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G.R.No.L38622

TodayisSaturday,May14,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.L38622October26,1987
VALENTINBERMUDO,petitioner,
vs.
THEHONORABLECOURTOFAPPEALS,FORMERSIXTHDIVISIONTHEHONORABLECOURTOFFIRST
INSTANCEOFLEYTE,BRANCH1andTHECHINESENATIONALISTPARTYOFTACLOBAN,respondents.

FERNAN,J.:
ThisspecialcivilactionforcertiorariandprohibitionstemmedfromthedecisionofthethenCourtofFirstInstance
of Leyte granting a petition for relief from its order directing the reconstitution of an original certificate of title
coveringaparcelofland.
Tom Chow and Go Se Pieng claimants of Lot 776, a 505 square meter parcel of land located in Lopez Jaena
Street,TaclobanCity,obtainedajudicialdecreeofregistrationNo.494657onOctober8,1931ascoownerspro
indivisoinfeesimplethereof.TheywereissuedOriginalCertificateofTitleNo.10256onNovember3,1932.
Therecordshows,however,thatonJune27,1931,beforetheissuanceofsaiddecreeandtitle,TomChowand
GoSePienghadrenouncedtheirinterests,rightsandprivilegesoverLot776inadocument[Exh.2]whereinthey
professedthattheyweremeretrusteesoftheChineseNationalistPartyofTacloban,Leyte.Thelatterallegedly
acquired said lot from the Philippine Refining Company, Inc. Consequently, on September 4, 1940, Transfer
CertificateofTitleNo.858wasissuedtotheChineseNationalistParty.
AlmosttwentyfouryearslateroronJune23,1964,ValentinBermudofiledintheCourtofFirstInstanceofLeyte,
Branch I atTacloban City, a petition for the reconstitution of the records of OCT No. 10256. He alleged therein
that he was the "vendee to the extent of onehalf [1/2] proindiviso" of Lot 776.Annexed to the petition was a
certification of the Register of Deeds of Leyte andTacloban City stating that the Book containing said OCT No.
10256"wascompletelydestroyed,"thatadiligentandreligioussearchthereofprovedfutile,andthat,"noowner's
DuplicateCertificateofTitleNo.10256waseverissuedinfavorofanybody."1
Astherewasnooppositiontosaidpetition,thelowercourt,afterthehearing,issuedanorderdatedNovember
23, 1964 allowing the reconstitution of the records of OCT No. 10256. The lower court based its order on its
findingsthatperanauthenticatedcopyoftheaforesaidjudicialdecreeofregistrationNo.494657,TomChowand
GoSePiengweretheownersinfeesimplethereof,andthatbyvirtueofadeedofadjudicationandabsolutesale
executedonJune3,1964,CristinaEsperasVda.deChowtransferredalltheinterestsandparticipationofTom
ChowoverLot776toBermudo.
ShortlythereafteroronDecember8,1964,TCTNo.1948wasissuedtoBermudoandGoSePiengasownersof
Lot776in"equalsharesundivided."2
OnJanuary23,1965,theChineseNationalistparty[hereinafterknownastheParty]filedapetitionforrelieffrom
saidorderprayingforitsannulmentandfortheissuanceofanordercancellingTCTNo.1948.Itallegedthatthe
reconstitution order was obtained through misrepresentation and fraud there being no notice of hearing of the
petition for reconstitution in spite of the fact that Bermudo, who was residing adjacent to Lot 776, had personal
knowledgethatsaidlothadbeenownedandpossessedbythePartyformorethanthirtyyearsbyvirtueofTCT
No.858.ItaddedthatitcametoknowofthereconstitutionorderonlyonJanuary5,1965whentheoccupantsof
saidlotinformeditspresidentthatBermudohadfiledanejectmentcaseagainstthem.3
In his opposition to said petition, Bermudo averred that notice of the hearing of his petition was duly published
thathedidnotknowofanyparticipationofthePartyinsaidlandthatthelatterhadnolegalcapacitytosuethat
underexistinglaws,itcouldnotownlandthatthelandallegedlytitledinitsnamewasnotthesameparcelofland
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subject matter of the case and that the petition for relief was pro farma and intended merely to delay the
proceedingsinthecase.4
InitsdecisionofJanuary6,1968,thelowercourtsetasideitsordertoreconstituteOCTNo.10256,annulledand
cancelledTCTNo.1948anddeclaredTCTNo.858tobeinfunforceandeffect.
ThelowercourtfoundthatBermudoactedinbadfaithinobtainingthereconstitutionofOCTNo.10256.Itnoted
thatbeingaresidentofthepropertyadjacenttoLot776,Bermudocouldhaveknownthepossessorandownerof
thelot.Itstatedthat,afterthePartyhadpresentedthewidowofTomChow,MagdalenaEsperasVda.deChow,
Bermudofailedtorebuthertestimonythroughhisownprecedessorininterest,CristinaEsperasVda.deChow,
allegedly also a widow of Tom Chow. The lower court also ruled that OCT No. 10256 could no longer be
reconstitutedbecauseithadbeencancelledbyTCTNo.858inthenameoftheParty.
Afterreceivingacopyofsaiddecision,BermudofiledanoticeofappealtothisCourt. 5Astheoriginalrecordofthe
case was transmitted to this Court, We required Bermudo to file the proper petition for review on certiorari pursuant to
RepublicActNo.5440.6

