year of
installment payments made; provided, That this
right shall be exercised by the Buyer only once in
every five years of the life of the contract and its
extensions,
if
any.
(b) If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty
percent of the total payments made, and, after
five years of installments, an additional five per
cent every year but not to exceed ninety per cent
of the total payments made; Provided, That the
actual cancellation or the demand for rescission of
the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
Down payments, deposits or options on the
contract shall be included in the computation of
the total number of installment payments made.
SECTION 4. In case where less than two years of
installments were paid, the seller shall give the
buyers a grace period of not less than sixty days
Page 126 of 158
from the date the installment become due.

If the buyer fails to pay the installments due at the
expiration of the grace period, the seller may
cancel the contract after thirty days from receipt
by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial
act.
SECTION 5. Under Section 3 and 4, the buyer shall
have the right to sell his rights or assign the same to
another person or to reinstate the contract by
updating the account during the grace period and
before actual cancellation of the contract. The
deed of sale or assignment shall be done by
notarial act.
Having paid monthly amortizations for two years
and four months, the petitioners now insist that they
were entitled to the grace period within which to
settle the unpaid amortizations without interest
provided under Section 3, supra.28 Otherwise, the
foreclosure of the mortgaged property should be
deemed premature inasmuch as their obligation
was
not
yet
due
and
demandable.29
The petitioners insistence would have been correct
if the monthly amortizations being paid to BPI
Family arose from a sale or financing of real estate.
In their case, however, the monthly amortizations
represented the installment payments of a housing
loan that BPI Family had extended to them as an
employees benefit. The monthly amortizations they
were liable for was derived from a loan transaction,
not a sale transaction, thereby giving rise to a
lender-borrower relationship between BPI Family
and the petitioners. It bears emphasizing that
Republic Act No. 6552 aimed to protect buyers of
real estate on installment payments, not borrowers
or mortgagors who obtained a housing loan to pay
the costs of their purchase of real estate and used
the real estate as security for their loan. The
financing of real estate in installment payments
referred to in Section 3, supra, should be construed
only as a mode of payment vis--vis the seller of the
real estate, and excluded the concept of bank
financing that was a type of loan. Accordingly,
Sections 3, 4 and 5, supra, must be read as to grant
certain rights only to defaulting buyers of real
estate on installment, which rights are properly
demandable only against the seller of real estate.
Thus, in Luzon Brokerage Co., Inc. v. Maritime
Building
Co.,
Inc.,30 the
Court
held:chanRoblesvirtualLawlibrary
Congress in enacting in September 1972 Republic
Act 6552 (the Maceda law), has by law which is its
proper and exclusive province (and not that of this
Court which is not supposed to legislate judicially)
has taken care of Justice Barredos concern over
the unhappy and helpless plight of thousands
upon
thousands
of
subdivision
buyers
of residential lots.
The Act even in residential properties recognizes

and reaffirms the vendor's right to cancel the
contract to sell upon breach and non-payment of
the stipulated installments but requires a grace
period after at least two years of regular installment
payments (of one month for every one year of
installment payments made, but to be exercise by
the buyer only once in every five years of the life of
the contract) with a refund of certain percentages
of payments made on account of the cancelled
contract (starting with fifty percent with gradually
increasing percentages after five years of
installments). In case of industrial and commercial
properties, as in the case at bar, the Act recognizes
and reaffirms the Vendor's right unqualifiedly to
cancel the sale upon the buyer's default.
The petitioners purchased the real estate from
PHILVILLE Realty,31 not from BPI Family. Without the
buyer-seller relationship between them and BPI
Family, the provisions of Republic Act No. 6552 were
inapplicable and could not be invoked by them
against
BPI
Family.
Apart from relying on the grace period provided in
Republic Act No. 6552 to assert the prematurity of
the foreclosure of the mortgage,32 the petitioners
argue that the foreclosure of the mortgage was null
and void because BPI Familys acceptance of their
late payments estopped it from invoking sanctions
against them.33 They further argue that the printed
conditions appearing at the back of BPI Familys
official receipt,34 which the CA cited to affirm the
validity of the foreclosure, partook of a contract of
adhesion that must be strictly construed against BPI
Family as the party who prepared the same.35
The petitioners arguments do not persuade. To
reiterate, their reliance on Republic Act No. 6552
was misplaced because its provisions could not
extend to a situation bereft of any seller-buyer
relationship. Hence, they could not escape the
consequences of the maturity of their obligation by
invoking the grace period provided in Section
3, supra.
The CA correctly found that there was basis to
declare the petitioners entire outstanding loan
obligation mature as to warrant the foreclosure of
their mortgage. It is settled that foreclosure is valid
only when the debtor is in default in the payment
of his obligation.36 Here, the records show that the
petitioners were defaulting borrowers, a fact that
the CA thoroughly explained in the following
manner:chanRoblesvirtualLawlibrary
Appellants insist that there was no valid ground for
appellee bank to institute the foreclosure
proceedings because they still have a pending
case for illegal dismissal before the NLRC. They
argue that the reason for the banks foreclosure is
their dismissal from employment. As they are still
questioning the illegality of their dismissal, the bank
Page 127 of 158
has no legal basis in foreclosing the property.

x
The
x
arguments
x
fail
to
x
persuade
Us.
First, appellants cannot rely on the mere possibility

that if the decision of the NLRC will be in their favor,
part of the reliefs prayed for would be
reinstatement without loss of seniority and other
privilege. Such argument is highly speculative. On
the contrary, in a thirteen-page decision, the Labor
Arbiter exhaustively discussed the validity of
appellant Jaime Sebastians termination. x x x
x
Second, even if it turns out the appellants were not

validly terminated from their employment, there is
valid reason to foreclose the mortgaged property.
Appellants themselves admit that they were in
arrears when they made the late payments in
March, 1991. While this admission was not in the
course of the testimony of appellant Jaime
Sebastian, this was done during the hearing of the
case when the trial judge propounded the
question to him. Hence, this constitute (sic) judicial
admission. An admission, verbal or written, made
by a party in the course of the trial or other
proceedings in the same case does not require
proof. The admission may be contradicted only by
showing that it was made through palpable
mistake or that no such admission is made. Judicial
admissions are those made voluntarily by a party,
which appear on record in the proceedings of the
court. Formal acts done by a party or his attorney
in court on the trial of a cause for the purpose of
dispensing with proof by the opposing party of
some fact claimed by the latter to be true.
x
Courts are not authorized to extricate parties from

the necessary consequences of their acts, and the
fact that the contractual stipulations may turn out
to be financially disadvantageous will not relieve
parties
thereto
of
their
obligations,
Moreover, appellants appealed the Labor Arbiters

decision as early as January 10, 1994. To date,
however, nothing has been heard from appellants
if they obtained a favorable judgment from the
NLRC.
to appellee bank, even acknowledged that in the

event of resignation or otherwise terminated from
his employment, the principal as well as the interest
due shall become entirely due and demandable
(Exh. E). The freedom to enter into contracts is
protected by law and the courts are not quick to
interfere with such freedom unless the contract is
contrary to law, morals, good customs, public
policy
or
public
order.
Fourth, the terms and conditions of the loan

agreement, promissory notes and the real estate
mortgage contract, do not partake of a contract
of adhesion. It must be noted that appellants are
personnel of the bank. Jaime Sebastian was then a
branch manager while his wife Evangeline was a
bank teller. It is safe to conclude that they are
familiar with the documents they signed, including
the conditions stated therein. It is also presumed
that they take ordinary care of their concerns and
that they voluntarily and knowingly signed the
contract.
Appellant Jaime Sebastian, in his letter addressed
Fifth, We cannot also buy appellants argument

that appellee refused to accept the subsequent
payments made by them. It is settled that an issue
which was not raised during the trial in the court
below could not be raised for the first time on
appeal, as to do so, would be offensive to the
basic rules of fair play, justice and due process.
Here, appellant Jaime Sebastian twice testified
before the Court, first, during the hearing on the
preliminary injunction and on the trial proper.
Nothing was mentioned about the refusal on the
part of the bank to accept their subsequent
payments.
Assuming, arguendo, that appellee bank indeed
refused to accept the subsequent payment from
appellants, they could have consigned the same
before the Court. They failed to do so. There was
no effort on their part to continue paying their
obligations.
Thus, having signed a deed of mortgage in favor of
appellee bank, appellants should have foreseen
that when their principal obligation was not paid
when due, the mortgagee has the right to
foreclose the mortgage and to have the property
seized and sold with a view to applying the
proceeds to the payment of the principal
obligation.37
Equally notable was that Jaimes undated lettermemorandum to BPI Family expressly stated the
following:chanRoblesvirtualLawlibrary
x x x In the event I leave, resign or am discharged
from the service of BPI Family Bank or my
employment with BPI Family Bank is otherwise
terminated, I also authorize you to apply any
amount due me from BPI Family Bank to the
payment of the outstanding principal amount of
the aforesaid loan and the interest accrued
thereon which shall thereupon become entirely
due and demandable on the effective date of
suchdischarge, resignation or termination without
need of notice of demand, and to do such other
acts
as
may
be
necessary
under
the
circumstances.38 (Bold emphasis supplied.)
Page 128 of 158
The petitioners thereby explicitly acknowledged

that BPI Family Bank had granted the housing loan
in consideration of their employer-employee
relationship. They were thus presumed to
understand the conditions for the grant of their
housing loan. Considering that the maturity of their
loan obligation did not depend on the legality of
their termination from employment, their assertion
that the resolution of their labor complaint for illegal
dismissal was prejudicial to the ripening of BPI
Familys cause of action was properly rejected.
Indeed, a finding of illegal dismissal in their favor
would not automatically and exclusively result in
their reinstatement. As fittingly ruled in Bani Rural
Bank, Inc. v. De Guzman:39
By jurisprudence derived from this provision,
separation pay may [also] be awarded to an
illegally
dismissed
employee
in
lieu
of
reinstatement. Section 4(b), Rule I of the Rules
Implementing Book VI of the Labor Code provides
the following instances when the award of
separation pay, in lieu of reinstatement to an
illegally dismissed employee, is proper: (a) when
reinstatement is no longer possible, in cases where
the dismissed employee s position is no longer
available; (b) the continued relationship between
the employer and the employee is no longer viable
due to the strained relations between them;
and (c)when the dismissed employee opted not to
be reinstated, or the payment of separation
benefits would be for the best interest of the parties
involved. In these instances, separation pay is the
alternative remedy to reinstatement in addition to
the award of backwages. The payment of
separation pay and reinstatement are exclusive
remedies. The payment of separation pay replaces
the legal consequences of reinstatement to an
employee who was illegally dismissed.
Nonetheless, it is noteworthy that the Labor Arbiter
ultimately ruled that Jaimes dismissal was valid and
legal. Such ruling affirmed the legality of the
termination
of
James
from
BPI
Familys
employment. Under the circumstances, the entire
unpaid balance of the housing loan extended to
him by BPI Family became due and demandable
upon such termination in accordance with Jaimes
express and written commitment to BPI Family. Even
if we were to disregard this condition, their
admission of default in their monthly amortizations
constituted an event of default within the context
of Section 7 of the loan agreement that produced
the same effect of rendering any outstanding loan
balance due and demandable. Section 7 the loan
agreement
reads
as
SECTION
7.
EVENTS
OF
DEFAULT
If any of the following Events of Default shall have
occurred
and
be
continuing:chanRoblesvirtualLawlibrary
a) The
Loan(s)
amount
or
x
Borrower shall fail to pay when due the

any installment thereof, or any other
payable under this Agreement the Note(s)
under
the
Collateral;
or
x
then, and in any such event, the Bank may by

written notice to the Borrower cancel the
Commitment and/or declare all amounts owing to
the Bank under this Agreement and the Note(s),
whether of principal, interest or otherwise, to be
forthwith due and payable, whereupon all such
amounts shall become immediately due and
payable without demand or other notice of any
kind, all of which are expressly waived by the
Borrower. The Borrower shall pay on demand by
the Bank, in respect of any amount or principal
paid in advance of stated maturity pursuant to this
Section 7, a prepayment penalty equal to the rate
mentioned in Section 2.07 (c).40
With demand, albeit unnecessary, having been
made on the petitioners, they were undoubtedly in
default
in
their
obligations.
The foreclosure of a mortgage is but the necessary
consequence of the non-payment of an obligation
secured by the mortgage. Where the parties have
stipulated in their agreement, mortgage contract
and promissory note that the mortgagee is
authorized to foreclose the mortgage upon the
mortgagors default, the mortgagee has a clear
right to the foreclosure in case of the mortgagors
default. Thereby, the issuance of a writ of
preliminary injunction upon the application of the
mortgagor to prevent the foreclosure will be
improper.41 As such, the lower courts did not err in
dismissing the injunction complaint of the
petitioners.
WHEREFORE, the Court DENIES the petition for
review
on certiorari; AFFIRMS the
decision
promulgated
on
November
21,
2002;
and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.chanroblesvirtuallawlibrary
#32
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 192717
March 12, 2014
MINDA S. GAERLAN, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, seeking to annul and set aside the
Page 129 of 158
Decision1 dated March 11 , 2010 and the

Resolution2 dated May 20, 2010 of the Court of
Appeals (CA) in CA-G.R. CV No. 00319-MIN. The CA
had reversed and set aside the Judgment3 of the
Regional Trial Court (RTC) ofMisamis Oriental,
Branch 20, in LRC No. 92-05 and dismissed the
application for registration of title filed by petitioner
Minda S. Gaerlan.
The records bear out the following factual
antecedents:
On April 10, 1992, petitioner filed an Application4 for
original registration of title over a parcel of land
known as Lot 18793, Cad-237 of Cagayan
Cadastre, with an area of 1,061 square meters,
more or less, and particularly described as follows:
A parcel of land situated at Patag, Cagayan de
Oro City. Bounded on the North, by Lot 835, Cag.
Cad; on the East, by Lot No. 4342-A of Subd. Plan;
on the South, by Lot 4342-K of Subd. Plan; and on
the West, by lot 4342-C of Subd. Plan with an area
of ONE THOUSAND SIXTY ONE (1,061) SQUARE
METERS more or less (Lot 4342-B - Sketch Plan).5
In her application, petitioner alleged that she
acquired the above-mentioned property from
Mamerta Tan in November 1989 by virtue of a
Deed of Absolute Sale of Unregistered Land.6 She
had the property declared for taxation purposes
under her name and was issued Tax Declaration
Nos. 998937 and 05 83 51.8 Attached to the
application are the following documents:
(a) Original Tracing Cloth Plan together
with the three (3) Blue print copies;9
(b) Technical Description of the parcel of
land;10
(c) Surveyor's Report of Survey or Surveyor' s
Certificate;11
(d) Deed of Absolute Sale of Unregistered
Land;12 and
(e) Tax Declaration No. 99893.13
After finding petitioner's application sufficient in
form and substance, the trial court set the case for
initial hearing.
On August 25, 1992, the Republic of the Philippines,
through the Office of the Solicitor General (OSG),
filed an Opposition14 to petitioner's application for
registration on the ground that (1) neither petitioner
nor her predecessors-in-interest have been in open,
occupation of the subject land since June 12, 1945
or earlier; (2) the muniments of title and tax
declarations attached to the petition do not
constitute competent and sufficient evidence of a
bona fide acquisition of the subject land; (3) the
claim of ownership based on Spanish title is no
longer available for purposes of registration; and (4)
the subject land is a portion of the public domain,
hence, not registrable.
During the hearing, petitioner testified that (1) she is
the applicant for registration of a parcel of land
located at Buenavista Village, Carmen, Patag,
Cagayan de Oro City, known as Lot 18793, Cad237, Cagayan Cadastre, containing an area of
1,061 square meters; (2) that she acquired said land
through sale on November 28, 1989 from Mamerta

Tan; (3) that after the sale, she declared the
property for taxation purposes under her name; (4)
that she was issued Tax Declaration Nos. 99893 and
058351 ; (5) that she has been religiously paying
taxes thereon since 1989 up to 1991; and ( 6) that
she took possession of the land and caused its
survey.15
Petitioner also presented Mamerta Tan who
testified that she is the vendor of the land subject of
the present application and that she sold the land
to petitioner in 1989. Mamerta averred that she
became the owner of the said property in 1975
after she bought the land from Teresita Tan. She
declared the property under her name for taxation
purposes under Tax Declaration No. 36942.16
Another witness, Mr. Honesto Velez, the City
Assessor of Cagayan de Oro City, testified that he
issued certifications or certified copies of records on
file in his office and he identified the certified
photocopy of the Land History Card17 pertaining to
Cadastral Lot 4342, Case No. 4 situated at Patag,
Cagayan de Oro City under the name of cadastral
claimant Potenciano Abragan. The history card
started with Tax Declaration No. 1645 in the name
of Potenciano Abragan. Later, another tax
declaration, Tax Declaration No. 37129 in the name
of Presentacion Eviofa, was issued. This tax
declaration was subsequently replaced by Tax
Declaration No. 37130. He stated that based on the
records in their office, it appeared that petitioner is
the owner of Lot 4342. Another claimant is
Presentacion Eviota and the remaining portion was
in the name of Potenciano Abragan. Presentacion
Eviota was also issued a tax declaration, Tax
Declaration No. 124750 covering an area of 897
square meters, but not involving the same parcel of
land. Eviota's land was only a portion of Lot 4342.
The original area of the land claimed by Abragan is
12,293 square meters.18
City Assessor Velez further testified that their records
showed that petitioner possessed a 1,061-square
meter portion of Lot 4342 covered by Tax
Declaration No. 058351. All the transfers made over
portions of this parcel of land were all recorded in
the land history card on file with their office, thus
paving the way for the issuance of corresponding
tax declaration to its new owners.19
Petitioner also presented and offered the following
exhibits20 to support her application for registration
of title, to wit:
1) Deed of Absolute Sale of Unregistered
Land,
2) Tax Declaration Nos. 99893 and 058351 ,
3) Tax Receipts,
4) Certified True Copy of Land History Card,
5) Tax Declaration in the name of
Potenciano Abragan,
Presentacion T. Eviota,
Potenciano Abragan.
Page 130 of 158
On November 20, 2001, the trial court rendered

