Traders Royal Bank V.

CA
Facts:
A parcel
of
land owned
by the
spouses
Capay was mortgage to and
subsequently extrajudicially foreclosed by Traders Royal Bank (TRB). To prevent property sale
in public auction, the Capays filed a petition for preliminary injunction alleging the mortgage was
void because they did not receive the proceeds of the loan. A notice of lis pendens (suit pending)
was filed before the Register of Deeds with the notice recorded in the Day Book. Meanwhile, a
foreclosure sale proceeded with the TRB as the sole and winning bidder. The Capays title was
cancelled and a new one was entered in TRBs name without the notice of lis pendens carried
over the title. The Capays filed recovery of the property and damages. Court rendered a decision
declaring the mortgage was void for want of consideration and thus cancelled TRBs title and
issued
a
new
cert.
of
title
for
the
Capays.

Pending its appeal before the court, TRB sold the land to Santiago who subsequently subdivided
and sold to buyers who were issued title to the land. Court ruled that the subsequent buyers
cannot be considered purchasers for value and in good faith since they purchase the land after it
became a subject in a pending suit before the court. Although the lis pendens notice was not
carried over the titles, its recording in the Day Book constitutes registering of the land and notice
to all persons with adverse claim over the property. TRB was held to be in bad faith upon selling
the property while knowing it is pending for litigation. The Capays were issued the cert. of title of
the land in dispute while TRB is to pay damages to Capays.

Issue:
1.
Who has the better right over the land in dispute?
2.

Whether or not TRB is liable for damages

Ruling:
The court ruled that a Torrens title is presumed to be valid which purpose is to avoid conflicts of
title to real properties. When the subsequent buyers bought the property there was no lis pendens
annotated on the title. Every person dealing with a registered land may safely rely on the
correctness of the title and is not obliged to interpret what is beyond the face of
the registered title. Hence the court ruled that the subsequent buyers obtained the property from a
clean title in good faith and for value. On one hand, the Capays are guilty of latches. After they
filed the notice for lis pendens, the same was not annotated in the TRB title. They did not take
any action for 15 years to find out the status of the title upon knowing the foreclosure of the
property. In consideration to the declaration of the mortgage as null and void for want of
consideration, the foreclosure proceeding has no legal effect. However, in as much as the Capays

remain to be the real owner of the property it has already been passed to purchasers in good faith
and for value. Therefore, the property cannot be taken away to their prejudice. Thus, TRB is duty
bound to pay the Capays the fair market value of the property at the time they sold it toSantiago.

Tan V. Phil Banking

Facts:
acts of the case as culled from the decision of the CA are as follows: On 29 December 1995,
petitioner bought from Helen L. Aguinaldo (respondent Aguinaldo) a parcel of land at the Valley
Golf Subdivision in Antipolo, Rizal. The lot was then covered by TCT No. 294192 in the name of
respondent Aguinaldo. No claims, liens or encumbrances appeared on the said title. After
payment of the agreed purchase price, TCT No. 294192 was cancelled and a new one (TCT No.
296945) in the name of petitioner was issued.
On 29 February 1996, two (2) months after he bought the property, petitioner was served a copy
of the petition for certiorari filed by respondent bank in CAG.R. SP No. 39903. Said petition
stated that petitioner was being sued here as a nominal party as the new registered owner of
Transfer Certificate of Title No. 296945.
It appears that respondent Aguinaldo and her husband Daniel R. Aguinaldo obtained a loan in the
amount of two hundred thousand pesos (P200,000.00) from respondent bank some time in
December 1977. To secure the payment of this obligation, the Aguinaldos executed in favor of
respondent bank a real estate mortgage over three parcels of land situated in Antipolo and Cainta,
Rizal covered by TCT Nos. 234903, 153844 and 151622. Upon maturity of these loans,
respondent bank sent a demand letter to respondent Aguinaldo. The loans remained unpaid,
respondent bank thus initiated extrajudicial foreclosure proceedings on the real estate mortgage.
Before the expiration of the redemption period of one year, respondent Aguinaldo filed a
complaint for the nullification of the aforesaid foreclosure proceedings the parties (respondent
Aguinaldo and respondent bank) entered into a Joint Partial Stipulation of Facts stating, among
others, that they agree that the decision to be rendered by this Honorable Court [RTC] shall be
final and unappealable, subject only to the filing within the reglementaryperiod of the usual
motion for reconsideration. The court ruled in favor of Aguinaldo and issued new titles in the
name of respondent Aguinaldo. She subsequently sold the lot covered by one of these titles to
petitioner. Respondent bank filed a motion for reconsideration of the decision of the trial court
but the same was denied. It then brought the case to the CA by way of certiorari. The CA,
however, denied respondent banks prayer for the reinstatement of its TCTs. The respondents then
filed for a motion for reconsideration in which the CA ruled in favor of phil banking.
Issue:
1. WON the CA erred and committed serious irregularity in directing the reinstatement of
Philbanks cancelled TCT No. 194096
2. WONThe Court of Appeals erred and acted without jurisdiction in deciding upon the
question of whether Philbanks cancelled TCT No. 194096 should be reinstated, or a new
title issued in its place, this being within the exclusive jurisdiction of regional trial courts,
and outside the scope of a certiorari proceeding
Held/Ratio

1. The first assailed CA resolution (28 August 1998) directing the Register of Deeds of
Marikina to reinstate the TCTs of respondent bank had the effect of canceling
petitioners title over the same parcel of land. Petitioner was not even a party to the action
between respondent Aguinaldo and respondent bank in the court a quo. Petitioner was
impleaded only in the certiorari case filed by respondent bank in the CA. The CA, in its
decision, correctly denied respondent banks prayer to reinstate its canceled TCTs
because to do so would effectively cancel petitioners title on the same lot. It must be
noted that petitioners title was regularly issued after the lot covered by the same was
sold to him by respondent Aguinaldo. Petitioner relied on the sellers title, which was
then free from any claims, liens or encumbrances appearing thereon. As such,
petitioners title can only be challenged in a direct action. It is well settled that a
certificate of title cannot be subject to collateral attack and can be altered, modified or
cancelled only in a direct proceeding in accordance with law. Having obtained a valid
title over the subject lot, petitioner is entitled to protection against indirect attacks against
his title. 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 sellers 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 the titles issued thereunder once the conditions laid down by the
law are satisfied.