Thepetition,whichwasdocketedasL30730,"ValentinBermudovs.ChineseNationalistParty,etal.",wasdenied
bytheCourtfornoncompliancewiththeRulerequiringaverifiedstatementofmaterialdatesandproofofservice
ofthepetitiononthelawercourt. 7 Bermudo's motion for reconsideration of said denial resolution was granted by the
CourtintheresolutionofSeptember24,1969but,itappearingthatthepetitioninvolvedmixedquestionsoflawandfact,the
CourttransmittedthepetitiontotheCourtofAppeals.8

InitsdecisionofDecember11,1972,theCourtofAppeals *dismissedthepetition,rulingthatBermudodidnotacquirealegaland

validtitleoverLot776fromhispredecessorininterest,CristinaE.Vda.deChow,andhence,heisnotentitledtoseekreconstitutionofthetitlecovering
saidland.ItunderscoredthefactthatOCTNo.10256wasnolongerinforcewhenthereconstitutionorderwasissuedbecauseasearlyasSeptember4,
1940, said title had been cancelled and in lieu thereof TCT No. 858 was issued in favor of the Party. It also upheld the Party's capacity to sue on the
groundthatbyvirtueoftheoldCivilCode,specificallyArticles1667and1356thereof,itwaspossessedofjuridicalpersonality.

Bermudo elevated said decision to this Court through another petition for review on certiorari. Docketed as L
36156,"ValentinBermudovs.CourtofAppeals,etal.,"saidpetitionwasdeniedforlackofmeritonJanuary29,
1973.9Hismotionforthereconsiderationofthedenialresolutionwaslikewisedeniedforlackofmerit.10
Undaunted,Bermudofiledtheinstantpetitionforcertiorariandprohibition.HeassertsthattheCourtofAppeals
actedbeyonditspowerandauthoritywhenitaffirmedthelowercourt'sdecisionsettingasideitsorderdirecting
thereconstitutionofOCTNo.10256,afterthesaidorderhadbeenexecutedandenforced.11
Fromtheproceduralstandpoint,WeagreewiththepetitionerthattheCourtofAppealsactedbeyonditsauthority
inupholdingthelowercourt'sdecision.WhenthePartyfileditspetitionforrelief,theorderofreconstitutionhad
notonlybecomefinalandexecutory.SaidorderwasalreadyexecutedbytheissuanceofthereconstitutedOCT
No.10256whichresultedinthesubsequentissuanceofTCTNo.1948toBermudo.Asapetitionforrelieffrom
judgmentisproperonlywhenthecourtisstillincontroloftheproceedings, 12thelowercourtshouldnothaveentertainedthe
Party'spetitionbecausebythattime,itwasalreadydeprivedofitsjurisdictionoverthecase.Furthermore,thelowercourtshouldhaveconsideredthefact
thatpremisedonequity,relieffromjudgmentisgrantedonlyinexceptionalcasesand,beinganactofgrace,itisnotregardedwithfavor.13