Judgment21 granting petitioner's application for
registration of title. The dispositive portion of the
decision reads:
There being no evidence presented by the
oppositor, JUDGMENT is hereby rendered finding
applicant Minda S. Gaerlan as owner in fee simple
of the land subject of this application and hereby
decreeing that Lot 18793, Cad-237, Cagayan
Cadastre, containing an area of One Thousand
Sixty One (1 ,061) square meters, more or less, be
registered in her name [in] accordance with the
technical description attached to the application.
SO ORDERED.22
The Republic, through the OSG, appealed from the
aforementioned decision asserting that the trial
court erred in ruling that the subject parcel of land
is available for private appropriation. The appeal
was docketed as CA-G.R. CV No. 00319-MIN.
On March 11, 2010, the CA rendered a
Decision23 reversing and setting aside the ruling of
the trial court and dismissing the application for
registration of title filed by petitioner.
The CA found that petitioner failed to present any
proof to establish that the subject land is alienable
and disposable. The CA stressed that the applicant
for land registration must prove that the
Department of Environment and Natural Resources
(DENR) Secretary had approved the land
domain as alienable and disposable and that the
land subject of the application falls within the
approved area per verification through survey by
the Provincial Environment and Natural Resources
Offices (PENRO) or Community Environment and
Natural Resources Offices (CENRO). In addition, the
CA held that the applicant must present a copy of
the original classification approved by the DENR
Secretary and certified as true copy by the legal
custodian of the official records. Moreover, the CA
observed that there is no evidence on record to
establish that petitioner, by herself or through her
predecessors-in-interest, had been in open,
occupation of the subject land and that she
possessed the subject land since June 12, 1945 or
earlier. Thus, the appellate court ruled that
petitioner is not entitled to registration under
Section 14(1) of Presidential Decree (P.D.) No.
1529.24
Hence, petitioner is now before us claiming that the
CA erred in denying her application for registration
of title.
Petitioner asserts that her predecessor-in-interest,
Potenciano Abragan, possessed the subject
property as early as 1929. She claims Potenciano
was the one who asked for the original survey of Lot
4342, Cad-23 7 with an original land area of 12,293
square meters, situated in Patag, Cagayan de Oro
City. She averred that the property subject of the
present application consisting of an area of 1,061
square meters and known as Lot 18793, Cad-237, is
a portion of Lot 4342, Cad-237. In support of her
claim, petitioner seeks to submit as additional

evidence Bureau of Lands (BL) Form No. 700-2A25 of
the Land Management Services which conducted
a survey on Lot 4342, Cad-237 on November 28,
1929 with Potenciano Abragan as the Cadastral
Survey Claimant.
Petitioner also maintains that the subject land is
alienable and disposable land of the public
domain and this land classification has long been
approved by the DENR Secretary. She points out
that during the entire period of possession of
Potenciano Abragan, the subject land had already
been classified as alienable and disposable land.
To support her claim, petitioner submits as
additional evidence the Certification26 issued by
the CENRO stating that a parcel of land
designated as Lot 4342, Cad-237 located in Patag,
Cagayan de Oro City containing a total area of
12,293 square meters more or less falls within an
area classified as Alienable and Disposable under
Project 8, Block I and Land Classification (LC) Map
No. 5 85 certified and approved on December 31,
1925. She prays that she be allowed with leave of,
court to submit the aforementioned document in
support of her application for registration.
Furthermore, petitioner claims that she and her
witnesses had testified on the issue of actual, open,
occupation of the subject land, including the act
of declaring the subject lot for tax purposes in their
names and religiously paying the taxes of the land
to the government. Thus, petitioner argues that the
CA erred in not declaring that she is entitled to
registration of the subject land.
Respondent,
through
the
OSG,
filed
a
Comment27 asserting that only questions of law
may be raised in a petition filed under Rule 45 of
the 1997 Rules of Civil Procedure, as amended.
Respondent posits that in the present case,
petitioner, for the first time and only in the present
appeal, seeks the admission to evidence of the
following: (1) the Certification dated July 16, 2010
issued by the CENRO in Cagayan de Oro City to
prove that Lot 4342, Cad-23 7 located in Patag,
Cagayan de Oro City falls within the alienable and
disposable area under Project No. 8, Block I and LC
Map No. 585 which was certified and approved on
December 31, 1925 and (2) BL Form No. 700-2A
which shows that Potenciano Abragan was the
original claimant of the entire land denominated as
Lot 4342 since 1929, to prove her supposed
acquisitive prescription of the contested lot.
Respondent argues that petitioner's attempt to
introduce additional evidence is impermissible as its
introduction would involve a review and
assessment of the evidence on record. Respondent
adds that the determination of the probative value
of evidence is a question of fact which is beyond
the province of a petition for review on certiorari.
Petitioner should have offered the aforementioned
documents before the land registration court and
while the case was pending appeal before the CA
Page 131 of 158
as it is an appellate court with authority to receive

evidence.
Moreover, respondent points out that BL Form No.
700-2A submitted by petitioner named Potenciano
Abragan as the original claimant of the entire area
known as Lot 4342 but the same document does
not show that petitioner is likewise a claimant of a
part of Lot 4342 or that she derived title to the lot in
question from Potenciano Abragan. Petitioner's
possession only started in 1989 when she acquired
the lot from Mamerta Tan who in turn acquired the
lot from Teresita Tan. But there is no clear evidence
showing how, when and from whom Teresita Tan
acquired the subject lot.
Respondent cites the rule that the applicant for
registration must be able to establish by evidence
that he and his predecessor-in-interest have
exercised acts of dominion over the lot under a
bona fide claim of ownership since June 12, 1945 or
earlier. It is respondent's contention that even if said
BL Form No. 700-2A were considered in this appeal,
it would not help petitioner's cause because the
document is bereft of any information showing that
petitioner has been in open, continuous, exclusive
and notorious possession of the subject lot since
June 12, 1945 or earlier.
Hence, respondent maintains that the CA properly
reversed and set aside the trial court's ruling
granting petitioner's application for land registration
since petitioner failed to offer in evidence the
necessary certification that the parcel of land
applied for registration is alienable and disposable
in character during the proceedings below.
Petitioner also did not present any certification from
the DENR or a certified copy of any land
classification map in order to establish irrefutably
the fact that the subject parcel of land is, in fact,
alienable and disposable. Respondent claims that
in the absence of such classification the land
remains an unclassified land until it is released
therefrom and rendered open to disposition.
Also, respondent avers that petitioner failed to
present specific acts that would show the nature of
her possession and that of her predecessors-ininterest. The trial court's decision merely relied on
the testimony of petitioner and her witnesses
regarding the transfer of possession of the subject
property from one possessor to another without,
however, adverting to the particulars of their
respective possession thereof. To prove adverse
possession, it is not enough to simply declare one's
possession
and
that
of
the
petitioner's
predecessors-in-interest to have been adverse,
continuous, open, public, peaceful and in the
concept of owner for the required number of years.
The applicant should present specific acts that
would show such nature of possession. Thus,
according to respondent, petitioner has failed to
positively establish a registrable title to the subject
parcel of land.
Essentially, the main issue to be resolved is whether
the CA erred in dismissing petitioner's application
for registration of title.
Prefatorily, we address the issue raised by

respondent that only questions of law may be
raised in a petition for review on certiorari. Indeed,
the principle is well established that this Court is not
a trier of facts . Therefore, in an appeal by certiorari
under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, only questions of law may be
raised.28
The distinction between a "question of law" and a
"question of fact" is settled. There is a question of
law when the doubt or difference arises as to what
the law is on a certain state of facts, and the
question does not call for an examination of the
probative value of the evidence presented by the
parties-litigants. On the other hand, there is a
"question of fact" when the doubt or controversy
arises as to the truth or falsity of the alleged facts.
Simply put, when there is no dispute as to the facts,
the question of whether the conclusion drawn
therefrom is correct or not, is a question of law.29 In
Republic v. Vega,30 the Court held that when
petitioner asks for a review of the decision made by
a lower court based on the evidence presented,
without delving into their probative value but simply
on their sufficiency to support the legal conclusions
made, then a question of law is raised.
In the present case, there seems to be no dispute
as to the facts, and the question presented before
us calls for a review of the CA's conclusion that the
documents and evidence presented by petitioner
are insufficient to support her application for
registration of title. Hence, the petition is properly
filed.
Now, on the merits. Petitioner asserts that the land
subject of her application has been declared
alienable and disposable in 1925 and that her
possession through her predecessors-in-interest
started in 1929. However, after a careful
examination of the evidence adduced by
petitioner, we find no error on the part of the CA in
dismissing petitioner's application for registration of
title for the failure of petitioner to prove satisfactorily
the requirements for registration provided under the
law.
P.D. No. 1529 or the Property Registration Decree in
relation to Section 48(b) of Commonwealth Act No.
141,31 as amended by Section 4 of P.D. No.
107332 specifies those who are qualified to apply for
registration of land. Section 14 of P.D. No. 1529 and
Section 48(b) of Commonwealth Act No. 141, as
amended provide thus:
SEC. 14. Who may apply. -The following persons
may file in the proper Court of First Instance [now
Regional Trial Court] an application for registration
of title to land, whether personally or through their
duly authorized representatives:
xxxx
Page 132 of 158
SEC. 48. The following described citizens of the

Instance [now Regional Trial Court] of the province
where the land is located for confirmation of their
claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:
xxxx
acquisition or ownership, since June 12, 1945,
except when prevented by war or force majeure.
These shall be conclusively presumed to have
performed all the conditions essential to a
Government grant and shall be entitled to
certificate of title under the provisions of this
chapter.
Based on the above-quoted provisions, applicants
for registration of title must establish and prove: (1)
that the subject land forms part of the disposable
and alienable lands of the public domain; (2) that
the applicant and his predecessors-in-interest have
been in open, continuous, exclusive and notorious
possession and occupation of the same; and (3)
that his possession has been under a bona fide
claim of ownership since June 12, 1945, or
earlier.33 Each element must necessarily be proven
by no less than clear, positive and convincing
evidence; otherwise the application for registration
should be denied.34
Under the Regalian doctrine, all lands of the public
domain belong to the State. The burden of proof in
overcoming the presumption of State ownership of
the lands of the public domain is on the person
applying for registration, who must prove that the
land subject of the application is alienable and
disposable. To overcome this presumption,
incontrovertible evidence must be presented to
establish that the land subject of the application is
alienable and disposable.35
To prove that the land subject of the application
for registration is alienable, an applicant must
establish the existence of a positive act of the
government such as a presidential proclamation or
an executive order; an administrative action;
investigation reports of Bureau of Lands
investigators; and a legislative act or statute. The
applicant may secure a certification from the
government that the lands applied for are
alienable and disposable, but the certification must
show that the DENR Secretary had approved the
land classification and released the land of the
public domain as alienable and disposable, and
that the land subject of the application for
registration falls within the approved area per
verification through survey by the PENRO or
CENRO. The applicant must also present a copy of
the original classification of the land into alienable
and disposable, as declared by the DENR Secretary

or as proclaimed by the President.36
To comply with the first requisite, petitioner
submitted a CENRO Certification stating that Lot
4342, Cad-237 located in Patag, Cagayan de Oro
City falls within the alienable and disposable area
under Project No. 8, Block I. Petitioner also
submitted LC Map No. 543 which was certified and
approved on December 31, 1925. We, however,
find that the attached certification is inadequate
to prove that the subject lot is alienable and
disposable. We held in Republic v. TA .N Properties,
Inc.37 that a CENRO certification is insufficient to
prove the alienable and disposable character of
the land sought to be registered. The applicant
must also show sufficient proof that the DENR
Secretary has approved the land classification and
released the land in question as alienable and
disposable. We ruled in Republic v. TA .N Properties,
Inc. that:
x x x it is not enough for the PENRO or CENRO to
and disposable. Respondents failed to do so
because
the
certifications
presented
by
respondent do not, by themselves, prove that the
land is alienable and disposable.38
Thus, as it now stands, aside from the CENRO
certification, an application for original registration
of title over a parcel of land must be accompanied
by a copy of the original classification approved by
the DENR Secretary and certified as a true copy by
the legal custodian of the official records in order
to establish that the land is indeed alienable and
disposable.39
In Republic v. Medida,40 the Court explained why a
CENRO or PENRO certification cannot be
considered prima facie evidence of the facts
stated therein:
Public documents are defined under Section 19,
Rule 132 of the Revised Rules on Evidence as
follows:
(a) The written official acts, or records of
the official acts of the sovereign authority,
official bodies and tribunals, and public
officers, whether of the Philippines, or of a
foreign country;
(b) Documents acknowledged before a
notary public except last wills and
testaments; and
Page 133 of 158
(c) Public records, kept in the Philippines, of

private documents required by law to be
entered therein.
Applying Section 24 of Rule 132, the record of
public documents referred to in Section 19(a),
when admissible for any purpose, may be
evidenced by an official publication thereof or by
a copy attested by the officer having legal custody
of the record, or by his deputy x x x. The CENRO is
not the official repository or legal custodian of the
issuances of the DENR Secretary declaring public
lands as alienable and disposable. The CENRO
should have attached an official publication of the
DENR Secretary s issuance declaring the land
alienable and disposable.
Section 23, Rule 132 of the Revised Rules on
Evidence provides:
Sec. 23. Public documents as evidence.Documents consisting of entries in public records
made in the performance of a duty by a public
officer are prima facie evidence of the facts stated
therein. All other public documents are evidence,
even against a third person, of the fact which gave
rise to their execution and of the date of the latter.
The CENRO and Regional Technical Director, FMSDENR, certifications [do] not fall within the class of
public documents contemplated in the first
sentence of Section 23 of Rule 132. The
certifications do not reflect "entries in public records
made in the performance of a duty by a public
officer," x x x. The certifications are not the certified
copies or authenticated reproductions of original
records in the legal custody of a government
office. The certifications are not even records of
public documents. x x x41
Moreover, the CENRO certification attached by
petitioner to her petition deserves scant
consideration since it was not presented during the
proceedings before the trial court or while the case
was pending before the appellate court. Petitioner
only presented the said certification for the first time
before this Court. The genuineness and due
execution of the said document had not been duly
proven in the manner required by law.42 Also,
generally, additional evidence is allowed when it is
newly discovered, or where it has been omitted
through inadvertence or mistake, or where the
purpose of the evidence is to correct evidence
previously offered.43 In the present case, petitioner
did not offer any explanation why the CENRO
certification was not presented and submitted
during the proceedings before the trial court to
justify its belated submission to this Court.
As to the second and third requisites, we agree with
the appellate court that petitioner failed to
establish that she and her predecessors-in-interest
have been in open, continuous, exclusive and
notorious possession and occupation of the subject
land on or before June 12, 1945. Based on the
records, the earliest evidence of possession that
petitioner and her predecessor-in-interest Mamerta
Tan had over the subject property was only in 1975
when Mamerta Tan purchased the subject lot from
Teresita Tan. While Mamerta Tan testified that she

purchased the property from Teresita, the records
are bereft of any evidence to show Teresita's mode
of acquisition of ownership over the subject lot or
from whom she acquired the property and when
her
possession
of
the
subject
lot
had
commenced.1wphi1
In addition, Honesto Velez, City Assessor of
Cagayan de Oro City, merely testified on the tax
declarations issued to certain persons including
petitioner and Mamerta Tan as enumerated in the
Land History Card of Cadastral Lot 4342 but his
testimony did not prove their possession and
occupation over the subject property. What is
required is open, exclusive, continuous and
notorious possession by the applicant and her
predecessors-in-interest, under a bona fide claim of
ownership, since June 12, 1945 or earlier.44 Here, it is
not shown by clear and satisfactory evidence that
petitioner by herself or through her predecessors-ininterest had possessed and occupied the land in
an open, exclusive, continuous and notorious
manner since June 12, 1945 or earlier.
Notably, petitioner attempted to convince this
Court that Potenciano Abragan is her predecessorin-interest and was in possession of the subject
property even before 1929. However, there was
absolutely no evidence proffered by petitioner that
she derived her title to the property from
Potenciano Abragan. Moreover, BL Form No. 7002A attached by petitioner to her present petition
and sought to be submitted as additional
evidence, does not in any way prove that
Potenciano Abragan was in possession and
occupation of the property before 1929. At best, it
merely shows that it was Potenciano who
requested for an original survey of the lot. More
importantly, just like the CENRO certification, BL
Form No. 700-2A could not be given any
evidentiary weight and value since it was not
presented before the trial court and its genuineness
and due execution has not been duly proven. It
must be emphasized that any evidence which a
party desires to submit for the consideration of the
court must formally be offered by the party;
otherwise, it is excluded and rejected.45
In fine, since petitioner failed to prove that (1) the
subject property was classified as part of the
disposable and alienable land of the public
domain; and (2) she and her predecessors-ininterest have been in open, continuous, exclusive,
and notorious possession and occupation thereof
under a bona fide claim of ownership since June
12, 1945 or earlier, her application for registration of
title of the subject property under P.D. No. 1529
should be denied.
WHEREFORE, the petition is DENIED. The Decision
dated March 11, 2010 and Resolution dated May
20, 2010 of the Court of Appeals in CA-G.R. CV No.
00319-MIN are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
Page 134 of 158
#33
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179181
November 18, 2013
ROMAN CATHOLIC ARCHBISHOP OF
MANILA, Petitioner,
vs.
CRESENCIASTA.TERESA RAMOS, assisted by her
husband PONCIANO FRANCISCO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on
Certiorari1 under Rule 45 of the Rules of Court the
challenge to the April 10 2007 decision2 and the
August 9, 2007 resolution3 of the Court of Appeals
(CA) in CA-G.R. CV No. 84646. This CA decision
affirmed, with modification, the January 17, 2005
decision4 of the Regional Trial Court, Branch 156 of
Pasig City (RTC), in LRC Case No. N-5811 that
denied the application for confirmation and
registration of title filed by the petitioner, Roman
Catholic Archbishop of Manila (RCAM).
The Factual Antecedents
At the core of the controversy in the present
petition are two parcels of land Lot 1 with an area
of 34 square meters and Lot 2 with an area of 760
square meters- covered by amended Plan PSU2239195 property), both located in what used to be
Barrio Bagumbayan, Taguig, Rizal. On September
15, 1966, the RCAM filed before the R TC, (then
Court of First Instance of Rizal, Branch 11, acting as
a land registration court, an application for
registration of title6 (application) of property,
pursuant to Commonwealth Act C.A.) No. 141 (the
Public Land Act).7On October 4, 1974, the RCAM
amended its application8 by reducing Lot 2 to 760
square meters (from 1,832 square meters).
In its amended application, the RCAM claimed
that it owned the property; that it acquired the
property during the Spanish time; and that since
then, it has been in open, public, continuous and
peaceful possession of it in the concept of an
owner. It added that to the best of its knowledge
and belief, no mortgage or encumbrance of any
kind affects the property, and that no person has
any claim, legal or equitable, on the property.
The RCAM attached the following documents to
support its application: amended plan Psu-223919;
technical description of Lots 1 and 2;9 surveyor s
certificate;10 and Tax Declaration No. 9551 issued
on September 6, 1966.11
On May 22, 1992, the Republic of the Philippines
(Republic), through the Director of Lands, filed an
opposition12 to the application. The Republic
claimed that the property is part of the public
domain and cannot be subject to private
appropriation.
On August 18, 1992, respondent Cresencia Sta.
Teresa Ramos, through her husband Ponciano
Francisco, filed her opposition13 to the RCAM's
application. She alleged that the property formed

part of the entire property that her family owns and
has continuously possessed and occupied from the
time of her grandparents, during the Spanish time,
up to the present. Cresencia submitted the
following documents,14 among others, to support
her requested confirmation of imperfect title:
1.) the death certificates of Cipriano Sta.
Teresa and Eulogia Sta. Teresa Vda. de
Ramos (Cresencia's parents);
2.) her marriage certificate;
3.) their children's birth certificates;
4.) certificates of ownership covering two
bancas;
5.) photographs of these two bane as with
her youngest child while standing on the
property and showing the location of the
RCAM' s church relative to the location of
the property;
6.) photographs of a pile of gravel and
sand (allegedly for their gravel and sand
business) on the property;
7.) photographs of the RCAM's bahay ni
Maria standing on the property;
8.) a photograph of the plaque awarded
to Ponciano by ESSO Standard Philippines
as sole dealer of its gasoline products in
Bagumbayan, Taguig, Rizal;
9.) a photograph of their La Compania
Refreshment Store standing on their titled
lot adjacent to the property;
10.) a photograph of the certificate of
dealership given to Ponciano by a
Tobacco company for his dealership in
Bagumbayan, Taguig, Rizal; and
11.) the registration certificate for their
family's sheet manufacturing business
situated m Bagumbayan, Taguig,15 Rizal.
The RCAM presented in evidence the following
documents, in addition to those already on
record:16 tax declarations issued in its name in 1948,
1973, 1981, 1990, 1993, and 1999;17 the certified true
copy of Original Certificate of Title No. 0082
covering the lot in the name of Garcia, which
adjoins the property on the south; and the affidavit
of Garcia confirming the RCAM's ownership of the
property.18 It likewise submitted several testimonial
evidence to corroborate its ownership and claim of
possession of the property.
The ruling of the RTC
In its decision of January 17, 2005, 19 the RTC denied
the RCAM's application for registration of title. The
RTC held that the RCAM failed to prove actual
possession and ownership of the property applied
for. The RTC pointed out that the RCAM's only overt
act on the property that could be regarded as
evidence of actual possession was its construction
of the bahay ni Maria in 1991. Even this act,
according to the RTC, did not sufficiently satisfy the
actual possession requirement of the law as the
RCAM did not show how and in what manner it
possessed the property prior to 1991. The RCAM's
Page 135 of 158
tax declarations were also inconclusive since they

failed to prove actual possession.
In contrast, the numerous businesses allegedly
conducted by Cresencia and her family on the
property, the various pieces of documentary
evidence that she presented, and the testimony of
the RCAM' s own witnesses convinced the RTC that
she and her family actually possessed the property
in the manner and for the period required by law.
This notwithstanding, the RTC refused to order the
issuance of the title in Cresencia's name. The RTC
held that Cresencia failed to include in her
opposition a prayer for issuance of title.
The RCAM assailed the R TC' s decision before the
CA.
The CA ruling
In its April 10, 2007 decision,20 the CA affirmed with
modification the RTC's January 17, 2005 ruling. The
CA confirmed Cresencia's incomplete and
imperfect title to the property, subject to her
compliance with the requisites for registration of
title.
The CA agreed with the RTC that the totality of the
evidence on record unquestionably showed that
Cresencia was the actual possessor and occupant,
in the concept of an owner, of the disputed
property. The CA held that Cresencia s use of the
property since the Spanish time (through her
predecessors-in-interest), as confirmed by the
RCAM s witnesses, clearly demonstrated her
dominion over the property. Thus, while she failed
to register the property in her name or declare it for
taxation purposes as pointed out by the RCAM, the
CA did not consider this non-declaration significant
to defeat her claim. To the CA, Cresencia merely
tolerated the RCAM s temporary use of the
property for lack of any urgent need for it and only
acted to protect her right when the RCAM applied
for registration in its name. Thus, the CA declared
that Cresencia correctly waited until her possession
was disturbed before she took action to vindicate
her right.
The CA similarly disregarded the additional tax
declarations that the RCAM presented in support of
its application. The CA pointed out that these
documents hardly proved the RCAM s alleged
ownership of or right to possess the property as it
failed to prove actual possession. Lastly, the CA
held that it was bound by the findings of facts and
the conclusions arrived at by the RTC as they were
amply supported by the evidence.
The RCAM filed the present petition after the CA
denied its motion for reconsideration.21
Assignment of Errors
The RCAM argues before us that the CA erred and
gravely abused its discretion in:22
1. confirming the incomplete and
imperfect title of the oppositor when the
magnitude of the parties evidence shows
that the oppositors merely had pretended
possession that could not ripen into
ownership;
2. failing to consider that the RCAM had

continuous, open and notorious possession
of the property in the concept of an owner
for a period of thirty (30) years prior to the
filing of the application; and
3. confirming the oppositors incomplete
and imperfect title despite her failure to
comply
with
the
substantial
and
procedural requirements of the Public Land
Act.
The Issue
In sum, the core issue for our resolution is who between the RCAM and Cresencia -is entitled to
the benefits of C.A. No. 141 and Presidential
Decree (P.D.) No. 1529 for confirmation and
registration of imperfect title.
The Court s Ruling
Preliminary considerations: nature of he issues;
factual-issue-bar rule
In her comment,23 Cresencia primarily points out
that the present petition essentially questions the
CAs appreciation of the evidence and the
credibility of the witnesses who attested to her
actual, public and notorious possession of the
property. She argues that these are questions of
fact that are not proper for a Rule 45 petition. In
addition, the findings of the RTC were well
supported by the evidence, had been affirmed by
the CA, and are thus binding on this Court.
We are not entirely convinced of the merits of what
Cresencia pointed out.
The settled rule is that the jurisdiction of this Court
over petitions for review on certiorari is limited to
the review of questions of law and not of fact. "A
question of law exists when the doubt or
controversy concerns the correct application of
law or jurisprudence to a certain set of facts; or
when the issue does not call for an examination of
the probative value of the evidence presented, the
truth or falsehood of the facts being admitted. A
question of fact exists when a doubt or difference
arises as to the truth or falsehood of facts or when
the query invites calibration of the whole evidence
x x x as well as their relation to each other and to
the whole, and the probability of the situation."24
An examination of the RCAM's issues shows that the
claimed errors indeed primarily question the
sufficiency of the evidence supporting the lower
courts' conclusion that Cresencia, and not the
RCAM, had been in possession of the property in
the manner and for the period required by law.
When the presented question centers on the
sufficiency of the evidence, it is a question of
fact25 and is barred in a Rule 45 petition.
Nevertheless, jurisprudence recognizes certain
exceptions to the settled rule. When the lower
courts grossly misunderstood the facts and
circumstances that, when correctly appreciated,
would warrant a different conclusion, a review of
the lower courts' findings may be made.26 This, in
our view, is the exact situation in the case as our
discussions below will show.
Page 136 of 158
Moreover, the RCAM also questions the propriety of

the CA s confirmation of Cresencia's title over the
property although she was not the applicant and
was merely the oppositor in the present
confirmation and registration proceedings. Stated
in question form -was the CA justified under the law
and jurisprudence in its confirmation of the
oppositor's title over the property? This, in part, is a
question of law as it concerns the correct
application of law or jurisprudence to recognized
facts.
Hence, we find it imperative to resolve the petition
on the merits.
Requirements for confirmation and registration of
imperfect and incomplete title under C.A. No. 141
and P.D. No. 1529
C.A. No. 141 governs the classification and
disposition of lands of the public domain. Section
11 of C.A. No. 141 provides, as one of the modes of
disposing public lands that are suitable for
agriculture, the "confirmation of imperfect or
incomplete titles." Section 48, on the other hand,
enumerates those who are considered to have
acquired an imperfect or incomplete title over
public lands and, therefore, entitled to confirmation
and registration under the Land Registration Act.
The RCAM did not specify the particular provision of
C.A. No. 141 under which it anchored its
application for confirmation and registration of title.
Nevertheless, the allegations in its application and
amended application readily show that it based its
claim of imperfect title under Section 48(b) of C.A.
No. 141. As amended by P.D. No. 1073 on January
25, 1977, Section 48(b) of C.A. No. 141 currently
provides:
Section 48. The following described citizens of the
Instance [now Regional Trial Court] of the province
where the land is located for confirmation of their
claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:
xxxx
ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application
for confirmation of title except when prevented by
of this chapter. [emphases and italics ours]
Prior to the amendment introduced by P.D. No.
1073, Section 48(b) of C.A. No. 141, then operated
under the Republic Act R.A.) No. 1942 (June 22,
1957) amendment which reads:

ownership, for at least thirty years, immediately
preceding the filing of the application for
confirmation of title except when prevented by
of this chapter. [emphases and italics ours]
Since the RCAM filed its application on September
15, 1966 and its amended application on October
4, 1974, Section 48(b) of C.A. No. 141, as amended
by R.A. No. 1942 (which then required possession of
thirty years), governs.
In relation to C.A. No. 141, Section 14 of Presidential
Decree P.D.) No. 1529 or the Property Registration
Decree specifies those who are qualified to register
their incomplete title over an alienable and
disposable public land under the Torrens system.
P.D. No. 1529, which was approved on June 11,
1978, superseded and codified all laws relative to
the registration of property.
The pertinent portion of Section 14 of P.D. No. 1529
reads:
Section 14. Who may apply. The following persons
may file in the proper Court of First Instance [now
Regional Trial Court] an application for registration
of title to land, whether personally or through their
duly authorized representatives:
ownership since June 12, 1945, or earlier. [italics
ours]
Under these legal parameters, applicants in a
judicial confirmation of imperfect title may register
their titles upon a showing that they or their
acquisition or ownership, 27 since June 12, 1945, or
earlier (or for at least 30 years in the case of the
RCAM) immediately preceding the filing of the
application for confirmation of title. The burden of
proof in these cases rests on the applicants who
must demonstrate clear, positive and convincing
evidence that: (1) the property subject of their
application is alienable and disposable land of the
public domain; and (2) their alleged possession
and occupation of the property were of the length
and of the character required by law.28
On the issue of whether the RC M is entitled to the
benefits of C A No. 141 and P.D. No. 1529
Reiterating its position before the RTC and the CA,
the RCAM now argues that it actually, continuously,
openly and notoriously possessed the property
Page 137 of 158
since time immemorial. It points out that its tax

declarations covering the property, while not
conclusive evidence of ownership, are proof of its
claim of title and constitute as sufficient basis for
inferring possession.
For her part, Cresencia counters that the RCAM
failed to discharge its burden of proving possession
in the concept of an owner. She argues that the
testimonies of the RCAM s witnesses were replete
with inconsistencies and betray the weakness of its
claimed possession. Cresencia adds that at most,
the RCAM s possession was by her mere tolerance
which, no matter how long, can never ripen into
ownership. She also points out that the RCAM s tax
declarations are insufficient proof of possession as
they are not, by themselves, conclusive evidence
of ownership.
We do not see any merit in the RCAM s
contentions.
The RTC and the CA as it affirmed the RTC,
dismissed the RCAM s application for its failure to
comply with the second requirement possession
of the property in the manner and for the period
required by law.
We find no reason to disturb the RTC and the CA
findings on this point. They had carefully analyzed
and weighed each piece of the RCAM s evidence
to support its application and had extensively
explained in their respective decisions why they
could not give weight to these pieces of evidence.
Hence, we affirm their denial of the RCAM' s
application. For greater certainty, we expound on
the reasons below.
a. The RC M failed to prove possession of the
property in the manner and for the period required
by law
The possession contemplated by Section 48(b) of
C.A. No. 141 is actual, not fictional or constructive.
In Carlos v Republic of the Philippines,29 the Court
explained the character of the required possession,
as follows:
The law speaks of possession and occupation.
Since these words are separated by the
conjunction and, the clear intention of the law is
not to make one synonymous with the other.
Possession is broader than occupation because it
includes constructive possession. When, therefore,
the law adds the word occupation, it seeks to
delimit the all-encompassing effect of constructive
possession. Taken together with the words open,
continuous, exclusive and notorious, the word
occupation serves to highlight the fact that for an
applicant to qualify, his possession must not be a
mere fiction. Actual possession of a land consists in
the manifestation of acts of dominion over it of
such a nature as a party would naturally exercise
over his own property.
Accordingly, to prove its compliance with Section
48(b)' s possession requirement, the RCAM had to
show that it performed specific overt acts in the
character an owner would naturally exercise over
his own property. Proof of actual possession of the
property at the time of the filing of the application
is required because the phrase adverse,

continuous, open, public, and in concept of
owner," the RCAM used to describe its alleged
possession, is a conclusion of law,30 not an
allegation of fact. Possession is open when it is
patent, visible, apparent [and] notorious x x x
continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when [the
possession is characterized by acts manifesting]
exclusive dominion over the land and an
appropriation of it to [the applicant's] own use and
benefit; and notorious when it is so conspicuous
that it is generally known and talked of by the
public or the people in the neighborhood."31
Very noticeably, the RCAM failed to show or point
to any specific act characterizing its claimed
possession in the manner described above. The
various documents that it submitted, as well as the
bare assertions it made and those of its witnesses,
that it had been in open, continuous, exclusive and
notorious possession of the property, hardly
constitute the "well-nigh incontrovertible evidence
required in cases of this nature.32 We elaborate
below on these points.
First, the tax declarations issued in the RCAM's
name in 1948, 1966, 1977, 1984, 1990, 1993 and 1999
did not in any way prove the character of its
possession over the property. Note that the settled
rule is that tax declarations are not conclusive
evidence of ownership or of the right to possess
land when not supported by any other evidence
showing
actual,
public
and
adverse
possession.33 The declaration for taxation purposes
of property in the names of applicants for
registration or of their predecessors-in-interest may
constitute collaborating evidence only when
coupled with other acts of possession and
ownership;34 standing alone, it is inconclusive.
This rule applies even more strongly in this case
since the RCAM's payments of taxes due on the
property
were
inconsistent
and
random.
Interestingly, while the RCAM asserts that it had
been in possession of the property since the
Spanish time, the earliest tax declaration that it
could present was that issued in 1948. Also, when it
filed its application in 1966 and its amended
application in 197 4, the RCAM presented only two
tax declarations (issued in 1948 and 1966) covering
the property. And since then, up to the issuance of
the January 1 7, 2005 decision of the R TC, the
RCAM presented only five other tax declarations those issued in 1977, 1984, 1990, 1993 and 1999. The
case of Tan v. Republic35 teaches us that this type
of intermittent and sporadic assertion of alleged
ownership does not prove open, continuous,
exclusive
and
notorious
possession
and
occupation.
Second, even if we were to consider the RCAM' s
tax declarations as basis for inferring possession, 36
the RCAM still failed to prove actual possession of
the property for the required duration. As already
noted, the earliest tax declaration that it presented
was for 1948. We are in fact inclined to believe that
Page 138 of 158
the RCAM first declared the property in its name

only in 1948 as this tax declaration does not appear
to have cancelled any previously-issued tax
declaration. Thus, when it filed its application in
1966, it was in possession of the property for only
eighteen years, counted from 1948. Even if we
were to count the possession period from the filing
of its amended application in 1974, its alleged
possession (which was only for twenty-six years
counted from 1948) would still be short of the thirtyyear period required by Section 48(b) of C.A. No.
141, as amended by RA No. 1942. The situation
would be worse if we were to consider the
amendment introduced by P.D. No. 1073 to Section
48(b) where, for the RCAM's claimed possession of
the property to give rise to an imperfect title, this
possession should have commenced on June 12,
1945 or earlier.
Third, the amended plan Psu-223919, technical
description for Lots 1 and 2, and surveyor s
certificate only prove the identity of the property
that the RCAM sought to register in its
name.37 While these documents plot the location,
the area and the boundaries of the property, they
hardly prove that the RCAM actually possessed the
property in the concept of an owner for the
required duration. In fact, the RCAM seemed to be
uncertain of the exact area it allegedly possesses
and over which it claims ownership. The total area
that the RCAM applied for, as stated in its
amended application and the amended survey
plan, was 794 square meters (34 square meters for
Lot 1 and 760 square meters for Lot 2). Yet, in its
various tax declarations issued even after it filed its
amended application, the total area declared
under its name was still 1,832 square meters.
Notably, the area stated in its 1948 tax declaration
was only 132.30 square meters, while the area
stated in the subsequently issued tax declaration
(1966) was 1,832 square meters. Significantly, the
RCAM did not account for or provide sufficient
explanation for this increase in the area; thus, it
appeared uncertain on the specific area claimed.
Fourth, the RCAM did not build any permanent
structure or any other improvement that clearly
announces its claim of ownership over the property.
Neither did it account for any act of occupation,
development, maintenance or cultivation for the
duration of time it was allegedly in possession of it.
The "bahay ni Maria" where the RCAM conducts its
fiesta-related and Lenten activities could hardly
satisfy the possession requirement of C.A. No. 141.
As found out by the CA, this structure was
constructed only in 1991 and not at the time of, or
prior to, the filing of its application in 1966.
Last, the RCAM s testimonial evidence hardly
supplemented the inherent inadequacy of its
documentary
evidence.
While
apparently
confirming the RCAM s claim, the testimonies were
undoubtedly hearsay and were not based on
personal knowledge of the circumstances
surrounding
the
RCAMs
claimed
actual,
continuous, exclusive and notorious possession.
b. The RC M failed to prove that the property is