Foritspart,inchoosingaremedyfortheallowanceofthereconstitutionofOCTNo.10256andthesubsequent
issuanceofTCTNo.1948,thePartyshouldhaveconsideredthefactthatitwas,byitsownadmission,notserved
noticeofthejudicialreconstitutionproceeding.Rule38cannotbeappliedwhentheonedeprivedofhisrightwas
nevermadeapartytothecaseforlackoftherequisitenotice.14
Underthecircumstances,thePartyshouldhaveavailedoftheremedyprovidedforinRepublicActNo.26which
states:
SEC. 19. ... Provided, however, That if the reconstituted certificate of title has been cancelled by
virtueofanydeedorinstrument,whethervoluntaryorinvoluntaryorbyanorderofthecourt,anda
newcertificateoftitlehasbeenissued,theprocedureprescribedabovewithrespecttomemoranda
or new liens or encumbrances made on the reconstituted certificate of title, after its reconstitution,
shagbefollowedwithrespecttothenewcertificateoftitle,andtosuchnewhensorencumbrances,
ifany,asmayhavebeenmadeonthelatter,aftertheissuancethereof.
Theprocedurereferredtoinsaidprovisionwithrespecttomemorandaofnewliensorencumbrancesannotated
onareconstitutedcertificateoftitle,consistsofthefilingofapetitionwiththeproperCourtofFirstInstance"for
the annotation of such right or interest on said reconstituted certificate of title and the court, after notice and
hearing,shalldeterminethemeritsofthepetitionandrendersuchjudgmentasjusticeandequitymayrequire."15
The Party's improper remedy notwithstanding, We are not prepared to uphold Bermudo's claim to onehalf
interestovertheundividedlot.ExtantfromtherecordsareproofsthatBermudo,ascorrectlyfoundbyboththe
lowercourtandtheCourtofAppeals,actedinbadfaithisseekingthereconstitutionofOCTNo.10256.
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Bermudo has not denied the fact that he was residing adjacent to Lot 776 when he filed the petition for
reconstitutionoftitleandyet,hefailedtogivenoticesofthehearingonthepetitionforreconstitutioneventoits
actualoccupants.Suchfailuremanifestedanattempttopresentanyoppositiontohispetition,notrealizingthatit
wouldprovefataltohiscaseconsideringthatnoticeandtheproceduralrequirementsofRepublicActNo.26are
mandatory. 16 Thus, courts must exercise utmost caution in entertaining petitions for reconstitution and should make sure that the indispensable
parties, i.e., the actual owners and possessors of the lands involved, are duly served with actual and personal notice of the petition, and not by mere
generalpublication.17

Moreover, it is possible that Bermudo could have bought an interest in Lot 776 from the wrong Mrs. Chow. He
shouldnothavereliedonthetestimonyofMrs.MagdalenaEsperasVda.deChowthatshecouldnotpersonally
locateandIdentifyLot776.Heshouldhavepresentedanewaswitnesshisallegedpredecessorininterest,Mrs.
Cristina Esperas Vda. de Chow to rebut Magdalena's testimony and to prove the authenticity of Cristina's claim
over the property. In the light of these factual findings, Bermudo's right to a onehalf interest over Lot 776 is
thereforeunclearanddoubtful.
Ontheotherhand,theParty'sclaimoverLot776appearstobeasnebulousasBermudo's.Itallegedlyacquired
thelotfromthePhilippineRefiningCompany,Inc.buttwotrustees[who,bytheirChinesenamesmighthavebeen
aliens] obtained an original certificate of title over it. It is worth noting, however, that the judicial decree of
registration in favor of said trustees did not indicate that they claimed their right over Lot 776 as such trustees
even if they had renounced their rights as such trustees before the issuance of both the judicial decree of
registrationandtheoriginalcertificateoftitle.
The fact that the Party acquired TCT No. 858 in 1940 when the 1935 Constitution was in full force and effect
furtherbecloudsitsrighttoacquiretitleoverLot776.WhileatthattimethePartymighthaveacquiredajuridical
personalityifWearetogobythefindingoftheCourtofAppeals,itisstillunclearwhetheritwasalsoqualifiedto
acquire or hold lands considering the provision of the 1935 constitution limiting the acquisition of land only to
corporations or associations at least sixty per cent of the capital stock of which is owned by Filipino citizens.18
AlthoughthePartyhadnocapitalstocksasitwasallegedlya"civilassociation", it cannot escape said Constitutional mandate because the purpose and
spirit of the 1935 Constitution "demands that in the absence of a capital stock, the controlling membership should be composed of Filipino citizens." 19
NowhereintherecorddoesitshowthatthePartyfulfillssaid"sixtypercentum"requirement.

ButgrantingthatthePartyisqualifiedtoholdorownprivateland,still,thereisthequestionofwhetherownership
of Lot 776 is indispensable to its activities as a "civil association."A corporation's right to hold or own lands is
furtherdelimitedbytheprovisionoftheCorporationLaw 20Section13(5)ofwhichstatesthatnocorporationshallbe
"permittedtoholdorownrealestateexceptsuchasmaybereasonablynecessarytoenableittocarryoutthepurposesfor
which it is created." Hence, it is still imperative for the Party to prove that ownership of Lot 776 was necessary when it
acquiredtitleoveritin1940,inorderthatitcouldundertakeitsaimsasa"civilassociation."

Worth noting is the fact that it was only on November 29, 1966, while its petition for relief from judgment was
pendingresolutioninthelowercourt,thatthePartyreorganizeditself,reincorporatedunderthenewnameLeyte
Kuomintang Cultural Association, Inc. and registered with the Securities and Exchange Commission. We view
such belated move as aimed at obtaining documentary evidence of its juridical existence to supplement the
testimonialproofofitsjuridicalpersonalitywhichwasquestionedbyBermudo.
Furthermore,inhismemorandum,BermudoalsoallegedthatasidefromthefactthatthePartypresentedonlya
photographofTCTNo.858withacertificationfromtheofficeoftheRegisterofDeedsthatitwasatruecopy,the
RegisterofDeedsofLeytefoundthreetransfercertificatesoftitlebearingthesamenumberinthenamesofthe
Party,oneFelicianoLabastida,andtheTaclobanElectricandIcePlantsCo.,Inc. 21The Party failed to rebut said
allegation.22

The existence of three transfer certificates of title all numbered 858 in the same locality is an anomaly that
requires investigation and correction.That anomalous situation, coupled with Our finding that it is very possible
thatbothatthetimeof'theParty'sacquisitionofLot776andtheissuanceinitsfavorofTCTNo.858,itwasnot
qualifiedtoholdandownprivatelandunderthe1935Constitutionandpertinentlaws,compelUstoconsiderthe
Party'sownershipoverLot776asquestionable.
ToremovealldoubtsovertheParty'srightoverlot776andtosettlethequestionofwhoreallyshouldbeentitled
to register said lot in his name, We are convinced that an escheat
escheat proceeding under Section 5, Rule 91 of the
RulesofCourtmustbeinitiatedbythegovernment.Allinterestedparties,especialIytheactualoccupantsandthe
adjacent lot owners including petitioner Bermudo shall be personally notified of the proceeding and given the
opportunitytopreventtheirvalidclaimsoverLot776otherwiseitwillberevertedtotheState.
WHEREFORE, the petition for certiorari and prohibition is herein dismissed. The Solicitor General or his
representativeisherebydirectedtoimmediatelyfileanescheatproceedingpursuanttoSection5,Rule91ofthe
escheat
RulesofCourtintheproperRegionalTrialCourtwhichshallgiveprioritytothecaseanddecideitattheearliest
possibletime.
SOORDERED.
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Gutierrez,Jr.,Feliciano,BidinandCortes,JJ.,concur.

Footnotes
1RecordonAppealinL30730,"ValentinBermudovs.ChineseNationalistParty,etal.",pp.210
Rollo,p.132.
2Rollo,p.84.
3RecordonAppeal.supra,atpp.1416.
4Supra,atpp.3334.
5RecordonAppeal,supra,atp.193.
6Rollo,p.101.
7Rollo,p.102.
8Rollo,p.103.
*PennedbyJusticeHermogenesConcepcion,Jr.,andconcurredinbyJusticeEulogioS.Serrano
andLourdesP.SanDiego.
9Rollo,p.127.
10Rollo,p.129.
11Petition,p.13.
12SeeOngvs.CourtofAppeals,L33436,June22,1984,129SCRA608.
13Dirigevs.Biranya,L22033,July30,1966,17SCRA840.
14Lagulavs.Casimiro,98Phil.102.
15Sec.8,RepublicActNo.26.
16TahananDevelopmentCorporationvs.CourtofAppeals,L55771,November15,1982,118
SCRA273:MetropolitanWaterworksandSewerageSystemvs.Sison,L40309,August31,1983,
124SCRA394.
17Concurringopinion,Teehankee,J.,DirectorofLandsvs.CourtofAppeals,L45168,January27,
1981,102SCRA370,456.
18Art.XIII,Sec.l.
19RegisterofDeedsvs.UngSiuSiTemple,97Phil.58,61.
20ActNo.1459.
21Rollo,pp.237238.
22Rollo,pp.254260.
TheLawphilProjectArellanoLawFoundation

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