alienable and disposable land of he public domain
Most importantly, we find the RCAM s evidence to
be insufficient since it failed to comply with the first
and most basic requirement proof of the
alienable and disposable character of the
property. Surprisingly, no finding or pronouncement
referring to this requirement was ever made in the
decisions of the R TC and the CA.
To prove that the property is alienable and
disposable, the RCAM was bound to establish "the
existence of a positive act of the government such
as a presidential proclamation or an executive
order; an administrative action; investigation
reports of Bureau of Lands investigators; and a
legislative act or a statute."38 It could have also
secured a certification from the government that
the property applied for was alienable and
disposable.39 Our review of the records shows that
this evidence is fatally absent and we are in fact
disappointed to note that both the RTC and the CA
appeared to have simply assumed that the
property was alienable and disposable.
We cannot tolerate this kind of approach for two
basic reasons. One, in this jurisdiction, all lands
belong to the State regardless of their
classification.40 This rule, more commonly known as
the Regalian doctrine, applies with equal force
even to private unregistered lands, unless the
contrary is satisfactorily shown. Second, unless the
date when the property became alienable and
disposable
is
specifically
identified,
any
determination on the RCAM' s compliance with the
second requirement is rendered useless as any
alleged period of possession prior to the date the
property became alienable and disposable can
never be counted in its favor as any period of
possession and occupation of public lands in the
concept of owner, no matter how long, can never
ripen into ownership.41
On this ground alone, the R TC could have
outrightly denied the RCAM' s application.
On the CAs authority to confirm the title of the
oppositor in land registration proceedings
The RCAM next argues that the CAs act of
confirming Cresencia's title over the property is
contrary to law and jurisprudence. The RCAM
points out that it filed the application for registration
of title under the provisions of C.A. No. 141 or
alternatively under P.D. No. 1529; both statutes
dictate several substantive and procedural
requirements that must first be complied with
before title to the property is confirmed and
registered. In affirming Cresencia's title without any
evidence showing her compliance with these
requirements, it claims that the CA, in effect, made
Cresencia the applicant entitled to the benefits of
the land registration proceedings that it initiated
before the lower court.
We differ with this view.
Section 29 of P.D. No. 1529 gives the court the
authority to confirm the title of either the applicant
or the oppositor in a land registration proceeding
Page 139 of 158
depending on the conclusion that the evidence

calls for. Specifically, Section 29 provides that the
court "x x x after considering the evidence x x x
finds that the applicant or the oppositor has
sufficient title proper for registration, judgment shall
be rendered confirming the title of the applicant,
or the oppositor, to the land x x x x." (emphases and
italics ours)
Thus, contrary to the RCAM's contention, the CA
has the authority to confirm the title of Cresencia,
as the oppositor, over the property. This, of course,
is subject to Cresencia's satisfaction of the
evidentiary requirement of P D No. 1529, in relation
with C.A. No. 141 in support of her own claim of
imperfect title over the property.
The issue of whether Cresencia is entitled to the
benefits of C.A. No. 141 and P.D. No. 1529
The RCAM lastly argues that the evidence belies
Cresencia's claim of continuous, open and
notorious possession since the Spanish time. The
RCAM points out that, first, Cresencia failed to
declare for taxation purposes the property in her
name, thus effectively indicating that she did not
believe herself to be its owner. Second, Cresencia
did not have the property surveyed in her name so
that she could assert her claim over it and show its
metes and bounds. Third, Cresencia did not register
the property in her name although she previously
registered the adjoining lot in her name. Fourth,
Cresencia did not construct any permanent
structure on the property and no traces of the
businesses allegedly conducted by her and by her
family on it could be seen at the time it filed its
application. And fifth, Cresencia did not perform
any act of dominion that, by the established
jurisprudential definition, could be sufficiently
considered as actual possession.
We agree with the RCAM on most of these points.
While we uphold the CA' s authority to confirm the
title of the oppositor in a confirmation and
registration proceedings, we cannot agree,
however, with the conclusion the CA reached on
the nature of Cresencia's possession of the
property.
Under the same legal parameters we used to affirm
the RTC's denial of the RCAM' s application, we also
find insufficient the evidence that Cresencia
presented to prove her claimed possession of the
property in the manner and for the period required
by C.A. No. 141. Like the RCAM, Cresencia was
bound to adduce evidence that irrefutably proves
her compliance with the requirements for
confirmation of title. To our mind, she also failed to
discharge this burden of proof; thus, the CA erred
when it affirmed the contrary findings of the RTC
and confirmed Cresencias title over the property.
We arrive at this conclusion for the reasons outlined
below.
First, the various pieces of documentary evidence
that Cresencia presented to support her own claim
of imperfect title hardly proved her alleged actual
possession of the property. Specifically, the
certificates of marriage, birth and death did not
particularly state that each of these certified

events, i.e. marriage, birth and death, in fact
transpired on the claimed property; at best, the
certificates proved the occurrence of these events
in Bagumbayan, Taguig, Rizal and on the stated
dates, respectively.
Similarly, the certificate of ownership of two bancas
in the name of Ponciano, the registration certificate
for their family s sheet manufacturing business, the
photograph of the certificate of dealership in the
name of Ponciano given by a tobacco company,
and the photograph of the plaque awarded to
Ponciano by ESSO Standard Philippines as sole
dealer of its gasoline products did not prove that
Cresencia and her family conducted these
businesses on the disputed property itself. Rather,
they simply showed that at one point in time,
Cresencia and her family conducted these
businesses in Bagumbayan, Taguig, Rizal. In fact,
Cresencia s claim that they conducted their
gasoline dealership business on the property is
belied by the testimony of a witness who stated
that the gas station was located north (or the other
side) of Cresencia s titled lot and not on the
property.42
The presence on the property, as shown by
photographs, of Cresencia s daughter, of the two
bancas owned by her family, and of the pile of
gravel and sand they allegedly used in their gravel
and sand business also hardly count as acts of
occupation, development or maintenance that
could have been sufficient as proof of actual
possession. The presence of these objects and of
Cresencia s daughter on the property was
obviously transient and impermanent; at most, they
proved that Cresencia and her family used the
property for a certain period of time, albeit, briefly
and temporarily.
Finally, the records show that the La Compania
Refreshment Store business (that they allegedly
conducted on the property) actually stood on their
titled lot adjoining the property.
Second, while Cresencia registered in her name
the adjoining lot (which they had been occupying
at the time the RCAM filed its application and
where their La Compania Refreshment Store
stood), she never had the property registered in her
name. Neither did Cresencia or her predecessorsin-interest declare the property for taxation
purposes nor had the property surveyed in their
names to properly identify it and to specifically
determine its metes and bounds. The declaration
for taxation purposes of property in their names
would have at least served as proof that she or her
predecessors-in-interest had a claim over the
property43 that could be labeled as "possession" if
coupled with proof of actual possession.
Finally, the testimonies of Ponciano and Florencia
Francisco Mariano (Cresencia's daughter) on the
nature and duration of their family's alleged
possession of the property, other than being selfserving, were mere general statements and could
not have constituted the factual evidence of
Page 140 of 158
possession that the law requires. They also failed to

point out specific acts of dominion or ownership
that were performed on the property by the
parents of Cresencia, their predecessors-in-interest.
They likewise failed to present any evidence that
could have corroborated their alleged possession
of the property from the time of their grandfather,
Cipriano, who acquired the property from its
previous owner, Petrona Sta. Teresa. Interestingly,
other than Ponciano and Florencia, none of the
witnesses on record seemed to have known that
Cresencia owns or at least claims ownership of the
property.
At any rate, even if we were to consider these
pieces of evidence to be sufficient, which we do
not, confirmation and registration of title over the
property in Cresencia' s name was still improper in
the absence of competent and persuasive
evidence on record proving that the property is
alienable and disposable.
For all these reasons, we find that the CA erred
when it affirmed the RTC's ruling on this matter and
confirmed Cresencia's imperfect title to the
property.WHEREFORE,
in
light
of
these
considerations, we hereby DENY the petition. We
AFFIRM with MODIFICATION the decision dated
April 10, 2007 and the resolution dated August 9,
2007 of the Court of Appeals in CA-G.R. CV No.
84646 to the extent described below:
1. We AFFIRM the decision of the Court of
Appeals as it affirmed the January 17 2005
decision of the Regional Trial Court of Pasig
City, Branch 156, in LRC Case No. N-5811
that
DENIED
the
application
for
confirmation and registration of title filed
by the petitioner, Roman Catholic
Archbishop of Manila; and
2. We REVERSE and SET ASIDE the
confirmation made by the Court of
Appeals of the title over the property in the
name of respondent Cresencia Sta. Teresa
Ramos for lack of sufficient evidentiary
basis.
Costs against the petitioner.
SO ORDERED.
#34
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 191109
July 18, 2012
PHILIPPINE RECLAMATION AUTHORITY
(PRA),Petitioner,
vs.
CITY OF PARANAQUE, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule
45 of the 1997 Rules of Civil Procedure, on pure
questions of law, assailing the January 8, 2010
Order1 of the Regional Trial Court, Branch 195,

Parafiaque City (RTC), which ruled that petitioner
Philippine Reclamation Authority (PRA) is a
government-owned and controlled corporation
(GOCC), a taxable entity, and, therefore, . not
exempt from payment of real property taxes. The
pertinent portion of the said order reads:
In view of the finding of this court that petitioner is
not exempt from payment of real property taxes,
respondent Paraaque City Treasurer Liberato M.
Carabeo did not act xxx without or in excess of
jurisdiction, or with grave abuse of discretion
amounting to lack or in excess of jurisdiction in
issuing the warrants of levy on the subject
properties.
WHEREFORE, the instant petition is dismissed. The
Motion for Leave to File and Admit Attached
Supplemental Petition is denied and the
supplemental petition attached thereto is not
admitted.
The Public Estates Authority (PEA) is a government
corporation created by virtue of Presidential
Decree (P.D.) No. 1084 (Creating the Public Estates
Authority, Defining its Powers and Functions,
Providing Funds Therefor and For Other Purposes)
which took effect on February 4,
1977 to provide a coordinated, economical and
efficient
reclamation
of
lands,
and
the
administration and operation of lands belonging to,
managed and/or operated by, the government
with the object of maximizing their utilization and
hastening their development consistent with public
interest.
On February 14, 1979, by virtue of Executive Order
(E.O.) No. 525 issued by then President Ferdinand
Marcos, PEA was designated as the agency
primarily responsible for integrating, directing and
coordinating all reclamation projects for and on
behalf of the National Government.
On October 26, 2004, then President Gloria
Macapagal-Arroyo issued E.O. No. 380 transforming
PEA into PRA, which shall perform all the powers
and functions of the PEA relating to reclamation
activities.
By virtue of its mandate, PRA reclaimed several
portions of the foreshore and offshore areas of
Manila Bay, including those located in Paraaque
City, and was issued Original Certificates of Title
(OCT Nos. 180, 202, 206, 207, 289, 557, and 559) and
Transfer Certificates of Title (TCT Nos. 104628, 7312,
7309, 7311, 9685, and 9686) over the reclaimed
lands.
On February 19, 2003, then Paraaque City
Treasurer Liberato M. Carabeo (Carabeo) issued
Warrants of Levy on PRAs reclaimed properties
(Central Business Park and Barangay San Dionisio)
located in Paraaque City based on the
assessment for delinquent real property taxes made
by then Paraaque City Assessor Soledad Medina
Cue for tax years 2001 and 2002.
On March 26, 2003, PRA filed a petition for
prohibition with prayer for temporary restraining
Page 141 of 158
order (TRO) and/or writ of preliminary injunction

against Carabeo before the RTC.
On April 3, 2003, after due hearing, the RTC issued
an order denying PRAs petition for the issuance of
a temporary restraining order.
On April 4, 2003, PRA sent a letter to Carabeo
requesting the latter not to proceed with the public
auction of the subject reclaimed properties on April
7, 2003. In response, Carabeo sent a letter stating
that the public auction could not be deferred
because the RTC had already denied PRAs TRO
application.
On April 25, 2003, the RTC denied PRAs prayer for
the issuance of a writ of preliminary injunction for
being moot and academic considering that the
auction sale of the subject properties on April 7,
2003 had already been consummated.
On August 3, 2009, after an exchange of several
pleadings and the failure of both parties to arrive at
a compromise agreement, PRA filed a Motion for
Leave to File and Admit Attached Supplemental
Petition which sought to declare as null and void
the assessment for real property taxes, the levy
based on the said assessment, the public auction
sale conducted on April 7, 2003, and the
Certificates of Sale issued pursuant to the auction
sale.
On January 8, 2010, the RTC rendered its decision
dismissing PRAs petition. In ruling that PRA was not
exempt from payment of real property taxes, the
RTC reasoned out that it was a GOCC under
Section 3 of P.D. No. 1084. It was organized as a
stock corporation because it had an authorized
capital stock divided into no par value shares. In
fact, PRA admitted its corporate personality and
that said properties were registered in its name as
shown by the certificates of title. Therefore, as a
GOCC, local tax exemption is withdrawn by virtue
of Section 193 of Republic Act (R.A.) No. 7160 Local
Government Code (LGC) which was the prevailing
law in 2001 and 2002 with respect to real property
taxation. The RTC also ruled that the tax exemption
claimed by PRA under E.O. No. 654 had already
been expressly repealed by R.A. No. 7160 and that
PRA failed to comply with the procedural
requirements in Section 206 thereof.
Not in conformity, PRA filed this petition for certiorari
assailing the January 8, 2010 RTC Order based on
the following GROUNDS
I
THE TRIAL COURT GRAVELY ERRED IN FINDING THAT
PETITIONER IS LIABLE TO PAY REAL PROPERTY TAX ON
THE SUBJECT RECLAIMED LANDS CONSIDERING
THAT
PETITIONER
IS
AN
INCORPORATED
INSTRUMENTALITY OF THE NATIONAL GOVERNMENT
AND IS, THEREFORE, EXEMPT FROM PAYMENT OF
REAL PROPERTY TAX UNDER SECTIONS 234(A) AND
133(O) OF REPUBLIC ACT 7160 OR THE LOCAL
GOVERNMENT
CODE
VIS--VIS
MANILA
INTERNATIONAL AIRPORT AUTHORITY V. COURT OF
APPEALS.
II
THE TRIAL COURT GRAVELY ERRED IN FAILING TO

CONSIDER THAT RECLAIMED LANDS ARE PART OF
THE PUBLIC DOMAIN AND, HENCE, EXEMPT FROM
REAL PROPERTY TAX.
PRA asserts that it is not a GOCC under Section
2(13) of the Introductory Provisions of the
Administrative Code. Neither is it a GOCC under
Section 16, Article XII of the 1987 Constitution
because it is not required to meet the test of
economic viability. Instead, PRA is a government
instrumentality vested with corporate powers and
performing an essential public service pursuant to
Section 2(10) of the Introductory Provisions of the
Administrative Code. Although it has a capital
stock divided into shares, it is not authorized to
distribute dividends and allotment of surplus and
profits to its stockholders. Therefore, it may not be
classified as a stock corporation because it lacks
the second requisite of a stock corporation which is
the distribution of dividends and allotment of
surplus and profits to the stockholders.
It insists that it may not be classified as a non-stock
corporation because it has no members and it is
not organized for charitable, religious, educational,
professional, cultural, recreational, fraternal, literary,
scientific, social, civil service, or similar purposes, like
trade, industry, agriculture and like chambers as
provided in Section 88 of the Corporation Code.
Moreover, PRA points out that it was not created to
compete in the market place as there was no
competing reclamation company operated by the
private sector. Also, while PRA is vested with
corporate powers under P.D. No. 1084, such
circumstance does not make it a corporation but
merely an incorporated instrumentality and that
the mere fact that an incorporated instrumentality
of the National Government holds title to real
property does not make said instrumentality a
GOCC. Section 48, Chapter 12, Book I of the
Administrative Code of 1987 recognizes a scenario
where a piece of land owned by the Republic is
titled in the name of a department, agency or
instrumentality.
Thus, PRA insists that, as an incorporated
instrumentality of the National Government, it is
exempt from payment of real property tax except
when the beneficial use of the real property is
granted to a taxable person. PRA claims that
based on Section 133(o) of the LGC, local
governments cannot tax the national government
which delegate to local governments the power to
tax.
It explains that reclaimed lands are part of the
public domain, owned by the State, thus, exempt
from the payment of real estate taxes. Reclaimed
lands retain their inherent potential as areas for
public use or public service. While the subject
reclaimed lands are still in its hands, these lands
remain public lands and form part of the public
domain. Hence, the assessment of real property
taxes made on said lands, as well as the levy
thereon, and the public sale thereof on April 7,
2003, including the issuance of the certificates of
Page 142 of 158
sale in favor of the respondent Paraaque City, are

invalid and of no force and effect.
On the other hand, the City of Paraaque
(respondent) argues that PRA since its creation
consistently represented itself to be a GOCC. PRAs
very own charter (P.D. No. 1084) declared it to be a
GOCC and that it has entered into several
thousands of contracts where it represented itself to
be a GOCC. In fact, PRA admitted in its original
and amended petitions and pre-trial brief filed with
the RTC of Paraaque City that it was a GOCC.
Respondent further argues that PRA is a stock
corporation with an authorized capital stock
divided into 3 million no par value shares, out of
which 2 million shares have been subscribed and
fully paid up. Section 193 of the LGC of 1991 has
withdrawn tax exemption privileges granted to or
presently enjoyed by all persons, whether natural or
juridical, including GOCCs.
Hence, since PRA is a GOCC, it is not exempt from
the payment of real property tax.
THE COURTS RULING
The Court finds merit in the petition.
Administrative Code of 1987 defines a GOCC as
follows:
SEC. 2. General Terms Defined. x x x x
(13) Government-owned or controlled corporation
refers to any agency organized as a stock or nonstock corporation, vested with functions relating to
public needs whether governmental or proprietary
in nature, and owned by the Government directly
or through its instrumentalities either wholly, or,
where applicable as in the case of stock
corporations, to the extent of at least fifty-one
(51) percent of its capital stock: x x x.
On the other hand, Section 2(10) of the
Introductory Provisions of the Administrative Code
defines a government "instrumentality" as follows:
SEC. 2. General Terms Defined. x x x x
(10) Instrumentality refers to any agency of the
National Government, not integrated within the
department framework, vested with special
functions or jurisdiction by law, endowed with some
if not all corporate powers, administering special
funds, and enjoying operational autonomy, usually
through a charter. x x x
From the above definitions, it is clear that a GOCC
must be "organized as a stock or non-stock
corporation" while an instrumentality is vested by
law with corporate powers. Likewise, when the law
makes a government instrumentality operationally
autonomous, the instrumentality remains part of the
National Government machinery although not
integrated with the department framework.
When the law vests in a government instrumentality
corporate powers, the instrumentality does not
necessarily become a corporation. Unless the
government instrumentality is organized as a stock
or non-stock corporation, it remains a government
instrumentality exercising not only governmental
but also corporate powers.
Many government instrumentalities are vested with

corporate powers but they do not become stock or
non-stock corporations, which is a necessary
condition before an agency or instrumentality is
deemed a GOCC. Examples are the Mactan
International Airport Authority, the Philippine Ports
Authority, the University of the Philippines, and
Bangko Sentral ng Pilipinas. All these government
instrumentalities exercise corporate powers but
they are not organized as stock or non-stock
corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code.
These government instrumentalities are sometimes
loosely called government corporate entities. They
are not, however, GOCCs in the strict sense as
understood under the Administrative Code, which
is the governing law defining the legal relationship
and status of government entities.2
Correlatively, Section 3 of the Corporation Code
defines a stock corporation as one whose "capital
stock is divided into shares and x x x authorized to
distribute to the holders of such shares dividends x x
x." Section 87 thereof defines a non-stock
corporation as "one where no part of its income is
distributable as dividends to its members, trustees or
officers." Further, Section 88 provides that non-stock
corporations are "organized for charitable, religious,
educational, professional, cultural, recreational,
fraternal, literary, scientific, social, civil service, or
similar purposes, like trade, industry, agriculture and
like chambers."
Two requisites must concur before one may be
classified as a stock corporation, namely: (1) that it
has capital stock divided into shares; and (2) that it
is authorized to distribute dividends and allotments
of surplus and profits to its stockholders. If only one
requisite is present, it cannot be properly classified
as a stock corporation. As for non-stock
corporations, they must have members and must
not distribute any part of their income to said
members.3
In the case at bench, PRA is not a GOCC because
it is neither a stock nor a non-stock corporation. It
cannot be considered as a stock corporation
because although it has a capital stock divided
into no par value shares as provided in Section 74 of
P.D. No. 1084, it is not authorized to distribute
dividends, surplus allotments or profits to
stockholders. There is no provision whatsoever in
P.D. No. 1084 or in any of the subsequent executive
issuances pertaining to PRA, particularly, E.O. No.
525,5 E.O. No. 6546 and EO No. 7987 that authorizes
PRA to distribute dividends, surplus allotments or
profits to its stockholders.
PRA cannot be considered a non-stock
corporation either because it does not have
members. A non-stock corporation must have
members.8 Moreover, it was not organized for any
of the purposes mentioned in Section 88 of the
Corporation Code. Specifically, it was created to
manage all government reclamation projects.
Page 143 of 158
Furthermore, there is another reason why the PRA

cannot be classified as a GOCC. Section 16, Article
XII of the 1987 Constitution provides as follows:
Section 16. The Congress shall not, except by
general
law,
provide
for
the
formation,
organization, or regulation of private corporations.
Government-owned or controlled corporations
may be created or established by special charters
in the interest of the common good and subject to
the test of economic viability.
The fundamental provision above authorizes
Congress to create GOCCs through special
charters on two conditions: 1) the GOCC must be
established for the common good; and 2) the
GOCC must meet the test of economic viability. In
this case, PRA may have passed the first condition
of common good but failed the second one economic viability. Undoubtedly, the purpose
behind the creation of PRA was not for economic
or commercial activities. Neither was it created to
compete in the market place considering that
there were no other competing reclamation
companies being operated by the private sector.
As mentioned earlier, PRA was created essentially
to perform a public service considering that it was
primarily responsible for a coordinated, economical
and efficient reclamation, administration and
operation of lands belonging to the government
with the object of maximizing their utilization and
hastening their development consistent with the
public interest. Sections 2 and 4 of P.D. No. 1084
reads, as follows:
Section 2. Declaration of policy. It is the declared
policy of the State to provide for a coordinated,
economical and efficient reclamation of lands,
and the administration and operation of lands
belonging to, managed and/or operated by the
government, with the object of maximizing their
utilization and hastening their development
consistent with the public interest.
Section 4. Purposes. The Authority is hereby created
for the following purposes:
(a) To reclaim land, including foreshore
and submerged areas, by dredging, filling
or other means, or to acquire reclaimed
land;
(b) To develop, improve, acquire,
administer, deal in, subdivide, dispose,
lease and sell any and all kinds of lands,
buildings, estates and other forms of real
property, owned, managed, controlled
and/or operated by the government.
(c) To provide for, operate or administer
such services as may be necessary for the
efficient, economical and beneficial
utilization of the above properties.
The twin requirement of common good and
economic viability was lengthily discussed in the
case of Manila International Airport Authority v.
Court of Appeals,9 the pertinent portion of which
reads:
Third, the government-owned or controlled
corporations created through special charters are
those that meet the two conditions prescribed in

Section 16, Article XII of the Constitution.
The first condition is that the government-owned or
controlled corporation must be established for the
common good. The second condition is that the
government-owned or controlled corporation must
meet the test of economic viability. Section 16,
Article XII of the 1987 Constitution provides:
SEC. 16. The Congress shall not, except by general
law, provide for the formation, organization, or
regulation of private corporations. Governmentowned or controlled corporations may be created
or established by special charters in the interest of
the common good and subject to the test of
economic viability.
The Constitution expressly authorizes the legislature
to create "government-owned or controlled
corporations" through special charters only if these
entities are required to meet the twin conditions of
common good and economic viability. In other
words, Congress has no power to create
government-owned or controlled corporations with
special charters unless they are made to comply
with the two conditions of common good and
economic viability. The test of economic viability
applies only to government-owned or controlled
corporations
that
perform
economic
or
commercial activities and need to compete in the
market place. Being essentially economic vehicles
of the State for the common good meaning for
economic development purposes these
government-owned or controlled corporations with
special charters are usually organized as stock
corporations just like ordinary private corporations.
In contrast, government instrumentalities vested
with
corporate
powers
and
performing
governmental or public functions need not meet
the
test
of
economic
viability.
These
instrumentalities perform essential public services for
the common good, services that every modern
State
must
provide
its
citizens.
These
instrumentalities need not be economically viable
since the government may even subsidize their
entire operations. These instrumentalities are not the
"government-owned or controlled corporations"
referred to in Section 16, Article XII of the 1987
Constitution.
Thus, the Constitution imposes no limitation when
the legislature creates government instrumentalities
vested with corporate powers but performing
essential governmental or public functions.
Congress has plenary authority to create
government instrumentalities vested with corporate
powers provided these instrumentalities perform
essential government functions or public services.
However, when the legislature creates through
special charters corporations that perform
economic or commercial activities, such entities
known as "government-owned or controlled
corporations" must meet the test of economic
viability because they compete in the market
place.
Page 144 of 158
This is the situation of the Land Bank of the

Philippines and the Development Bank of the
Philippines and similar government-owned or
controlled corporations, which derive their
incometo meet operating expenses solely from
commercial transactions in competition with the
private sector. The intent of the Constitution is to
prevent the creation of government-owned or
controlled corporations that cannot survive on their
own in the market place and thus merely drain the
public coffers.
Commissioner Blas F. Ople, proponent of the test of
economic viability, explained to the Constitutional
Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this
concern is really that when the government
creates a corporation, there is a sense in which this
corporation becomes exempt from the test of
economic performance. We know what happened
in the past. If a government corporation loses, then
it makes its claim upon the taxpayers' money
through new equity infusions from the government
and what is always invoked is the common good.
That is the reason why this year, out of a budget of
P115 billion for the entire government, about P28
billion of this will go into equity infusions to support a
few government financial institutions. And this is all
taxpayers' money which could have been
relocated to agrarian reform, to social services like
health and education, to augment the salaries of
grossly underpaid public employees. And yet this is
all going down the drain.
Therefore, when we insert the phrase "ECONOMIC
VIABILITY" together with the "common good," this
becomes a restraint on future enthusiasts for state
capitalism to excuse themselves from the
responsibility of meeting the market test so that
they become viable. And so, Madam President, I
reiterate, for the committee's consideration and I
am glad that I am joined in this proposal by
Commissioner Foz, the insertion of the standard of
"ECONOMIC VIABILITY OR THE ECONOMIC TEST,"
together with the common good.1wphi1
Father Joaquin G. Bernas, a leading member of the
Constitutional Commission, explains in his textbook
The 1987 Constitution of the Republic of the
Philippines: A Commentary:
The second sentence was added by the 1986
Constitutional Commission. The significant addition,
however, is the phrase "in the interest of the
common good and subject to the test of
economic viability." The addition includes the ideas
that they must show capacity to function efficiently
in business and that they should not go into
activities which the private sector can do better.
Moreover, economic viability is more than financial
viability but also includes capability to make profit
and generate benefits not quantifiable in financial
terms.
Clearly, the test of economic viability does not
apply to government entities vested with corporate
powers and performing essential public services.
The State is obligated to render essential public
services regardless of the economic viability of

providing such service. The non-economic viability
of rendering such essential public service does not
excuse the State from withholding such essential
services from the public.
However,
government-owned
or
controlled
corporations with special charters, organized
essentially for economic or commercial objectives,
must meet the test of economic viability. These are
the government-owned or controlled corporations
that are usually organized under their special
charters as stock corporations, like the Land Bank of
the Philippines and the Development Bank of the
Philippines. These are the government-owned or
controlled corporations, along with governmentowned or controlled corporations organized under
the Corporation Code, that fall under the definition
of "government-owned or controlled corporations"
in Section 2(10) of the Administrative Code.
[Emphases supplied]
This Court is convinced that PRA is not a GOCC
either under Section 2(3) of the Introductory
Provisions of the Administrative Code or under
Section 16, Article XII of the 1987 Constitution. The
facts, the evidence on record and jurisprudence
on the issue support the position that PRA was not
organized either as a stock or a non-stock
corporation. Neither was it created by Congress to
operate commercially and compete in the private
market.
Instead,
PRA
is
a
government
instrumentality vested with corporate powers and
performing an essential public service pursuant to
Administrative Code. Being an incorporated
government instrumentality, it is exempt from
payment of real property tax.
Clearly, respondent has no valid or legal basis in
taxing the subject reclaimed lands managed by
PRA. On the other hand, Section 234(a) of the LGC,
in relation to its Section 133(o), exempts PRA from
paying realty taxes and protects it from the taxing
powers of local government units.
Sections 234(a) and 133(o) of the LGC provide, as
follows:
SEC. 234. Exemptions from Real Property Tax The
following are exempted from payment of the real
property tax:
(a) Real property owned by the Republic of the
Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person.
xxxx
SEC. 133. Common Limitations on the Taxing Powers
of Local Government Units. Unless otherwise
provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following:
xxxx
(o) Taxes, fees or charges of any kinds on the
National
Government,
its
agencies
and
instrumentalities, and local government units.
[Emphasis supplied]
Page 145 of 158
It is clear from Section 234 that real property owned

by the Republic of the Philippines (the Republic) is
exempt from real property tax unless the beneficial
use thereof has been granted to a taxable person.
In this case, there is no proof that PRA granted the
beneficial use of the subject reclaimed lands to a
taxable entity. There is no showing on record either
that PRA leased the subject reclaimed properties to
a private taxable entity.
This exemption should be read in relation to Section
133(o) of the same Code, which prohibits local
governments from imposing "taxes, fees or charges
of any kind on the National Government, its
agencies and instrumentalities x x x." The
Administrative Code allows real property owned by
the Republic to be titled in the name of agencies
or instrumentalities of the national government.
Such real properties remain owned by the Republic
and continue to be exempt from real estate tax.
Indeed, the Republic grants the beneficial use of its
real property to an agency or instrumentality of the
national government. This happens when the title
of the real property is transferred to an agency or
instrumentality even as the Republic remains the
owner of the real property. Such arrangement does
not result in the loss of the tax exemption, unless
"the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person."10
The rationale behind Section 133(o) has also been
explained in the case of the Manila International
Airport Authority,11 to wit:
Section 133(o) recognizes the basic principle that
local governments cannot tax the national
government, which historically merely delegated to
local governments the power to tax. While the 1987
Constitution now includes taxation as one of the
powers of local governments, local governments
may only exercise such power "subject to such
guidelines and limitations as the Congress may
provide."
When local governments invoke the power to tax
on national government instrumentalities, such
power
is
construed
strictly
against
local
governments. The rule is that a tax is never
presumed and there must be clear language in the
law imposing the tax. Any doubt whether a person,
article or activity is taxable is resolved against
taxation. This rule applies with greater force when
local governments seek to tax national government
instrumentalities.
Another rule is that a tax exemption is strictly
construed against the taxpayer claiming the
exemption. However, when Congress grants an
exemption
to
a
national
government
instrumentality from local taxation, such exemption
is construed liberally in favor of the national
government instrumentality. As this Court declared
in Maceda v. Macaraig, Jr.:
The reason for the rule does not apply in the case
of exemptions running to the benefit of the
government itself or its agencies. In such case the
practical effect of an exemption is merely to
reduce the amount of money that has to be
handled by government in the course of its

operations. For these reasons, provisions granting
exemptions to government agencies may be
construed liberally, in favor of non tax-liability of
such agencies.
There is, moreover, no point in national and local
governments taxing each other, unless a sound
and compelling policy requires such transfer of
public funds from one government pocket to
another.
There is also no reason for local governments to tax
national government instrumentalities for rendering
essential public services to inhabitants of local
governments. The only exception is when the
legislature clearly intended to tax government
instrumentalities for the delivery of essential public
services for sound and compelling policy
considerations. There must be express language in
the law empowering local governments to tax
national government instrumentalities. Any doubt
whether such power exists is resolved against local
governments.
Thus, Section 133 of the Local Government Code
states that "unless otherwise provided" in the Code,
local
governments
cannot
tax
national
government instrumentalities. As this Court held in
Basco v. Philippine Amusements and Gaming
Corporation:
The states have no power by taxation or otherwise,
to retard, impede, burden or in any manner control
the operation of constitutional laws enacted by
Congress to carry into execution the powers vested
in the federal government. (MC Culloch v.
Maryland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the
National Government over local governments.
"Justice Holmes, speaking for the Supreme Court,
made reference to the entire absence of power on
the part of the States to touch, in that way
(taxation) at least, the instrumentalities of the
United States (Johnson v. Maryland, 254 US 51) and
it can be agreed that no state or political
subdivision can regulate a federal instrumentality in
such a way as to prevent it from consummating its
federal responsibilities, or even to seriously burden it
in the accomplishment of them." (Antieau, Modern
Constitutional Law, Vol. 2, p. 140, emphasis
supplied)
Otherwise, mere creatures of the State can defeat
National policies thru extermination of what local
authorities may perceive to be undesirable
activities or enterprise using the power to tax as "a
tool for regulation." (U.S. v. Sanchez, 340 US 42)
The power to tax which was called by Justice
Marshall as the "power to destroy" (McCulloch v.
Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which
has the inherent power to wield it. [Emphases
supplied]
The Court agrees with PRA that the subject
reclaimed lands are still part of the public domain,
owned by the State and, therefore, exempt from
payment of real estate taxes.
Page 146 of 158
Section 2, Article XII of the 1987 Constitution reads

in part, as follows:
Section 2. All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the
exception of agricultural lands, all other natural
resources shall not be alienated. The exploration,
development, and utilization of natural resources
shall be under the full control and supervision of the
State. The State may directly undertake such
activities, or it may enter into co-production, joint
venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at
least 60 per centum of whose capital is owned by
such citizens. Such agreements may be for a period
not exceeding twenty-five years, renewable for not
more than twenty-five years, and under such terms
and conditions as may provided by law. In cases of
water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of
waterpower, beneficial use may be the measure
and limit of the grant.
Similarly, Article 420 of the Civil Code enumerates
properties belonging to the State:
Art. 420. The following things are property of public
dominion:
(1) Those intended for public use, such as
roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks,
shores, roadsteads, and others of similar
character;
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or for the
development of the national wealth.
[Emphases supplied]
Here, the subject lands are reclaimed lands,
specifically portions of the foreshore and offshore
areas of Manila Bay. As such, these lands remain
public lands and form part of the public domain. In
the case of Chavez v. Public Estates Authority and
AMARI Coastal Development Corporation,12 the
Court held that foreshore and submerged areas
irrefutably belonged to the public domain and
were inalienable unless reclaimed, classified as
alienable lands open to disposition and further
declared no longer needed for public service. The
fact that alienable lands of the public domain
were transferred to the PEA (now PRA) and issued
land patents or certificates of title in PEAs name
did not automatically make such lands private. This
Court also held therein that reclaimed lands
retained their inherent potential as areas for public
use or public service.
As the central implementing agency tasked to
undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the
place of DENR as the government agency
charged with leasing or selling reclaimed lands of
the public domain. The reclaimed lands being
leased or sold by PEA are not private lands, in the
same manner that DENR, when it disposes of other

alienable lands, does not dispose of private lands
but alienable lands of the public domain. Only
when qualified private parties acquire these lands
will the lands become private lands. In the hands of
the government agency tasked and authorized to
dispose of alienable of disposable lands of the
public domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states that PEA
"shall hold lands of the public domain" as well as
"any and all kinds of lands." PEA can hold both
lands of the public domain and private lands. Thus,
the mere fact that alienable lands of the public
domain like the Freedom Islands are transferred to
PEA and issued land patents or certificates of title in
PEA's name does not automatically make such
lands private.13
Likewise, it is worthy to mention Section 14, Chapter
4, Title I, Book III of the Administrative Code of 1987,
thus:
SEC 14. Power to Reserve Lands of the Public and
Private Dominion of the Government.(1)The President shall have the power to reserve for
settlement or public use, and for specific public
purposes, any of the lands of the public domain,
the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to
the specific public purpose indicated until
otherwise provided by law or proclamation.
Reclaimed lands such as the subject lands in issue
are reserved lands for public use. They are
properties of public dominion. The ownership of
such lands remains with the State unless they are
withdrawn by law or presidential proclamation from
public use.
Under Section 2, Article XII of the 1987 Constitution,
the foreshore and submerged areas of Manila Bay
are part of the "lands of the public domain, waters
x x x and other natural resources" and consequently
"owned by the State." As such, foreshore and
submerged areas "shall not be alienated," unless
they are classified as "agricultural lands" of the
public domain. The mere reclamation of these
areas by PEA does not convert these inalienable
natural resources of the State into alienable or
disposable lands of the public domain. There must
be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or
disposable and open to disposition or concession.
Moreover, these reclaimed lands cannot be
classified as alienable or disposable if the law has
reserved them for some public or quasi-public use.
As the Court has repeatedly ruled, properties of
public dominion are not subject to execution or
foreclosure sale.14Thus, the assessment, levy and
foreclosure made on the subject reclaimed lands
by respondent, as well as the issuances of
certificates of title in favor of respondent, are
without basis.
WHEREFORE, the petition is GRANTED. The January
8, 2010 Order of the Regional Trial Court, Branch
195, Paraaque City, is REVERSED and SET ASIDE. All
Page 147 of 158
reclaimed properties owned by the Philippine

Reclamation Authority are hereby declared
EXEMPT from real estate taxes. All real estate tax
assessments, including the final notices of real
estate tax delinquencies, issued by the City of
Paraaque on the subject reclaimed properties;
the assailed auction sale, dated April 7, 2003; and
the Certificates of Sale subsequently issued by the
Paraaque City Treasurer in favor of the City of
Paraaque, are all declared VOID.
SO ORDERED.
#35
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 163767
March 10, 2014
REPUBLIC OF THE PHILIPPINES, represented by THE
DIRECTOR OF LANDS, Petitioner,
vs.
ROSARIO DE GUZMAN VDA. DE
JOSON, Respondent.
DECISION
BERSAMIN, J.:
This case concerns the discharge of the burden of
proof by the applicant in proceedings for the
registration of land under Section 14 (1) and (2) of
Presidential Decree No. 1529 (Property Registration
Decree).
The Republic appeals the adverse decision
promulgated on January 30, 2004,1 whereby the
Court of Appeals (CA) affirmed the judgment
rendered on August 10, 1981 by the erstwhile Court
of First Instance (CFI) of Bulacan (now the Regional
Trial Court) in Registration Case No. 3446-M granting
the application of the respondent for the
registration of her title covering a parcel of land
situated in San Isidro, Paombong, Bulacan.2
The respondent filed her application for land
registration in the CFI in Bulacan.3 The jurisdictional
requirements were met when the notice of initial
hearing was published in the Official Gazette for
two successive weeks,4 as evidenced by a
certification of publication.5 The notice of initial
hearing was also posted by the Provincial Sheriff of
Bulacan in a conspicuous place in the municipal
building of Paombong, Bulacan as well as on the
property itself.6On June 2, 1977, at the initial hearing
of the application, Fiscal Liberato L. Reyes
interposed an opposition in behalf of the Director of
Lands and the Bureau of Public Works. Upon motion
by the respondent and without objection from
Fiscal Reyes, the CFI commissioned the Acting
Deputy Clerk of Court to receive evidence in the
presence of Fiscal Reyes.7
The records show that the land subject of the
application was a riceland with an area of 12,342
square meters known as Lot 2633, Cad-297,
Paombong, Bulacan, and covered by plan Ap-03001603;8 that the riceland had been originally
owned and possessed by one Mamerto Dionisio
since 1907;9 that on May 13, 1926, Dionisio, by way

of a deed of sale,10 had sold the land to Romualda
Jacinto; that upon the death of Romualda Jacinto,
her sister Maria Jacinto (mother of the respondent)
had inherited the land; that upon the death of
Maria Jacinto in 1963, the respondent had herself
inherited the land, owning and possessing it openly,
publicly, uninterruptedly, adversely against the
whole world, and in the concept of owner since
then; that the land had been declared in her name
for taxation purposes; and that the taxes due
thereon had been paid, as shown in Official
Receipt No. H-7100234.11
In their opposition filed by Fiscal Reyes,12 the
Director of Lands and the Director of Forest
Development averred that whatever legal and
possessory rights the respondent had acquired by
reason of any Spanish government grants had
been lost, abandoned or forfeited for failure to
occupy and possess the land for at least 30 years
immediately
preceding
the
filing
of
the
application;13 and that the land applied for, being
actually a portion of the Labangan Channel
operated by the Pampanga River Control System,
could not be subject of appropriation or land
registration.14
The Office of the Solicitor General (OSG) also filed
in behalf of the Government an opposition to the
application,15insisting that the land was within the
unclassified region of Paombong, Bulacan, as
indicated in BF Map LC No. 637 dated March 1,
1927; that areas within the unclassified region were
denominated as forest lands and thus fell under the
exclusive jurisdiction, control and authority of the
Bureau of Forest Development (BFD);16 and that the
CFI did not acquire jurisdiction over the application
considering that: (1) the land was beyond the
commerce of man; (2) the payment of taxes
vested no title or ownership in the declarant or
taxpayer.17
Ruling ofthe CFI
On August 10, 1981, the CFI rendered its
decision,18 ordering the registration of the land in
favor of the respondent on the ground that she
had sufficiently established her open, public,
continuous, and adverse possession in the concept
of an owner for more than 30 years, to wit:
Since it has been established that the applicants
and her predecessors-in-interest have been in the
open, public, continuous, and adverse possession
of the said parcel of land in the concept of an
owner for more than thirty (30) years, that it, since
1926 up to the present time, applicant therefore is
entitled to the registration thereof under the
provisions od Act No. 496, in relation to
Commonwealth Act No. 141 as amended by
Republic Act No. 6236 and other existing laws.
WHEREFORE, confirming the order of general
default issued in this case, the Court hereby orders
the registration of this parcel of land Lot 2633, Cad
297. Case 5, Paombong Cadastre[)] described in
plan Ap-03-001603 (Exhibit D, page 7 of records)
and in the technical description (Exhibit F, page 5
Page 148 of 158
of records) in favor of Rosario de Guzman Vda de

Joson, of legal age, Filipino, widow and resident of
Malolos, Bulacan.
After the decision shall have become final, let the
corresponding decree be issued,
SO ORDERED19.
The Republic, through the OSG, appealed to the
CA, contending that the trial court had erred in
granting the application for registration despite the
land not being the subject of land registration due
to its being part of the unclassified region
denominated as forest land of Paombong,
Bulacan.20
Judgment of the CA
On January 30, 2004, the CA promulgated its
assailed judgment,21 affirming the decision of the
trial court upon the following ratiocination:
The foregoing documentary and testimonial
evidence stood unrebutted and uncontroverted by
the oppositor-appellant and they should serve as
proof of the paucity of the claim of the applicantappellee over the subject property.
Upon the other hand, oppositor-appellant, in a
lackluster fashion, advanced pro forma theories
and arguments in its Opposition which naturally
failed to merit any consideration from the court a
quo and also from this Court. The indorsement from
the Bureau of Forest Development, San Fernando,
Pampanga to the effect that the subject area is
within the unclassified region of Paombong,
Bulacan does not warrant any evidentiary weight
since the same had never been formally offered as
evidence by the oppositor-appellant. All the other
allegations in the Opposition field (sic) by the
oppositor-appellant failed to persuade this Court as
to the veracity thereof considering that no
evidence was ever presented to prove the said
allegations.
Such being the case, this Court is not inclined to
have the positive proofs of her registrable rights
over the subject property adduced by the
applicant-appellee be defeated by the bare and
unsubstantiated allegations of the oppositorappellant.
WHEREFORE, PREMISES CONSIDERED, the assailed
Decision is hereby AFFIRMED IN TOTO.
SO ORDERED.22
Hence, the Republic appeals by petition for review
on certiorari.
Issue
(1) WHETHER OR NOT THE LAND SUBJECT OF
THE APPLICATION FOR REGISTRATION IS
SUSCEPTIBLE OF PRIVATE ACQUISITION; and
(2) WHETHER OR NOT THE TRIAL COURT, AS
WELL AS THE COURT OF APPEALS, ERRED IN
GRANTING
THE
APPLICATION
FOR
REGISTRATION.23
Ruling
The appeal is impressed with merit.
Section 14 (1) and (2) of the Property Registration
Decree state:
Section 14. Who may apply. The following
persons may file in the proper [Regional Trial Court]

representatives:
(1) Those who by themselves or through
their predecessors-in-interest have been in
possession and occupation of alienable
and disposable lands of the public domain
under a bona fide claim of ownership since
June 12, 1945, or earlier.
(2) Those who have acquired ownership of
private lands by prescription under the
provision of existing laws.
xxxx
Section 14(1) deals with possession and occupation
in the concept of an owner while Section 14(2)
involves prescription as a mode of acquiring
ownership. In Heirs of Mario Malabanan v.
Republic,24 the Court set the guidelines concerning
land registration proceedings brought under these
provisions of the Property Registration Decree in
order provide clarity to the application and scope
of said provisions.
The respondent sought to have the land registered
in her name by alleging that she and her
predecessors-in-interest had been in open,
peaceful, continuous, uninterrupted and adverse
possession of the land in the concept of owner
since time immemorial. However, the Republic
counters that the land was public land; and that it
could not be acquired by prescription. The
determination of the issue hinges on whether or not
the land was public; if so, whether the respondent
satisfactorily proved that the land had already
been declared as alienable and disposable land of
the public domain; and that she and her
predecessors-in-interest had been in open,
peaceful, continuous, uninterrupted and adverse
possession of the land in the concept of owner
since June 12, 1945, or earlier.
In Republic vs. Tsai,25 the Court summarizes the
amendments that have shaped the current
phraseology of Section 14(1), to wit:
Through the years, Section 48(b) of the CA 141 has
been amended several times. The Court of Appeals
failed to consider the amendment introduced by
PD 1073. In Republic v. Doldol, the Court provided
a summary of these amendments:
The original Section 48(b) of C.A. No.141 provided
for possession and occupation of lands of the
public domain since July 26, 1894. This was
superseded by R.A. No. 1942, which provided for a
simple thirty-year prescriptive period of occupation
by an applicant for judicial confirmation of
imperfect title. The same, however, has already
been amended by Presidential Decree No. 1073,
approved on January 25, 1977. As amended,
Section 48(b) now reads:
predecessors in interest have been in open,
domain, under a bona fide claim of acquisition of
Page 149 of 158
ownership, since June 12, 1945, or earlier,

immediately preceding the filing of the application
for confirmation of title, except when prevented by
of this chapter. (Emphasis supplied)
As the law now stands, a mere showing of
possession and occupation for 30 years or more is
not sufficient. Therefore, since the effectivity of PD
1073 on 25 January 1977, it must now be shown that
possession and occupation of the piece of land by
the applicant, by himself or through his
predecessors-in-interest, started on 12 June 1945 or
earlier. This provision is in total conformity with
Section 14(1) of PD 1529.26
Under Section 14(1), therefore, the respondent had
to prove that: (1) the land formed part of the
alienable and disposable land of the public
domain; and (2) she, by herself or through her
predecessors-in-interest, had been in open,
occupation of the subject land under a bona fide
claim of ownership from June 12, 1945, or earlier.27 It
is the applicant who carries the burden of proving
that the two requisites have been met. Failure to do
so warrants the dismissal of the application.
The respondent unquestionably complied with the
second requisite by virtue of her having been in
possession and occupation of the land since June
12, 1945, or earlier. She testified on how the land
had been passed on to her from her predecessorsin-interest; and tendered documentary evidence
like: (1) the Deed of Sale evidencing the transfer of
the property from Mamerto Dionisio to Romualda
Jacinto in 1926;28 (2) Tax Declaration No. 4547
showing that she had declared the property for
taxation purposes in 1976;29 and (3) Official Receipt
No. H-7100234 indicating that she had been paying
taxes on the land since 1977.30 The CFI found her
possession of the land and that of her
predecessors-in-interest to have been open, public,
continuous, and adverse in the concept of an
owner since 1926 until the present time, or for more
than 30 years, entitling her to the registration under
the provisions of Act No. 496, in relation to
Commonwealth Act No. 141, as amended by
Republic Act No. 6236 and other existing laws.31 On
its part, the CA ruled that the documentary and
testimonial evidence stood unrebutted and
uncontroverted by the Republic.32
Nonetheless, what is left wanting is the fact that the
respondent did not discharge her burden to prove
the classification of the land as demanded by the
first requisite. She did not present evidence of the
land, albeit public, having been declared
alienable and disposable by the State. During trial,
she testified that the land was not within any
military or naval reservation, and Frisco Domingo,
her other witness, corroborated her. Although the
Republic countered that the verification made by
the Bureau of Forest Development showed that the

land was within the unclassified region of
Paombong, Bulacan as per BF Map LC No. 637
dated March 1, 1927,33 such showing was based on
the 1st Indorsement dated July 22, 1977 issued by
the Bureau of Forest Development,34 which the CA
did not accord any evidentiary weight to for failure
of the Republic to formally offer it in evidence. Still,
Fiscal Reyes, in the opposition he filed in behalf of
the Government, argued that the land was a
portion of the Labangan Channel operated by the
Pampanga River Control System, and could not be
the subject of appropriation or land registration.
Thus, the respondent as the applicant remained
burdened with proving her compliance with the first
requisite.
Belatedly realizing her failure to prove the alienable
and disposable classification of the land, the
petitioner attached as Annex A to her appellees
brief35 the certification dated March 8, 2000 issued
by the Department of Environment and Natural
ResourcesCommunity Environment and Natural
Resources Office (DENR-CENRO),36viz:
THIS IS TO CERTIFY that the parcel of land described
on lot 2633 located at San Isidro, Paombong,
Bulacan as shown in the sketch plan surveyed by
Geodetic Engineer Carlos G. Reyes falls within the
Alienable or Disposable Land Project No. 19 of
Paombong, Bulacan per Land Classification Map
No. 2934 certified on October 15, 1980.
However, in its resolution of July 31, 2000,37 the CA
denied her motion to admit the appellees brief,
and expunged the appellees brief from the
records. Seeing another opportunity to make the
certification a part of the records, she attached it
as Annex A of her comment here.38 Yet, that
attempt to insert would not do her any good
because only evidence that was offered at the trial
could be considered by the Court.
Even had the respondents effort to insert the
certification been successful, the same would
nonetheless be vain and ineffectual. In Menguito v.
Republic,39 the Court pronounced that a survey
conducted by a geodetic engineer that included
a certification on the classification of the land as
alienable and disposable was not sufficient to
overcome the presumption that the land still
formed part of the inalienable public domain, to
wit:
To prove that the land in question formed part of
the alienable and disposable lands of the public
domain, petitioners relied on the printed words
which read: "This survey plan is inside Alienable and
Disposable Land Area, Project No. 27-B as per L.C.
Map No. 2623, certified by the Bureau of Forestry on
January 3, 1968," appearing on Exhibit "E" (Survey
Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the
1987 Constitution, provides: "All lands of the public
domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna,
Page 150 of 158
and other natural resources are owned by the

State. x x x." (Emphasis supplied.)
For the original registration of title, the applicant
(petitioners in this case) must overcome the
presumption that the land sought to be registered
forms part of the public domain. Unless public land
is shown to have been reclassified or alienated to a
private person by the State, it remains part of the
inalienable public domain. Indeed, "occupation
thereof in the concept of owner, no matter how
long, cannot ripen into ownership and be
registered as a title." To overcome such
shown by the applicant. Absent such evidence, the
land sought to be registered remains inalienable.
In the present case, petitioners cite a surveyorgeodetic engineers notation in Exhibit "E"
indicating that the survey was inside alienable and
disposable land. Such notation does not constitute
a positive government act validly changing the
classification of the land in question. Verily, a mere
surveyor has no authority to reclassify lands of the
public domain. By relying solely on the said
surveyors assertion, petitioners have not sufficiently
proven that the land in question has been
declared alienable.40
We reiterate the standing doctrine that land of the
public domain, to be the subject of appropriation,
must be declared alienable and disposable either
by the President or the Secretary of the DENR. In
Republic v. T.A.N. Properties, Inc.,41 we explicitly
ruled:
The applicant for land registration must prove that
the DENR Secretary had approved the land
and disposable.42
This doctrine unavoidably means that the mere
certification issued by the CENRO or PENRO did not
suffice to support the application for registration,
because the applicant must also submit a copy of
the original classification of the land as alienable
and disposable as approved by the DENR
custodian of the official records. As the Court said
in Republic v. Bantigue Point Development
Corporation:43
The Regalian doctrine dictates that all lands of the
public domain belong to the State. The applicant
for land registration has the burden of overcoming
the presumption of State ownership by establishing
through incontrovertible evidence that the land
sought to be registered is alienable or disposable
based on a positive act of the government. We
held in Republic v. T.A.N. Properties, Inc. that a
CENRO certification is insufficient to prove the

alienable and disposable character of the land
sought to be registered. The applicant must also
show sufficient proof that the DENR Secretary has
approved the land classification and released the
land in question as alienable and disposable.
Thus, the present rule is that an application for
original registration must be accompanied by (1) a
CENRO or PENRO Certification; and (2) a copy of
the original classification approved by the DENR
custodian of the official records.
Here, respondent Corporation only presented a
CENRO certification in support of its application.
Clearly, this falls short of the requirements for
original registration.44
Yet, even assuming that the DENR-CENRO
certification alone would have sufficed, the
respondents application would still be denied
considering that the reclassification of the land as
alienable or disposable came only after the filing of
the application in court in 1976. The certification
itself indicated that the land was reclassified as
alienable or disposable only on October 15, 1980.
The consequence of this is fittingly discussed in Heirs
of Mario Malabanan v. Republic, to wit:
We noted in Naguit that it should be distinguished
from Bracewell v. Court of Appeals since in the
latter, the application for registration had been
filed before the land was declared alienable or
disposable. The dissent though pronounces
Bracewell as the better rule between the two. Yet
two years after Bracewell, its ponente, the
esteemed Justice Consuelo Ynares-Santiago,
penned the ruling in Republic v. Ceniza, which
involved a claim of possession that extended back
to 1927 over a public domain land that was
declared alienable and disposable only in 1980.
Ceniza cited Bracewell, quoted extensively from it,
and following the mindset of the dissent, the
attempt at registration in Ceniza should have
failed. Not so.
To prove that the land subject of an application for
registration is alienable, an applicant must establish
the existence of a positive act of the government
such as a presidential proclamation or an
executive order; an administrative action;
investigators; and a legislative act or a statute.
In this case, private respondents presented a
certification dated November 25, 1994, issued by
Eduardo M. Inting, the Community Environment
and Natural Resources Officer in the Department of
Environment and Natural Resources Office in Cebu
City, stating that the lots involved were "found to
be within the alienable and disposable (sic) Block-I,
Land Classification Project No. 32-A, per map 2962
4-I555 dated December 9, 1980." This is sufficient
evidence to show the real character of the land
subject of private respondents application. Further,
the certification enjoys a presumption of regularity
in the absence of contradictory evidence, which is
Page 151 of 158
true in this case. Worth noting also was the

observation of the Court of Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands
and Forestry to contest the application of
appellees on the ground that the property still forms
part of the public domain. Nor is there any showing
that the lots in question are forestal land...."
Thus, while the Court of Appeals erred in ruling that
mere possession of public land for the period
required by law would entitle its occupant to a
confirmation of imperfect title, it did not err in ruling
in favor of private respondents as far as the first
requirement in Section 48(b) of the Public Land Act
is concerned, for they were able to overcome the
burden of proving the alienability of the land
subject of their application.
As correctly found by the Court of Appeals, private
respondents were able to prove their open,
continuous, exclusive and notorious possession of
the subject land even before the year 1927. As a
rule, we are bound by the factual findings of the
Court of Appeals. Although there are exceptions,
petitioner did not show that this is one of them."
Why did the Court in Ceniza, through the same
eminent member who authored Bracewell,
sanction the registration under Section 48(b) of
public domain lands declared alienable or
disposable thirty-five (35) years and 180 days after
12 June 1945? The telling difference is that in
Ceniza, the application for registration was filed
nearly six (6) years after the land had been
declared alienable or disposable, while in
Bracewell, the application was filed nine (9) years
before the land was declared alienable or
disposable. That crucial difference was also
stressed in Naguit to contradistinguish it from
Bracewell, a difference which the dissent seeks to
belittle.45 (citations omitted)
On the other hand, under Section 14(2), ownership
of private lands acquired through prescription may
be registered in the owners name. Did the
respondent then acquire the land through
prescription considering that her possession and
occupation of the land by her and her
predecessors-in-interest could be traced back to as
early as in 1926, and that the nature of their
possession and occupation was that of a bona fide
claim of ownership for over 30 years?
Clearly, the respondent did not. Again, Heirs of
Mario Malabanan v. Republic is enlightening, to
wit:
It is clear that property of public dominion, which
generally includes property belonging to the State,
cannot be the object of prescription or, indeed, be
subject of the commerce of man. Lands of the
public domain, whether declared alienable and
disposable or not, are property of public dominion
and thus insusceptible to acquisition by
prescription.
Let us now explore the effects under the Civil Code
of a declaration by the President or any duly
authorized government officer of alienability and
disposability of lands of the public domain. Would
such lands so declared alienable and disposable

be converted, under the Civil Code, from property
of the public dominion into patrimonial property?
After all, by connotative definition, alienable and
disposable lands may be the object of the
commerce of man; Article 1113 provides that all
things within the commerce of man are susceptible
to prescription; and the same provision further
provides that patrimonial property of the State may
be acquired by prescription.
that "[p]roperty of public dominion, when no longer
form part of the patrimonial property of the State."
It is this provision that controls how public dominion
After all, Article 420 (2) makes clear that those
property "which belong to the State, without being
wealth" are public dominion property. For as long
as the property belongs to the State, although
already classified as alienable or disposable, it
remains property of the public dominion if when it is
"intended for some public service or for the
development of the national wealth".1wphi1
authorized by law.
It is comprehensible with ease that this reading of
Section 14(2) of the Property Registration Decree
limits its scope and reach and thus affects the
registrability even of lands already declared
alienable and disposable to the detriment of the
bona fide possessors or occupants claiming title to
the lands. Yet this interpretation is in accord with
the Regalian doctrine and its concomitant
assumption that all lands owned by the State,
although declared alienable or disposable, remain
as such and ought to be used only by the
Government.
Recourse does not lie with this Court in the
matter.1wphi1 The duty of the Court is to apply
the Constitution and the laws in accordance with
their language and intent. The remedy is to change
the law, which is the province of the legislative
branch. Congress can very well be entreated to
Page 152 of 158
amend Section 14(2) of the Property Registration

Decree and pertinent provisions of the Civil Code
to liberalize the requirements for judicial
confirmation of imperfect or incomplete titles.46
The period of possession prior to the reclassification
of the land as alienable and disposable land of the
public domain is not considered in reckoning the
prescriptive period in favor of the possessor. As
pointedly clarified also in Heirs of Mario Malabanan
v. Republic:47
Should public domain lands become patrimonial
because they are declared as such in a duly
enacted law or duly promulgated proclamation
that they are no longer intended for public service
or for the development of the national wealth,
would the period of possession prior to the
conversion of such public dominion into patrimonial
be reckoned in counting the prescriptive period in
favor of the possessors? We rule in the negative.
The limitation imposed by Article 1113 dissuades us
from ruling that the period of possession before the
public domain land becomes patrimonial may be
counted for the purpose of completing the
prescriptive period. Possession of public dominion
property before it becomes patrimonial cannot be
the object of prescription according to the Civil
Code. As the application for registration under
Section 14(2) falls wholly within the framework of
prescription under the Civil Code, there is no way
that possession during the time that the land was
still classified as public dominion property can be
counted to meet the requisites of acquisitive
prescription and justify registration.48
In other words, the period of possession prior to the
reclassification of the land, no matter how long,
was irrelevant because prescription did not
operate against the State before then.
WHEREFORE, the Court REVERSES and SETS ASIDE
the decision of the Court of Appeals promulgated
on January 30, 2004; DISMISSES the application for
land registration of respondent Rosario de Guzman
Vda. De Joson respecting Lot 2633, Cad-297 with a
total area of 12,342 square meters, more or less,
situated in San Isidro, Paombong, Bulacan; and
DIRECTS the respondent to pay the costs of suit.
SO ORDERED.
#36
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 184371
March 5, 2014
SPOUSES MARIO AND JULIA CAMPOS, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
BRION, J.:
Before this Court is a petition for review on
certiorari1 assailing the April 30, 2007 decision2 and
August 22, 2008 resolution3 of the Court of Appeals
(CA) in CA-G.R. CV No. 84620. The CA reversed
and set aside the December 29, 2004 decision4 of

the Municipal Trial Court (MTC) Bauang, La Union in
LRC Case No. 80-MTC, BgLU, which approved the
application of registration of title of Lot No. 3876,
Cad-474-D, Case 17, Bauang Cadastre, filed by the
spouses Mario and Julia Campos (petitioners).
Facts
On November 17, 2003, the petitioners applied for
the registration of a 6,904 square meter-parcel of
land situated in Baccuit, Bauang, La Union,
particularly described as Lot No. 3876, Cad-474-D,
Case 17, Bauang Cadastre. The petitioners bought
the subject land from Roberto Laigo, as evidenced
by a Deed of Absolute Sale executed by the
parties on July 26, 1990.
In support of their application, the petitioners
presented, among others, the following evidence:
(1) testimony of petitioner Mario Campos; (2)
testimony of adjoining lot-owner, Leopoldo Subang;
(3) Linen cloth of Lot 3876 of AP-1-002221, Cad-474D; (4) Original technical description of the lot; (5)
Certificate of Assessment; (6) Deed of Absolute
Sale dated July 26, 1990; (7) Certified true copies of
Tax declarations for the years 1948 and 1953 in the
name of Margarita Laigo, the mother of Roberto
Laigo; (8) Certified true copies of Tax declarations
for the years 1970, 1974, 1980, 1985 and 1987 in the
name of Roberto Laigo; (9) Certified true copies of
Tax declarations for the years 1990, 1994, 1995 and
1998 in the names of the petitioners; (10) Tax
receipts for the years 1991-1994, 1999-2000, 20012002, 2003 and 2004; and (11) Certification from the
DENR-CENRO that Lot 3876 falls within the alienable
or disposable land of the public domain.5
Only the Republic filed a formal opposition to the
petitioners application, which the MTC later
dismissed due to the Republics failure to present
testimonial
or
documentary
evidence
to
substantiate its grounds for objection.6
On December 29, 2004, the MTC rendered a
decision granting the petitioners application for
registration, stating that:
Based on the evidences presented, it is appearing
that the applicants have established a satisfactory
proof that they have a registrable title over the
property subject of these proceedings, they, being
qualified to own that land being Filipino citizens, it
being established also that their possession and
that of their predecessor-in-interest of the parcel of
land subject of this application have been open,
continuous, exclusive and adverse against the
whole world for more than fifty-six (56) years since
the oldest documentary evidence, Tax Declaration
No. 235 series of 1948 and in the name of Margarita
Laigo shows that Margarita Laigo, mother of
Roberto Laigo from whom the applicants bought
this land subject of this case, has owned it since
1948. Besides, witness Leopoldo Subang, the owner
of the land adjacent to this land subject of this
case, confirmed that their possession was probably
before 1948 because he knows Roberto Laigo as
the present owner of the land when he sold it to
the applicants; and that this property was originally
Page 153 of 158
owned by Margarita Laigo, mother of Roberto

Laigo. Hence, this Court conclusively presumes that
Margarita Laigo was the original owner even
before the Second World War.7
The Republic appealed to the CA on the ground
that the MTC erred in granting the petitioners
application
for
registration
because
of
discrepancies in the area of the subject land as
applied for and indicated in the tax declarations
and the parties deed of sale. Also, discrepancies in
the description of the subject land appeared in the
tax declarations, as the land was sometimes
described as "swampy" and, in others, "sandy."
The CA, in its assailed April 30, 2007 decision,
reversed and set aside the MTCs decision and
dismissed the petitioners application for registration
of title. It ruled that, contrary to the MTCs findings,
the evidence failed to prove the nature and
duration of the petitioners possession and that of
their predecessors-in-interest; that the petitioners
failed to prove that they and their predecessors-ininterest have been in open, continuous, exclusive,
notorious and adverse possession of Lot 3876 since
June 12, 1945 or earlier.
The CA further held that the petitioners failed to
establish when the subject land became alienable;
that while the DENR-CENRO La Union certified that
"Lot 3876 falls within the Alienable and Disposable
land of the Public Domain as per Project No. 9, L.C.
Map No. 3330 of Bauang Cadastre as certified on
January 21, 1987," such certification (as annotated
in the lots Advance Plan) was inadequate to
prove that the subject land was classified as
alienable and disposable on said date.
Lastly, the CA noted the discrepancies in the area
of the subject land indicated in the tax
declarations and deed of sale presented by the
petitioners, which put in doubt the lots identity. It
held that:
xxx, insufficient identification of the land claimed in
absolute ownership by the applicant cannot ripen
into ownership. Lot 3876 consists of 6,904 square
meters, as shown in the tax declarations for 1994
and 1996, whereas the tax declarations for 1948,
1953 and 1970 cover a parcel of land consisting of
4,502 square meters. Besides, the Deed of Absolute
Sale and tax declarations covering the years 1980
until 1987, inclusive, pertain to a land with an area
of 4,512 square meters.8 (Citation omitted)
The petitioners moved to reconsider the CA
decision but the CA denied their motion in a
resolution dated August 22, 2008, hence, the filing
of the present petition for review for certiorari with
this Court.
The Petition
In the present petition, the petitioners argue that
the CA erred in ruling on non-issues and on
established and undisputed facts that were not
raised by the Republic as errors in its appeal; that
the sole issue raised by the Republic was merely on
the discrepancies on the area and description of
the subject land as indicated in the documents
and evidence presented, which issue the
petitioners already addressed in their appeal brief

before the CA.
The petitioners maintain that they have presented
sufficient evidence to show the nature and
duration of their possession and the fact that they
had possessed and cultivated the land sought to
be registered.
Our Ruling
We deny the present petition as the CA committed
no reversible error in dismissing the petitioners
application for registration of title.
First, we address the procedural issue raised by the
petitioners. Section 8, Rule 51 of the 1997 Rules of
Civil Procedure expressly provides:
SEC. 8. Questions that may be decided. No error
which does not affect the jurisdiction over the
subject matter or the validity of the judgment
appealed from or the proceedings therein will be
considered unless stated in the assignment of errors,
or closely related to or dependent on an assigned
error and properly argued in the brief, save as the
court pass upon plain errors and clerical
errors.1avvphi1
The general rule that an assignment of error is
essential to appellate review and only those errors
assigned will be considered applies in the absence
of
certain
exceptional
circumstances.
As
exceptions to the rule, the Court has considered
grounds not raised or assigned as errors in instances
where: (1) grounds not assigned as errors but
affecting jurisdiction over the subject matter; (2)
matters not assigned as errors on appeal but are
evidently plain or clerical errors within the
contemplation of the law; (3) matters not assigned
as errors on appeal, whose consideration is
necessary in arriving at a just decision and
complete resolution of the case or to serve the
interest of justice or to avoid dispensing piecemeal
justice; (4) matters not specifically assigned as
errors on appeal but raised in the trial court and are
matters of record having some bearing on the issue
submitted which the parties failed to raise or which
the lower court ignored; (5) matters not assigned as
errors on appeal but are closely related to the
assigned error/s; and (6) matters not assigned as
errors on appeal, whose determination is necessary
to rule on the question/s properly assigned as
errors.9 The present case falls into the exceptions.
We find no error by the CA in resolving the issues on
the nature and duration of the petitioners
possession and on the alienable character of the
subject land. These issues were apparently not
raised by the Republic in its appeal before the CA,
but are crucial in determining whether the
petitioners have registrable title over the subject
land. In Mendoza v. Bautista,10 the Court held that
the appellate court reserves the right, resting on its
public duty, to take cognizance of palpable error
on the face of the record and proceedings, and to
notice errors that are obvious upon inspection and
are of a controlling character, in order to prevent a
miscarriage of justice due to oversight.1wphi1
Page 154 of 158
In deciding on the merits of the present petition, we

affirm the CA in dismissing the petitioners'
application for registration of title.
Persons applying for registration of title under
Section 14( 1) of Presidential Decree No.
152911 must prove: (1) that the land sought to be
registered forms part of the disposable and
alienable lands of the public domain, and (2) that
they have been in open, continuous, exclusive and
notorious possession and occupation of the same
under a bona fide claim of ownership since June
12, 1945, or earlier.12
As the CA did, we find that the petitioners failed to
prove that they and their predecessors-in-interest
have been in open, continuous, exclusive and
notorious possession and occupation of the subject
land, under a bona fide claim of ownership, since
June 12, 1945, or earlier. The oldest documentary
evidence presented by the petitioners was a 1948
tax declaration over the subject land in the name
of Margarita Laigo. The petitioners failed to present
evidence of their possession prior to 1948. In fact,
the petitioners, in their application for registration,
base their possession of the subject land only from
1948, and not "since June 12, 1945, or earlier" as
required by law.
We emphasize that since the effectivity of P.D. No.
107313 on January 25, 1977, it must be shown that
possession and occupation of the land sought to
be registered by the applicant himself or through
his predecessors-in-interest, started on June 12,
1945 or earlier, which totally conforms to the
requirement under Section 14(1) of P.D. No 1529. A
mere showing of possession and occupation for
thirty (30) years or more is no longer sufficient.14
WHEREFORE, premises considered, we hereby DENY
the petition and AFFIRM the April 30, 2007 decision
and August 22, 2008 resolution of the Court of
Appeals in CA-G.R. CV No. 84620.
SO ORDERED.
#37
FIRST DIVISION
G.R. No. 157485, March 26, 2014
REPUBLIC OF THE PHILIPPINES REPRESENTED BY
AKLAN NATIONAL COLLEGE OF FISHERIES (ANCF)
AND DR. ELENITA R. ANDRADE, IN HER CAPACITY AS
ANCF SUPERINTENDENT,Petitioner, v. HEIRS OF
MAXIMA LACHICA SIN, NAMELY: SALVACION L. SIN,
ROSARIO S. ENRIQUEZ, FRANCISCO L. SIN, MARIA S.
YUCHINTAT, MANUEL L. SIN, JAIME CARDINAL SIN,
RAMON L. SIN, AND CEFERINA S. VITA, Respondents.
DECISION
LEONARDODE CASTRO, J.:
This is a Petition for Review assailing the Decision1 of
the Court of Appeals in CAG.R. SP No. 65244
dated February 24, 2003, which upheld the
Decisions of the Regional Trial Court (RTC) of Kalibo,
Aklan in Civil Case No. 6130 and the First Municipal
Circuit Trial Court (MCTC) of New Washington and
Batan, Aklan in Civil Case No. 1181, segregating
from the Aklan National College of Fisheries (ANCF)
reservation the portion of land being claimed by

respondents.
Petitioner in this case is the Republic of the
Philippines, represented by ANCF and Dr. Elenita R.
Andrade, in her capacity as Superintendent of
ANCF. Respondents claim that they are the lawful
heirs of the late Maxima Lachica Sin who was the
owner of a parcel of land situated at Barangay
Tambac, New Washington, Aklan, and more
particularly described as follows:
A parcel of cocal, nipal and swampy land, located
at Barangay Tambac, New Washington, Aklan,
containing an approximate area of FIFTY[]EIGHT
THOUSAND SIX HUNDRED SIX (58,606) square meters,
more or less, as per survey by Geodetic Engineer
Reynaldo L. Lopez. Bounded on the North by
Dumlog Creek; on the East by Adriano Melocoton;
on the South by Mabilo Creek; and on the West by
Amado Cayetano and declared for taxation
purposes in the name of Maxima L. Sin (deceased)
under Tax Declaration No. 10701 (1985) with an
assessed value of Php1,320.00.2
On August 26, 1991, respondent heirs instituted in
the RTC of Kalibo, Aklan a complaint against Lucio
Arquisola, in his capacity as Superintendent of
ANCF (hereinafter ANCF Superintendent), for
recovery of possession, quieting of title, and
declaration
of
ownership
with
damages.
Respondent heirs claim that a 41,231square
meterportion of the property they inherited had
been usurped by ANCF, creating a cloud of doubt
with respect to their ownership over the parcel of
land they wish to remove from the ANCF
reservation.
The ANCF Superintendent countered that the
parcel of land being claimed by respondents was
the subject of Proclamation No. 2074 of then
President Ferdinand E. Marcos allocating 24.0551
hectares of land within the area, which included
said portion of private respondents alleged
property, as civil reservation for educational
purposes of ANCF. The ANCF Superintendent
furthermore averred that the subject parcel of land
is timberland and therefore not susceptible of
private
ownership.
Subsequently, the complaint was amended to
include ANCF as a party defendant and Lucio
Arquisola, who retired from the service during the
pendency of the case, was substituted by Ricardo
Andres, then the designated OfficerinCharge of
ANCF.
The RTC remanded the case to the MCTC of New
Washington and Batan, Aklan, in view of the
enactment of Republic Act No. 7659 which
expanded the jurisdiction of firstlevel courts. The
case was docketed as Civil Case No. 1181 (4390).
Before the MCTC, respondent heirs presented
evidence that they inherited a bigger parcel of
Page 155 of 158
land from their mother, Maxima Sin, who died in the

year 1945 in New Washington, Capiz (now Aklan).
Maxima Sin acquired said bigger parcel of land by
virtue of a Deed of Sale (Exhibit B), and then
developed the same by planting coconut trees,
banana plants, mango trees and nipa palms and
usufructing the produce of said land until her death
in
1945.
In the year 1988, a portion of said land respondents
inherited from Maxima Sin was occupied by ANCF
and converted into a fishpond for educational
purpose. Respondent heirs of Maxima Sin asserted
that they were previously in possession of the
disputed land in the concept of an owner. The
disputed area was a swampy land until it was
converted into a fishpond by the ANCF. To prove
possession, respondents presented several tax
declarations, the earliest of which was in the year
1945.
On June 19, 2000, the MCTC rendered its Decision
in favor of respondents, the dispositive portion of
which reads:
WHEREFORE, judgment is rendered declaring
plaintiffs [respondent heirs herein] the owner and
possessor of the land in question in this case and for
the defendants to cause the segregation of the
same from the Civil Reservation of the Aklan
National College of Fisheries, granted under
Proclamation No. 2074 dated March 31, 1981.
It is further ordered, that defendants jointly and
severally pay the plaintiffs actual damages for the
unearned yearly income from nipa plants uprooted
by the defendants [on] the land in question when
the same has been converted by the defendants
into a fishpond, in the amount of Php3,500.00 yearly
beginning the year 1988 until plaintiffs are fully
restored to the possession of the land in question.
It is finally ordered, that defendants jointly and
severally pay the plaintiffs the sum of Php10,000.00
for attorneys fees and costs of this suit.3
According to the MCTC, the sketch made by the
Court Commissioner in his report (Exh. LL) shows
that the disputed property is an alienable and
disposable land of the public domain. Furthermore,
the land covered by Civil Reservation under
Proclamation No. 2074 was classified as timberland
only on December 22, 1960 (Exh. 4D). The MCTC
observed that the phrase Block II Alien or Disp. LC
2415 was printed on the Map of the Civil
Reservation
for
ANCF
established
under
Proclamation No. 2074 (Exh. 6), indicating that
the disputed land is an alienable and disposable
land
of
the
public
domain.
The MCTC likewise cited a decision of this Court in
the 1976 case of Republic v. Court of
Appeals4 where it was pronounced that:
Lands covered by reservation are not subject to
entry, and no lawful settlement on them can be
acquired. The claims of persons who have settled

on, occupied, and improved a parcel of public
land which is later included in a reservation are
considered worthy of protection and are usually
respected, but where the President, as authorized
by law, issues a proclamation reserving certain
lands, and warning all persons to depart therefrom,
this terminates any rights previously acquired in
such lands by a person who has settled thereon in
order to obtain a preferential right of purchase.
And patents for lands which have been previously
granted, reserved from sale, or appropriated are
void. (Underscoring from the MCTC, citations
omitted.)
Noting that there was no warning in Proclamation
No. 2074 requiring all persons to depart from the
reservation, the MCTC concluded that the
reservation was subject to private rights if there are
any.
The MCTC thus ruled that the claim of respondent
heirs over the disputed land by virtue of their and
their predecessors open, continuous, exclusive and
notorious possession amounts to an imperfect title,
which should be respected and protected.
Petitioner, through the Solicitor General, appealed
to the RTC of Kalibo, Aklan, where the case was
docketed
as
Civil
Case
No.
6130.
On May 2, 2001, the RTC rendered its Decision
affirming the MCTC judgment with modification:
WHEREFORE, premises considered, the assailed
decision is modified absolving Appellant Ricardo
Andres from the payment of damages and
attorneys fees. All other details of the appealed
decision are affirmed in toto.5
The RTC stressed that Proclamation No. 2074
recognizes vested rights acquired by private
individuals prior to its issuance on March 31, 1981.
The RTC added that the findings of facts of the
MCTC may not be disturbed on appeal unless the
court below has overlooked some facts of
substance that may alter the results of its findings.
The RTC, however, absolved the Superintendent of
the ANCF from liability as there was no showing on
record that he acted with malice or in bad faith in
the implementation of Proclamation No. 2074.6
Petitioner Republic, represented by the ANCF and
Dr. Elenita R. Andrade, in her capacity as the new
Superintendent of the ANCF, elevated the case to
the Court of Appeals through a Petition for Review.
The petition was docketed as CAG.R. SP No.
65244.
On February 24, 2003, the Court of Appeals
rendered its Decision dismissing the petition for lack
of merit. In addition to the findings of the MCTC
and the RTC, the Court of Appeals held:
Moreover, petitioner had not shown by competent
evidence that the subject land was likewise
Page 156 of 158
declared a timberland before its formal

classification as such in 1960. Considering that lands
adjoining to that of the private respondents, which
are also within the reservation area, have been
issued original certificates of title, the same affirms
the conclusion that the area of the subject land
was agricultural, and therefore disposable, before
its declaration as a timberland in 1960.
It should be noted that Maxima Lachica Sin
acquired, through purchase and sale, the subject
property from its previous owners spouses Sotera
Melocoton and Victor Garcia on January 15, 1932,
or 28 years before the said landholding was
declared a timberland on December 22, 1960.
Tacking, therefore, the possession of the previous
owners and that of Maxima Lachica Sin over the
disputed property, it does not tax ones imagination
to conclude that the subject property had been
privately possessed for more than 30 years before it
was declared a timberland. This being the case,
the said possession has ripened into an ownership
against the State, albeit an imperfect one.
Nonetheless, it is our considered opinion that this
should come under the meaning of private rights
under Proclamation No. 2074 which are deemed
segregated from the mass of civil reservation
granted to petitioner.7 (Citation omitted.)
Hence, this Petition for Review, anchored on the
following grounds:
I
THE COURT OF APPEALS GRAVELY ERRED ON A
QUESTION OF LAW IN UPHOLDING RESPONDENTS
CLAIM TO SUPPOSED PRIVATE RIGHTS OVER
SUBJECT LAND DESPITE THE DENR CERTIFICATION
THAT IT IS CLASSIFIED AS TIMBERLAND.
II
THE COURT OF APPEALS GRAVELY ERRED ON A
QUESTION OF LAW IN AFFIRMING THE DECISIONS OF
THE REGIONAL TRIAL COURT AND THE MUNICIPAL
CIRCUIT TRIAL COURTS RELEASING THE SUBJECT
LAND BEING CLAIMED BY RESPONDENTS FROM THE
MASS OF PUBLIC DOMAIN AND AWARDING
DAMAGES TO THEM.8
The central dispute in the case at bar is the
interpretation
of
the
first
paragraph
of
Proclamation No. 2074:
Upon recommendation of the Director of Forest
Development, approved by the Minister of Natural
Resources and by virtue of the powers vested in me
by law, I, FERDINAND E. MARCOS, President of the
Philippines, do hereby set aside as Civil Reservation
for Aklan National College of Fisheries, subject to
private rights, if any there be, parcels of land,
containing an aggregate area of 24.0551 hectares,
situated in the Municipality of New Washington,
Province of Aklan, Philippines, designated Parcels I
and II on the attached BFD Map CR203, x x x [.]9
The MCTC, the RTC and the Court of Appeals
unanimously held that respondents retain private
rights to the disputed property, thus preventing the
application of the above proclamation thereon.

The private right referred to is an alleged imperfect
title, which respondents supposedly acquired by
possession of the subject property, through their
predecessorsininterest, for 30 years before it was
declared as a timberland on December 22, 1960.
At the outset, it must be noted that respondents
have not filed an application for judicial
confirmation of imperfect title under the Public
Land Act or the Property Registration Decree.
Nevertheless, the courts a quo apparently treated
respondents complaint for recovery of possession,
quieting of title and declaration of ownership as
such an application and proceeded to determine
if respondents complied with the requirements
therefor.
The requirements for judicial confirmation of
imperfect title are found in Section 48(b) of the
Public Land Act, as amended by Presidential
Decree No. 1073, as follows:
Registration Act, to wit:chanRoblesvirtualLawlibrary
x

predecessors in interest have been in the open,
acquisition or ownership, since June 12, 1945, or
earlier, immediately preceding the filing of the
application for confirmation of title except when
prevented by war or force majeure. These shall be
conclusively presumed to have performed all the
conditions essential to a Government grant and
shall be entitled to a certificate of title under the
provisions of this chapter.
An equivalent provision is found in Section 14(1) of
the Property Registration Decree, which provides:
SECTION 14. Who may apply. The following
persons may file in the proper Court of First Instance
representatives:chanRoblesvirtualLawlibrary
(1) those who by themselves or through their
predecessorsininterest have been in open,
This Court has thus held that there are two requisites
for judicial confirmation of imperfect or incomplete
Page 157 of 158
title under CA No. 141, namely: (1) open,

occupation of the subject land by himself or
through his predecessorsininterest under a bona
fide claim of ownership since time immemorial or
from June 12, 1945; and (2) the classification of the
land as alienable and disposable land of the public
domain.10
With respect to the second requisite, the courts a
quo held that the disputed property was alienable
and disposable before 1960, citing petitioners
failure to show competent evidence that the
subject land was declared a timberland before its
formal
classification
as
such
on
said
year.11 Petitioner emphatically objects, alleging
that under the Regalian Doctrine, all lands of the
public domain belong to the State and that lands
not appearing to be clearly within private
ownership are presumed to belong to the State.
After a thorough review of the records, we agree
with petitioner. As this Court held in the fairly recent
case of Valiao v. Republic12:
Under the Regalian doctrine, which is embodied in
our Constitution, all lands of the public domain
belong to the State, which is the source of any
asserted right to any ownership of land. All lands
not appearing to be clearly within private
ownership are presumed to belong to the State.
Accordingly, public lands not shown to have been
reclassified or released as alienable agricultural
land or alienated to a private person by the State
remain part of the inalienable public domain.
Unless public land is shown to have been
reclassified as alienable or disposable to a private
person by the State, it remains part of the
inalienable public domain. Property of the public
domain is beyond the commerce of man and not
susceptible of private appropriation and acquisitive
prescription. Occupation thereof in the concept of
owner no matter how long cannot ripen into
ownership and be registered as a title. The burden
of proof in overcoming the presumption of State
ownership of the lands of the public domain is on
the person applying for registration (or claiming
ownership), who must prove that the land subject
of the application is alienable or disposable. To
overcome
this
presumption,
incontrovertible
evidence must be established that the land subject
of the application (or claim) is alienable or
disposable.
There must be a positive act declaring land of the
public domain as alienable and disposable. To
prove that the land subject of an application for
registration is alienable, the applicant must
establish the existence of a positive act of the
government, such as a presidential proclamation or
an executive order; an administrative action;
investigators; and a legislative act or a statute. The
applicant may also secure a certification from the
government that the land claimed to have been

possessed for the required number of years is
alienable and disposable. (Citations omitted.)
This Court reached the same conclusion
in Secretary of the Department of Environment and
Natural Resources v. Yap,13 which presents a similar
issue with respect to another area of the same
province of Aklan. On November 10, 1978,
President Marcos issued Proclamation No. 1801
declaring Boracay Island, among other islands,
caves and peninsulas of the Philippines, as tourist
zones and marine reserves under the administration
of the Philippine Tourism Authority (PTA). On
September 3, 1982, PTA Circular 382 was issued to
implement
Proclamation
No.
1801.
The
respondentsclaimants in said case filed a petition
for declaratory relief with the RTC of Kalibo, Aklan,
claiming that Proclamation No. 1801 and PTA
Circular 382 precluded them from filing an
application for judicial confirmation of imperfect
title or survey of land for titling purposes. The
respondents claim that through their predecessors
ininterest, they have been in open, continuous,
exclusive and notorious possession and occupation
of their lands in Boracay since June 12, 1945 or
earlier
since
time
immemorial.
On May 22, 2006, during the pendency of the
petition for review of the above case with this
Court, President Gloria MacapagalArroyo issued
Proclamation No. 1064 classifying Boracay Island
into four hundred (400) hectares of reserved forest
land (protection purposes) and six hundred twenty
eight and 96/100 (628.96) hectares of agricultural
land (alienable and disposable). Petitioner
claimants and other landowners in Boracay filed
with this Court an original petition for prohibition,
mandamus and nullification of Proclamation No.
1064, alleging that it infringed on their prior vested
right over portions of Boracay which they allege to
have possessed since time immemorial. This petition
was consolidated with the petition for review
concerning Proclamation No. 1801 and PTA
Circular
382.
This Court, discussing the Regalian Doctrine vis
vis the right of the claimants to lands they claim to
have possessed since time immemorial, held:
A positive act declaring land as alienable and
disposable is required. In keeping with the
presumption of State ownership, the Court has time
and again emphasized that there must be
a positive act of the government, such as an official
proclamation, declassifying inalienable public land
into disposable land for agricultural or other
purposes. In fact, Section 8 of CA No. 141 limits
alienable or disposable lands only to those lands
which have been officially delimited and
classified.
The burden of proof in overcoming the
presumption of State ownership of the lands of the
public domain is on the person applying for
Page 158 of 158
registration (or claiming ownership), who must

prove that the land subject of the application is
alienable or disposable. To overcome this
established that the land subject of the application
(or claim) is alienable or disposable. There must still
be a positive act declaring land of the public
domain as alienable and disposable. To prove that
the land subject of an application for registration is
alienable, the applicant must establish the
existence of a positive act of the government such
as a presidential proclamation or an executive
order; an administrative action; investigation
reports of Bureau of Lands investigators; and a
legislative act or a statute. The applicant may also
secure a certification from the government that the
land claimed to have been possessed for the
required number of years is alienable and
disposable.
In the case at bar, no such proclamation,
executive order, administrative action, report,
statute, or certification was presented to the Court.
The records are bereft of evidence showing that,
prior to 2006, the portions of Boracay occupied by
private claimants were subject of a government
proclamation that the land is alienable and
disposable. Absent such wellnigh incontrovertible
evidence, the Court cannot accept the submission
that lands occupied by private claimants were
already open to disposition before 2006. Matters of
land classification or reclassification cannot be
assumed. They call for proof.14 (Emphases in the
original; citations omitted.)
Accordingly, in the case at bar, the failure of
petitioner Republic to show competent evidence
that the subject land was declared a timberland
before its formal classification as such in 1960 does
not lead to the presumption that said land was
alienable and disposable prior to said date. On the
contrary, the presumption is that unclassified lands
are inalienable public lands. Such was the
conclusion of this Court in Heirs of the Late Spouses
Pedro S. Palanca and Soterranea Rafols v.
Republic,15 wherein we held:
While it is true that the land classification map does
not categorically state that the islands are public
forests, the fact that they were unclassified lands
leads to the same result. In the absence of the
classification as mineral or timber land, the land
remains unclassified land until released and
rendered open to disposition. x x x. (Emphasis
supplied, citation deleted.)
The requirements for judicial confirmation of
imperfect title in Section 48(b) of the Public Land
Act, as amended, and the equivalent provision in
Section 14(1) of the Property Registration Decree
was furthermore painstakingly debated upon by
the members of this Court in Heirs of Mario
Malabanan v. Republic.16 In Malabanan, the
members of this Court were in disagreement as to
whether lands declared alienable or disposable
after June 12, 1945 may be subject to judicial
confirmation of imperfect title. There was, however,

no disagreement that there must be a declaration
to
that
effect.
In the case at bar, it is therefore the respondents
which have the burden to identify a positive act of
the government, such as an official proclamation,
declassifying
inalienable
public
land
into
disposable land for agricultural or other purposes.
Since respondents failed to do so, the alleged
possession by them and by their predecessorsin
interest is inconsequential and could never ripen
into ownership. Accordingly, respondents cannot
be considered to have private rights within the
purview of Proclamation No. 2074 as to prevent the
application of said proclamation to the subject
property. We are thus constrained to reverse the
rulings of the courts a quo and grant the prayer of
petitioner Republic to dismiss Civil Case No. 1181
(4390)
for
lack
of
merit.
WHEREFORE, premises considered, the Petition for
Review is GRANTED. The Decision of the Court of
Appeals in CAG.R. SP No. 65244 dated February
24, 2003, which upheld the Decisions of the
Regional Trial Court of Kalibo, Aklan in Civil Case
No. 6130 and the First Municipal Circuit Trial Court of
New Washington and Batan, Aklan in Civil Case No.
1181 (4390), segregating from the Aklan National
College of Fisheries reservation the portion of land
being claimed by respondents is REVERSED and SET
ASIDE. Civil Case No. 1181 (4390) of the First
Municipal Circuit Trial Court of New Washington
and
Batan,
Aklan
is
hereby DISMISSED.
SO ORDERED.

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Page 1 of 158

from bringing an action for the recovery of such

Court of Antipolo, Rizal, Branch 73, for declaration

performance of their respective duties under the

Nor does petitioners situation fall under the

January 30, 2009

GUARANTEED HOMES, INC., Petitioner,

TCT No. T-1086319 was issued in the name of

The factual antecedents are as follows:

It was further averred in the complaint that Jorge

Respondents, who are the descendants of Pablo

Petitioner filed a motion to dismiss23 the complaint

OCT No. 4047 was attached as one of the annexes

Impleaded as defendants, the heirs of Cipriano

In their complaint,13 respondents alleged that

The Register of Deeds and the National Treasurer

favor. As the prescriptive period for reconveyance

The petition is meritorious.

Since "the act of registration is the operative act to

the root of a valid title.39 And one such instance is

Contrary to the assertion of respondents, OCT No.

Sec. 56. Each register of deeds shall keep an entry

Secondly, while the Extrajudicial Settlement of a

The Court cannot give credence to respondents

Registration in the public registry is notice to the

therefrom, even if alleged in the pleading; nor

REPUBLIC OF THE PHILIPPINES, represented by the

surplusage and irrelevant matters.47

From the above discussion, there is no question that

The antecedents of the case are as follows:

DANTE O. TINGAAssociate Justice

On December 11, 1979, the CFI rendered a

(LRC), Solicitor General, Atty. Sumulong, and Atty.

Reyes, and TCT No. 78982 in the name of petitioner

The Heirs of Dionisio Tomas appealed the De Leon

Consequently, on September 6, 1984, the Republic

It appears that another decision, similar to the De

The complaint alleged that the LRC received a

On February 8, 1985, respondents Heirs of Casiano

On appeal, the CA, in its Decision dated January

The CA held that the complaint is actually an

value because it failed to make a prior inspection

We deny the petition.

We do not agree. The body of the pleading or

record, the dispositive portion of said falsified

From the allegations in the Complaint, it is evident

The court may order the Register of Deeds to

Under Section 6, P.D. 1529, the Commissioner of

counsel. Such contention is not worthy of

innocent purchaser for value since it acquired the

Fund be the registered owner and, as the holders

February 27, 2013

SPOUSES ALFONSO AND MARIA ANGELES CUSI,

learned that construction activities were being

for the TRO enjoining the defendants from

(b) Declaring the Sps. Edgardo and Ramona Liza

(c) lifting the writ of preliminary injunction;

2. Five Hundred Thousand Pesos (P500,000.00)

2. One Million Pesos (P1,000,000.00) representing

This Decision is without prejudice to whatever civil

5. Two Hundred Thousand Pesos (P200,000.00)

On appeal, the assignment of errors each set of

a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN

a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT