Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 76148 December 20, 1989
ELISEO CARO, CARLOS CARO, BENITO CARO, CARMEN CARO,
BATAYOLA AND LORENZO CARO, petitioners,
vs.
HON. COURT OF APPEALS, SERAFIN V. RONZALES, JOSE
RONZALES, JR. AND GEMME RONZALES, respondents.
Resurreccion S. Salvilla for petitioners.
Tirol & Tirol for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals in AC-G.R. CV No. 01016 entitled, "Epifanio Caro, Plaintiff-
Appellant v. Serafin V. Ronsales, et al., Defendants-Appellees," dated
January 28, 1986 affirming the decision of the Court of First Instance (now
Regional Trial Court) of Iloilo; and its resolution dated September 11, 1986
denying the motion for reconsideration.
The subject matter of the present controversy is a 260 square meter parcel
of land which, according to petitioners, is included in the parcel of land
purchased by their predecessor, Epifanio Caro, from Simeon Gallego; but
contradicted by the private respondents by claiming it as their own
evidenced by a certificate of title issued in their favor. We gathered from the
records that the questioned land is the eastern portion allegedly included in
the parcel of land purchased from Simeon Gallego. The trial court ruled in
favor of the private respondents on the grounds of estoppel, absence of
fraud in the registration of the questioned land and prescription. This ruling
was affirmed by the respondent court. Likewise, We affirm, based on the first
two grounds but not on the ground of prescription.
The antecedent facts are as follows:
It appears that on May 14, 1946, Simeon Gallego bought a parcel of land
from Loreto Martinez, Presentacion Jereza, Hermenigildo Jereza, Maria Luz
Nele Jereza and Maria Elena Jereza, situated within the poblacion of
Jordan, Sub-Province of Guimaras with an area of 5,031 square meters and
bounded on the North by Jordan River, Joaquin Galve and Custodia
Jalandoni; on the East by Roman Catholic Church and the Municipality of
Jordan; on the South by Graciana Martinez; and on the West by Jordan
River. The above-described parcel of land was then declared for taxation
purposes under Tax Declaration No. 6437. This land was later on sold by
Simeon Gallego to Epifanio Caro in 1948. On May 15, 1962, Trinidad
Castem, Rolando Iranaya and Eriberto Iranaya sold a parcel of land which
they inherited from Custodia Jalandoni, situated in the poblacion of Jordan,
Sub-Province of Guimaras, with an area of 1,011 square meters and
bounded on the North by Jordan River; on the East by Roman Catholic
Archbishop of Jaro; on the South by Rafael Gaylan; and on the West by
Jordan River, to Epifanio Caro. The land was then declared for taxation
purposes under Tax Declaration No. 4135. In the same year, Epifanio Caro
bought another parcel of land from the heirs of Rafael Gaylan, situated in the
poblacion of Jordan, Sub-Province of Guimaras, with an area of 1,750
square meters and bounded on the North and East by the heirs of Custodia
Jalandoni; on the South by Simeon Gallego; and on the West by Jordan
River, and declared for taxation purposes under Tax Declaration No. 3638.
In 1963, Epifanio Caro had those three (3) parcels of land surveyed and
were then designated as Lot No. 54. When Blas Gonzales conducted the
survey, he prepared a plan. Epifanio Caro was given a copy of the plan and
he just kept it. During that survey, Epifanio Caro pointed the boundaries of
his parcels of land to the survey team. These parcels of land were relocated
in 1968 by the Sirilan Surveying Company and Plan Psu-207820 was
prepared. The parcels of land of Epifanio Caro were denominated as Lot No.
54 and the land claimed by the private respondents Serafin V. Ronzales,
Jose Ronzales, Jr. and Gemme Ronzales, as Lot No. 55. Epifanio Caro had
the three lots consolidated after the survey into one lot, and Tax Declaration
No. 7688 was issued. During the cadastral proceeding, Epifanio Caro filed
an answer for Lot 54. There is no showing whether or not a title was issued
to him.
On the other hand, the private respondents claim that the questioned land
was formerly owned by Pascuala Lacson and was declared in her name
under Tax Declaration No. 4234. Pascuala Lacson was married to Domingo
Ronzales. Long before World War II, private respondents and their
predessors-in-interest had been living on the questioned land. When
Epifanio Caro bought a parcel of land from Simeon Gallego, Jose Ronzales,
Sr., his brother Serafin Ronzales, and sister Gemme Ronzales children of
Domingo Ronzales, and Pascuala Lacson, were already living in a house of
semi-strong materials on the questioned land.
Sometime in 1964, another survey was conducted. The parcels of land
claimed by Epifanio Caro were denominated as Lot No. 54 and the land
claimed by the private respondents was denominated as Lot No. 55.
Epifanio Caro filed an answer for Lot No. 54 and Purificacion Ronzales,
mother of private respondent Jose Ronzales, Jr. filed an answer for Lot No.
55. No other person or persons filed an answer for Lot No. 55.
Consequently, Original Certificate of Title No. 0-6836 was issued in the
names of the private respondents, in equal shares of 1/3 portion each on
September 17, 1970.
In June 1973, the spouses Epifanio Caro and Paz Caro filed an ejectment
case against Augusta Chavez, Naciso Galila, Timoteo Parreno, Ramon
Aranduque and Rafael Galotera, involving Lot Nos. 56, 59 and 60. In 1974,
the spouses filed an ejectment and illegal detainer case against Ramon
Aranduque, Timoteo Parreno and Augusta Chavez, involving Lot No. 54.
On June 4, 1975, Epifanio Caro flied a complaint before the Court of First
Instance of Iloilo (Civil Case No. 10235) for cancellation of Certificate of Title
No. 0-6836, reconveyance, recovery of possession and damages on the
ground of fraud. During the pendency of the case, Epifanio Caro died, so he
was substituted by his heirs, namely, Eliseo Caro, Carlos Caro, Benito Caro,
Carmen Caro Batayola and Lorenzo Caro.
On November 22, 1982, the trial court dismissed the complaint. On appeal,
the dismissal was affirmed by the respondent Court of Appeals. The motion
for reconsideration was denied. Hence, the present petition for review
on certiorari.
The issues may be limited to the following:
1) Whether or not the action in Civil Case No. 10235 has
prescribed;
2) Whether or not fraud attended the issuance of Original
Certificate of Title No. 0-6836; and
3) Whether or not the plaintiff in said civil case was in
estoppel.
Petitioners contend that since private respondents do not own the
questioned land, they are mere trustees and this being the case, prescription
does not lie in an action for reconveyance.
In this regard, the trial court held (p. 413, Records):
An action for reconveyance on the ground of fraud
prescribes in four (4) years from the time of the decree of
registration, for the reason that the registration of the
decree constitutes constructive notice to the whole world
(Gerona v. de Guzman, G.R. No. L-19060, May 29, 1964,
citing the cases J.M. Tuason and Co. vs. Magdangal, G.R.
No. L-15539, June 30, 1962; Abdon v. Abella, C.A. G.R.
No. L-29846-R, August 31, 1964).
Affirming, the respondent court said (p. 29, Rollo):
... even if a trust relationship had existed, the right to seek
reconveyance prescribed ten (10) years after 1948 when
Epifanio Caro was informed by the wife of Jose Ronzales,
that she inherited the land from her grandmother (de la
Cerna vs. de la Cerna, 72 SCRA 515; Alzona vs.
Calupitan, 4 SCRA 450; Carantes vs. Court of Appeals, 76
SCRA 516). Since there is no trust relationship between
the ancestors of and between plaintiffs and defendants,
the same action prescribed in 4 years from the issuance of
title on September 17, 1970, because the complaint was
filed only on June 4,1975, as ruled by the lower court (de
la Cerna vs. de la Cerna, 72 SCRA 515).
We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran, G.R.
No. L-33261, September 30, 1987,154 SCRA 396 illuminated what used to
be a gray area on the prescriptive period for an action to reconvey the title to
real property and, corollarily, its point of reference:
... It must be remembered that before August 30,1950, the
date of the effectivity of the new Civil Code, the old Code
of Civil Procedure (Act No. 190) governed prescription. It
provided:
SEC. 43. Other civil actions; how limited.- Civil actions
other than for the recovery of real property can only be
brought within the following periods after the right of action
accrues:
xxx xxx xxx
3. Within four years: .... An action for relief on the ground
of fraud, but the right of action in such case shall not be
deemed to have accrued until the discovery of the fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just
as an implied or constructive trust is an offspring of the law
(Art. 1456, Civil Code), so is the corresponding obligation
to reconvey the property and the title thereto in favor of the
true owner. In this context, and vis-a-vis prescription,
Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxxxxxxxx
(Emphasis supplied).
An action for reconveyance based on an implied or
constructive trust must perforce prescribe in ten years and
not otherwise. A long line of decisions of this Court, and of
very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for
reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens
title over the property. The only discordant note, it seems,
is Balbin vs. Medalla which states that the prescriptive
period for a reconveyance action is four years. However,
this variance can be explained by the erroneous reliance
on Gerona vs. de Guzman. But in Gerona, the fraud was
discovered on June 25,1948, hence Section 43(3) of act
No. 190, was applied, the new Civil Code not coming into
effect until August 30,1950 as mentioned earlier. It must
be stressed, at this juncture, that article 1144 and article
1456, are new provisions. They have no counterparts in
the old Civil Code or in the old Code of Civil Procedure,
the latter being then resorted to as legal basis of the four-
year prescriptive period for an action for reconveyance of
title of real property acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of
Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner
may pursue all his legal and equitable remedies against
the parties to such fraud without prejudice, however, to the
rights of any innocent holder of the decree of registration
on the original petition or application, ...
This provision should be read in conjunction with Article 1456 of the Civil
Code, which provides:
Article 1456. If property is acquired through mistake or
fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of
the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the
property and the title thereto in favor of the true owner. Correlating Section
53, paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
Code with Article 1144(2) of the Civil Code, supra, the prescriptive period for
the reconveyance of fraudulently registered real property is ten (10) years
reckoned from the date of the issuance of the certificate of title. In the
present case, therefore, inasmuch as Civil Case No. 10235 was filed on
June 4, 1975, it was well-within the prescriptive period of ten (10) years from
the date of the issuance of Original Certificate of Title No. 0-6836 on
September 17, 1970.
Unfortunately for the petitioners, however, We agree with the respondent
court and the trial court that the private respondents did not employ any
fraud in securing title to the questioned land. A perusal of the pertinent
portions of the deposition of Epifanio Caro supports this finding, to wit:
ATTY. TANEO:
Q Now, at the time you bought this land from Simeon
Gallego in 1948, who was residing in that shack?
A There was no more shack, but there was a big house.
Q And who was residing on that big house?
A Jose and his wife and children, and his sister.
Q Since according to you at the time you bought this land
from Simeon Gallego there was already that big house
occupied by Jose Ronzales and his wife, their children and
sister, did you make any demand from them to vacate the
premises since you have already purchased the land from
Simeon Gallego?
A I informed them that I have already bought the lot from
Simeon Gallego, and I demanded from them rental of the
house, because their house was already there at the time I
bought the land.
Q And what was their answer, if any, to your demand?
A They promised me that they will also pay the rent, or if I
wish to sell the land to them, they will buy the same. But I
told them that I will not sell the land.
Q Now, since you told them that you did not want to sell to
them the portion of the land occupied by their big house,
what did they, if any, suggest to you regarding their
occupancy of the land?
ATTY. ALINIO:
We would like now to object to this line of questioning
because this is irrelevant, immaterial, and impertinent, not
being raised in the complaint. Not one of the issues in this
case.
ATTY. GRIJALVO:
Subject to the objection, witness may answer.
WITNESS:
A They told me that they will just pay the rent.
ATTY. TANEO:
Q Did you agree?
A I agreed. I consented, but they merely promised and
promised to me, but they did not pay anything.
Q In other words you mean that after they suggested to
rent the land and you agreed, you made several demands
from them to pay the rentals?
A Yes, sir, I demanded from them the rentals. But later
when I demanded from them the payment of the rent, they
told me that it is not my land being occupied by their
house, but it is the land of the municipality.
Q Around how many times did you demand from them for
the payment of the rentals?
A Two times. And on the second time you demanded for
the payment of rentals and they did not still pay, what was
their reason, if any?
ATTY. ALINIO:
Objection, because the witness has already answered the
same or similar questions.
ATTY. TANEO:
The witness stated that he made around two demands for
the payment of rentals. When he made the demand later
after there was an agreement that they would just pay the
rental, they reasoned out that the land occupied by their
house is a portion of the land of the municipality. Since the
witness stated that there was a second demand, the
purpose now of the pending question is if there was any
other reason stated by them.
ATTY. GRIJALVO:
Subject to the objection, witness may answer.
WITNESS:
A They will not pay, because according to them the land
on which their house stands is a portion of the land owned
by the municipality. But actually it is my own, and the
municipality has nothing to do with it. (pp. 207-212,
Records) ...
ATTY. TANEO:
Q The last time you stated that you know Lot No. 55.
When for the first time did you know about this Lot 55?
A I know this lot for the first time when I bought this lot
from Simeon Gallego.
Q At that time did you know that this lot already bears Lot
No. 55?
A I know it because one Purit told me that she inherited
the same from her grandmother.
Q This Purit you are mentioning, are you referring to
Purificacion Villanueva Ronsales, who is the widow of
Jose Ronsales?
A Yes, sir.
Q When was this when this Purit mentioned to you about
this Lot 55?
A When I bought said land. (pp. 215-216, Records)
It is clear, therefore, that as early as 1948, Epifanio Caro was already aware
of the adverse claim of the private respondents. He should have been
vigilant of his right as the allegedly new owner of the questioned land. What
he did was the reverse, he slept on his rights for a number of years. In the
recent case of Bagtas v. Court of Appeals, et al., G.R. No. L-50732, August
10, 1989, We held that considerable delay in asserting one's right before a
court of justice is strongly persuasive of the lack of merit of his claim, since it
is human nature for a person to enforce his right when same is threatened or
invaded. Thus, he is estopped by laches from questioning the ownership of
the questioned land. Not only that. There is also estoppel in pais in this case
because Epifanio Caro filed his answer with respect to Lot No. 54 only while
Purificacion Villanueva flied her answer with respect to Lot No. 55 (see
Tijam, et al. v. Sibonghanoy, et al., G.R. No. L-21450, April 15,1968, 23
SCRA 29). In addition, the trial court observed (pp. 414-415, Records):
The Tax Declaration of the land bought by Epifanio Caro,
Exhibit 4, states that its adjacent owner on the east is
Pascual (sic) Lacson who is the grandmother of the
defendants. When said land was declared in the name of
Epifanio Caro in 1969, the adjacent owner on the East is
still Pascuala Lacson, Exhibit E. The Tax Declaration of
the land bought by Epifanio Caro from the heirs of
Custodia Jalandoni, Exhibit 8 shows that the land in
question is not an adjacent property. The same is true with
the Tax Declaration of the land bought by Epifano Caro
from the heirs of Rafael Gaylan, Exhibit 9. This clearly
shows that Lot No. 55 which originally belonged to
Pascuala Lacson is a different and distinct parcel from the
lands bought by Epifanio Caro from Simeon Gallego, from
the heirs of Custodia Jalandoni and from the heirs of
Rafael Gaylan (sic).
While We commiserate with the petitioners because of Epifanio Caro's lack
of formal education still, his negligence and belated action were undoubtedly
the root cause of the present controversy:
Q Is this the same survey plan which Mr. Gonzales gave
you?
A That is the one but I have not read it because I do not
understand English or Spanish because I have never gone
to school (p. 217, Records).
xxx xxx xxx
Q Now, when the cadastral survey was conducted, did you
take occasion to verify also the cadastral survey of your
lot?
A I did not bother anymore because I entrusted everything
to them (p. 232, Records).
xxx xxx xxx
Q Now, when you purchased the lot from Simeon Gallego
because you said you could not read English nor Spanish,
did you ask the help of somebody else to explain to you
the document?
A I have not asked the help of anybody. In other words
you did not read nor understand the sale in your favor
executed by Simeon Gallego?
A I have confidence in him because it was prepared by the
father of the mayor.
Q Did you not inquire from Simeon Gallego of the
boundaries of the church from him?
A Before that I knew that the boundaries of the lot of
Loreta Martinez was the municipal building, a road and a
church.
Q Now, before you purchase the property from Simeon
Gallego did you not also ask the help of somebody to
examine the tax declaration in the name of Simeon
Gallego?
A No, because I already knew that lot was owned by
Martinez.
Q And therefore, I gather from you that you relied on your
knowledge, own knowledge when you purchased the land
from Simeon Gallego about the boundaries of the land?
A I relied on my own knowledge because I know it fully
well. "
Q You did not, you said, anymore examine the tax
declaration?
A I did not bother because I knew that the lot was owned
by Martinez.
Q Did you inquire also from the Martinezes the boundaries
of their lots?
A I did not bother because I knew fully well because since
1909 I was aready there in the church (pp. 251-253,
Records).
ACCORDINGLY, the petition is hereby DENIED. The decision dated
January 28,1986 and the resolution dated September 11, 1986 of the
respondent Court of Appeals are AFFIRMED subject to the MODIFICATION
regarding prescription.
SO ORDERED.
G.R. No. 156357 February 18, 2005
ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON
QUA, CARIDAD V. LEYSON and ESPERANZA V. LEYSON, petitioners,
vs.
NACIANSINO BONTUYAN and MAURECIA B. BONTUYAN, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of
Appeals (CA), as well as its Resolution in CA-G.R. CV No. 64471 denying
the motion for reconsideration of the said decision.
The Antecedents
Calixto Gabud was the owner of a parcel of land located in Barangay
Adlawon, Mabolo, Cebu City, which was declared for taxation purposes
under Tax Declaration (T.D.) No. 03276-R in 19452 with the following
boundaries:
North Calixto Gabud East Marcelo Cosido
South Pedro Bontuyan West Asuncion Adulfo.3
Because of the construction of a provincial road, the property was divided
into two parcels of land covered by T.D. No. 03276-R and T.D. No. 01979-R.
On February 14, 1948, Gabud executed a Deed of Absolute Sale 4 over the
property covered by T.D. No. 03276-R, as well as the other lot covered by
T.D. No. 01979-R, in favor of Protacio Tabal, married to Leodegaria
Bontuyan. On the basis of the said deed, T.D. No. 03276-R was cancelled
by T.D. No. 13615-R in the name of Protacio Tabal effective 1949.5 On
January 5, 1959, Tabal executed a Deed of Sale 6 over the property covered
by T.D. No. 13615-R in favor of Simeon Noval, married to Vivencia
Bontuyan, daughter of Gregorio Bontuyan, for ₱800.00. T.D. No. 13615-R
was cancelled by T.D. No. 100356 in the names of the spouses
Noval.7 Gregorio Bontuyan received a copy of the said tax declaration in
behalf of the spouses Noval.8 The latter tax declaration was then cancelled
by T.D. No. 008876 under the same names effective 1967. 9
Subsequently, the property was surveyed by Cadastral Land Surveyor
Mauro U. Gabriel on January 22, 1964. The plan survey was approved on
September 30, 1966.10 The property covered by T.D. No. 008876 was
identified as Lot No. 17150 of Cebu Cadastre No. 12, while the property
covered by T.D. No. 01979-R was identified as Lot No. 13272. On May 22,
1968, the spouses Noval executed a Deed of Absolute Sale 11 over the two
lots covered by T.D. No. 008876 in favor of Lourdes V. Leyson for
₱4,000.00. Lourdes Leyson took possession of the property and had it
fenced. Despite the said sale, T.D. No. 008876 was cancelled by T.D. No.
21267 effective 1974.12 Thereafter, T.D. No. 21267 was cancelled by T.D.
No. 2382113 which, in turn, was cancelled by T.D. No. 01-17455 effective
1980.14 In 1989, the latter was cancelled by a new tax declaration, T.D. No.
01-001-00646. All these tax declarations were in the names of the spouses
Noval.15
Meanwhile, Lourdes Leyson paid for the realty taxes over the property.
However, the tax declaration issued thereon continued to be under the
names of the spouses Noval.16
Despite his knowledge that the property had been purchased by his son-in-
law and daughter, the spouses Noval, Gregorio Bontuyan, who was then 91
years old, filed an application with the Bureau of Lands for a free patent over
Lot No. 17150 on December 4, 1968. He alleged therein that the property
was public land and was neither claimed nor occupied by any person,17 and
that he first entered upon and began cultivating the same in 1918. Thus, on
November 19, 1971, Free Patent No. 510463 was issued over Lot No.
17150 in his favor, on the basis of which Original Certificate of Title (OCT)
No. 0-1619 was issued to and under his name on March 21, 1974. 18 Another
parcel of land, Lot No. 13272, was also registered under the name of
Gregorio Bontuyan under OCT No. 0-1618. He then declared Lot No. 17150
for taxation purposes under T.D. No. 13596 effective 1974.19 On February
20, 1976, Gregorio Bontuyan executed a Deed of Absolute Sale 20 over Lot
No. 17150 in favor of his son, Naciansino Bontuyan.
On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed another
Deed of Absolute Sale21 over Lot Nos. 13272 and 17150, covered by OCT
No. 0-1618 and OCT No. 0-1619, respectively, in favor of Naciansino
Bontuyan for ₱3,000.00. On the basis of the said deed, OCT No. 0-1619
was cancelled by TCT No. 1392 in the name of Naciansino Bontuyan on
December 2, 1980.22 Gregorio Bontuyan died intestate on April 12, 1981.23
On March 30, 1981, the spouses Bontuyan executed a Real Estate
Mortgage over Lot No. 17150 covered by OCT No. 0-1619 in favor of the
Development Bank of the Philippines (DBP) as security for a loan of
₱11,200.00.24Naciansino Bontuyan had earlier executed an affidavit that the
property was not tenanted. Shortly thereafter, the spouses Bontuyan left the
Philippines and resided in the United States. Meanwhile, Lourdes Leyson
died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem the
property from DBP only to discover that there were tenants living on the
property installed by Engineer Gabriel Leyson, one of the late Lourdes
Leyson’s children. Despite being informed that the said spouses owned the
property, the tenants refused to vacate the same. The tenants also refused
to deliver to the spouses the produce from the property. The spouses
Bontuyan redeemed the property from DBP on September 22, 1989.
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico Bontuyan,
Vivencia Noval and Naciansino Bontuyan, the surviving heirs of Gregorio
Bontuyan, executed an Extrajudicial Settlement25 of the latter’s estate and
adjudicated Lot No. 13272 in favor of Naciansino. Based on the said deed,
T.D. No. 01-001-00877 was issued to and under the name of Naciansino
over the said property starting 1994.
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr.
Gabriel Leyson, demanding that he be furnished with all the documents
evidencing his ownership over the two lots, Lots Nos. 17150 and
13272.26 Engr. Leyson ignored the letter.
The spouses Bontuyan, thereafter, filed a complaint against Engr. Leyson in
the Regional Trial Court (RTC) of Cebu City for quieting of title and
damages. They alleged that they were the lawful owners of the two lots and
when they discovered, upon their return from the United States, that the
property was occupied and cultivated by the tenants of Engr. Leyson, they
demanded the production of documents evidencing the latter’s ownership of
the property, which was ignored.
The spouses Bontuyan prayed that, after due proceedings, judgment be
rendered in their favor, thus:
WHEREFORE, premises considered, it is most respectfully prayed of this
Honorable Court to render judgment against the defendant and in favor of
the plaintiffs, to wit:
(a) Confirming the ownership of the plaintiffs on the lots in question;
(b) Ordering defendant to pay the plaintiffs the amount of Twenty
Thousand Pesos (₱20,000.00) as the share of the plaintiffs of the
produce of the lots in question;
(c) Ordering defendant to pay plaintiffs the sum of ₱50,000.00 as
reimbursement of attorney’s fees and the further sum of ₱500.00 as
appearance fee every time the case is called for trial;
(d) Ordering the defendant to pay plaintiffs the sum of ₱50,000.00
as moral damages and exemplary damages may be fixed by the
court;
(e) Ordering defendant to pay plaintiffs the sum of ₱5,000.00 as
actual expenses for the preparation and filing of the complaint;
(f) Ordering defendant to pay the costs; and
(g) Granting to plaintiffs such other reliefs and remedies just and
equitable in the premises.27
In his answer to the complaint, Engr. Leyson averred, by way of affirmative
defenses, that the two lots were but portions of a parcel of land owned by
Calixto Gabud, covered by T.D. No. 03276-R, and was subdivided into two
parcels of land because of the construction of a provincial road on the
property; Gabud later sold the two lots to Protacio Tabal, who sold the same
to Simeon Noval, married to Vivencia Bontuyan, one of the children of
Gregorio Bontuyan; Simeon Noval later sold the property to Lourdes Leyson
on May 22, 1968 who, forthwith, took possession thereof as owner; and
Gregorio Bontuyan was issued a free patent over the property through fraud.
Engr. Leyson concluded that the said patent, as well as OCT No. 0-1619
and TCT No. 1392, were null and void and that the plaintiffs acquired no title
over the property.
Engr. Leyson interposed a counterclaim against the spouses Bontuyan and
repleaded as an integral part thereof all the material allegations in his
affirmative defense. He prayed that, after due proceedings, judgment be
rendered in his favor, thus:
a) Dismissing Plaintiffs’ complaint for failure to include
indispensable parties;
 b) Declaring the Defendant and his four (4) sisters, namely, Dr.
Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza Leyson and
Caridad Leyson as the true and legal owners and possessors of the
parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan
and TCT No. 1392 in the name of Naciansino Bontuyan null and
void and to order the Register of Deeds to cancel the same and
issue new ones in favor of the Defendant Gabriel V. Leyson and his
four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua,
Esperanza V. Leyson and Caridad V. Leyson;
d) And on the Counterclaim, to order Plaintiffs to pay the Defendant
the following sums:
d-1) ₱50,000.00 as attorney’s fees and appearance fee of
₱1,000.00 per hearing;
d-2) ₱500,000.00 as moral damages;
d-3) ₱20,000.00 as exemplary damages;
d-4) ₱10,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the
premises.28
In due course, the other children of Lourdes Leyson, namely, Dr. Josefina L.
Poblete, Fe Leyson Qua, Caridad V. Leyson and Esperanza V. Leyson,
were allowed to intervene as defendants. They filed their answer-in-
intervention wherein they adopted, in their counterclaim, paragraphs 7 to 26
of the answer of their brother, Engr. Leyson, the original defendant. They
prayed that, after due hearing, judgment be rendered in their favor as
follows:
Wherefore, this Honorable Court is prayed to render judgment in favor of the
Defendant and the Defendants-in-Intervention and against the Plaintiffs as
follows:
a) Promissory Plaintiffs’ complaint for failure to include
indispensable parties and for lack of cause of action;
b) Declaring the Defendant and his four (4) sisters, namely: Dr.
Josefina L. Poblete; Mrs. Fe L. Qua, Esperanza Leyson and
Caridad Leyson as the true and legal owners and possessors of the
parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan
and TCT No. 1392 in the name of Naciansino Bontuyan null and
void and to order the Register of Deeds to cancel the same and
issue new ones in favor of the Defendant Gabriel V. Leyson and his
four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua,
Esperanza V. Leyson and Caridad V. Leyson;
d) On the Counterclaim, Plaintiffs should pay the Defendants the
following sums:
d-1) ₱50,000.00 as attorney’s fees and appearance fee of
₱1,000.00 per hearing;
d-2) ₱500,000.00 as moral damages to each Intervenor;
d-3) ₱50,000.00 as exemplary damages;
d-4) ₱15,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the
premises.29
In their reply, the spouses Bontuyan averred that the counterclaim of the
defendants for the nullity of TCT No. 1392 and the reconveyance of the
property was barred by laches and prescription.
On January 21, 1999, the trial court rendered judgment in favor of the
Leyson heirs and against the spouses Bontuyan. The fallo of the decision
reads:
WHEREFORE, foregoing considered judgment is hereby rendered
dismissing plaintiff’s complaint for dearth of evidence declaring the
defendant and the intervenors as the true and legal owners and possessors
of the subject parcels of land; declaring OCT No. 0-1619 in the name of
Gregorio Bontuyan and TCT No. 1392 in the name of Naciansino Bontuyan
null and void; ordering the Register of Deeds to cancel OCT No. 0-1619 and
TCT No. 1392 and issue new ones in favor of defendant Gabriel Leyson and
intervenors Josefina Poblete, Fe Qua, Esperanza Leyson and Caridad
Leyson; ordering plaintiff to pay defendant and intervenors the following:
a) ₱50,000.00 attorney’s fees;
b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and intervenors;
d) 10,000.00 exemplary damages; and
e) 10,000.00 litigation expenses.
SO ORDERED.30
The trial court held that Simeon Noval had sold the lots to Lourdes Leyson
on May 22, 1968, who thus acquired title over the property.
The spouses Bontuyan appealed the decision to the CA which affirmed, with
modification, the decision of the RTC. The appellate court held that the
Leyson heirs were the owners of Lot No. 13273, while the spouses Bontuyan
were the owners of Lot No. 17150. The CA ruled that the answer of the
Leyson heirs to the complaint constituted a collateral attack of OCT No. 0-
1619 which was proscribed by law. The Leyson heirs filed a motion for
reconsideration of the decision insofar as Lot No. 17150 was concerned,
contending that their counterclaim for the nullification of OCT No. 0-1619
contained in their answer constituted a direct attack on the said title. The CA
denied the motion.
The Leyson heirs then filed a petition for review with this Court and made the
following assignments of error:
First Assignment of Error
THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT
RULED THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619
CANNOT BE RULED UPON IN THESE PROCEEDINGS BROUGHT BY
THE RESPONDENTS FOR THE QUIETING OF THEIR TITLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT PETITIONERS’ ANSWER WITH COUNTERCLAIM,
PRAYING FOR THE CANCELLATION OF PLAINTIFFS’ TORRENS
CERTIFICATE IS A MERE COLLATERAL ATTACK ON THE TITLE.31
Third Assignment of Error
THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE
DECISION OF THE REGIONAL TRIAL COURT DATED JANUARY 21, 1999
BY RULING THAT PETITIONERS ARE DECLARED THE OWNERS OF
LOT 13273 BUT RESPONDENTS ARE DECLARED THE OWNERS OF
LOT 17150 UNDER OCT NO. 0-1619 AND PRESENTLY COVERED BY
TCT NO. 1392 IN THE NAME OF NACIANSINO BONTUYAN, DESPITE
THE APPELLATE COURT’S AFFIRMING THE FINDINGS OF THE TRIAL
COURT THAT FRAUD WAS COMMITTED BY GREGORIO BONTUYAN
(RESPONDENTS’ PREDECESSOR-IN-INTEREST) IN ACQUIRING TITLE
OVER THE SUBJECT PROPERTIES.32
Fourth Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY
OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392, IN
FAVOR OF PETITIONERS HAD PRESCRIBED.33
Fifth Assignment of Error
THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING
ATTORNEY’S FEES AND APPEARANCE FEES DESPITE
RESPONDENTS’ FRAUD IN ACQUIRING TITLE OVER THE SUBJECT
PROPERTIES.34
On the first two assignments of errors, the petitioners aver that the
counterclaim in their answer to the complaint constituted a direct attack of
the validity of OCT No. 0-1619. They maintain that the appellate court’s
reliance on the ruling of this Court in Cimafrancia v. Intermediate Appellate
Court35 was misplaced. They assert that what is controlling is the ruling
in Pro Line Sports Center, Inc. v. Court of Appeals36 wherein this Court held
that the counterclaim of the petitioners therein constituted a direct attack on
a certificate of title. The petitioners, likewise, cited Section 55 of Act No. 496,
as amended, to buttress their stance. They plead that their answer to the
complaint should be liberally construed so as to afford them substantial
justice.
On the other hand, the respondents assert that the decision of the CA is
correct. They claim that Lot No. 17150 was still public land when Lourdes
Leyson purchased the same from Simeon Noval, and that the property
became private land only when Free Patent No. 510463 was issued to and
under the name of Gregorio Bontuyan.
We agree with the contention of the petitioners that the CA erred in not
nullifying OCT No. 0-1619 and TCT No. 1392 and ordering the respondents
to reconvey the property covered by the said title to the petitioners.
The respondents, as plaintiffs in the court a quo, were burdened to prove
their claim in their complaint that Gregorio Bontuyan was the owner of Lot
No. 17150 and that they acquired the property in good faith and for valuable
consideration from him.37 However, the respondents failed to discharge this
burden. The evidence on record shows that Calixto Gabud sold the property
to Protacio Tabal on February 14, 1948,38 and that the latter sold the
property to Simeon Noval on January 5, 1959.39 Simeon Noval then sold the
property to Lourdes Leyson on May 22, 1968.40The respondents failed to
adduce any evidence to prove that Lourdes Leyson, or even Simeon Noval,
sold the property to Gregorio Bontuyan, or to any of the respondents for that
matter. Since Gregorio Bontuyan was not the owner of the property, he
could not have sold the same to his son Naciansino Bontuyan and the
latter’s wife, the respondents herein. As the Latin adage goes: NEMO DAT
QUOD NON HABET. Gregorio Bontuyan could not feign ignorance of
Simeon Noval’s ownership of the property, considering that the latter was his
son-in-law, and that he (Gregorio Bontuyan) was the one who received the
owner’s copy of T.D. No. 100356 covering the property under the name of
Simeon Noval.41 At the dorsal portion of the said tax declaration, there was
even an annotation that the property was transferred to Simeon Noval as
shown by the deed of sale executed before Notary Public Gregorio A. Uriarte
who notarized the deed of sale over the property executed by Protacio Tabal
in favor of Simeon Noval on January 5, 1959.42 We note that the
respondents failed to adduce in evidence any receipts of real property tax
payments made on the property under their names, which would have
fortified their claim that they were the owners of the property. We agree with
the findings of the CA, thus:
This case involves two parcels of land – Lot 17150 and Lot 13273. Lot
17150 is registered under the Torrens System under the names of plaintiffs-
appellants, while Lot 13273 remained to be unregistered.
In this case, records show that defendant-appellee and intervenors-
appellees are the true owners of the subject lots. They have in their favor tax
receipts covering the subject lots issued since 1945.
While, indeed, tax receipts and declarations are not incontrovertible
evidence of ownership, such, however, if accompanied with open, adverse,
continuous possession in the concept of an owner, as in this case, constitute
evidence of great weight that person under whose name the real taxes were
declared has a claim of right over the land.
Further, defendant-appellee and intervenors-appellees presented before the
trial court the Deed of Absolute Sale dated February 14, 1948, executed by
Calixto Gabud, conveying the subject lots in favor of Protacio Tabal. The
deed is a notarial document.
Likewise presented is the Deed of Absolute Sale of the subject lots dated
January 5, 1959, executed by Protacio Tabal in favor of spouses Simeon
Noval and Vivencia Bontuyan. The document is, likewise, a notarial
document.
Defendant-appellee and intervenors-appellees also presented the Deed of
Absolute Sale of the subject lots dated May 22, 1968, executed by spouses
Simeon Noval and Vivencia Bontuyan in favor of Lourdes Leyson. The deed
is a notarial document.
A notarial document is evidence of the facts in clear, unequivocal manner
therein expressed. It has in its favor the presumption of regularity. It is
admissible in evidence without necessity of preliminary proof as to its
authenticity and due execution.
There exist (sic) no trace of irregularity in the transfers of ownership from the
original owner, Calixto Gabud, to defendant-appellee and intervenors-
appellees.
Plaintiffs-appellants, on the other hand, offered no convincing evidence as to
how their predecessor-in-interest, Gregorio Bontuyan, acquired the subject
lots. Plaintiffs-appellants presented only the Free Patent and OCT No. 0-
1619, covering Lot No. 17150, issued in the name of Gregorio Bontuyan.
As to Lot No. 13273, We find no sufficient reason why defendant-appellee
and intervenors-appellees should be disturbed in their ownership and
possession of the same.43
As copiously shown by the record, Gregorio Bontuyan filed his application
for a free patent with the Bureau of Lands on December 4, 1968 in gross
bad faith, thereby defrauding Lourdes Leyson of the said property through
deceit. Gregorio Bontuyan falsely declared in the said application: (a) that he
entered upon and cultivated the property since 1918 and that the property
was not claimed or occupied by any person; and (b) that Lot No. 17150 was
located in Sirao, Cebu City, when, in fact, the property was located in
Adlawon, Cebu City. Lourdes Leyson was not notified of the said application
and failed to file any opposition thereto. Gregorio Bontuyan was then able to
secure Free Patent No. 510463 on November 19, 1971 and OCT No. 0-1619
on March 21, 1974. It appears in the said title that the property’s location
was indicated as "Sirao, Cebu City."44 Indeed, the CA declared that Gregorio
Bontuyan had acquired title to the property through fraud:
However, as to Lot No. 17150, We find that despite the fraud committed by
Gregorio Bontuyan (plaintiffs-appellants’ predecessor-in-interest) in
acquiring his title over the said lot, ownership over the said lot should be
adjudged in favor of plaintiffs-appellants.
Records, indeed, show that, at the time when Gregorio Bontuyan applied for
Free Patent, Gregorio Bontuyan was living with his daughter, Vivencia
Bontuyan (defendant-appellee’s predecessor-in-interest). Thus, Gregorio
Bontuyan must have known that at the time when he applied for free patent
on December 1968, the subject lots were already sold on May 1968 by his
daughter Vivencia Bontuyan in favor of Lourdes Leyson, predecessor-in-
interest of defendants-appellees.
Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.]
17150 to plaintiffs-appellants. The first was in 1976 and the other was in
1980. Plaintiffs-appellants offered no reasonable explanation why Gregorio
Bontuyan have (sic) to sell twice Lot No. 17150 in favor of plaintiffs-
appellants.
As found by the trial court, these are badges of bad faith which affect the
validity of the title of Gregorio Bontuyan over the subject lots.
We are aware that the torrens system does not create or vest title. It only
confirms and records title already existing and vested. It does not protect a
usurper from the true owner. It cannot be a shield for the commission of
fraud. It does not permit one to enrich himself at the expense of another.
Where one does not have any rightful claim over a real property, the torrens
system of registration can confirm or record nothing.45
The findings of the CA affirmed the findings of the trial court in its decision,
thus:
After having thoroughly analyzed the records and the evidences adduced
during the trial of this case, this Court is convinced and sincerely believes
that the lots in question were originally owned by Calixto Gabud as
evidenced by T.D. [No.] 03276R marked as Exh. "1." In 1945, this consisted
of only one lot in Adlawon, Cebu City, as there was no provincial road yet.
However in 1948, the said parcel of land was divided into two because a
provincial road was constructed passing through it. Hence, T.D. [No.]
03276R and T.D. [No.] 01979-R were issued to Calixto Gabud. On February
16, 1948, Calixto Gabud sold the said parcels of land to spouses Protacio
Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of
Sale, Exh. "2." On January 5, 1959, spouses Protacio Tabal and Ludegaria
(sic) Bontuyan, in turn, sold the same parcels of land to spouses Simeon
Noval and Vivencia Bontuyan as evidenced by a Deed of Sale, Exh. "4." It is
noteworthy to mention at this point in time that Vivencia Bontuyan is one of
the daughters of Gregorio Bontuyan, the father of herein plaintiff Naciansino
Bontuyan. In May 1968, spouses Simeon Noval and Vivencia Bontuyan sold
the subject parcels of land to Lourdes vs. (sic) Leyson, the mother of herein
defendant as evidenced by a Deed of Sale marked as Exh. "6." It is quite
perplexing for the court to imagine that Gregorio Bontuyan, father of herein
plaintiff, who was then residing with spouses Simeon Noval and Vivencia
Bontuyan at 179 C San Jose dela Montaña, Mabolo, Cebu City, as reflected
in his application for Free Patent (Exhs. "8" & "26") dated December 4, 1968
was unaware of the sale of the subject parcels of land made by his daughter
Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. It is
evident that, after the sale from spouses Noval to Lourdes Leyson in May
1968, Gregorio Bontuyan applied for Free Patent for the same parcels of
land in December 1968 claiming to have cultivated the land since 1918,
stating therein the location as Sirao and not Adlawon which is the true and
correct location. Sirao and Adlawon are two different barangays which are
not even adjacent to each other. In fact, as borne out by Exh. "25," it is
separated by Barangay Guba. In 1974, Free Patent No. 510463 and OCT#
0-1619 was issued to Gregorio Bontuyan covering subject property, the
location of which is in Barangay Sirao in consonance to his application.
Gregorio Bontuyan’s application for Free Patent over subject parcels of land
had raised in the mind of this Court reasonable badges of bad faith on his
part as the subject parcels of land were already sold by his daughter
Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. Another
badge of bad faith is raised in the mind of this Court when he (Gregorio) sold
the subject parcels of land twice to his son Naciansino Bontuyan in 1976 and
1980, respectively, wherein both Deeds of Sale were notarized by different
Notary Publics, (Exhs. "10" & "16").46
Considering that Lourdes Leyson was in actual possession of the property,
the respondents cannot, likewise, claim that they were in good faith when
Gregorio Bontuyan allegedly sold the property to them on April 28,
1980.1awphi1.nét
Anent the third and fourth assignments of error, we do not agree with the
ruling of the CA that the petitioners failed to directly attack the validity of
OCT No. 0-1619. The CA failed to consider the fact that, in their respective
answers to the complaint, the petitioners inserted therein a counterclaim
wherein they repleaded all the material allegations in their affirmative
defenses, that Gregorio Bontuyan secured OCT No. 0-1619 through fraud
and deceit and prayed for the nullification thereof.
While Section 47 of Act No. 496 provides that a certificate of title shall not be
subject to collateral attack, the rule is that an action is an attack on a title if
its object is to nullify the same, and thus challenge the proceeding pursuant
to which the title was decreed.l^vvphi1.net The attack is considered direct
when the object of an action is to annul or set aside such proceeding, or
enjoin its enforcement. On the other hand, an attack is indirect or collateral
when, in an action to obtain a different relief, an attack on the proceeding is
nevertheless made as an incident thereof.47 Such action to attack a
certificate of title may be an original action or a counterclaim in which a
certificate of title is assailed as void. A counterclaim is considered a new suit
in which the defendant is the plaintiff and the plaintiff in the complaint
becomes the defendant. It stands on the same footing and is to be tested by
the same rules as if it were an independent action. 48 Furthermore, since all
the essential facts of the case for the determination of the title’s validity are
now before the Court, to require the party to institute cancellation
proceedings would be pointlessly circuitous and against the best interest of
justice.49
The CA, likewise, erred in holding that the action of the petitioners to assail
OCT No. 0-1619 and TCT No. 1392 and for the reconveyance of the
property covered by the said title had already prescribed when they filed
their answer to the complaint.
Case law has it that an action for reconveyance prescribes in ten years, the
point of reference being the date of registration of the deed or the date of
issuance of the certificate of title over the property. In an action for
reconveyance, the decree of registration is highly regarded as
incontrovertible. What is sought instead is the transfer of the property or its
title, which has been wrongfully or erroneously registered in another
person’s name, to its rightful or legal owner, or to one who has a better
right.50
However, in a series of cases, this Court declared that an action for
reconveyance based on fraud is imprescriptible where the plaintiff is in
possession of the property subject of the acts. In Vda. de Cabrera v. Court of
Appeals,51 the Court held:
... [A]n action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten years, the point of reference being the
date of registration of the deed or the date of the issuance of the certificate
of title over the property, but this rule applies only when the plaintiff or the
person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the
property, as the defendants are in the instant case, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a
piece of land claiming to be the owner thereof may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right,
the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession.
Similarly, in the case of David v. Malay,52 the same pronouncement was
reiterated by the Court:
... There is settled jurisprudence that one who is in actual possession of a
piece of land claiming to be owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the
reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of the court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession.
No better situation can be conceived at the moment for Us to apply this rule
on equity than that of herein petitioners whose ... possession of the litigated
property for no less than 30 years and was suddenly confronted with a claim
that the land she had been occupying and cultivating all these years, was
titled in the name of a third person. We hold that in such a situation the right
to quiet title to the property, to seek its reconveyance and annul any
certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only
then that the statutory period of prescription commences to run against such
possessor.1awphi1.nét
owners thereof. The trial court’s award of ₱50,000.00 for attorney’s fees to
the petitioners is AFFIRMED. No pronouncement as to costs.
SO ORDERED.

The paramount reason for this exception is based on the theory that
registration proceedings could not be used as a shield for fraud. 53 Moreover,
to hold otherwise would be to put premium on land-grabbing and
transgressing the broader principle in human relations that no person shall
unjustly enrich himself at the expense of another. 54

In the present case, Lourdes Leyson and, after her death, the petitioners,
had been in actual possession of the property. The petitioners were still in
possession of the property when they filed their answers to the complaint
which contained their counterclaims for the nullification of OCT No. 0-1619
and TCT No. 1392, and for the consequent reconveyance of the property to
them. The reconveyance is just and proper in order to put a stop to the
unendurable anomaly that the patentees should have a Torrens title for the
land which they and their predecessors never possessed and which has
been possessed by another in the concept of an owner. 55

On the fifth assignment of error, we rule for the petitioners. The award of
attorney’s and appearance fees is better left to the sound discretion of the
trial court, and if such discretion is well exercised, as in this case, it will not
be disturbed on appeal.56 With the trial and the appellate courts’ findings that
the respondents were in bad faith, there is sufficient basis to award
attorney’s and appearance fees to the petitioners. Had it not been for the
filing of a baseless suit by the respondents against the petitioners, the latter
would not have sought the services of counsel to defend their interests and
represent them in this case.1awphi1.nét

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The

Decision of the Court of Appeals declaring the respondents the owners of
Lot No. 17150 covered by OCT No. 0-1619 and TCT No. 1392; and setting
aside the award of attorney’s fees in favor of the petitioners by the Regional
Trial Court are REVERSED AND SET ASIDE.

The Court hereby AFFIRMS the ownership of the petitioners of Lot No.
17150. OCT No. 0-1619 and TCT No. 1392 covering the said lot are hereby
nullified. The Register of Deeds is ORDERED to cancel TCT No. 1392 and
to issue another title over the property in favor of the petitioners as co-
G.R. No. 96829 December 9, 1991
EMILIANO S. CASIPIT and ANTONIA C. CASIPIT VDA. DE
BEATO, petitioners,
vs.
HON. COURT OF APPEALS, (FORMER SECOND DIVISION), SPOUSES
SEVERINO B. DIAZ and ZENAIDA ALZONA-DIAZ, ROSA BEATO VDA.
DE DIAZ, FORTUNATO S. BEATO, JUANITA A. BEATO, FELICEDAD A.
BEATO, ARCADIO A. BEATO, ARCADIO A. BEATO, PACIENCIA A.
BEATO, AVELINO K. BEATO, ANTONIA K. BEATO, NILDA K. BEATO,
THE REGISTER OF DEEDS FOR THE PROVINCE OF LAGUNA, AND
THE PROVINCIAL ASSESSOR OF LAGUNA, respondents.
Roldan M. Noynay for petitioners.
Ramon C. Casano for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari seeking reversal of the adverse
decision of public respondent Court of Appeals dated August 22, 1990, in
C.A. G.R. CV-No. 22671, entitled "Emiliano S. Casipit, et al. v. Spouses
Severino B. Diaz and Zenaida Alzona-Diaz, et al.," which affirmed the
dismissal of petitioners' complaint by the Regional Trial Court of Calamba,
Laguna and ordered them to vacate the questioned property and pay to
private respondents rentals, damages and attorney's fees; and its resolution
dated January 11, 1991, which denied petitioners' motion for
reconsideration.
The antecedent facts, as found by the trial court are, are follows:
On July 21, 1919, Urbano Casipit, father of petitioner Emiliano S. Casipit,
bought Lot No. 144 (questioned property) located at Sinalhan, Sta. Rosa,
Laguna, containing an area of 661 square meters from the, government
(Exhibit "2"). On June 7, 1923, he assigned his rights to the questioned
property to Gabriel Beato (Exhibit "3") due to his (Urbano Casipit) default in
paying the installments due thereon (Exhibits "2-A" and "2-B"). In 1932, Tax
Declaration No. 7233 over the questioned property (Exhibit "4") was issued
in the name of Gabriel Beato. On February 23, 1933, Patent No. 31464 over
the questioned property was issued by Friar Lands Agency No. 2 in his
name (Exhibit "3-A"). On October 7, 1945, Gabriel Beato died.
In 1945, Tax Declaration No. 2561 (Exhibit "C") over the questioned property
was issued in the name of petitioner Emiliano S. Campit, but covering an
area of 330 meters only. On February 9, 1949, he paid real estate taxes
thereon for the years 1945 to 1949. He also paid taxes thereon for the years
1950 and 1954 (Exhibit "B").
On November 25, 1961, the heirs of Gabriel Beato namely, Ricardo, Rosa,
Narciso, Fortunata and Domingo, all surnamed Beato, executed a document
entitled "Kasulatan ng Pagmamana at Paghahati" wherein they adjudicated
to themselves the properties of Gabriel Beato. In the name document, they
sold to private respondents spouses Severino B. Diaz and Zenaida Alzona-
Diaz the questioned property (Exhibits "F" and "l"). At the time of the sale,
there was no occupant on the questioned property and petitioner Emiliano S.
Casipit was then residing in an adjoining lot.
On January 6, 1962, Narciso Beato filed before the Court of First Instance of
Laguna a Petition for Reconsideration of Titles, which was granted on July
17, 1963. On August 30, 1963, TCT No. RT-7880 was cancelled by TCT No.
T-27996 in the name of the heirs of Gabriel Beato (Exhibit "8") which was in
turn cancelled by TXT No. T-27997 in the name of private respondents Diaz
spouses (Exhibit "9").
In 1965, petitioner Antonia C. Casipit Vda. de Beato and Julian Almadovar
erected their respective houses on a portion of the questioned property. On
October 8, 1981, a criminal complaint for violation of P.D. No. 772
(Penalizing Squatting and Other Similar Acts) was filed before the Municipal
Court of Sta.Rosa, Laguna against them by private respondent Severino B.
Diaz (Exhibit "5"). This complaint was dismmissed at the instance of the
fiscal on March 26, 1985 because the questioned property is not among the
areas approved for inclusion in the slum improvement and resettlement
program of the government thus, said decree does not apply (Exhibit "5-A").
On June 6, 1985, a complaint for ejectment (Civil Case No. 1601) was filed
against petitioner Antonia C. Casipit Vda. de Beato by private respondents
Diaz spouses before the Municipal Trial Court of Sta. Rosa, Laguna (Exhibit
"6").
On April 27, 1987, a complaint was filed by petitioners agains private
respondents Diaz spouses, Rosa Beato Vda. de Diaz and Fortunate S.
Beato mainly for recovery of ownership over the questioned property before
the Regional Trial Court of Biñan, Laguna (pp. 1-14, Records). On June 23,
1987 (pp. 84-98, Records) and April 15, 1988 (pp. 173-188, Records), the
complaint was amended. The ejectment case (Civil Case No. 1601) was
then suspended due to the filing of the present case. In their complaint, it
was alleged that petitioner Emiliano S. Casipit is the true and lawful owner of
the questioned property by virtue of continuous, uninterrupted, peaceful,
open and public possession in the concept of owner since 1930. Petitioners
were deprived of ownership thereof by the Beatos through Narciso Beato,
who filed a Petition for Reconstitution of Titles in the name of Gabriel Beato,
using fictitious documents. Petitioners therefore prayed that TCT No. RT-
7880 and other succeeding titles be cancelled, as well as Tax Declaration
No. 7192 (sic) and succeeding tax declarations; that the questioned property
be reconveyed to them; that the document entitled, "Kasulatan ng
Pagmamana at Paghahati," insofar as it included the questioned property be
rescinded; and that private respondents be ordered to pay damages and
attorney's fees.
Private respondents disputed these allegations in their answer and by way of
counterclaim, prayed for petitioners and all persons deriving title from them
to vacate the questioned property, and to pay reasonable rentals, moral and
exemplary damages and attorney's fees.
On July 11, 1989, the trial court rendered judgment, the dispositive portion of
which, reads (p. 571, Records):
IN VIEW OF THE FOREGOING, judgment is rendered in favor of
the defendants and against the plaintiffs and the Second Amended
Complaint is dismissed. Further, the plaintiffs are ordered to pay
jointly and severally the Spouses Severino Diaz and Zenaida Diaz
the amount of P5,000.00 as attorney's fees. With costs against the
plaintiffs.
SO ORDERED.
In support of this ruling, the trial court ratiocinated (pp. 569-571, Records):
It must be noted that the plaintiffs' claim of ownership over Lot No.
144 is based on their alleged continuous possession of the same
and on Tax Declaration No. 2561 (Exhibit "C") in the name of
Emiliano Casipit, as well as on the receipts showing payments of
real estate taxes for the years starting 1945 to 1949, 1950 and
1954.
Such claims of the plaintiffs cannot be sustained by the Court for
the following reasons: (1) the testimonies of Antonia Casipit and
Clara Casipit Calderon to the effect that they and their predecessor-
in-interest have been in continuous possession of Lot No. 144 since
time immemorial are self serving; (2) Tax Declaration No. 2561
(Extubit "C") in the name of Emiliano Casipit has been (sic) issued
only in 1945 and does not indicate the previous tax declaration it
cancelled. likewise, it only covers 330 square meters of Lot No.
144. On the other hand, tax declaration No. 7233 (Exhibit "4") in the
name of Gabriel Beato was issued in 1932 and it covers the whole
of Lot No.144; (3) the testimony of Antonia Casipit that her father
Emiliano Casipit inherited from Urbano Casipit the land covered by
tax declaration No. 2561 can not overcome the ancient documents
introduced by the defendants showing that Urbano Casipit after
defaulting in the payment of installments due the government
assigned in 1923 his rights over Lot No. 144 to Gabriel Beato
(Exhibits "2-A", "2-B"and "3"); and (4)the possession by the
plaintiffs of a portion of Lot No. 144 can not ripened (sic) into
ownership, for land registered under the Torrens System may not
be acquired by prescription or adverse possession.
Manifestly, the defendants have a better right over Lot No. 144 than
the plaintiffs. Besides, the cause of action of the plaintiffs being
based on fraud, has prescribed for it must be filed within four (4)
years after the cause of action arose. The issuance of the
reconstituted title over Lot No. 144 and its registration in the office
of the Register of Deeds of Laguna, in 1973 (sic) is the starling date
for the prescriptive period to commence.
Anent the second issue, the Court finds no justifiable reason to
order the cancellation of TCT No. (T-27997) T-13161, since the
plaintiffs have failed to prove that they are the owners of the land
covered by the said title. The fact that the Petition for Reconstitution
of titles was granted by the Court of First Instance of Laguna in
LRC Record No. 23313 and such order having become final and
executory, it is conclusive on Gabriel Beato's title over Lot No. 144.
As to the third issue, the records show that the plaintiffs' (sic) have
miserably failed to present evidence to establish bad faith on the
part of the defendants Severino Diaz and Zenaida Diaz. On
contrary, Zenaida Diaz declared that when they bought Lot No. 144
nobody was residing thereon and that Emiliano Casipit was the
living at the adjoining lot. Therefore, said defendants are buyers in
 good faith and for value, for good faith is presumed unless the
contrary is shown.
Regarding the last issue, definitely, the plaintiffs are not entitle to
damages, attorney's fees and costs, however, the defendants
Severino Diaz and Zenaida Diaz are. The Diazes since 1985 have
bee trying to eject from the land in question the plaintiffs but have
bee unsuccessful. For this reason, the Diazes are entitled to actual
dam ages and attorney's fees. Unfortunately, the Diazes have not
presented competent evidence to prove the actual damages they
sustained although as to attorney's fees they are entitled to the
amount o P5,000.00. The Court can not award moral damages in
favor of the Diazes since no bad faith or malice has been proven on
the part of plaintiffs.
Both parties appealed to public respondent Court of Appeals Petitioners
questioned the dismissal of their complaint by the trial court whereas private
respondents questioned the fail of said court to grant them their prayer for
reasonable rentals actual and moral damages. On August 22, 1990, respond
court resolved the appeal in favor of private respondents, th dispositive
portion of which, reads (p. 32, Rollo):
WHEREFORE, the appealed decision dismissing the complaint
should be as it is hereby AFFIRMED. On the counterclaim of
defendants, judgment is hereby rendered ordering plaintiffs to
vacate lot No. 144, and to pay the reasonable rental in the amount
of P300.00 from October, 1981 until they should have vacatedthe
(sic) premises to pay moral damages in the amount of P30,000.00,
and attorney's fees in the amount of P5,000.00. No costs.
SO ORDERED.
In affirming the trial court's decision, respondent court expounded (pp. 27-
29, Rollo):
... To make it worse, on its face the tax declaration (No. 2561)
appears to have been cancelled by provincial form No. 183 in 1966.
Thereafter, no other tax declaration or any proof of ownership was
issued in the name of plaintiffs-appellants.
The payment of realty taxes by plaintiffs-appellants do not give any
added weight to their claim of ownership of the lot in dispute. This is
so considering the doctrine that 'payment of land taxes is not an
evidence of ownership of the parcel of land for which payment is
made.' (Reyes vs. Serra, 93 SCRA 472; Director of Lands vs. C.A.,
133 SCRA 701). During the pre-trial on November 2, 1988, the
parties agreed, among other things —
5. That Emiliano Casipit on February 9, 1949 paid the land
taxes for lot 144 for the years 1945, 1946, 1947, 1948 and
1949; and on August 5, 1950 paid the land taxes for the
said lot for 1950 and on October 13, 1954 paid the land
taxes for the said lot for 1954. (pp. 492-493, rec.)
Admittedly, therefore, it would appear that plaintiff-appellants paid
realty taxes for the land in dispute only 3 times and no more.
Certainly that kind of payment cannot convey the idea of
ownership.
... Then, the record shows that on October 8, 1981, Severino Diaz
filed charges of anti-squatting against Casipit and Almadovar. On
June 6, 1985, the Diaz spouses again filed an ejectment suit
against Antonia Casipit. These undisputed facts would disprove the
claim of the plaintiffs-appellants to uninterrupted possession that
would have ripened to ownership.
xxx xxx xxx
... Plaintiffs-appellants, ... failed to explain how Emiliano Casipit
acquired a right over 1/2 of lot 144. ...
... Then, tax declaration 7232 (sic) shows on its dorsal side that it
was the very first or original tax declaration issued for lot 144, as
shown by the notation: "New". Thereafter, in the same year, tax
declaration 142 (sic) was issued in the name of the heirs of Gabriel
Beato, and, unlike tax declaration 2561 of Casipit, clearly stated
that is was cancelling tax declaration 7232 (sic) in the name of
Gabriel Beato.
On January 11, 1991, the motion for reconsideration was denied
(p.17, Rollo). Hence, the present petition.
Petitioners assign as errors committed by respondent court the following
(pp.7-8, Rollo):
First Assignment of Error
THE HONORABLE COURT OF APPEALS HAS GRAVELY
ERRED WHEN IT DENIED THE MOTION FOR
RECONSIDERATION FILED BY THE PETITIONERS AS THE
ISSUES RAISED THEREIN WERE NOT SQUARELY AND
THOROUGHLY THRESHED OUT IN THE QUESTIONED
RESOLUTION PROMULGATED ON JANUARY 11, 1991 AS THE
CERTIFICATION ISSUED BY THE BUREAU OF LANDS OR
ANNEX "F" OR EXHIBIT "D" HAS PROBATIVE VALUE TO BE
GIVEN FULL CREDENCE AS THE SAME HAS BEEN ADMITTED
BY THE PRIVATE RESPONDENTS AND THEREBY DECLARING
AS NULL AND VOID THE "KASULATAN NG PAGMAMANA AT
PAGHAHTI" OR EXHIBIT "l" EXECUTED ON NOVEMBER 25,
1961 FOR WHICH REASON THE ACTION OF PETITIONERS IS
IMPRESCRIPTIBLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
PROMULGATING ITS RESOLUTION OR ANNTEX "B" WHEN IT
DENIED THE MOTION FOR RECONSIDERATION OF
PETITIONERS AS THE QUESTIONED "KASULATAN NG
PAGMAMANA AT PAGHAHATI" EXECUTED ON NOVEMBER 25,
1961 CANNOT BE MADE AS BASIS IN CANCELLING
RECONSTITUTED TRANSFER CERTIFICATE OF TITLE NO. RT-
7880 WHICH WAS RECONSTITUTED ONLY ON AUGUST
30,1963 AND NON-EXISTING ON NOVEMBER 25, 1961 WITHIN
THE KNOWLEDGE OF PRIVATE RESPONDENTS DIAZES
MAKING THEM AS BUYERS IN BAD FAITH AND BESIDES THE
SAID "KASULATAN NG PAGMAMANA AT PAGHAHATI" HAS TO
BE DECLARED NULL AND VOID AB INITIO.
Third Assignment of Error
THE HONORABLE COURT OF APPEALS HAS GRAVELY
ABUSED ITS DISCRETION IN PROMULGATING ITS
RESOLUTION OR ANNEX "B"AND ITS DECISION OR ANNEX "E"
ORDERING THE EJECTMENT OF THE PETITIONERS FROM
THE PREMISES AND AWARD OF DAMAGES AND ATTORNEY'S
FEES AS SAID ORDER OF EJECTMENT IS EQUIVALENT TO
VIOLATION OF THE CONSTITUTIONAL RIGHT OF DUE
PROCESS OF LAW AND THE RIGHT TO BE HEARD WHICH
THE PETITIONERS ARE ENTITLED AS PETITIONER EMILLANO
CASIPIT IS NOT A PARTY TO SAID EJECTMENT SUIT AND THE
TRIAL COURT ANDS NO EVIDENCE TO WARRANT
EJECTMENT.
They allege that pursuant to the Certification issued by the Bureau of Lands
(Exhibit "D") that Patent No. 31464 over the questioned property has not
been issued to Gabriel Beato, the "Kasulatan ng Pagmamana at Paghahati"
is therefore a void contract. This being the case, the action taken by
petitioners is imprescriptible. Private respondents Diaz spouses were buyers
in bad faith because they had full knowledge that Emiliano Casipit has been
in actual possession in the concept of owner of the questioned property and
paid the real property taxes thereon. Private respondent Zenaida Alzona-
Diaz testified that (pp. 46-48, tsn, March 20,1989):
ATTY. NOYNAY:
xxx xxx xxx
Q So, when was that year, if you still remember when
Emiliano Casipit came from lot 144?
A I saw in 1948, that is my first year in teaching, I saw the
house of Emiliano Casipit situated on that Lot 144.
xxx xxx xxx
Q So, in other words, Mrs. witness before 1948 you have
seen the house of Emiliano Casipit in lot 144?
A Yes, sir.
Likewise, private respondents Diaz spouses were aware that the
Beatos had no title over the questioned property as of November
25, 1961 when the "Kasulatan ng Pagmamang at Paghahati" was
executed because TCT No. RT-7880 was issued only on August
30, 1963. This was revealed by Zenaida Diaz in her testimony (pp.
45-46, supra):
ATTY. NOYNAY:
xxx xxx xxx
Q So, when you answered a while ago that
during the time when this Kasulatan was
executed in 1961 and which according to you,
you were shown titles by the Beatos' is not (sic)
correct?
WITNESS:
A At that time, sir, there was no title yet.
The ejectment of petitioners from the questioned property
and the award of damages and attomey's fees are
violative of due process of law because petitioner Emiliano
S. Casipit is not a party to the ejectment suit before the
trial court (Civil Case No. 1601).
The petition is not impressed with merit.
There is no dispute that an action for reconveyance based
on a void contract is imprescriptible (Castillo, et al. v.
Madrigal, et al., G.R. No. 62650, June 27, 1991; Baranda,
et al. v. Baranda, et al., G.R. No. 73275, May 20, 1987,
150 SCRA 59). However, We simply cannot apply this
principle to the present case because the action filed by
petitioner before the trial court was 1) for reconveyance
based on fraud since the ownership of private respondents
over the questioned property was allegedly established on
"false assertions, misrepresentations and deceptive
allegations" (p. 182, Records); and 2) for rescission of the
"Kasulatan ng Pagmamana at Paghahati" (pp. 173, 187,
Records). Besides, as against said Certification issued by
the Bureau of Land (Exhibit "D") dated March 18, 1987,
which petitioners harp on, is the explicit Certification of
Friar Lands Agency No. 2 of the same Bureau dated June
17, 1951, that ... according to the records of this Office,
Lot No. 144 of the SANTA ROSA (DETACHED) ESTATE,
was deeded under Patent No. 31464 dated February 23,
1933 in the name of Gabriel Beato of Sinalhan, Sta. Rosa,
Laguna." Thus, the action for reconveyance based on
fraud filed by petitioners before the trial court is subject to
prescription. In this regard, respondent court shares the
same view as the trial court that (p. 29, Rollo):
... The issuance of the reconstituted title over lot
No. 144 and its registration in the office of the
Register of Deeds of Laguna in 1973 (sic) is the
reckoning point for the prescriptive period to
commence. The 4-year period within which to file
this case for cancellation of title based on fraud
must be done within 4 years after the cause of
action arose. Here, more than 4 years has
elapsed. (emphasis supplied)
We were categorical in the case of Caro, et al. v. Court of
Appeals, et al., G.R. No. 76148, December 20, 1989, 180
SCRA 401 citing the case of Liwalug Amerol, et al. v.
Molok Bagumbaran, G.R. No. L-33261, September 30,
1987, 154 SCRA 396 that 694 the prescriptive period for
the reconveyance of fraudulently registered real property
is ten (10) years reckoned from the date of the issuance of
the certificate of title. We even said in the case of Heirs of
Maria Revilleza Vda. de Vega, et al. v. Court of Appeals,
et al., G.R. No. 93507, July 12, 1991 that:
... after numerous illuminating decisions by this
Court, nobody can successfully claim ignorance
of the rule that an action for reconveyance based
on an implied or constructive trust prescribes in
ten (10) years...
Conformably with these settled jurisprudence, the
prescriptive period for petitioners' action for reconveyance
is ten (10) years from August 30, 1963, the date of the
issuance of TCT No. RT-7880 (Exhibit "7-B"). Obviously,
Our discussion on this subject matter is not beneficial to
petitioners because they filed the action for reconveyance
only on April 27, 1987.
While private respondent Zenaida Alzona-Diaz saw the
house of petitioner Emiliano S. Casipit on the questioned
property before 1948, at the time of the sale, there was no
occupant on the questioned property and he (Emiliano S.
Casipit) was then residing in an adjoining lot (supra).
When she testified that there was no title yet when the
"Kasulatan ng Pagmamana at Paghahati" was executed in
1961, she was referring to the reconstituted torrens title
thereon. The other portions of her testimony which were
conveniently deleted by petitioners read 45-45, tsn, March
20, 1989):
Q In 1961, you mean to say that the Beatos had
already told you that they have already a
reconstituted title over the portion that was sold
to you?
A None yet, sir.
Q What (sic) is it that you were answering (sic)
Atty. Noynay that you were told about the
reconstituted title?
A My husband and I were informed that they will
file a petition for reconstitution on Lot No. (sic)
132, 134 and 144.
A purchaser in good faith is one who buys the property of
another without notice that some other person has a right
to, or interest in, such property and pays a full and fair
price for the same, at the time of such purchase, or before
he has notice of the claim or interest of some other person
in the property (Vda. de Recinto v. Inciong, et al., G.R. No.
L-26083, May 31, 1977, 77 SCRA 196 citing Cui and
Joven v. Henson, 51 Phil. 606 and Fule v. De Legare, 7
SCRA 351). In consonance with this definition, private
respondents Diaz spouses were purchasers in good faith.
They bought the property of private respondents Beatos
without notice that some other person has a right to, or
interest in, the questioned property and paid the fun price
therefor at the time of such purchase. In addition,
respondent court said (pp. 29-30, Rollo):
The Diaz spouses who bought the land in
question from the Beatos are buyers in good
faith. We find no need for an extended discussion
on this issue, considering that plaintiffs-
appellants failed to show a better title to the lot
than that of the defendants-appellees Beatos.
However, We shall dwell briefly on this matter if
only to erase any doubt as to the good title of the
Diazes over the property which they now own.
When the Diazes bought the property in question
for a valuable consideration, they were shown the
Beatos' documents which show and prove how
the latter acquired ownership thereof. These
consisted of Exhibits 2, 2-A, 3, and 4, which are
all ancient documents. Then, when the Diaz
spouses purchased the lot in question, there was
no house or structure built thereon, nor anyone
living in the premises. Under the circumstance,
the Diaz spouses cannot be imputed with notice
of this adverse claim of the plaintiff (sic) or any
flaw, assuming there is any, in the title of the
vendors.
Regarding the last allegation of petitioners, We adopt
respondent court's reasoning thereon (pp. 31-32, Rollo):
... the herein defendants-appellants are entitled
to lot 144, and thus, in effect, plaintiffs-appellees
are unlawfully occupying portions of the said lot.
The trial court thus may award actual (sic)
damages in every case where a property right
has been invaded (Article 2222 of the New Civil
Code). Defendant-appellant Zenaida Diaz
testified that the reasonable rental for the area
occupied by Antonio (sic) Casipit is P300.00 a
month (p. 40, tsn; Mar. 20, 1987 (sic)). This
testimony of Diaz was unrebutted. It is also
unrebutted that on October 8, 1981, Severino
Diaz filed a criminal complaint against Antonio
(sic) Casipit and Julian Almadovar for violation of
P.D. 772, but was dismissed by the prosecuting
fiscal on the ground that the said law applies to
urban land only. And on June 6,1987 (sic), a
complaint for ejectment was filed by the Diazes
against Antonia Casipit before the Municipal Trial
Court which was suspended due to the filing of
this instant case. Thus, October 8, 1981, should
be the reckoning point for the awed (sic) of
P300.00 a month in the form of reasonable
rentals to compensate the Diazes for the loss of
enjoyment of property that lawfully belongs to
them.
An award of moral damages is justified since the
evidence indicate (sic) bad faith in the filing of
this complaint by plaintiffs-appellees. Apparently,
plaintiffs-appellees are not even convinced of the
validity of their claim since they permitted a
period of more than 30 years to lapse before they
went to court. It would seem that this complaint
filed by plaintiffs-appellees was merely an
afterthought in order to counteract the ejectment
suit filed by defendants-appellants Diazes on
June 6, 1985. The numerous court cases relative
to the lot in dispute have caused the Diazes
sleepless nights and thus they should be entitled
to moral damages in the amount of P30,000.00.
appellants. It is best to grant the relief prayer (sic)
for, that of ejectment, in the case at bar, in order
to avoid multiplicity of suits. It will not only save
the parties and the court the rigors and expenses
of multitple (sic) litigations, but also avoid the
remote probability that there might be conflicting
decisions relative to one and the same imue.
ACCORDINGLY, the petition is hereby DENIED. The
decision of the Court of Appeals dated August 22, 1990
and its resolution dated January 11, 1991 are AFFIRMED.
SO ORDERED.

In order to give complete relief to the Diazes,

plaintiffs-appellees must vacate the lot in dispute.
True, there is now a pending ejectment case in
the Municipal Trial Court of Sta. Rosa, Laguna.
However, the pendency of the said ejectment
case should not constitute a bar to the grant of
the relief prayed for by appellants Diazes in their
answer, i.e., to vacate the premises. In the case
at bar, the issue of ownership has in effect settled
the issue of possession which would be litigated
upon in the ejectment suit. The trial court took
into account the fact that appellants Diazes first
filed a criminal complaint against plaintiff-
appellees in 1981; and, in 1985, a complaint for
ejectment. The Diazes, therefore, being the
lawful owners of the property in dispute, and in
this case, the issue of possession having been
properly ventilated, should be awarded
immediate possession of the property. This is
necessary in order to finish once and for all the
controversy between the defendants-appellants
and the plaintiffs-appellees. To leave the issue of
ejectment in the hands of the Municipal Trial
Court where a complaint has been pending,
would be to deny complete relief to defendants-
G.R. No. 71110 November 22, 1988
PAZ VILLAGONZALO, ESTELA VILLAGONZALO, AIDA
VILLAGONZALO, HERMINIA VILLAGONZALO, GWENDOLYN
VILLAGONZALO, JENSINE VILLAGONZALO and LEONILA
VILLAGONZALO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and CECILIA A.
VILLAGONZALO, respondents.
Julio L. Falcone and Makilito B. Mahinay for petitioners.
Adelino B. Sitoy for private respondent.
REGALADO, J.:
From a decision rendered in favor of herein petitioners, as plaintiffs, against
herein private respondent, as defendant, in an action for reconveyance in
the then Court of First Instance of Leyte, 1 which reads:
Wherefore, decision is hereby rendered in favor of the
plaintiffs and against defendant declaring Lot No. 7429 of
the Ormoc Cadastre, situated at Bo. Dolores, Ormoc City,
with an area of 97,213 square meters, more or less, as the
conjugal property of the deceased spouses, Juan
Villagonzalo and Felicisima Abella Villagonzalo hereby
ordering the cancellation of Transfer Certificate of Title No.
4259 in the name of Cecilia A. Villagonzalo and ordering
the Register of Deeds of Ormoc City to issue another
Transfer Certificate of Title in the name of spouses Juan
C. Villagonzalo and Felicisima A. Villagonzalo, Filipinos, of
legal age, residents of Cebu City now deceased and
survived by the present plaintiffs and defendants, each of
whom upon payment of the inheritance taxes with the BIR,
shall be entitled to 1/9 share of the land, subject to claims
by other heirs and creditors within a period of two (2)
years as provided for by the Rules of Court, and further
ordering the partition of the said land within a period of
ninety (90) days from the finality of this decision and if the
parties cannot agree on the partition this Court may
appoint a commissioner to partition the same without
pronouncement as to costs. 2
therein defendant appealed to the former Intermediate Appellate Court
which, in a decision 3 of the Second Civil Cases Division in AC-G.R. No.
65128, reversed the appealed judgment and dismissed the complaint for
reconveyance.
As found by the respondent Court—
The facts in this regard show that on February 22, 1961,
Juan C. Villagonzalo, the predecessor-in-interest of the
parties, purchased Lot No. 7429 of the Ormoc Cadastre,
situated at Barrio Dolores, Municipality of Ormoc,
containing an area of 97,213 sq. meters covered by
Transfer Certificate of Title No. 24611 of the Register of
Deeds of Ormoc City, from the Heirs of Roman Matuguina
for Pl,500.00 (Exhibits A and 6, Folder of Exhibits, pp. 1,
15). It was made to appear however that the sale was in
the name of his daughter, defendant Cecilia Villagonzalo,
who was single, since he borrowed from her the sum of
P500.00 to complete the full payment of the price of the
lot. Consequently, TCT No. 4259 was issued in the name
of defendant Cecilia A. Villagonzalo as the registered
owner (Exhibit 5, Ibid., p. 15) on July 18, 1962. The
complaint was filed on April 2, 1975 thirteen (13) years
after the issuance of Transfer Certificate of Title No. 4259
on the subject land in the name of the defendant Cecilia
Villagonzalo. 4
On such factual moorings, the respondent court, now the Court of Appeals,
held that the right of action of therein plaintiffs-appellees, petitioners herein,
had prescribed for the reasons that follow. 5
It ratiocinated that when private respondent obtained Transfer Certificate of
Title No. 4259 in her name she thereby excluded herein petitioners from the
estate of their deceased predecessor-in-interest and, consequently, she set
up a title to the land adverse to them. The registration of the deed of sale
with the Register of Deeds, so it opined, was constructive notice to the whole
world of defendant's adverse claim to the property, thereby repudiating any
fiduciary or trust relationship involved. It anchored its conclusion on doctrinal
holdings that an action for reconveyance based on an implied or constructive
trust prescribes in ten years counted from the date when adverse title is
asserted by the possessor of the property.
Prescinding therefrom into the field of laches, respondent court further noted
that because of the neglect and inaction of the present petitioners, the
private respondent was thereby made to feel secure in her belief that she
had rightly acquired the controverted land and that no legal action would be
filed against her. She was thus induced to spend time, money and effort for
the cultivation of the land and the payment of the taxes thereon. It then
further rested its conclusion on the established principle that inaction and
neglect of a party to assert a right can convert what could otherwise be a
valid claim into a stale demand.
Petitioners have come before Us contending that their action was
seasonably filed because private respondent's registration of the land in her
name was not a repudiation of the implied trust created between her and
their father; and, confusing extinctive for aquisitive prescription, that good
faith and just title are essential requisites in this case.
The respondent court is correct and certiorari must be denied.
It is now well settled that an action for reconveyance of real property to
enforce an implied trust shall prescribe after ten years, 6 since it is an action
based upon an obligation created by law, 7 and there can be no doubt as to
its prescriptibility. 8
It is likewise established that said period of ten years is counted from the
date adverse title to the property is asserted by the possessor thereof. In the
case at bar, that assertion of adverse title, which consequently was a
repudiation of the implied trust for the purpose of the statute of limitations,
took place when Transfer Certificate of Title No. 4259 was issued in the
name of private respondent on July 18, 1962. As succinctly but pithily
resolved inVda. de Pama vs. Pama, et al.: 9
... Considering the settled doctrine that an action for
reconveyance of real property based upon constructive or
implied trust prescribes in ten (10) years counted from the
date adverse title is asserted by the possessor of the
property (Diaz vs. Gorricho, 103 Phil. 261; Candelaria vs.
Romero, 109 Phil. 100; J. M. Tuazon vs. Magdangal, 114
Phil. 42); that when respondent Guillermo Pama caused
the registration on June 18, 1956 of the affidavit of
adjudication declaring himself to be the sole heir of the
late Mateo Pama and obtained Transfer Certificate of Title
No. T-4006 in his own name, he thereby excluded
petitioners from the estate of the deceased Mateo Pama
and, consequently, set up a title adverse to them; that
such registration constitutes constructive notice to
petitioners of the respondent's adverse claim to the
property (Carantes vs. Court of Appeals, 76 SCRA 514,
523; Gerona vs. de Guzman, 11 SCRA 153, 157); and it
appearing that petitioners filed their complaint for
reconveyance only on April 28, 1969, or twelve (12) years,
ten (10) months and ten (10) days after their cause of
action had accrued on June 18, 1956; this Court resolved
to dismiss this petition and to affirm the questioned order
dismissing petitioner's complaint ... 10
There is also evidence of record that as far back as 1961, private
respondent refused to give any share in the produce of the land to
petitioners; that in 1963 she mortgaged the property in her own name; and
that in 1969, she leased the same to one Ramon Valera, without the
petitioners taking preventive or retaliatory legal action. 11
The rule in this jurisdiction is that an action to enforce an implied trust may
be barred not only by prescription but also by laches, in which case
repudiation is not even required. 12 Whether the trust is resulting or
constructive, its enforcement may be barred by laches. 13 Petitioners were,
therefore, correctly faulted for their unjustified inaction.
WHEREFORE, the judgment of the respondent Court is hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-33261 September 30, 1987
LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL,
DIBARATUN AMEROL, DIBARATUN, MATABALAO, MINDALANO
DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.
SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of
First Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case No.
1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under
Republic Act No. 5400, "as only question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for
reconveyance of real property which has been wrongfully or erroneously
registered under the Torrens System in another's name. In other words,
what is the prescriptive period for the action to reconvey the title to real
property arising from an implied or constructive trust and, corrolarily
reference. The petitioners herein, defendants in the trial court, assert that
they have ten years to bring the action, while the respondent, plaintiff in the
court below, claims the prescriptive period is four years. The trial court ruled
tor the plaintiff, now respondent.
We reverse. We hold that the prescriptive period for such an action for
reconveyance, as this case, is ten years. The point of reference is, or the
ten-year prescriptive period commences to run from, the. date of the
issuance of the certificate of title over the real property.
There is no issue as to the facts, this case having been elevated to this
Court, as aforestated, on purely a question of law. Be that as it may, in order
to satisfy constitutional requirements as well as to place the question of law
in proper perspective, there is need to state the facts of the case. On this
regard, the findings of the trial court would best serve the stated purposes.
xxx xxx xxx
From the evidence submitted during the trial there is no
dispute concerning the fact relative to the Identity of the
land in litigation. It is commonly known as Lot No. 524,
Pls-126 and technically described and bounded in the
sketch (Exh. "7 "). This is the very tract of land alleged by
the plaintiff to have been forcibly entered into by the
defendants and which plaintiff now w&s to recover
possession thereof. It has also been proven that the same
lot was covered by two free patent applications: — (l) that
of defendant Liwalug Datomanong (erroneously surnamed
Amerol) which he filed on the 4th day of September, 1953,
and (2) that of Molok Bagumbaran which was filed on
December 27, 1954. There is also no question regarding
the fact that as to these two free patent applications, that
of plaintiff Molok Bagumbaran was given due course as a
result of which Free Patent No. V-19050 was issued on
August 16,1955 by authority of the President of the
Philippines Ramon Magsaysay, by Jaime Ferrer,
Undersecretary of Agriculture and Natural Resources and
duly registered with the office of the Register of Deeds of
the Province of Lanao (now Lanao del Sur) in the mm year
whereupon Original Certificate of Title No. P-466 was duly
issued, owner's duplicate certificate having been furnished
the herein plaintiff.
This court is also inclined to believe that defendant
Liwalug Datomanong had never known of plaintiff's free
patent application on the land in question nor was he ever
notified or participated in the administrative proceedings
relative to plaintiff's free patent application. In the
meantime, since the date he purchased the land from
Mandal Tondo, said defendant has been and up to the
present in con. tinuous occupation and cultivation of the
same. His co-defendants named in the complaint are
merely his tenants.
It is also incontrovertible fact that said defendant did not
take appropriate action to annul the patent and title of the
plaintiff within one year from issuance thereof and that the
first step taken by him to contest said patent and title was
a formal protest (Exh. "12", p. 408, Record) dated April 24,
1964, filed before the Bureau of Lands after the lapse of
Nine (9) long years from the issuance of patent in favor of
the plaintiff. The second step he took was his counterclaim
contained in his answer to the complaint in the above
entitled case, which answer was filed with this court on
December 4, 1964. In said counterclaim, defendant
reiterated his stand that plaintiff secured patent on the
land by means of deceit and fraud, wherefore, defendant
prayed that said title be annulled, or, alternatively, plaintiff
be ordered to reconvey the said land to the said defendant
Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff
is guilty of fraud or misrepresentation in securing the Free
Patent No. V-19050 covering the land in question.
Upon a thorough examination of the evidence, proofs are
sufficient to support defendant's contention that plaintiff is
guilty of fraud and misrepresentation. In the first place,
proofs are abundant tending to show that since 1952 when
Mandal Tando transferred the land to said defendant, the
latter occupied, took possession thereof and cultivated the
same continuously, publicly, adversely against any
claimant and in the concept of owner up to the present;
that said defendant had introduced considerable
improvements such as coconut and coffee plantations and
other fruit trees besides his farm house, a mosque,
cassava plantation and clearing and full cultivation of the
entire area. The fact of possession on the part of said
defendant has been attested to by competent and
creditable witnesses like Mandal Tando who conveyed the
land to the defendant; Hadji Sirad Gomandang, the barrio
captain of Montay, Malabang, Lanao del Sur, Hadji Rasol
Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot,
Malabang, Lanao del Sur who are farmers and barrio-
mates of said defendant; and also Disomnong Dimna
Macabuat, an employee in the office of the District Land
Officer at Marawi City who had officially conducted occular
inspection and investigation of the premises in connection
with the protest of said defendant found thereon the
above-mentioned improvements introduced by the said
defendant.
What is more, on or before filing his free patent
application, plaintiff knew that the land in question which
was covered by his free patent application was then
actually occupied and cultivated by defendant Liwalug
Datomanong if not by Mandal Tando, the original
occupant. Be it remembered that Mandal Tando had
transferred to defendant Liwalug Datomanong Twenty
Four (24) hectares, more than eleven hectares of which is
(sic) outside the military reservation and designated as Lot
No. 524, Pls-126 and the rest which is in the southern
portion lies within the military reservation. Now,
immediately adjacent thereto on the south is the land
claimed and occupied by the herein plaintiff also
consisting of Twenty Four (24) hectares but wholly within
the military reservation. It appears that plaintiff declared
this Twenty four hectares for the first time on October 24,
1950 for taxation purposes (Tax Declaration No. 1529,
Record) and stated in said tax declaration (Exhs. "8" and
"8-A," p. 414, Record) regarding the boundaries that the
adjacent owner on the north is Mandal Tando. In other
words, plaintiff had expressly recognized the fact that
Mandal Tando is an adjacent land owner north of plaintiff's
property. On February 19, 1951 herein plaintiff revised the
above-stated tax declaration and secured another (Tax
Declaration No. 1794, Exh. "9" and "9-A," p. 413, Record)
and still plaintiff stated therein that his boundary land
owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug
Datomanong(Amerol)]. 4
xxx xxx xxx
Notwithstanding the aforequoted findings, very unequivocal to be sure, the
trial court denied the counterclaim of the defendants, now petitioners, for the
affirmative relief of reconveyance on the ground of prescription. Said the
court:
xxx xxx xxx
The patent of the plaintiff having been registered back in
1955 and in contemplation of law registration thereof is
 notice to the whole world and yet defendant exerted no
effort whatsoever either to annul the title or institute
proceedings for reconveyance except in his counterclaim
contained in his answer to the complaint in this case at bar
which answer and counter-claim was filed on December 4,
1964, some nine long years from the date of registration of
the patent, defendant unfortunately lost his right to
reconveyance within the period of four (4) years from the
date of registration of said patent. 5
xxx xxx xxx
Thus, the dispositive portion of the assailed decision stated:
xxx xxx xxx
PREMISES CONSIDERED, judgment is hereby rendered
as follows: (1) declaring the herein plaintiff the registered
owner of Lot No. 524, Pls-126 and sustaining and
respecting the validity of the plaintiff's Original Certificate
of Title No. P-466 covering the said land; (2) ordering the
defendants to vacate the premises of Lot No. 524; Pls-126
and deliver possession thereof to the herein plaintiff under
certain terms and conditions herein below stated; (3)
denying and hereby dismissing the counterclaim of the
herein defendants and consequently the prayer to annul
the title and/or for reconveyance of the land to said
defendant Liwalug Datomanong must Likewise be denied;
(4) that before plaintiff could take possession of said
premises he must reimburse defendant Liwalug
Datomanong the total sum of Six Thousand Seven
Hundred Fifty-Two Pesos and Sixty-Two Centavos
(P6,752.62) which he incurred for the necessary and
useful expenses on the land in question with the right of
said defendant to retain possession of the premises if said
reimbursement be not completely made. No
pronouncement as to costs. 6
xxx xxx xxx
Hence, this petition. 7
The petitioners in their Brief 8 assign the following two errors allegedly
committed by the trial court:
I.
THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT
THAT PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR
VIOLATION OF AN IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS
FROM THE REGISTRATION OF THE PATENT OF RESPONDENT.
II.
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF
EVIDENCE AS BASIS IN THE ASSESSMENT OF THE FAIR MARKET
VALUE OF THE IMPROVEMENT INTRODUCED ON THE LAND IN GOOD
FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT
UPON PURE AND SIMPLE GUESS WORKS AND WILD ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.
Indubitably, the act of respondent in misrepresenting that he was in actual
possession and occupation of the property in question, obtaining a patent
and Original Certificate of Title No. P- 466 in his name, created an implied
trust in favor of the actual possessor of the said property. The Civil Code
provides:
ARTICLE 1456. If property is acquired through mistake or
fraud, the person obtaining it is by force of law, considered
a trustee of an implied trust for the benefit of the person
from whom the property comes.
In this case, the land in question was patented and titled in respondent's
name by and through his false pretenses. Molok Bagumbaran fraudulently
misrepresented that he was the occupant and actual possessor of the land
in question when he was not because it was Liwalug Datomanong.
Bagumbaran falsely pretended that there was no prior applicant for a free
patent over the land but there was — Liwalug Datomanong. By such
fraudulent acts, Molok Bagumbaran is deemed to hold the title of the
property in trust and for the benefit of petitioner Liwalug Datomanong.
Notwithstanding the irrevocability of the Torrens title already issued in the
name of respondent, he, even being already the registered owner under the
Torrens system, may still be compelled under the law to reconvey the
subject property to Liwalug Datomanong. After all, the Torrens system was
not designed to shield and protect one who had committed fraud or
misrepresentation and thus holds title in bad faith. Further, contrary to the
erroneous claim of the respondent, 9 reconveyance does not work to set
aside and put under review anew the findings of facts of the Bureau of
Lands. In an action for reconveyance, the decree of registration is respected
as incontrovertible. What is sought instead is the transfer of the property, in
this case the title thereof, which has been wrongfully or erroneously
registered in another person's name, to its rightful and legal owner, 10 or to
one with a better right. That is what reconveyance is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust
is not absolute. It is subject to extinctive prescription. 11 Happily, both
parties agree on this point. The seeming impediment however, is that while
the petitioners assert that the action prescribes in ten years, the respondent
avers that it does in only four years.
In support of his submission, the respondent invokes several cases. We
have examined the invocations and find them inapplicable. For instance, the
case of Fabian vs. Fabian, 12 relied on by the respondent, does not square
with the present case. In Fabian, the party who prayed for reconveyance
was not in actual possession and occupation of the property. It was instead
the party to whom title over the property had been issued who occupied and
possessed it. Further, the litigated property had been in the adverse
possession of the registered owner for well-nigh over twenty-nine big years,
hence, reconveyance had been irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the
actual occupant and possessor of the controverted parcel of land, after
having been enticed by Leonor Reyes, an ambulatory notary public, with
promise of help, engaged and retained the services of the latter to facilitate
the issuance of a patent for the said land in his (Miguel's) favor. Thus, there
existed between the parties a relationship very much akin to that of lawyer-
client and which is similarly fiduciary in character. But Reyes, inspite of his
compensation of one-fifth of the yearly produce of the property, still violated
the trust reposed on him and instead worked for the issuance of the patent in
the name of his own wife. So, after the demise of Leonor Reyes, the
property was fraudulently patented and titled in his widow's favor. The
reconveyance of the property was decreed by the Court based on "breach of
fiduciary relations and/or fraud." It was shown that the parties were legally
bound to each other by a bond of fiduciary trust, a bond lacking in the case
at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of
because the period of prescription was not there definitely and squarely
settled. In fact, Ramirez underscores a vacillation between the four-year and
the ten-year rule. There it was stated that "an action for relief on the ground
of fraud — to which class the remedy prayed for by Paguia belong — scan
only be brought within four years after accrual of the right of action, or from
the discovery of the fraud." If the decision just stayed pat on that statement,
there would be merit in the respondent's presentation. But Ramirez
continues: "(I)ndepedently, however, of the alleged fraud on the part of
Ramirez, the right to demand a reconveyance prescribes after 10 years from
accrual of the cause of action, June 22, 1944, the date of registration of the
patent and of the issuance of OCT No. 282- A in his name." 15
Significantly, the three cases cited by the respondent to buttress his position
and support the ruling of the trial court have a common denominator, so to
speak. The cause of action assailing the frauds committed and impugning
the Torrens titles issued in those cases, all accrued prior to the effectivity of
the present Civil Code. The accrual of the cause of action in Fabian was in
1928, in Miguel, February, 1950, and in Ramirez, 1944. It must be
remembered that before August 30, 1950, the date of the effectivity of the
new Civil Code, the old Code of Civil Procedure (Act No. 190) governed
prescription. It provided:
SEC. 43. Other civil actions; how limited-Civil actions other
than for the recovery of real property can only be brought
within the following periods after the right of action
accrues:
xxx xxx xxx
3. Within four years: x x x An action for relief on the
ground of fraud, but the right of action in such case shall
not be deemed to have accrued until the discovery of the
fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in
favor of the true owner. In this context, and vis-a-vis prescription, Article
1144 of the Civil Code is applicable.
 Article 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must
perforce prescribed in ten years and not otherwise. A long line of decisions
of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on
an implied or constructive trust prescribes in ten years from the issuance of
the Torrens title over the property. 16 The only discordant note, it seems,
is Balbin vs. Medalla, 17 which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained
by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the
fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190,
was applied, the new Civil Code not coming into effect until August 30, 1950
as mentioned earlier. It must be stressed, at this juncture, that Article 1144
and Article 1456, are new provisions. They have no counterparts in the old
Civil Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.
It is abundantly clear from all the foregoing that the action of petitioner
Datomanong for reconveyance, in the nature of a counterclaim interposed in
his Answer, filed on December 4, 1964, to the complaint for recovery of
possession instituted by the respondent, has not yet prescribed. Between
August 16, 1955, the date of reference, being the date of the issuance of the
Original Certificate of Title in the name of the respondent, and December 4,
1964, when the period of prescription was interrupted by the filing of the
Answer cum Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the
existence of a mortgage on the property. It is claimed by the respondent that
reconveyance would not be legally possible because the property under
litigation has already been mortgaged by him to the Development Bank of
the Philippines. 19 This claim is untenable otherwise the judgment for
reconveyance could be negated at the will of the holder of the title. By the
simple expedient of constituting a mortgage or other encumbrance on the
property, the remedy of reconveyance would become illusory. In the instant
case, the respondent being doubly in bad faith — for applying for and
obtaining a patent and the Original Certificate of Title therefor without being
in possession of the land and for mortgaging it to the Development Bank
knowing that his Original Certificate of Title was issued under false
pretenses — must alone suffer the consequences.
Besides, given the undisputed facts, we cannot consider the mortgage
contracted by the respondent in favor of the Development Bank of the
Philippines as valid and binding against petitioner Liwalug Datomanong. It
would be most unjust to saddle him, as owner of the land, with a mortgage
lien not of his own making and from which he derived no benefit whatsoever.
The consequences of the void mortgage must be left between the mortgagor
and the mortgagee. In no small measure the Development Bank of the
Philippines might even be faulted for not making the requisite investigation
on the possession of the land mortgaged.
Premises considered, we deemed it superfluous to rule on the second
assignment of error raised by the petitioners.
WHEREFORE, the petition is GRANTED and the Decision dated June 3,
1970 of the then Court of First Instance of Lanao del Sur in Civil Case No.
1354 is hereby ANNULLED and SET ASIDE and a new one entered
ORDERING the respondent to RECONVEY Original Certificate of Title No.
P-466 in favor of petitioner Liwalug Datomanong, free of any encumbrance.
Costs against the respondent.
SO ORDERED.
G.R. No. 83383 May 6, 1991
SOLID STATE MULTI-PRODUCTS CORPORATION, petitioner,
vs.
THE COURT OF APPEALS (Former Sixth Division) and THE INTESTATE
ESTATE OF ANTENOR S. VIRATA and the DEVELOPMENT BANK OF
THE PHILIPPINES, respondents.
Antonio M. Chavez for petitioner.
Rodolfo M. Dela Rosa for respondent Intestate Estate of Antenor S. Virata.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals which affirmed the decision of the trial court dismissing the
complaint filed by petitioner for quieting of title and declaring Antenor Virata
as the true and lawful owner of the disputed property.
The antecedent facts are as follows:
On September 28, 1982, petitioner, a domestic corporation, filed an action
for quieting of title against the respondent estate of Virata alleging that it is
the registered owner of a parcel of land located at Imus, Cavite, with an area
of 48,182 sq. meters, covered by Certificate of Title No. T-80889 of the
Register of Deeds of Cavite, which was issued on February 24, 1976; that
Virata, during his lifetime thru the use of fraud, caused the issuance of
Certificate of Title No. T-11520 RT 1660 on September 1, 1959 thru an
administrative reconstitution of a nonexistent original title covering the same
parcel of land; that by reason of the said reconstitution and subsequent
issuance of TCT No. T-11520 RT 1660, there now exists a cloud on the title
of petitioner.
As gathered by the respondent appellate court and trial court, the evidence
for the petitioner consists of the following:
Pursuant to the provisions of Act No. 32, as amended, Julian
Peñaranda submitted with the Bureau of Lands, thru its District
Land Office at Rosario, Cavite an application dated November 22,
1968, in a verified Indorsement dated November 25, 1968, to
purchase a friar land which was subscribed and sworn to before
Manuel Cupino, Acting District Land Officer (Exh. "D"). The
application covers Lot No. 7449 of the Imus Friar Lands Estate,
situated at Barrio Molino, Bacoor, Cavite, containing an area of 4
hectares, 81 ares and 82 centares. Said application was
accompanied by a "SALAYSAY" (Exhibit "A") signed and sworn to
by one Mabini Legaspi before said District Land Officer Cupino,
purporting to transfer to, and to waive in favor of, Julian Peñaranda,
all the rights of executor to Lot No. 7449.
Following the routine in cases of this nature, District Land Officer
Cupino referred to Land Investigator Alberto Buhain for
investigation and in a verified Indorsement dated November 25,
1968, said investigator made a Report (Exh. "B") on the result of his
investigation, to District Land Officer Cupino, District Land Office
No. III-8 Bureau of Lands, Rosario, Cavite, certifying that applicant
Julian Peñaranda is the actual occupant of Lot No. 7449, has
introduced improvements consisting of upland rice and other
seasonal crops; that Peñaranda's occupation of the land is derived
through a voluntary assignment of right of the former occupant,
Mabini Legaspi, and that the same is free from claims and conflicts
and that the said applicant has established his rights over the
subject land, in view of which, said investigator recommended that
said lot be awarded to applicant Julian Peñaranda according to law.
Thereafter, the Report having been submitted to Cupino, the latter
directed investigator Buhain to prepare an Information Sheet (Exh.
"G" up to "G-3") and Cupino made the Appraisal Report (Exh. "E-
2"). The above requirements having been accomplished, District
Land Officer Cupino forwarded Peñaranda's application to the
Director of Lands, thru the Chief, Land Management Division,
recommending disposition of Lot No. 7449 be made in accordance
with the findings of his office, to Julian Peñaranda, pursuant to the
provisions of C.A. of No. 32, as amended.
By second Indorsement dated December 16, 1968, Higinio P.
Sunico, Chief, Land Management Division, acting for and in behalf
of the Director of Lands, forwarded to the Secretary of Agriculture
and Natural Resources, the application of Julian Peñaranda,
recommending that Lot No. 7449 be sold to said applicant without
public auction for a sum of P1,198.00 (Exh. "I") and by a 3rd
Indorsement dated December 16, 1969, the application of Julian
Peñaranda was returned by the Secretary of Agriculture and
Natural Resources, to the Director of Lands, Manila, approving that
sale without auction, to Julian Peñaranda, of lot No. 7449. Pursuant
to this approval, the Director of Lands authorized the District Land
Officer, Rosario, Cavite, to sell without auction to Julian Peñaranda,
 and directing that the sales contract should be executed soonest
(Exh- "I"). The Director of Lands and Julian Peñaranda executed,
therefore, Sales Contract No. V-447 (Exh. "K"), on February 28,
1969, for a consideration of P1,198.00, to be paid in ten (10)
monthly installments, the first installment of P290.00 having been
paid upon execution of the sales contract and the payment of the
P1,198.00 was fully paid on August 6, 1969 (Exh. "O").
The contract price of the land having been paid by Peñaranda,
Undersecretary of Agriculture and Natural Resources Isoceles
Pascual, on August 13, 1969, issued the final deed of conveyance
of lot No. 7449 (Exh."8") in favor of Julian Peñaranda and the said
deed of conveyance contains the physical and technical description
of the lot in question (See Exh. "S-l").
xxx xxx xxx
On the basis of said Deed of Conveyance No. 10431, the Register
of Deeds of Cavite issued on November 14, 1969 in favor of Julian
Peñaranda TCT No. T-39631 (Exh. "Z-6") which on its face shows it
to have come from a direct transfer from OCT no. 1002, and on
February 17, 1976, the plaintiff, by way of a Deed of Absolute Sale
(Exh. "Z") bought said Lot No. 7449 as a consequence of which,
TCT No. T-39631 was cancelled and new TCT No. T-80889 was
issued on February 24, 1976 to the plaintiff, Solid State Multi
Products Corporation.
Plaintiff Solid State Multi-Products Corporation enrolled Lot No.
7449 with the issuance of Tax Declaration No. 20893 which was
superseded by Tax Declaration No. 10973 and continued to
religiously pay the realty taxes as covered by receipts of tax
payments (Exh. for 1977 and Exh. "7-19" for 1984) and the subject
property is in its actual possession since its acquisition from
Peñaranda up to the present. (pp. 109-112, Rollo (Emphasis Ours)
On the other hand, respondent Virata denied the allegations in the complaint
and presented evidence to prove his claim over the land. The appellate court
and trial court made the following findings:
. . . on March 20, 1943, the Director of Lands, Mr. Jose F. Dans,
gave authority to sell at public auction Lot No. 7449 of the Imus
Estate, containing an area of 4.8182 hectares at the price of not
less than its appraised value of P290.00 (Exh. X-33). Accordingly
on April 20, 1943, the Bureau of Friar Lands Agent Severo Rivera
issued a Notice fixing the public auction of Lot No. 7449, among
others, on May 5, 1943 at 10:00 a.m. (Exh. 1). On said date, Mabini
Legaspi (appellee Virata's predecessor-in-interest) submitted a
winning bid of P290.00 and paid P29.00 (10% of the purchase
price) and even issued Bureau of Lands Official Receipt No. 77735
dated May 5, 1943 (Exh. 7). The subsequent installments were paid
on January 14, 1944, April 24, 1944, August 17, 1944, and
September 20, 1944 in the amounts of P29.00, P29.00, 87.00 and
P116.00, respectively. The payments were evidenced by Official
Receipts Nos. 78396, 783392, 784704 and 78466 (Exhs. 7-A, 7-B,
7-C and V)
On December 12, 1944, the Bureau of Lands, through Mr. Vicente
Tordesillas, sent a letter to the Register of Deeds at Imus, Cavite,
requesting the issuance of the corresponding certificates of title to
eight persons, among whom was Mabini Legaspi, specifying with
respect to him Lot No. 7449 with an area of 4.8182 located at
Bacoor, Cavite Exh. 2). Accordingly, the Register of Deeds of
Cavite issued TCT No. A-2188 to Mabini Legaspi who held
ownership of the property up to December 6, 1957 when he
executed a Deed of Sale transferring it to Antenor S. Virata (Exh.
6). The deed was registered with the Registry of Deeds on
December 10, 1957 . . . . On the same day, December 10, 1957,
the Register of Deeds issued TCT No. 11520 (Exh. 12) to Antenor
Virata . . .
However, on June 7, 1959, the Provincial Capitol building of Cavite
which housed the Registry of Deeds was burned, destroying land
records and titles in d registry among which were the records
relating to Lot No. 7449.
On September 1, 1959, the Registry of Deeds administratively
reconstituted the original of TCT No. T-11520 based on owner's
duplicate certificate (Exh. 12) and renumbered the same as TCT
No. (T-11520) RT-1660.
xxx xxx xxx
The sentence of TCT No. 80889 issued in the name of appellant on
February 24, 1976 came to the knowledge of Antenor Virata in
August 1978 when he received a subpoena from the National
Bureau of Investigation (NBI) in connection with its investigation of
 the conflicting land titles on Lot No. 7449. Virata presented Mabini
Legaspi as his witness. NBI Agent Manuel C. Dionisio took the
sworn testimony of Mabini Legaspi on August 27, 1978 (Exh. 10)
and submitted a written report (Exhs. 9 to 9-H) of his investigation
on October 27, 1978. Mabini Legaspi in her sworn testimony (Exh.
10) declared that she acquired Lot 7449 during the Japanese
occupation and in support of her acquisition, she presented to NBI
agent Dionisio the carbon or duplicate original of the notice of
public auction and the letters dated December 12, 1944 of Vicente
Tordesillas of the Bureau of Lands to the Register of Deeds
requesting the issuance of a certificate of title in favor of Mabini
Legaspi, which documents were substituted on the same occasion
with xerox copies (Exh. 1 and 2) also marked as Exhibits 10-C and
10-D, respectively, after a comparison with the duplicate originals.
Legaspi also presented the originals of the receipts of payment she
made to the Bureau of Lands, which were substituted with xerox
copies (Exhs. 7, 7-A, 7-B and 7-C, also marked as Exhibit 10-E, 10-
F 10-G and 10-H) after comparison with the original. She (Mabini)
also testified on the sale of the lot in favor of Antenor Virata on
December 6, 1957, presenting as proof thereof, the duplicate or
carbon original of the Absolute Deed of Sale of Agricultural Land,
which was likewise, substituted with xerox copies (Exhs. 6 to 6-F,
inclusive, also marked Exh. 11).
Mabini Legaspi testified that the originals of Exhibits 1 and 2 got
lost. She said she placed the documents on the table in her house
after returning from the NBI investigation, thinking "all the while that
those documents will be useless because I had my property sold."
(Tsn., p. 17, December 19, 1984). She denied having sold the land
to Julian Peñaranda, nor having waived her right over the land in
his favor (tsn., p. 12, March 18, 1985). (pp. 113-116, Rollo).
On June 15, 1985, the trial court rendered its decision, the dispositive
portion of which reads:
WHEREFORE, by preponderance of evidence, judgment is hereby
rendered for defendant Virata and against the plaintiff, to wit:
a. Dismissing the complaint which states no cause of action;
b. Recognizing that defendant Virata is the true and lawful owner of
the land covered by Transfer Certificate of Title No. (T-11520) RT
1660 of the Register of Deeds of the Province of Cavite and holding
that the same is valid;
c. Declaring that Transfer Certificate of Title No. T-80889 in the
name of plaintiff, the Solid State Multi Products Corporation is null
and void and of no force and effect and is, therefore, ordered
cancelled;
d. Sentencing the plaintiff to pay the costs of the proceeding.
SO ORDERED. (p. 70, Rollo).
Not satisfied with the decision of the trial court, the petitioner appealed to the
Court of Appeals. On July 13, 1987, the respondent appellate court rendered
its decision affirming the decision of the trial court.
Hence, this petition was filed with the petitioner assigning the following
errors:
THE RESPONDENT COURT GROSSLY ERRED WHEN IT
IGNORED THE BASIC CONSIDERATION THAT THE
CONTESTED PROPERTY CAME FROM THE FRIAR LANDS
ESTATE THE DISPOSITION OF WHICH IS GOVERNED BY
SPECIAL LAWS SPECIFYING THE REQUIREMENTS FOR ITS
ACQUISITION FROM THE GOVERNMENT THROUGH SALE,
WHICH LAW AND SPECIAL REQUIREMENTS SHOULD SERVE
AS THE MEASURE AGAINST WHICH THE EVIDENCE OF THE
PARTIES TO THIS CASE SHOULD BE WEIGHED, SUCH GROSS
ERROR LEADING THE APPELLATE COURT TO—
(A) ERRONEOUSLY INFER THE EXISTENCE AND/OR
DUE ISSUANCE OF THE SUPPOSED TCT NO. A-2188
(IN THE NAME OF PRIVATE RESPONDENTS
PREDECESSOR-IN INTEREST), FROM DOCUMENTS
THAT CAME AFTER WERE BASED ON SUCH TCT NO.
A-2188, CLEARLY BEGGING THE ISSUE WHICH IS
PRECISELY WHETHER OR NOT THE TRANSFER
CERTIFICATE OF TITLE WAS IN FACT ISSUED IN
COMPLIANCE WITH THE FRIAR LANDS ACT AND CA-
32 TO COVER THE PROPERTY IN QUESTION;
 (B) ERRONEOUSLY BASE ITS DECISION IN FAVOR OF
PRIVATE RESPONDENT ON TCTs ISSUED BY THE
REGISTER OF DEEDS INSPITE OF THE FACT THAT IT
IS THE BUREAU OF LANDS UNDER THE DIRECTION
OF THE SECRETARY OF AGRICULTURE AND
COMMERCE (NATURAL RESOURCES) WHICH
DISPOSES FRIAR LANDS AND NOT THE REGISTER
OF DEEDS WHOSE RECORDS CAN BE NO BETTER
THAN THE RIGHT IT HAS REGISTERED;
(C) ERRONEOUSLY DISREGARD THE PATENT
INADMISSIBILITY OF THE DOCUMENTARY EVIDENCE
OFFERED BY THE PRIVATE RESPONDENT THE
ORIGINALS OF WHICH WERE NEVER PRESENTED
BEFORE THE TRIAL COURT;
(D) ERRONEOUSLY IGNORE THE LACK OF
PROBATIVE VALUE OF SUCH DOCUMENTARY
EVIDENCE SUCH LACK OF PROBATIVE VALUE BEING
PATENT ON THE FACE OF SUCH DOCUMENT;
(E) ERRONEOUSLY IGNORE THE VERITY THAT THE
DOCUMENTARY EVIDENCE COULD SUPPORT NO
MORE THAN THE FACT THAT THE RESPONDENTS
PREDECESSOR-IN-INTEREST HAD MERELY A
QUESTIONABLE INCHOATE AND INCOMPLETE RIGHT
TO ACQUIRE THE PROPERTY IN QUESTION, WHICH
QUESTIONABLE INCHOATE AND IN FACT
UNCOMPLETED RIGHT CANNOT PREVAIL OVER THE
TITLE OF PETITIONER'S PREDECESSOR IN INTEREST
WHO WAS THE ACTUAL POSSESSOR THAT APPLIED
FOR THE PURCHASE OF THE LAND EVERY NEEDED
STEP FOR THE PURCHASE HAVING BEEN PASSED
UPON AND RECORDED BY THE BUREAU OF LANDS
WHOSE RECORDS SHOW ONE AND ONLY TITLE
ISSUED OVER THE LAND, THAT IS, THE TITLE OF THE
PETITIONER'S PREDECESSOR-IN-INTEREST (pp. 20,
22, Rollo)
We find the petition impressed with merit.
Since the assigned errors were interrelated, it would be well for this
Court to discuss them jointly.
Petitioner does not question the factual findings made by the
respondent appellate court and supported by the records (p.
22, Rollo). It does not however accept the legal conclusion made by
the appellate court and trial court that the registered title of private
respondent to the land should prevail over its own title.
Petitioner contends that Act No. 1120, otherwise known as the Friar
Lands Act provides the procedure for the sale and disposition of the
friar lands to private persons; that pursuant thereto, the acquisition
by petitioner's predecessor-in-interest Julian Peñaranda of the
disputed Lot 7449, which was formerly part of the friar lands estate,
was in compliance with all legal requisites laid down in Act No.
1120, for the validity of the sale by the government in favor of
Peñaranda of such friar lands.
It also argues that the sale of Lot No. 7449 to respondent's
predecessor, Mabini Legaspi, and the issuance of a certificate of
title in her favor was in violation of the Friar Lands Act as there was
no required approval by the Secretary of Agriculture and Natural
Resources.
There is no dispute here that the land involved in this case is a friar
land and that the laws which are applicable are Act No. 1120, know
as the Friar Lands Act, providing for the administration and
temporary leasing and sale of certain haciendas and parcels of
land, commonly known as friar lands, and Commonwealth Act No.
32 dated September 15, 1936 as amended by Commonwealth Act
No. 316 dated June 9, 1938, which provided for the subdivision and
sale of all the portions of the friar lands estated remaining
undisposed of.
Sec. 12 of Act No. 1120 provides in part:
. . . the Chief of the Bureau of Public Lands shall give the
said settler and occupant a certificate which shall set forth
in detail that the Government has agreed to sell to such
settler and occupant the amount of land so held by him at
the price so fixed payable as provided in this Act at the
Office of the Chief of the Bureau of Public Lands . . . and
that upon the payment of the final installment together with
all accrued interest the Government will convey to such
settler and occupant the said land so held by him by
proper instrument of conveyance, which shall be issued
 and become effective in the manner provided in section
one hundred and twenty two of the Land Registration Act.
Also, Sec. 18 of the same Act provides:
No lease or sale made by the Chief of the Bureau of
Public Lands under the provisions of this Act shall be valid
until approved by the Secretary of the Interior. (Emphasis
ours)
Similarly, Sec. 2 of C.A. No. 32, as amended by C.A. No. 316
provides in part:
. . . The persons who, at the time of the subdivision survey
are actual and bona fide occupants of any portion of the
Friar Lands Estates, not exceeding ten hectares, shall be
given preference to purchase the portion occupied at a
private sale and at a price to be fixed in such case, by the
Director of Lands, subject to the approval of the Secretary
of Agriculture and Commerce, after taking into
consideration its location, quality, and any other
circumstances as may affect its value, the provisions of
section twelve of Act Numbered Eleven hundred and
twenty, as amended, to the contrary, . . . (Emphasis ours)
It is clear from the foregoing provisions that the friar lands were purchased
by the government for sale to actual settlers and occupants at the time said
lands are acquired by the government. The Bureau of Lands shall first issue
a certificate stating therein that the government has agreed to sell the land to
such settler or occupant. The latter then shall accept the certificate and
agree to pay the purchase price so fixed and in the installments and at the
interest specified in the certificate.
The conveyance executed in favor of a buyer or purchaser, or the so called
certificate of sale, is a conveyance of the ownership of the property, subject
only to the resolutory condition that the sale may be cancelled if the price
agreed upon is not paid for in full. The purchaser becomes the owner upon
the issuance of the certificate of sale in his favorsubject only to the
cancellation thereof in case the price agreed upon is not paid (Pugeda vs.
Trias, No. L-16925, March 31, 1962, 4 SCRA 849.)
Upon the payment of the final installment together with all accrued interests,
the government shall then issue a final deed of conveyance in favor of the
purchaser. However, the sale of such friar lands shall be valid only if
approved by the Secretary of Interior as provided in Act No. 1120. Later
laws, however, required that the sale shall be approved by the Secretary of
Agriculture and Commerce. In short, the approval by the Secretary of
Agriculture and Commerce is indispensable for the validity of the sale.
It is undisputed that petitioner's predecessor, Julian Peñaranda was the
actual occupant of Lot 7449 when he filed his application to purchase the
said lot on November 22, 1968; that on December 16, 1989, the Secretary of
Agriculture and Natural Resources approved the sale of the lot without
auction to Peñaranda; that a sales contract was executed between the
Director of Lands and Peñaranda on February 28, 1969 for a consideration
of P 1,198.00 payable in 10 monthly installments; that upon the full payment
of the price, the Undersecretary of Agriculture and Natural Resources issued
the final deed of conveyance of Lot No. 7449 in favor of Peñaranda.
Subsequently, the Register of Deeds of Cavite issued TCT No. 39631 in the
name of Peñaranda, and when the latter sold the land to petitioner, TCT No.
39631 was cancelled and TCT No. T-80889 was issued in favor of the latter.
Clearly, the purchase of the friar land made by Peñaranda was in
compliance with law. The execution of the sales contract vested the right of
ownership in Peñaranda over the land. There is no doubt whatsoever that
the said sale was valid as it was approved by the Secretary of Agriculture
and Natural Resources. Hence, the sale made by Peñaranda in favor of the
petitioner transferred the ownership of the land in favor of the latter resulting
in the proper issuance of TCT No. T-80889 in its name.
On the other hand, the antecedents leading to the acquisition of title by
respondent Virata are clearly shown in the records. The latter's predecessor,
Mabini Legaspi bought Lot 7449 in a sale by public auction held on May 5,
1943 conducted by the Bureau of Lands and friar lands agent Severino
Rivera, and paid the purchase price thereof in installments in 1943; that on
December 12, 1944, the Bureau of Lands sent a letter to the Register of
Deeds of Cavite requesting the issuance of certificates of title to several
persons including Mabini Legaspi, in whose favor TCT A-2188 was issued;
that subsequently on December 6, 1957, she sold the disputed land to
respondent Virata, which was evidenced by a deed of sale registered with
the Registry of Deeds of Cavite on December 10, 1957; that on the same
date, TCT No. 11520 was issued in the name of Virata. Due to the fire which
gutted the building housing the Registry of Cavite on June 7, 1959, the latter
administratively reconstituted the original of TCT No. 11520 on September 1,
1959, based on the owner's duplicate certificate and renumbered the same
as TCT No. 1120 RT 1660.
Apparently, the sale of the lot to Mabini Legaspi occurred much earlier than
the date of acquisition of same lot by petitioner's predecessor, and the
evidence presented by respondent Virata indicates that the latter's
predecessor paid the purchase price of Lot No. 7449 on installments.
Nowhere in the evidence for the respondent or in the records of this case
however, would show that a certificate of sale was ever issued by the
Bureau of Lands, which would vest ownership and title over the land in favor
of Mabini Legaspi. The existence of the official receipts showing payment of
the price of the land by Legaspi does not prove that the land was legally
conveyed to her without any contract of sale having been executed by the
government in her favor. Viewed from all angles, the acquisition of the lot by
Legaspi was highly irregular and void, and not in compliance with the
procedure mandated by law for the sale of friar lands. For one thing, Mabini
Legaspi allegedly purchased the land in a sale at public auction, which
procedure is nowhere provided in Act No. 1120 or in C.A. 32, as amended
by C.A. 316. The laws expressly state that an actual occupant of the land
shall purchase the lot occupied by him at a private sale and not in a sale at
public auction (Sec. 2, C.A. 32 as amended). Further, neither was there any
deed of conveyance issued to Legaspi by the government after the full
payment of the installments on the disputed lot.
Highly significant at this point is the fact that there was neither allegation nor
proof that the sale was with the approval of the Secretary of Agriculture and
Commerce. The absence of such approval made the supposed sale null and
void ab initio. Without the certificate of sale to prove the transfer of the
ownership of the land from the government Mabini Legaspi and without the
required approval of the sale by the Secretary of Agriculture and Commerce,
We find that Mabini Legaspi did not in any manner acquire ownership over
the land in 1943. The ownership or title over the friar land, specifically Lot
No. 7449 remained in the government until Peñaranda, petitioners
predecessor, lawfully acquired ownership over the same lot on February 28,
1969 by virtue of a sales contract executed in his favor.
The issuance of a certificate of title in favor of Mabini Legaspi did not vest
ownership upon her over the land nor did it validate the alleged purchase of
the lot, which is null and void. Time and again, it has been held that
registration does not vest title. It is merely evidence of such title over a
particular property. Our land registration laws do not give the holder any
better title than that what he actually has (De man et al. vs. Court of
Appeals, G.R. L- 46935 December 21, 1987, 156 SCRA 701; Cruz vs.
Cabana, No. 56232, June 22, 1984, 129 SCRA 656).
Although a period of one year has already expired from the time the
certificate of title was issued to Mabini Legaspi pursuant to the alleged sale
from the government, said title does not become incontrovertible but is null
and void since the acquisition of the property was in violation of law. Further,
the petitioner herein is in possession of the land in dispute. Hence, its action
to quiet title is imprescriptible (Coronel vs. Intermediate Appellate Court, No.
70191, October 29, 1987, 155 SCRA 270).1âwphi1 In one case, this Court
ruled that an adverse claimant of a registered land who is in possession
thereof for a long period of time is not barred from bringing an action for
reconveyance which in effect seeks to quiet title to the property against a
registered owner relying upon a Torrens title which was illegally or wrongfully
acquired (Caragay-Layno vs. Court of Appeals, 133 SCRA 718). In actions
for reconveyance of property predicated on the fact that the conveyance
complained of was void ab initio, a claim of prescription of the action would
be unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil. 722; Agne vs.
Director of Lands, G.R. L-40399, February 6, 1990, 181 SCRA 793). Being
null and void, the sale made to Mabini Legaspi and the subsequent titles
issued pursuant thereto produced no legal effects whatsoever. Quod nullum
est nullum producit affectum (Agnes vs. Director of Lands, supra). There
being no title to the land that Mabini Legaspi acquired from the government,
it follows that no title to the same land could be conveyed by the former to
respondent Virata.
Even assuming that respondent Virata was a purchaser in good faith and for
value, the law is, as between two persons both of whom are in good faith
and both innocent of any negligence, the law must protect and prefer the
lawful holder of registered title over the transferee of a vendor bereft of any
transmissible rights (Baltazar vs. Court of Appeals, G.R. 78728, December
8, 1988, 168 SCRA 354, emphasis ours). Further if a person happened to
obtain property by mistake or to the prejudice of another with or without bad
faith, the certificate of title which may have been issued to him under the
circumstances may and should be cancelled or corrected.
Our unavoidable conclusion in this case is that the title of petitioner under
the Torrens land system should be upheld considering that no previous valid
title to the same land existed.
ACCORDINGLY, the petition is hereby GRANTED and the decision of the
respondent Court of Appeals dated July 13, 1987 is hereby REVERSED.
Petitioner Solid State Multi-Products Corporation is hereby declared the true
owner of the land covered by Transfer Certificate of Title No. T-80889. The
Register of Deeds of Cavite is ordered to cancer transfer Certificate of Title
No. (T-11520) RT 1660 in the name of respondent Antenor Virata.

SO ORDERED.
[G.R. No. 121658. March 27, 1998]
NESTOR LACSAMANA,* EL DORADO PLANTATION, INC., LBJ
DEVELOPMENT CORPORATION and CONRAD C.
LEVISTE, petitioners, vs. COURT OF APPEALS, ESTER
GAITOS ROBLES, LEON GAITOS ROBLES and DULCE CLARA
ROBLES, respondents.
DECISION
BELLOSILLO, J.:
This is a petition to review the decision of the Court of Appeals
affirming that of the Regional Trial Court in an action by private respondents
against petitioners for reconveyance and cancellation of certificates of title.[1]
Leon Robles and his niece Amparo Robles were the registered co-
owners in equal shares of Lot No. 13535, a 56,864-square meter piece of
land situated in Bo. Inosloban, Lipa City, covered by OCT No. 0-363-R
issued on 3 March 1965 by the local Register of Deeds. [2]
On 26 April 1965 Amparo sold her one-half (1/2) undivided share to El
Dorado Corporation (EL DORADO). Consequently, OCT No. 0-363-R was
cancelled and TCT No. 15261 issued in the names of EL DORADO and
Leon Robles as co-owners.
On 24 September 1969 Leon Robles, who was then residing in San
Francisco, California, U.S.A., died survived by his wife Ester Gaitos Robles
and children Leon Jr. and Dulce Clara as his sole heirs. However, in a Deed
of Absolute Sale dated 22 July 1971, Leon Robles purportedly with the
marital consent of his wife Ester sold his one-half (1/2) undivided share in
Lot No. 13535 to one Nestor Lacsamana. Nine (9) years later, or on 22
January 1980, the Deed of Absolute Sale was registered in the Registry of
Deeds of Lipa City by one Philip Neri Gonzales. Consequently, TCT No.
15261 in the names of EL DORADO and Leon Robles was cancelled and
TCT No. 46245 issued in the names of EL DORADO and Nestor
Lacsamana.
On 22 July 1980, Nestor Lacsamana purportedly sold his one-half (1/2)
share to LBJ Development Corporation (LBJ) represented by its President,
Conrad C. Leviste. A certain Rolando Lumanglas registered the deed of sale
in the Registry of Deeds resulting in the cancellation of TCT No. 46245 and
the issuance of TCT No. 47475 in the names of EL DORADO and LBJ.
On 26 January 1982 LBJ became the owner of the entire Lot No.
13535 when EL DORADO sold its one-half share
for P30,000.00. Consequently, TCT No. 47475 was cancelled and TCT Nos.
49915 to 49990 were issued in the name of LBJ conformably with an
approved consolidated subdivision plan.
On 11 November 1983 Ester, Leon Jr. and Dulce Clara, all surnamed
Robles, as surviving heirs of Leon Robles, filed a complaint with the
Regional Trial Court of Lipa City[3] gainst Nestor Lacsamana, EL DORADO,
LBJ and Conrad C. Leviste for the recovery of the one-half undivided share
of Leon in Lot No. 13535 and the cancellation of TCT Nos. 49915 to
49990. The complaint alleged that the signature of Leon Robles in the Deed
of Absolute Sale dated 22 July 1971 in favor of defendant Nestor
Lacsamana was a forgery as Leon was already dead at the time of the
alleged sale; that defendant LBJ, a corporation owned and controlled by the
Leviste family with defendant Conrad C. Leviste as its President, was not a
buyer in good faith since facts existed which should have put it on guard as
to defects in the title of Lacsamana; and, that defendant EL DORADO,
likewise owned and controlled by the Leviste family with Conrad C. Leviste
as President, participated in the fraud by surrendering the only co-owner's
duplicate copy of TCT No. 15261 in its name and that of Leon Robles thus
paving the way for the issuance of a new TCT in the name of Nestor
Lacsamana as co-owner in place of Leon Robles.
Defendants LBJ and EL DORADO invoked the defense of prescription
and/or laches and alleged that LBJ was a buyer in good faith and for
value. However, their defenses were rejected by the court a quo which ruled
that the complaint filed by plaintiffs on 11 November 1983, i.e., almost three
(3) years and nine (9) months from the date of registration of the questioned
Deed of Absolute Sale on 22 January 1980 was timely filed since actions for
reconveyance of real property on ground of fraud may be filed within four (4)
years from its discovery.
As regards the second issue, the trial court ruled that LBJ was not an
innocent purchaser because facts existed which should have put it on inquiry
as to possible defects in the title of Lacsamana, e.g., while the questioned
Deed of Absolute Sale purportedly executed in Manila stated that Leon and
Ester Robles personally appeared before Notary Public Engracio S.
Concepcion and presented their Residence Certificates issued in Makati, the
same document showed that the spouses were residing at 695 22nd
Avenue, San Francisco, California, U.S.A., and did not indicate that they
were temporarily staying in the Philippines at the time of its execution; and,
the Deed of Absolute Sale was registered in the Office of the Register of
Deeds of Lipa City only in 1980, or after the lapse of more than eight (8)
years. Additionally, the court found that Leon Robles and Roman Payumo,
one of the supposed instrumental witnesses to the deed of sale, were
already dead at the time of the execution of the sale; [4] that Nestor
Lacsamana was a non-existent person;[5] and, that EL DORADO, Leon
Robles' co-owner at the time of the alleged sale in favor of Lacsamana, and
LBJ, to whom Lacsamana purportedly sold Leon's one-half share, were both
corporations owned and controlled by the Leviste family with defendant
Conrad C. Leviste as its common President.[6] Thus, on the basis of the
foregoing, the court a quo rendered judgment in favor of plaintiffs[7] the
dispositive portion of which read -
WHEREFORE, the Court holds that defendant LBJ Development
Corporation is not a purchaser in good faith. Accordingly, the
Court hereby orders the Register of Deeds of Lipa City to cancel
all the present titles covering the parcel of land formerly covered
by Transfer Certificate of Title No. T-47475 in the names of
defendants El Dorado Plantation, Inc., and LBJ Development
Corporation and to reinstate Transfer Certificate of Title No. T-
15261 in the names of Leon Robles and El Dorado Plantation, Inc.
In the event that reconveyance of the property involved is not
possible due to any subsequent transfer of the property to third
persons or persons not parties to this suit, the Court hereby orders
defendant LBJ Development Corporation to pay plaintiffs the
present fair market value of plaintiffs' one-half (1/2) share in the
property, which fair market value shall be determined by an
appraiser to be agreed upon by the parties, and in case of
disagreement the parties shall recommend to the Court the
appraisers of their choice who shall appraise the property jointly
and submit the corresponding report for approval or resolution of
the Court.
The Court further orders defendants LBJ Development
Corporation, El Dorado Plantation, Inc., and Conrad Leviste to pay
jointly and severally plaintiffs attorney's fees in the sum of Twenty
Thousand Pesos (P20,000.00), since the latter was compelled
to institute this case to protect their interests, and to pay the costs
of suit.[8]
The Court of Appeals affirmed the findings and conclusions of the trial
court on appeal by EL DORADO, LBJ and Conrad C. Leviste.[9] They
differed only insofar as the issue of prescription was concerned. Instead of
the period of four (4) years for filing actions for reconveyance on ground of
fraud cited by the trial court, respondent appellate court ruled that the
present action had not yet prescribed since actions to declare the nullity of a
void contract was imprescriptible.
Petitioners insist that the action instituted by private respondents has
already prescribed, but even if it has not, it is already barred by laches and
reiterate their position that LBJ was a buyer in good faith.
We affirm the decision of respondent appellate court. On the issue of
prescription, we agree that the present action has not yet prescribed
because the right to file an action for reconveyance on the ground that the
certificate of title was obtained by means of a fictitious deed of sale is
virtually an action for the declaration of its nullity, which action does not
prescribe.[10] Hence, the fact that the alleged sale took place in 1971 and the
action to have it declared void or inexistent was filed in 1983 is of no
moment.[11] To reiterate, an action for reconveyance based on a void
contract is imprescriptible.[12]
Neither can the defense of laches be sustained. We cannot see how
private respondents may be considered guilty of laches. It should be noted
that private respondents, upon learning that the relevant portion of Lot No.
13535 was no longer registered in the name of Leon, immediately caused an
investigation to be made for the purpose of finding out the author and the
circumstances behind the execution of the fictitious 1971 Deed of Absolute
Sale. Thus, in less than two (2) months after it was discovered by the
National Bureau of Investigation that Nestor Lacsamana was in fact a
fictitious/non-existent person,[13] private respondents through their attorney-
in-fact Petronilo Gaitos instituted on 11 November
1983,the present action i.e., barely three (3) years and nine (9) months after
the fraudulent registration on 22 January 1980. Thus, it is said, the concept
of laches is not concerned with the lapse of time but only with the effect of
unreasonable lapse.[14]
We are urged by petitioners to rule that LBJ was a buyer in good
faith. We cannot. Besides being a factual finding shared by both the trial
court and the Court of Appeals that it was not, and supported by the
evidence on record, it is conclusive upon us.[15]
Three (3) reasons, at least, militate against petitioner LBJ's claim of
good faith. First, Conrad C. Leviste, President of LBJ, claimed that the
company came to know of the disputed property through its driver Jovito
Lacsamana who allegedly introduced his nephew Nestor Lacsamana as its
owner who was interested in selling his share in the property. On this point,
without necessarily underestimating the capacity of driver Jovito's nephew
Nestor to own one-half of a 5.6-hectare parcel of land, Leviste's curiosity
should have been aroused just the same as to how Nestor came to own his
portion of the property. The records fail to disclose any inquiry, formal or
informal, to determine how Nestor acquired his portion. Second, Nestor
Lacsamana allegedly presented a copy of TCT No. 46425 in his name and
that of EL DORADO as co-owners. However, it is a fact that, as testified to
by Register of Deeds AntonioEscutin, the only co-owner's duplicate copy of
TCT No. 46425 was issued to EL DORADO, LBJ's sister company. [16] Third,
the fictitious 1971 Deed of Absolute Sale in favor of Nestor Lacsamana, the
root of the issuance of TCT No. 46245, was only registered more than eight
(8) years later.[17]
Given the attendant circumstances, in addition to the defects of the
1971 Deed of Absolute Sale found by the trial court and affirmed by
respondent Court of Appeals, petitioner LBJ cannot claim to be a buyer in
good faith. But even if we concede that petitioner LBJ was innocent of the
fraud perpetrated against private respondents, the records abound with facts
which should have impelled it to investigate deeper into the title of
Lacsamana, more so when such effort would not have entailed additional
hardship, nay, would have been quite easy, since the titled co-owner of
Lacsamana is LBJ's own sister company EL DORADO.
The rule that a person dealing with registered land has the right to rely
on the Torrens title will not apply when such person has actual knowledge of
facts that would impel a reasonably cautious man to make an inquiry. [18] He
cannot close his eyes to such facts and later claim that he acted in good
faith.[19] Thus, LBJ is not entitled to the mantle of protection accorded by the
Torrens System of registration which protects only the title holder in good
faith. It has never been created as a shield to fraud.[20]
WHEREFORE, premises considered, the petition is
DENIED. The questioned decision of respondent Court of Appeals dated 20
July 1995 in CA-G.R. CV No. 38246 affirming that of the Regional Trial Court
of Lipa City dated 8 April 1992 is AFFIRMED, with costs against petitioners.
SO ORDERED.
G.R. No. L-11285 May 16, 1958
VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs-
appellants,
vs.
APOLONIO FABIANA, defendant-appellee.
Rodolfo A. Ta-Asan for appellants.
Napoleon B. Nidea for appellee.
REYES, J.B.L., J.:
Sapto (Moro), now deceased was the registered owner of a parcel of land
located in Alambre, Toril, Davao City, under Transfer Certificate of Title No.
T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died, he
left his children Samuel, Constancio, and Ramon as heirs of the property in
question. Ramon pre-deceased his two brothers, leaving no, other heirs. On
June 6, 1931, Samuel and Constancio Sapto executed a deed of sale of a
portion of four hectares of the land aforementioned if favor of defendant
Apolonio Fabiana, in consideration of the amount of P245.00. The sale was
duly approved by the Provincial Governor of Davao, but was never
registered. Possession of the land conveyed was, however, transferred to
Fabiana and the latter has been in the possession thereof 1931 up to the
present.
Thereafter, Constancio Sapto died without any issue, Samuel Sapto married
one Dora (Bagoba) and upon his death was survived by his widow and two
children, Laureana and Vicente Sapto. On October 19, 1954, the widow and
children of Samuel Sapto filed this action in the Court of First Instance of
Davao for the recovery of the parcel of land sold by their predecessors to
defendant Apolonio Fabiana in 1931. After trial, the lower court held that
although the sale between Samuel and Constancio Sapto and defendant in
1931 was never registered, it was valid and binding upon the parties and the
vendors heirs, and ordered the plaintiffs to execute the necessary deed of
conveyance in defendant's favor and its annotation in the certificate of title.
From this judgment, plaintiffs appealed to this Court.
The issue is whether the deed of sale executed by appellants' predecessors
in favor of the appellee over the land in question, although never registered,
is valid and binding on appellants and operated to convey title and
ownership to the appellee.
The question is not new. In a long line of cases already decided by this
Court, we have consistently interpreted sec. 50 of the Land Registration Act
providing that "no deed . . . shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as
evidence of authority to the clerk or register of deeds to make registration" in
the sense that as between the parties to a sale registration is not necessary
to make it valid and effective, for actual notice is equivalent to registration
(Obras Pias vs. Devera Ignacio, 17 Phil., 45; Gustilo vs. Maravilla, 48 Phil.,
442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43 Phil., 609;
Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91 Phil.,
265). "The peculiar force of a title under Act No. 492", we said in Medina vs.
Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus), "is exhibited only
when the purchaser has sold to innocent third parties the land described in
the conveyance. Generally speaking, as between vendor and vendee, the
same rights and remedies exist in relation to land not so registered". In
Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to
protect the buyer against claims of third persons arising from subsequent
alienations by the vendor, and is certainly not necessary to give effect as
between the parties to their deed of sale". And in the recent case of
Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957, we reiterated that "the
purpose of registration is merely to notify and protect the interests of
strangers to a given transaction, who may be ignorant thereof, and the non-
registration of the deed evidencing said transaction does not relieve the
parties thereto of their obligations thereunder".
No right of innocent third persons or subsequent transferees of the property
in question is involved herein. The property has remained and still is in the
possession of the vendee of appellants' predecessors, herein appellee. It is,
therefore, clear that the conveyance between appellee and his vendors and
valid and binding upon the latter, and is equally binding and effective against
the heirs of the vendors, herein appellants. To hold otherwise would make of
the Torrens system a shield for the commission of fraud by the vendors or
his heirs (Gustilo vs. Maravilla, 48 Phil., 442), who would then be able to
reconvey the same property to other persons.
Appellants cite several cases wherein we have held that under the Torrens
system, registration is the operative act that gives validity to the transfer or
creates a lien upon the land. The authorities cited refer, however, to cases
involving conflicting rights over registered property and those of innocent
transferees who relied on the clean titles of the properties in question. These
cases have, therefore, no bearing on the instant case, where the appellee
has always, remained in the possession of the land in question and no
subsequent transfer thereof to other persons has been made either by
appellants or their prodecessors-in-interest.
The appellants aver that it was error to require them to execute a deed of
conveyance in favor of the plaintiff, appellee, and argue that the latter's
action to obtain it had long prescribed, twenty years having elapsed since
the original sale. This contention must be overruled, being predicated on the
assumption that the reconveyance is sought by way of performance of the
contract of sale entered into in 1931. No enforcement of the contract is in
fact needed, since the delivery of possession of the land sold had
consummated the sale and transferred title to the purchaser, registration of
the contract not being indispensable as between the parties. Actually the
action for conveyance was one to quiet title, i.e., to remove the cloud cast
upon appellee's ownership by the refusal of the appellants to recognize the
sale made by their predecessors. This action accrued only when appellant,
initiated their suit to recover the land in 1954. Furthermore, it is an
established rule of American jurisprudence (made applicable in this
jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to
property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p.
47; Cooper vs. Rhea, 39 L. R. A. 930; Inland Empire Land Co. vs. Grant
County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to
land quieted, as against one who is asserting some adverse claim
or lien thereon, is not barred while the plaintiff or his grantors
remain in actual possession of the land, claiming to be owners
thereof, the reason for this rule being that while the owner in fee
continues liable to an action, proceeding, or suit upon the adverse
claim, he has a continuing right to the aid of a court of equity to
ascertain and determine the nature of such claim and its effect on
his title, or to assert any superior equity in his favor. He may wait
until his possession is disturbed or his title is attacked before taking
steps to vindicate his right. But the rule that the statute of limitations
is not available as a defense to an action to remove a cloud from
title can only be invoked by a complaint when he is in possession.
One who claims property which is in the possession of another
must, it seems, invoke his remedy within the statutory period. (44
Am. Jur., p. 47)

Wherefore, the judgment appealed from is affirmed. Costs against

appellants. So ordered.
G.R. No. L-52064 December 26, 1984
JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO
LAYNO, petitioner,
vs.
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as
Administrator of the Estate of the Deceased, MARIANO DE
VERA, respondents.
Pedro Peralta for petitioner.
Andres T. Gutierrez for private respondent.
MELENCIO-HERRERA, J.:
Respondent Appellate Court, then the Court of Appeal, affirmed in toto the
judgment of the former Court of First Instance of Pangasinan, Branch III, at
Dagupan adjudging private respondent entitled to recover possession of a
parcel of land and ordering petitioners, as defendants below, to vacate the
premises. Petitioners, as paupers, now seek a reversal of that judgment.
It was established by a relocation survey that the Disputed Portion is a 3,732
square-meter-area of a bigger parcel of sugar and coconut land (Lot No. 1,
Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of 8,752
square meters, situated at Calasiao, Pangasinan. The entire parcel is
covered by Original Certificate of Title No. 63, and includes the adjoining
Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M. DE
VERA, who died in 1951 without issue. His intestate estate was
administered first by his widow and later by her nephew, respondent
Salvador Estrada.
Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were
first cousins, "both orphans, who lived together under one roof in the care of
a common aunt."
As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058
of the former Court of First Instance of Pangasinan, Branch III, an Inventory
of all properties of the deceased, which included "a parcel of land in the
poblacion of Calasiao, Pangasinan, containing an area of 5,417 square
meters, more or less, and covered by Tax Declaration No. 12664."
Because of the discrepancy in area mentioned in the Inventory as 5,147
square meters (as filed by the widow), and that in the title as 8,752 square
meters, ESTRADA repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters,
was occupied by petitioner-spouses Juliana Caragay Layno and Benito
Layno. ESTRADA demanded that they vacate the Disputed Portion since it
was titled in the name of the deceased DE VERA, but petitioners refused
claiming that the land belonged to them and, before them, to JULIANA's
father Juan Caragay.
ESTRADA then instituted suit against JULIANA for the recovery of the
Disputed Portion (Civil Case No. D-2007), which she resisted, mainly on the
ground that the Disputed Portion had been fraudulently or mistakenly
included in OCT No. 63, so that an implied or constructive trust existed in
her favor. She then counterclaimed for reconveyance of property in the
sense that title be issued in her favor.
After hearing, the Trial Court rendered judgment ordering JULIANA to vacate
the Disputed Portion.
On appeal respondent Appellate Court affirmed the Decision in toto.
Before us, JULIANA takes issue with the following finding of respondent
Court:
Although Section 102 of Act 496 allows a Petition to
compel a Trustee to reconvey a registered land to
the cestui que trust (Severino vs. Severino, 44 Phil 343;
Escobar vs. Locsin, 74 PhiL 86) this remedy is no longer
available to Juliana Caragay. Mariano de Vera's land, Lot
1, Psu-24206, was registered on September 11, 1947
(Exhibit"C") and it was only on March 28, 1967 when the
defendants filed their original answer that Caragay sought
the reconveyance to her of the 3,732 square meters.
Thus, her claim for reconveyance based on implied or
constructive trust has prescribed after 10 years (Banaga
vs. Soler, L-15717, June 30,1961; J.M. Tuason & Co. vs.
Magdangal, L-15539, Jan. 30, 1962; Alzona vs.
Capunitan, 4 SCRA 450). In other words, Mariano de
Vera's Original Certificate of Title No. 63 (Exhibit "C") has
become indefeasible. 1
We are constrained to reverse.
The evidence discloses that the Disputed Portion was originally possessed
openly, continuously and uninterruptedly in the concept of an owner by Juan
Caragay, the deceased father of JULIANA, and had been declared in his
name under Tax Declaration No. 28694 beginning with the year 1921
(Exhibit "2-C"), later revised by Tax Declaration No. 2298 in 1951 (Exhibit "2-
B"). Upon the demise of her father in 1914, JULIANA adjudicated the
property to herself as his sole heir in 1958 (Exhibit "4"), and declared it in her
name under Tax Declaration No. 22522 beginning with the year 1959
(Exhibit "2-A"), later cancelled by TD No. 3539 in 1966 (Exhibit "2"). Realty
taxes were also religiously paid from 1938 to 1972 (Exhibits "3-A" to "3-H").
Tacking the previous possession of her father to her own, they had been in
actual open, continuous and uninterrupted possession in the concept of
owner for about forty five (45) years, until said possession was disturbed in
1966 when ESTRADA informed JULIANA that the Disputed Portion was
registered in Mariano DE VERA's name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion in
OCT No. 63, JULIANA, an unlettered woman, declared that during his
lifetime, DE VERA, her first cousin, and whom she regarded as a father as
he was much older, borrowed from her the Tax Declaration of her land
purportedly to be used as collateral for his loan and sugar quota application;
that relying on her cousin's assurances, she acceded to his request and was
made to sign some documents the contents of which she did not even know
because of her ignorance; that she discovered the fraudulent inclusion of the
Disputed Portion in OCT No. 63 only in 1966 when ESTRADA so informed
her and sought to eject them.
Of significance is the fact, as disclosed by the evidence, that for twenty (20)
years from the date of registration of title in 1947 up to 1967 when this suit
for recovery of possession was instituted, neither the deceased DE VERA up
to the time of his death in 1951, nor his successors-in-interest, had taken
steps to possess or lay adverse claim to the Disputed Portion. They may,
therefore be said to be guilty of laches as would effectively derail their cause
of action. Administrator ESTRADA took interest in recovering the said
portion only when he noticed the discrepancy in areas in the Inventory of
Property and in the title.
Inasmuch as DE VERA had failed to assert any rights over the Disputed
Portion during his lifetime, nor did he nor his successors-in-interest possess
it for a single moment: but that, JULIANA had been in actual, continuous and
open possession thereof to the exclusion of all and sundry, the inescapable
inference is, fraud having been unsubstantiated, that it had been erroneously
included in OCT No. 63. The mistake is confirmed by the fact that deducting
3,732 sq. ms., the area of the Disputed Portion from 8,752 sq. ms., the area
of Lot 1 in OCT No. 63, the difference is 5,020 sq. ms., which closely
approximates the area of 5,147 sq. ms., indicated in the Inventory of
Property of DE VERA. In fact, the widow by limiting the area in said
Inventory to only 5,147 sq. ms., in effect, recognized and admitted that the
Disputed Portion of 3,132 sq. ms., did not form part of the decedent's estate.
The foregoing conclusion does not necessarily wreak havoc on the
indefeasibility of a Torrens title. For, mere possession of a certificate of title
under the Torrens System is not conclusive as to the holder's true ownership
of all the property described therein for he does not by virtue of said
certificate alone become the owner of the land illegally included. 2 A Land
Registration Court has no jurisdiction to decree a lot to persons who have
never asserted any right of ownership over it.
... Obviously then, the inclusion of said area in the title of
Lot No. 8151 is void and of no effect for a land registration
Court has no jurisdiction to decree a lot to persons who
have put no claim in it and who have never asserted any
right of ownership over it. The Land Registration Act as
well as the Cadastral Act protects only the holders of a title
in good faith and does not permit its provisions to be used
as a shield for the commission of fraud, or that one should
enrich himself at the expense of another. 3
JULIANA, whose property had been wrongfully registered in the name of
another, but which had not yet passed into the hands of third parties, can
properly seek its reconveyance.
The remedy of the landowner whose property has been
wrongfully or erroneously registered in another's name is,
after one year from the date of the decree, not to set aside
the decree, but, respecting the decree as incontrovertible
and no longer open to review, to bring an ordinary action
in the ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent
purchaser for value, for damages. 4
Prescription cannot be invoked against JULIANA for the reason that as
lawful possessor and owner of the Disputed Portion, her cause of action for
reconveyance which, in effect, seeks to quiet title to the property, falls within
settled jurisprudence that an action to quiet title to property in one's
possession is imprescriptible. 5 Her undisturbed possession over a period of
fifty two (52) years gave her a continuing right to seek the aid of a Court of
equity to determine the nature of the adverse claim of a third party and the
effect on her own title. 6
Besides, under the circumstances, JULIANA's right to quiet title, to seek
reconveyance, and to annul OCT. No. 63 accrued only in 1966 when she
was made aware of a claim adverse to her own. It was only then that the
statutory period of prescription may be said to have commenced to run
against her, following the pronouncement in Faja vs. Court of Appeals,
supra, a case almost Identical to this one.
Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera,
to cause the segregation of the disputed portion of 3,732 square meters
forming part of Lot No. 1, Psu-24206, Case No. 44, GLRO Rec. No. 117,
presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the
same to said petitioner. After the segregation shall have been accomplished,
the Register of Deeds of Pangasinan is hereby ordered to issue a new
certificate of title covering said 3,732 sq. m. portion in favor of petitioner, and
another crtificate of title in favor of the Estate of the deceased, Mariano de
Vera covering the remaining portion of 5,0520 square meters. No costs.

... Inasmuch as it is alleged in paragraph 3 of Frial's SO ORDERED

complaint, that Felipa Faja has been in possession of the
property since 1945 up to the present for a period of 30
years, her cause of action for reconveyance, which in
effect seeks to quiet her title to the property, falls within
that rule. If at all, the period of prescription began to run
against Felipa Faja only from the time she was served with
copy of the complaint in 1975 giving her notice that the
property she was occupying was titled in the name of
Indalecio Frial. There is settled jurisprudence that one who
is in actual possession of a piece of land claiming to be
owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his
right, the reason for the rule being, that his undisturbed
possession gives him a continuing right to seek the aid of
a court of equity to ascertain and determine the nature of
the adverse claim of a third party and its effect on his own
title, which right can be claimed only by one who is in
possession. No better situation can be conceived at the
moment for Us to apply this rule on equity than that of
herein petitioners whose mother, Felipa Faja, was in
possession of the litigated property for no less than 30
years and was suddenly confronted with a claim that the
land she had been occupying and cultivating all these
years, was titled in the name of a third person. We hold
that in such a situation the right to quiet title to the
property, to seek its reconveyance and annul any
certificate of title covering it, accrued only from the time
the one in possession was made aware of a claim adverse
to his own, and it is only then that the statutory period of
prescription commences to run against such possessor.

WHEREFORE, the judgment under review is hereby REVERSED and SET

ASIDE, and another one entered ordering private respondent Salvador
[G.R. No. 156357. February 18, 2005]
ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON
QUA, CARIDAD V. LEYSON and ESPERANZA V. LEYSON,
petitioners, vs. NACIANSINO BONTUYAN and MAURECIA B.
BONTUYAN, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision[1] of the Court
of Appeals (CA), as well as its Resolution in CA-G.R. CV No. 64471 denying
the motion for reconsideration of the said decision.
The Antecedents
Calixto Gabud was the owner of a parcel of land located in Barangay
Adlawon, Mabolo, Cebu City, which was declared for taxation purposes
under Tax Declaration (T.D.) No. 03276-R in 1945[2] with the following
boundaries:
North Calixto Gabud East Marcelo Cosido
South Pedro Bontuyan West Asuncion Adulfo.[3]
Because of the construction of a provincial road, the property was
divided into two parcels of land covered by T.D. No. 03276-R and T.D. No.
01979-R. On February 14, 1948, Gabud executed a Deed of Absolute
Sale[4] over the property covered by T.D. No. 03276-R, as well as the other
lot covered by T.D. No. 01979-R, in favor of Protacio Tabal, married to
Leodegaria Bontuyan. On the basis of the said deed, T.D. No. 03276-R was
cancelled by T.D. No. 13615-R in the name of Protacio Tabal effective
1949.[5] On January 5, 1959, Tabal executed a Deed of Sale [6] over the
property covered by T.D. No. 13615-R in favor of Simeon Noval, married to
Vivencia Bontuyan, daughter of Gregorio Bontuyan, for P800.00. T.D. No.
13615-R was cancelled by T.D. No. 100356 in the names of the spouses
Noval.[7] Gregorio Bontuyan received a copy of the said tax declaration in
behalf of the spouses Noval.[8]The latter tax declaration was then cancelled
by T.D. No. 008876 under the same names effective 1967. [9]
Subsequently, the property was surveyed by Cadastral Land Surveyor
Mauro U. Gabriel on January 22, 1964. The plan survey was approved on
September 30, 1966.[10] The property covered by T.D. No. 008876 was
identified as Lot No. 17150 of Cebu Cadastre No. 12, while the property
covered by T.D. No. 01979-R was identified as Lot No. 13272. On May 22,
1968, the spouses Noval executed a Deed of Absolute Sale [11] over the two
lots covered by T.D. No. 008876 in favor of Lourdes V. Leyson
for P4,000.00. Lourdes Leyson took possession of the property and had it
fenced. Despite the said sale, T.D. No. 008876 was cancelled by T.D. No.
21267 effective 1974.[12] Thereafter, T.D. No. 21267 was cancelled by T.D.
No. 23821[13] which, in turn, was cancelled by T.D. No. 01-17455 effective
1980.[14] In 1989, the latter was cancelled by a new tax declaration, T.D. No.
01-001-00646. All these tax declarations were in the names of the spouses
Noval.[15]
Meanwhile, Lourdes Leyson paid for the realty taxes over the property.
However, the tax declaration issued thereon continued to be under the
names of the spouses Noval.[16]
Despite his knowledge that the property had been purchased by his
son-in-law and daughter, the spouses Noval, Gregorio Bontuyan, who was
then 91 years old, filed an application with the Bureau of Lands for a free
patent over Lot No. 17150 on December 4, 1968. He alleged therein that the
property was public land and was neither claimed nor occupied by any
person,[17] and that he first entered upon and began cultivating the same in
1918. Thus, on November 19, 1971, Free Patent No. 510463 was issued
over Lot No. 17150 in his favor, on the basis of which Original Certificate of
Title (OCT) No. 0-1619 was issued to and under his name on March 21,
1974.[18] Another parcel of land, Lot No. 13272, was also registered under
the name of Gregorio Bontuyan under OCT No. 0-1618. He then declared
Lot No. 17150 for taxation purposes under T.D. No. 13596 effective
1974.[19] On February 20, 1976, Gregorio Bontuyan executed a Deed of
Absolute Sale[20] over Lot No. 17150 in favor of his son, Naciansino
Bontuyan.
On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed
another Deed of Absolute Sale[21] over Lot Nos. 13272 and 17150, covered
by OCT No. 0-1618 and OCT No. 0-1619, respectively, in favor of
Naciansino Bontuyan for P3,000.00. On the basis of the said deed, OCT No.
0-1619 was cancelled by TCT No. 1392 in the name of Naciansino Bontuyan
on December 2, 1980.[22] Gregorio Bontuyan died intestate on April 12,
1981.[23]
On March 30, 1981, the spouses Bontuyan executed a Real Estate
Mortgage over Lot No. 17150 covered by OCT No. 0-1619 in favor of the
Development Bank of the Philippines (DBP) as security for a loan
of P11,200.00.[24] Naciansino Bontuyan had earlier executed an affidavit that
the property was not tenanted. Shortly thereafter, the spouses Bontuyan left
the Philippines and resided in the United States. Meanwhile, Lourdes
Leyson died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem
the property from DBP only to discover that there were tenants living on the
property installed by Engineer Gabriel Leyson, one of the late Lourdes
Leysons children. Despite being informed that the said spouses owned the
property, the tenants refused to vacate the same. The tenants also refused
to deliver to the spouses the produce from the property. The spouses
Bontuyan redeemed the property from DBP on September 22, 1989.
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico
Bontuyan, Vivencia Noval and Naciansino Bontuyan, the surviving heirs of
Gregorio Bontuyan, executed an Extrajudicial Settlement [25] of the latters
estate and adjudicated Lot No. 13272 in favor of Naciansino. Based on the
said deed, T.D. No. 01-001-00877 was issued to and under the name of
Naciansino over the said property starting 1994.
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr.
Gabriel Leyson, demanding that he be furnished with all the documents
evidencing his ownership over the two lots, Lots Nos. 17150 and
13272.[26] Engr. Leyson ignored the letter.
The spouses Bontuyan, thereafter, filed a complaint against Engr.
Leyson in the Regional Trial Court (RTC) of Cebu City for quieting of title
and damages. They alleged that they were the lawful owners of the two lots
and when they discovered, upon their return from the United States, that the
property was occupied and cultivated by the tenants of Engr. Leyson, they
demanded the production of documents evidencing the latters ownership of
the property, which was ignored.
The spouses Bontuyan prayed that, after due proceedings, judgment
be rendered in their favor, thus:
WHEREFORE, premises considered, it is most respectfully prayed of this
Honorable Court to render judgment against the defendant and in favor of the
plaintiffs, to wit:
(a) Confirming the ownership of the plaintiffs on the lots in question;
(b) Ordering defendant to pay the plaintiffs the amount of Twenty Thousand Pesos
(P20,000.00) as the share of the plaintiffs of the produce of the lots in question;
(c) Ordering defendant to pay plaintiffs the sum of P50,000.00 as reimbursement of
attorneys fees and the further sum of P500.00 as appearance fee every time the case
is called for trial;
(d) Ordering the defendant to pay plaintiffs the sum of P50,000.00 as moral damages
and exemplary damages may be fixed by the court;
(e) Ordering defendant to pay plaintiffs the sum of P5,000.00 as actual expenses for
the preparation and filing of the complaint;
(f) Ordering defendant to pay the costs; and
(g) Granting to plaintiffs such other reliefs and remedies just and equitable in the
premises.[27]
In his answer to the complaint, Engr. Leyson averred, by way of
affirmative defenses, that the two lots were but portions of a parcel of land
owned by Calixto Gabud, covered by T.D. No. 03276-R, and was subdivided
into two parcels of land because of the construction of a provincial road on
the property; Gabud later sold the two lots to Protacio Tabal, who sold the
same to Simeon Noval, married to Vivencia Bontuyan, one of the children of
Gregorio Bontuyan; Simeon Noval later sold the property to Lourdes Leyson
on May 22, 1968 who, forthwith, took possession thereof as owner; and
Gregorio Bontuyan was issued a free patent over the property through fraud.
Engr. Leyson concluded that the said patent, as well as OCT No. 0-1619
and TCT No. 1392, were null and void and that the plaintiffs acquired no title
over the property.
Engr. Leyson interposed a counterclaim against the spouses Bontuyan
and repleaded as an integral part thereof all the material allegations in his
affirmative defense. He prayed that, after due proceedings, judgment be
rendered in his favor, thus:
a) Dismissing Plaintiffs complaint for failure to include indispensable parties;
b) Declaring the Defendant and his four (4) sisters, namely, Dr. Josefina L. Poblete,
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
in the name of Naciansino Bontuyan null and void and to order the Register of
Deeds to cancel the same and issue new ones in favor of the Defendant Gabriel V.
Leyson and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua,
Esperanza V. Leyson and Caridad V. Leyson;
d) And on the Counterclaim, to order Plaintiffs to pay the Defendant the following
sums:
d-1) P50,000.00 as attorneys fees and appearance fee
of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages;
d-3) P20,000.00 as exemplary damages;
d-4) P10,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the premises. [28]
In due course, the other children of Lourdes Leyson, namely, Dr.
Josefina L. Poblete, Fe Leyson Qua, Caridad V. Leyson and Esperanza V.
Leyson, were allowed to intervene as defendants. They filed their answer-in-
intervention wherein they adopted, in their counterclaim, paragraphs 7 to 26
of the answer of their brother, Engr. Leyson, the original defendant. They
prayed that, after due hearing, judgment be rendered in their favor as
follows:
Wherefore, this Honorable Court is prayed to render judgment in favor of the
Defendant and the Defendants-in-Intervention and against the Plaintiffs as follows:
a) Promissory Plaintiffs complaint for failure to include indispensable parties and for
lack of cause of action;
b) Declaring the Defendant and his four (4) sisters, namely: Dr. Josefina L. Poblete;
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
in the name of Naciansino Bontuyan null and void and to order the Register of
Deeds to cancel the same and issue new ones in favor of the Defendant Gabriel V.
Leyson and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua,
Esperanza V. Leyson and Caridad V. Leyson;
d) On the Counterclaim, Plaintiffs should pay the Defendants the following sums:
d-1) P50,000.00 as attorneys fees and appearance fee
of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages to each Intervenor;
d-3) P50,000.00 as exemplary damages;
d-4) P15,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the premises.[29]
In their reply, the spouses Bontuyan averred that the counterclaim of
the defendants for the nullity of TCT No. 1392 and the reconveyance of the
property was barred by laches and prescription.
On January 21, 1999, the trial court rendered judgment in favor of the
Leyson heirs and against the spouses Bontuyan. The fallo of the decision
reads:
WHEREFORE, foregoing considered judgment is hereby rendered dismissing
plaintiffs complaint for dearth of evidence declaring the defendant and the
intervenors as the true and legal owners and possessors of the subject parcels of
land; declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No.
1392 in the name of Naciansino Bontuyan null and void; ordering the Register of
Deeds to cancel OCT No. 0-1619 and TCT No. 1392 and issue new ones in favor of
defendant Gabriel Leyson and intervenors Josefina Poblete, Fe Qua, Esperanza
Leyson and Caridad Leyson; ordering plaintiff to pay defendant and intervenors the
following:
a) P50,000.00 attorneys fees;
b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and
intervenors;
d) 10,000.00 exemplary damages; and
e) 10,000.00 litigation expenses.
SO ORDERED.[30]
The trial court held that Simeon Noval had sold the lots to Lourdes
Leyson on May 22, 1968, who thus acquired title over the property.
The spouses Bontuyan appealed the decision to the CA which
affirmed, with modification, the decision of the RTC. The appellate court held
that the Leyson heirs were the owners of Lot No. 13273, while the spouses
Bontuyan were the owners of Lot No. 17150. The CA ruled that the answer
of the Leyson heirs to the complaint constituted a collateral attack of OCT
No. 0-1619 which was proscribed by law. The Leyson heirs filed a motion for
reconsideration of the decision insofar as Lot No. 17150 was concerned,
contending that their counterclaim for the nullification of OCT No. 0-1619
contained in their answer constituted a direct attack on the said title. The CA
denied the motion.
The Leyson heirs then filed a petition for review with this Court and
made the following assignments of error:
First Assignment of Error
THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT
RULED THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619
CANNOT BE RULED UPON IN THESE PROCEEDINGS BROUGHT BY THE
RESPONDENTS FOR THE QUIETING OF THEIR TITLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT PETITIONERS ANSWER WITH COUNTERCLAIM, PRAYING
FOR THE CANCELLATION OF PLAINTIFFS TORRENS CERTIFICATE IS A
MERE COLLATERAL ATTACK ON THE TITLE.[31]
Third Assignment of Error
THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE
DECISION OF THE REGIONAL TRIAL COURT DATED JANUARY 21, 1999
BY RULING THAT PETITIONERS ARE DECLARED THE OWNERS OF LOT
13273 BUT RESPONDENTS ARE DECLARED THE OWNERS OF LOT 17150
UNDER OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392 IN
THE NAME OF NACIANSINO BONTUYAN, DESPITE THE APPELLATE
COURTS AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT FRAUD
WAS COMMITTED BY GREGORIO BONTUYAN (RESPONDENTS
PREDECESSOR-IN-INTEREST) IN ACQUIRING TITLE OVER THE SUBJECT
PROPERTIES.[32]
Fourth Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY
OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392, IN FAVOR
OF PETITIONERS HAD PRESCRIBED.[33]
Fifth Assignment of Error
THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING
ATTORNEYS FEES AND APPEARANCE FEES DESPITE RESPONDENTS
FRAUD IN ACQUIRING TITLE OVER THE SUBJECT PROPERTIES.[34]
On the first two assignments of errors, the petitioners aver that the
counterclaim in their answer to the complaint constituted a direct attack of
the validity of OCT No. 0-1619. They maintain that the appellate courts
reliance on the ruling of this Court in Cimafrancia v. Intermediate Appellate
Court[35] was misplaced. They assert that what is controlling is the ruling
in Pro Line Sports Center, Inc. v. Court of Appeals[36] wherein this Court held
that the counterclaim of the petitioners therein constituted a direct attack on
a certificate of title. The petitioners, likewise, cited Section 55 of Act No. 496,
as amended, to buttress their stance. They plead that their answer to the
complaint should be liberally construed so as to afford them substantial
justice.
On the other hand, the respondents assert that the decision of the CA
is correct. They claim that Lot No. 17150 was still public land when Lourdes
Leyson purchased the same from Simeon Noval, and that the property
became private land only when Free Patent No. 510463 was issued to and
under the name of Gregorio Bontuyan.
We agree with the contention of the petitioners that the CA erred in not
nullifying OCT No. 0-1619 and TCT No. 1392 and ordering the respondents
to reconvey the property covered by the said title to the petitioners.
The respondents, as plaintiffs in the court a quo, were burdened to
prove their claim in their complaint that Gregorio Bontuyan was the owner of
Lot No. 17150 and that they acquired the property in good faith and for
valuable consideration from him.[37] However, the respondents failed to
discharge this burden. The evidence on record shows that Calixto Gabud
sold the property to Protacio Tabal on February 14, 1948, [38] and that the
latter sold the property to Simeon Noval on January 5, 1959. [39] Simeon
Noval then sold the property to Lourdes Leyson on May 22, 1968. [40] The
respondents failed to adduce any evidence to prove that Lourdes Leyson, or
even Simeon Noval, sold the property to Gregorio Bontuyan, or to any of the
respondents for that matter. Since Gregorio Bontuyan was not the owner of
the property, he could not have sold the same to his son Naciansino
Bontuyan and the latters wife, the respondents herein. As the Latin adage
goes: NEMO DAT QUOD NON HABET. Gregorio Bontuyan could not feign
ignorance of Simeon Novals ownership of the property, considering that the
latter was his son-in-law, and that he (Gregorio Bontuyan) was the one who
received the owners copy of T.D. No. 100356 covering the property under
the name of Simeon Noval.[41] At the dorsal portion of the said tax
declaration, there was even an annotation that the property was transferred
to Simeon Noval as shown by the deed of sale executed before Notary
Public Gregorio A. Uriarte who notarized the deed of sale over the property
executed by Protacio Tabal in favor of Simeon Noval on January 5,
1959.[42] We note that the respondents failed to adduce in evidence any
receipts of real property tax payments made on the property under their
names, which would have fortified their claim that they were the owners of
the property. We agree with the findings of the CA, thus:
This case involves two parcels of land Lot 17150 and Lot 13273. Lot 17150 is
registered under the Torrens System under the names of plaintiffs-appellants, while
Lot 13273 remained to be unregistered.
In this case, records show that defendant-appellee and intervenors-appellees are the
true owners of the subject lots. They have in their favor tax receipts covering the
subject lots issued since 1945.
While, indeed, tax receipts and declarations are not incontrovertible evidence of
ownership, such, however, if accompanied with open, adverse, continuous
possession in the concept of an owner, as in this case, constitute evidence of great
weight that person under whose name the real taxes were declared has a claim of
right over the land.
Further, defendant-appellee and intervenors-appellees presented before the trial
court the Deed of Absolute Sale dated February 14, 1948, executed by Calixto
Gabud, conveying the subject lots in favor of Protacio Tabal. The deed is a notarial
document.
Likewise presented is the Deed of Absolute Sale of the subject lots dated January 5,
1959, executed by Protacio Tabal in favor of spouses Simeon Noval and Vivencia
Bontuyan. The document is, likewise, a notarial document.
Defendant-appellee and intervenors-appellees also presented the Deed of Absolute
Sale of the subject lots dated May 22, 1968, executed by spouses Simeon Noval and
Vivencia Bontuyan in favor of Lourdes Leyson. The deed is a notarial document.
A notarial document is evidence of the facts in clear, unequivocal manner therein
expressed. It has in its favor the presumption of regularity. It is admissible in
evidence without necessity of preliminary proof as to its authenticity and due
execution.
There exist (sic) no trace of irregularity in the transfers of ownership from the
original owner, Calixto Gabud, to defendant-appellee and intervenors-appellees.
Plaintiffs-appellants, on the other hand, offered no convincing evidence as to how
their predecessor-in-interest, Gregorio Bontuyan, acquired the subject lots.
Plaintiffs-appellants presented only the Free Patent and OCT No. 0-1619, covering
Lot No. 17150, issued in the name of Gregorio Bontuyan.
As to Lot No. 13273, We find no sufficient reason why defendant-appellee and
intervenors-appellees should be disturbed in their ownership and possession of the
same.[43]
As copiously shown by the record, Gregorio Bontuyan filed his
application for a free patent with the Bureau of Lands on December 4, 1968
in gross bad faith, thereby defrauding Lourdes Leyson of the said property
through deceit. Gregorio Bontuyan falsely declared in the said application:
(a) that he entered upon and cultivated the property since 1918 and that the
property was not claimed or occupied by any person; and (b) that Lot No.
17150 was located in Sirao, Cebu City, when, in fact, the property was
located in Adlawon, Cebu City. Lourdes Leyson was not notified of the said
application and failed to file any opposition thereto. Gregorio Bontuyan was
then able to secure Free Patent No. 510463 on November 19, 1971 and
OCT No. 0-1619 on March 21, 1974. It appears in the said title that the
propertys location was indicated as Sirao, Cebu City.[44] Indeed, the CA
declared that Gregorio Bontuyan had acquired title to the property through
fraud:
However, as to Lot No. 17150, We find that despite the fraud committed by
Gregorio Bontuyan (plaintiffs-appellants predecessor-in-interest) in acquiring his
title over the said lot, ownership over the said lot should be adjudged in favor of
plaintiffs-appellants.
Records, indeed, show that, at the time when Gregorio Bontuyan applied for Free
Patent, Gregorio Bontuyan was living with his daughter, Vivencia Bontuyan
(defendant-appellees predecessor-in-interest). Thus, Gregorio Bontuyan must have
known that at the time when he applied for free patent on December 1968, the
subject lots were already sold on May 1968 by his daughter Vivencia Bontuyan in
favor of Lourdes Leyson, predecessor-in-interest of defendants-appellees.
Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 17150
to plaintiffs-appellants. The first was in 1976 and the other was in 1980. Plaintiffs-
appellants offered no reasonable explanation why Gregorio Bontuyan have (sic) to
sell twice Lot No. 17150 in favor of plaintiffs-appellants.
As found by the trial court, these are badges of bad faith which affect the validity of
the title of Gregorio Bontuyan over the subject lots.
We are aware that the torrens system does not create or vest title. It only confirms
and records title already existing and vested. It does not protect a usurper from the
true owner. It cannot be a shield for the commission of fraud. It does not permit one
to enrich himself at the expense of another. Where one does not have any rightful
claim over a real property, the torrens system of registration can confirm or record
nothing.[45]
The findings of the CA affirmed the findings of the trial court in its
decision, thus:
After having thoroughly analyzed the records and the evidences adduced during the
trial of this case, this Court is convinced and sincerely believes that the lots in
question were originally owned by Calixto Gabud as evidenced by T.D. [No.]
03276R marked as Exh. 1. In 1945, this consisted of only one lot in Adlawon, Cebu
City, as there was no provincial road yet. However in 1948, the said parcel of land
was divided into two because a provincial road was constructed passing through it.
Hence, T.D. [No.] 03276R and T.D. [No.] 01979-R were issued to Calixto Gabud.
On February 16, 1948, Calixto Gabud sold the said parcels of land to spouses
Protacio Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of
Sale, Exh. 2. On January 5, 1959, spouses Protacio Tabal and Ludegaria (sic)
Bontuyan, in turn, sold the same parcels of land to spouses Simeon Noval and
Vivencia Bontuyan as evidenced by a Deed of Sale, Exh. 4. It is noteworthy to
mention at this point in time that Vivencia Bontuyan is one of the daughters of
Gregorio Bontuyan, the father of herein plaintiff Naciansino Bontuyan. In May
1968, spouses Simeon Noval and Vivencia Bontuyan sold the subject parcels of land
to Lourdes vs. (sic) Leyson, the mother of herein defendant as evidenced by a Deed
of Sale marked as Exh. 6. It is quite perplexing for the court to imagine that
Gregorio Bontuyan, father of herein plaintiff, who was then residing with spouses
Simeon Noval and Vivencia Bontuyan at 179 C San Jose dela Montaa, Mabolo,
Cebu City, as reflected in his application for Free Patent (Exhs. 8 & 26) dated
December 4, 1968 was unaware of the sale of the subject parcels of land made by
his daughter Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. It is
evident that, after the sale from spouses Noval to Lourdes Leyson in May 1968,
Gregorio Bontuyan applied for Free Patent for the same parcels of land in December
1968 claiming to have cultivated the land since 1918, stating therein the location as
Sirao and not Adlawon which is the true and correct location. Sirao and Adlawon
are two different barangays which are not even adjacent to each other. In fact, as
borne out by Exh. 25, it is separated by Barangay Guba. In 1974, Free Patent No.
510463 and OCT# 0-1619 was issued to Gregorio Bontuyan covering subject
property, the location of which is in Barangay Sirao in consonance to his
application. Gregorio Bontuyans application for Free Patent over subject parcels of
land had raised in the mind of this Court reasonable badges of bad faith on his part
as the subject parcels of land were already sold by his daughter Vivencia Bontuyan
and spouse Simeon Noval to Lourdes Leyson. Another badge of bad faith is raised
in the mind of this Court when he (Gregorio) sold the subject parcels of land twice
to his son Naciansino Bontuyan in 1976 and 1980, respectively, wherein both Deeds
of Sale were notarized by different Notary Publics, (Exhs. 10 & 16).[46]
Considering that Lourdes Leyson was in actual possession of the
property, the respondents cannot, likewise, claim that they were in good faith
when Gregorio Bontuyan allegedly sold the property to them on April 28,
1980.
Anent the third and fourth assignments of error, we do not agree with
the ruling of the CA that the petitioners failed to directly attack the validity of
OCT No. 0-1619. The CA failed to consider the fact that, in their respective
answers to the complaint, the petitioners inserted therein a counterclaim
wherein they repleaded all the material allegations in their affirmative
defenses, that Gregorio Bontuyan secured OCT No. 0-1619 through fraud
and deceit and prayed for the nullification thereof.
While Section 47 of Act No. 496 provides that a certificate of title shall
not be subject to collateral attack, the rule is that an action is an attack on a
title if its object is to nullify the same, and thus challenge the proceeding
pursuant to which the title was decreed. The attack is considered direct
when the object of an action is to annul or set aside such proceeding, or
enjoin its enforcement. On the other hand, an attack is indirect or collateral
when, in an action to obtain a different relief, an attack on the proceeding is
nevertheless made as an incident thereof.[47] Such action to attack a
certificate of title may be an original action or a counterclaim in which a
certificate of title is assailed as void. A counterclaim is considered a new suit
in which the defendant is the plaintiff and the plaintiff in the complaint
becomes the defendant. It stands on the same footing and is to be tested by
the same rules as if it were an independent action.[48] Furthermore, since all
the essential facts of the case for the determination of the titles validity are
now before the Court, to require the party to institute cancellation
proceedings would be pointlessly circuitous and against the best interest of
justice.[49]
The CA, likewise, erred in holding that the action of the petitioners to
assail OCT No. 0-1619 and TCT No. 1392 and for the reconveyance of the
property covered by the said title had already prescribed when they filed
their answer to the complaint.
Case law has it that an action for reconveyance prescribes in ten
years, the point of reference being the date of registration of the deed or the
date of issuance of the certificate of title over the property. In an action for
reconveyance, the decree of registration is highly regarded as
incontrovertible. What is sought instead is the transfer of the property or its
title, which has been wrongfully or erroneously registered in another persons
name, to its rightful or legal owner, or to one who has a better right.[50]
However, in a series of cases, this Court declared that an action for
reconveyance based on fraud is imprescriptible where the plaintiff is in
possession of the property subject of the acts. In Vda. de Cabrera v. Court of
Appeals,[51] the Court held:
... [A]n action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property, but
this rule applies only when the plaintiff or the person enforcing the trust is not in
possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, as the defendants are in the instant case, the right
to seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a piece of
land claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of
a court of equity to ascertain and determine the nature of the adverse claim of a third
party and its effect on his own title, which right can be claimed only by one who is
in possession.
Similarly, in the case of David v. Malay,[52] the same pronouncement
was reiterated by the Court:
... There is settled jurisprudence that one who is in actual possession of a piece of
land claiming to be owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of
the court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one
who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose ... possession of the
litigated property for no less than 30 years and was suddenly confronted with a
claim that the land she had been occupying and cultivating all these years, was titled
in the name of a third person. We hold that in such a situation the right to quiet title
to the property, to seek its reconveyance and annul any certificate of title covering it,
accrued only from the time the one in possession was made aware of a claim adverse
to his own, and it is only then that the statutory period of prescription commences to
run against such possessor.
The paramount reason for this exception is based on the theory that
registration proceedings could not be used as a shield for
fraud.[53] Moreover, to hold otherwise would be to put premium on land-
grabbing and transgressing the broader principle in human relations that no
person shall unjustly enrich himself at the expense of another. [54]
In the present case, Lourdes Leyson and, after her death, the
petitioners, had been in actual possession of the property. The petitioners
were still in possession of the property when they filed their answers to the
complaint which contained their counterclaims for the nullification of OCT
No. 0-1619 and TCT No. 1392, and for the consequent reconveyance of the
property to them. The reconveyance is just and proper in order to put a stop
to the unendurable anomaly that the patentees should have a Torrens title
for the land which they and their predecessors never possessed and which
has been possessed by another in the concept of an owner. [55]
On the fifth assignment of error, we rule for the petitioners. The award
of attorneys and appearance fees is better left to the sound discretion of the
trial court, and if such discretion is well exercised, as in this case, it will not
be disturbed on appeal.[56] With the trial and the appellate courts findings
that the respondents were in bad faith, there is sufficient basis to award
attorneys and appearance fees to the petitioners. Had it not been for the
filing of a baseless suit by the respondents against the petitioners, the latter
would not have sought the services of counsel to defend their interests and
represent them in this case.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decision of the Court of Appeals declaring the respondents the owners of
Lot No. 17150 covered by OCT No. 0-1619 and TCT No. 1392; and setting
aside the award of attorneys fees in favor of the petitioners by the Regional
Trial Court are REVERSED AND SET ASIDE.
The Court hereby AFFIRMS the ownership of the petitioners of Lot No.
17150. OCT No. 0-1619 and TCT No. 1392 covering the said lot are hereby
nullified. The Register of Deeds is ORDERED to cancel TCT No. 1392 and
to issue another title over the property in favor of the petitioners as co-
owners thereof. The trial courts award of P50,000.00 for attorneys fees to
the petitioners is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
[G.R. No. L-9335. October 31, 1956.]
CONCORDIA MEJIA DE LUCAS, Plaintiff-Appellee, vs. ANDRES
GAMPONIA, Defendant-Appellant.
DECISION
LABRADOR, J.:
Appeal from the judgment of the Court of First Instance of Nueva Vizcaya,
Honorable Jose de Venecia, presiding, and appealed directly to this court as
judgment was rendered on a stipulation of facts and only questions of law are
raised in the appeal.
By the stipulation of the parties it appears that on March 13, 1916, free patent No.
3699 was issued over the land subject of the action in the name of Domingo Mejia.
This patent was transcribed in the Office of the Register of Deeds of Nueva Vizcaya
on July 26, 1916 and certificate of title No. 380 issued in the name of Domingo
Mejia. On March 24, 1916, after the issuance of the patent but before the
registration of the same, patentee Domingo Mejia deeded the land to Zacarias
Ciscar, who immediately took possession thereof and enjoyed its fruits. Upon his
death the property was included in the distribution of his estate and adjudicated to
Roque Sanchez. Roque Sanchez in turn sold the land on January 21, 1940 to Andres
Gamponia, Defendant herein. Sanchez was in possession and enjoyment of the land
from the time he acquired it by inheritance from Ciscar up to the time he sold it
to Defendant Andres Gamponia, the latter has also possessed and enjoyed the
property from the time he bought it to date.
Domingo Mejia, upon his death, left no descendants or ascendants and his only
surviving kin was his brother Pedro Mejia. Pedro Mejia is now also dead and is
survived by his daughter Concordia Mejia de Lucas, Plaintiff herein. Upon the
above facts the court a quo held that the sale by the patentee to Zacarias Ciscar is
null and void, as the sale was made only 11 days after the issuance of a patent in
violation of the provisions of section 35 of Act No. 926. The Court further held that
since the land is registered land no title in derogation to that of the registered
owner could have been acquired either by Zacarias Ciscar or his successors in
interest, namely, Roque Sanchez and Defendant Andres Gamponia.
The main defense presented in the answer, is that Plaintiff’s right of action has
already prescribed by virtue of the possession of the land by the Defendant and his
predecessors in interest for a period of 37 years. This defense was overruled by the
court a quo on the ground that as the land is registered, with a certificate of title in
the name of patentee Domingo Mejia, title thereto may not be acquired by
the Defendant and his predecessors in interest against said registered owner. This
ruling is evidently based on Section 46 of the Land Registration Act, which provides
that “no title to registered land in derogation to that of the registered owner shall
be acquired by prescription or adverse possession.
Upon a careful consideration of the facts and circumstances, we are constrained to
find, however, that while no legal defense to the action lies, an equitable one lies in
favor of the Defendant and that is, the equitable defense of laches. No hold that
the defense of prescription or adverse possession in derogation of the title of the
registered owner Domingo Mejia does not lie, but that of the equitable defense of
laches. Otherwise, stated, we hold that while Defendant may not be considered as
having acquired title by virtue of his and his predecessors’ long continued
possession for 37 years, the original owner’s right to recover back the possession of
the property and the title thereto from the Defendant has, by the long period of 37
years and by patentee’s inaction and neglect, been converted into a stale demand.
In Go Chi Gun, et al., vs. Co Cho, et al., (96 Phil., 622) we held that the equitable
defense of laches requires four elements:chanroblesvirtuallawlibrary (1) conduct
on the part of the Defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made and for which the complaint seeks a
remedy; chan roblesvirtualawlibrary(2) delay in asserting the complainant’s rights,
the complainant having had knowledge or notice, of the Defendant’s conduct and
having been afforded an opportunity to institute a suit, (3) lack of knowledge or
notice on the part of the Defendant that the complainant would assert the right on
which he bases his suit; chan roblesvirtualawlibraryand (4) injury or prejudice to
the Defendant in the event relief is accorded to the complainant, or the suit is not
held to be barred.
All the four elements mentioned above are present in the case at bar. The first
element is present because on March 24, 1916 Domingo Mejia sold the land which
was covered by a free patent title dated March 13, 1916 and said sale or
conveyance was made in violation of Section 35 of the Public Land Act. The second
element is also present because from the date of the sale on March 24, 1916 the
patentee and vendor Domingo Mejia could have instituted the action to annul the
conveyance and obtain back the possession and ownership of the land, but
notwithstanding the apparent invalidity of the sale, neither patentee nor his
successors in interest, his brother, or the latter’s daughter, Plaintiff herein, who
should have known of the invalidity of the sale because it is a matter of law and
had all the opportunity to institute an action for the annulment of the sale,
instituted no suit to annul the sale or to recover the land for a period of 37 years.
Again the Defendant and his predecessors in interest, the original vendee and
purchaser Zacarias Ciscar, as well as vendee’s successors in interest, Roque
Sanchez, and later, Andres Gamponia, never expected or believed that the original
patentee or his successors in interest would bring an action to annul the sale.
These circumstances constitute the third element of laches. The fourth element is lot who failed to appear in the proceedings, as a result of which his land was
also present, not only because Zacarias Ciscar paid for the land but this same land declared public property, who brings an action 10 years later, is guilty of laches and
was divided among the heirs of Zacarias Ciscar in the proceedings for the inexcusable negligence and his action under Section 513 of the Code of Civil
settlement of his estate (Civil Case No. 301 of the Court of First Instance of Nueva Procedure can no longer be maintained. In another case where the Plaintiff loaned
Vizcaya) and Roque Sanchez, to whom the land was adjudicated, sold the property money to a couple and when the wife died and the conjugal properties divided
for P800 to the present Defendant Andres Gamponia. All of these transfer from between her heirs and her husband, the vendor did not present his claim against
Zacarias Ciscar to his heirs, to Roque Sanchez and to Defendant Andres Gamponia, the estate and only did so four years later against the widower, it was held that the
acts which covered a period of 37 years, would all have to be undone and the lender was guilty of laches in so far as the estate of the deceased spouse is
respective rights and obligations of the parties affected adjusted, unless the concerned because it would be inequitable and unjust to permit him to revive any
defense is sustained. claims which he may have had, which claims he did not present during the
distribution of the estate of the deceased wife. (Yaptico vs. Marina Yulo, et al., 57
It is to be noted that all the above complications would never had been occasioned
Phil., 818). In a third case (Kambal vs. Director of Lands, 62 Phil., 293), cadastral
had the original patentee and his successors in interest not slept on their rights for
proceedings for compulsory registration of certain parcels of land in Cotabato were
more than a generation. Add to this the fact that the original conveyance made by
instituted. These proceedings included two lands belonging to
the patentee is not absolutely null and void. The prohibition against the sale of free
the Petitioner. Petitioner failed to claim said lands in said proceedings and in 1917
patents is for a period of seven years (Section 35, Act No. 926); chan
the titles to the lands of the Petitioner were cancelled. Petitioner alleges that he
roblesvirtualawlibraryafter that period of time a patentee would be free to dispose
came to know by accident of the cancellation of his titles in the year 1933 or 1935.
of the land. Within seven years from the conveyance the original patentee could
It was held that because of the lapse of 16 years from the date the decision was
have brought an action to recover back his property. Since nothing of this sort was
rendered in the said registration case to the filing of the petition, no relief can be
done by him, it was certainly natural for the purchase to have assumed that the
granted the Petitioner as he has been guilty of laches. In the three cases decided
original patentee gave up his right to recover back the property and acquiesced in
previously by this Court, the periods of inaction were from 10 to 16 years. In the
vendee’s right and title. The successor in interest of the original purchaser must
case at bar it was a full period of 37 years.
also have believed in good faith that the patentee and his successors in interest
were reconciled to the idea of allowing the property to stay in the hands of the The judgment appealed from is hereby reversed and one is hereby entered
successors in interest. By this inaction for a period of 37 years to the consequent absolving the Defendant from the action. Without costs.
prejudice that annulment of the original sale would entail upon so many successive
owners, the equitable principle now stands up as a bar.
“The reason upon which the rule is based is not alone the lapse of time during
which the neglect to enforce the right has existed, but the changes of condition
which may have arisen during the period in which there has been neglect. In other
words, where a court of equity finds that the position of the parties has to change
that equitable relief cannot be afforded without doing injustice, or that the
intervening rights of third persons may be destroyed or seriously impaired, it will
not exert its equitable powers in order to save one from the consequences of his
own neglect.” (Penn Mutual Life Inc. Co., et al., vs. City of Austin et al., U. S. 962.)
In effect, the principle is one of estoppel because it prevents people who have slept
on their rights from prejudicing the rights of third parties who have placed reliance
on the inaction of the original patentee and his successors in interest.
The equitable defense of laches has been held to exist in this jurisdiction for
periods less than the period in the case at bar. Thus in the case of Gonzales vs.
Director of Lands, 52 Phil. 895, it was held in a cadastral case that the owner of a
[G.R. No. 138660. February 5, 2004]
HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs.
COURT OF APPEALS and MAGUESUN MANAGEMENT AND
DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition to cite for indirect contempt the officers of
Meycauayan Central Realty Corporation (Meycauayan) for defying the final
and executory Decision and Resolution of this Court in G.R. No. 118436
entitled Heirs of Manuel A. Roxas and Trinidad de Leon Vda. De Roxas v.
Court of Appeals and Maguesun Management & Development Corporation
(G.R. No. 118436).[1]
The Antecedents
This petition stems from a case filed by Trinidad de Leon Vda. De
Roxas to set aside the decree of registration over two unregistered parcels
of land in Tagaytay City granted to Maguesun Management and
Development Corporation (Maguesun) before the Regional Trial Court on
the ground of actual fraud. The trial court dismissed the petition to set aside
the decree of registration. On appeal, the Court of Appeals denied the
petition for review and affirmed the findings of the trial court. On 21 March
1997, this Court reversed the appellate courts decision in G.R. No. 118436.
The dispositive portion reads:
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court
of Appeals in C.A. G.R. CV No. 38328 (Trinidad de Leon Vda. de Roxas v.
Maguesun Management & Development Corporation, et al.) promulgated on
December 8, 1994 is hereby REVERSED AND SET ASIDE. Accordingly,
registration of title over the subject parcels of land, described in Plan AS-04-000108,
Lot Nos. 7231 and 7239, with an area of 3,461 and 10,674 square meters,
respectively, as shown and supported by the corresponding technical descriptions
now forming part of the Records of LRC No. TG-373, is awarded to herein
petitioner Trinidad de Leon vda. de Roxas and her heirs, herein substituted as
petitioners. Upon finality of this Decision, the Land Registration Authority is hereby
directed to ISSUE with reasonable dispatch the corresponding decree of registration
and certificate of title pursuant to Section 39 of Presidential Decree No. 1529.[2]
On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R.
No. 118436. Meycauayan alleged that on 14 May 1992, it purchased three
parcels of land from Maguesun which form part of the property awarded to
the heirs of Trinidad de Leon Vda. De Roxas (Roxas heirs). Meycauayan
contended that since it is a purchaser in good faith and for value, the Court
should afford it the opportunity to be heard. Meycauayan contends that the
adverse decision in G.R. No. 118436 cannot impair its rights as a purchaser
in good faith and for value.
On 25 June 1997, this Court denied the Petition for Intervention. This
Court also denied the Motion for Reconsideration filed by Maguesun. Thus,
on 21 August 1997, the Decision dated 21 March 1997 in G.R. No. 118436
became final and executory.
On 13 April 1998, the Land Registration Authority (LRA) submitted a
Report to the Regional Trial Court of Tagaytay City, Branch 18 (land
registration court), in LR Case No. TG-373, praying that the land registration
court:
a) Order the LRA to cancel Decree No. N-197092 in the name of
Maguesun to enable it to issue another decree in favor of the
heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas;
b) Order the Register of Deeds to cancel OCT No. 0-515 and all its
derivative titles; and
c) Order the issuance of the Decree with respect to the decision of the
Supreme Court dated 21 March 1997.
Meycauayan filed with the land registration court a Motion For Leave
To Intervene And For Period Of Time To File Opposition To The Report
Dated March 25, 1998 Filed By The LRA And To File Complaint-in-
Intervention.
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with
this Court raising the following issues:
a) Whether it is necessary for the trial court to first order the LRA to cancel Decree
No. N-197092 in the name of Maguesun Management and Development
Corporation to enable (the LRA) to issue another decree in favor of the Heirs of
Manuel A. Roxas and Trinidad de Leon Vda. de Roxas? Or is that order necessarily
included in the dispositive portion of the Supreme Court decision directing the LRA
to issue with reasonable dispatch the corresponding decree of registration and
certificate of title in favor of the Roxas heirs? Please note that this necessary
implication is a consequence of the Supreme Court finding that the decree in favor
of Maguesun was wrongfully issued because it was not entitled to the registration
decree as it had no registrable title, since Zenaida Melliza (from whom Maguesun
supposedly bought the lots) conveyed no title over the subject parcels of land to
Maguesun Corporation as she was not the owner thereof.
b) Whether an order from the trial court is necessary for the Register of Deeds
concerned to cancel OCT No. 0-515 and all its derivative titles? Or is that order
necessarily included in the dispositive portion of the Supreme Court decision
directing the LRA to issue the corresponding decree of registration and certificate of
title in favor of the Roxas heirs, considering that the original certificate of title
issued to Maguesun was based on an illegal decree of registration as found by this
Honorable Court. Further, the unconditional order of the Supreme Court to LRA to
issue the corresponding certificate of title to the Roxas heirs necessarily implies that
the OCT issued to Maguesun and its derivative titles shall be canceled, for it cannot
[be] assumed that the Supreme Court intended that the same parcel of land shall be
covered by more than one certificate of title.
c) Whether an order from the trial court is necessary before the LRA can comply
with the Supreme Court decision directing the LRA to issue with reasonable
dispatch the corresponding decree of registration and certificate of title in favor of
the Roxas heirs?
On 23 June 1998, the Roxas heirs filed a Supplement to Motion for
Clarification, the pertinent portions of which are:
1. In petitioners Motion for Clarification, one of the items sought to be clarified is
whether the derivative titles (i.e., the titles derived from Maguesun Management and
Development Corporations [Maguesun] Original Certificate of Title No. 0-515 and
issued to Meycauayan Central Realty Corp.) should be canceled, together with
Maguesuns certificates of title, so that new decree of registration and certificate of
title can be issued to petitioners, as ordered in the decision of this Honorable Court
dated 21 March 1997, which has become final and executory?
2. From the Petition for Intervention filed by Meycauayan Central Realty
Corporation (Meycauayan) with this Honorable Court on 22 May 1997, the
following statements, among others, are alleged:
a. That on May 14, 1992, the intervenor purchased for value
several parcels of real property from private
respondent Maguesun Management and Development
Corp. covered by TCT Nos. 24294, 24295 and 24296
containing an area of 2,019 square meters each, more
or less.
b. That prior to paying the agreed purchase price in full to
respondent Maguesun, an investigation with the
Tagaytay City Office of the Register of Deeds was
made to determine and ascertain the authenticity,
status and condition of the titles of Maguesun over the
aforesaid properties.
c. That investigation made by the intervenor with the Office of
Register of Deeds of Tagaytay City showed that in all
the certified true copies of the titles to the properties
above-mentioned which were registered in the name
of Maguesun, the last entry which appeared was the
following, to wit: x x x.
d. Appearing that the properties to be purchased by the herein
intervenor from respondent Maguesun have no
existing liens and/or encumbrances and considering
that the properties do not appear to be the subject of a
pending case which would affect the titles of those
who may subsequently purchase the same, the herein
intervenor proceeded to pay, in full, the total amount
of ONE MILLION FIVE HUNDRED THOUSAND
PESOS (P1,500,000.00) to Maguesun. Immediately
thereafter, Maguesun, through its duly authorized
officer, executed the corresponding Deeds of Absolute
Sale.
e. That after the corresponding taxes and/or fees were paid by
herein intervenor, the aforementioned TCT Nos. T-
24294, 24295 and 24296, were canceled and in lieu
thereof, new titles in the name of intervenor were
issued by the Register of Deeds of Tagaytay City.
 f. That on March 25, 1997, an officer of the intervenor corporation
was informed of a newspaper report stating, in big
bold letters, the following sub-headline, to wit:
SC RULES ON ROXAS FAMILY
LAND ROW IN TAGAYTAY.
g. The President of herein intervenor right after secured from the
Tagaytay City Office of the Register of Deeds
certified true copies of torrens titles over its Tagaytay
City properties.
h. That only then, after it secured certified true copies of the titles
mentioned in the preceding paragraph from the Office
of the Register of Deeds of Tagaytay City, did
intervenor come to know of the existence of a case
involving the properties sold to it by respondent
Maguesun on May 14, 1992.
3. Meycauayans Petition for Intervention was denied by this Honorable Court in its
Resolution dated 25 June 1997, a denial that has since become final and
executory. However, as stated in petitioners Motion for Clarification, Meycauayan
committed the proscribed act of forum-shopping by filing with the trial court a
motion for leave to intervene raising again the issue of its alleged ownership of
portions of the land.
4. In order to settle once and for all Meycauayans allegation that it was a buyer in
good faith, and to show that its derivative titles should be declared void and
canceled by this Honorable Court, petitioners will show herein that the sale to
Meycauayan was spurious or, at the very least, it was a buyer in bad faith.
In a Resolution dated 29 July 1998, this Court acted favorably on the
Roxas heirs Motion for Clarification and its Supplement. The pertinent
portions of the Resolution read:
Upon careful consideration of the points made by petitioners in their motions, this
Court finds the same meritorious and, hence, a clarification is in order. We,
therefore, declare that our directive on the LRA to issue with reasonable dispatch the
corresponding decree of registration and certificate of title also includes, as part
thereof, the cancellation, without need of an order of the land registration court, of
Decree No. N-197092, as well as OCT No. 0-515, and all its derivative titles. This is
a necessary consequence of the Courts earlier finding that the foregoing documents
were illegally issued in the name of respondent. But in light of Section 39 of
Presidential Decree No. 1529 (the Property Registration Decree), Decree No. N-
197092 which originated from the LRA must be cancelled by the LRA itself. On
account of this cancellation, it is now incumbent upon the LRA to issue in lieu of the
cancelled decree a new one in the name of petitioners as well as the
corresponding original certificate of title.Cancellation of OCT No. 0-515, on the
other hand, properly devolves upon the Register of Deeds who, under Section 40 of
P.D. No. 1529, has earlier entered a copy thereof in his record book. OCT No. 0-515
having been nullified, all titles derived therefrom must also be considered void it
appearing that there had been no intervening rights of an innocent purchaser for
value involving the lots in dispute.
ACCORDINGLY, the Court hereby resolves to GRANT petitioners Motion for
Clarification together with the Supplement thereto. For this reason, the dispositive
portion of our decision dated March 21, 1997 is clarified, thus:
First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative
titles, namely, TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689,
and T-25690, the latter three being already in the name of Meycauayan Realty
and Development Corporation (also designated as Meycauayan Central Realty,
Inc. and Meycauayan Realty Corporation).
Thereafter, the Land Registration Authority shall:
(a) CANCEL Decree No. N-197092 originally issued in the name
of Maguesun Management and Development
Corporation without need of an order from the land
registration court; and
(b) ISSUE with reasonable dispatch a new decree of registration
and a new original certificate of title (OCT) in favor of
petitioners pursuant to Section 39 of Presidential
Decree No. 1529. (Emphasis added)
On 11 December 1998, the land registration court issued an order denying the LRA
Report dated 25 March 1998 and the Motion for Leave to Intervene filed by
Meycauayan since the Supreme Court Resolution of 29 July 1998 had rendered them
moot.
The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627,
T-25628, T-25688, T-25689, T-25690 and T-27390.[3] TCT Nos. T-25688, T-
25689, T-25690 and T-27390 were derivative titles already in the name of
Meycauayan.
On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of
Possession with the land registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance,
damages and quieting of title with the trial court entitled Meycauayan Central
Realty Corp. v. Heirs of Manuel A. Roxas and Trinidad de Leon Vda. de
Roxas, Maguesun Management and Development Corp., Register of Deeds
of Tagaytay City, City Assessor of Tagaytay City and Land Registration
Authority.[4] The Complaint is almost an exact reproduction of the Petition for
Intervention filed by Meycauayan before this Court. The Complaint prayed
for judgment:
1. Ordering the defendants Land Registration Authority and the Register of Deeds of
Tagaytay City to cancel the titles and decree of registration they issued in lieu of
TCT Nos. 25688, 25689, 25690 and 27390 registered in the name of plaintiff
Meycauayan Central Realty Corporation and reconvey said properties to the plaintiff
corporation by reinstating the said cancelled titles or if the same not be possible,
cause the issuance of new decrees and titles thereto;
2. Ordering the defendant City Assessor of Tagaytay City to reinstate the
Assessments for real estate taxes it previously cancelled covering the properties of
plaintiff;
3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff actual and/or compensatory damages in the total amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00);
4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00) as
and by way of nominal damages;
5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff exemplary damages in the amount of TWO HUNDRED THOUSAND
PESOS (P200,000.00);
6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff Attorneys fees in the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00); and
7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff the costs of suit.[5]
On 6 May 1999, Meycauayan filed a Special Appearance Questioning
Court Jurisdiction and Opposition to the Motion for Issuance of Writ of
Possession Against Meycauayan Central Realty Corporation with the land
registration court.
On 2 September 1999, the land registration court issued an order, the
dispositive portion of which reads:
WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued
against Maguesun Management and Development Corporation in these
cases. However, insofar as Meycauayan Central Realty is concerned, let a resolution
of the motion filed by the movants herein be deferred until the Supreme Court had
resolved with finality the petition for contempt of herein movant in G.R. No.
138660.
On 7 March 2000, the trial court dismissed for lack of merit
Meycauayans complaint for reconveyance, damages and quieting of title.
The trial court held that (1) the nullity of OCT No. 0-515, which is the source
of Meycauayans titles, is now res judicata; (2) the complaints prayer for the
trial court to annul the decision of the Supreme Court in G.R. No. 118436 is
beyond the trial courts jurisdiction; and (3) Meycauayan is guilty of forum
shopping.[6] The trial court likewise denied Meycauayans Motion for
Reconsideration in an Order dated 20 June 2000.[7] On 24 August 2000,
Meycauayan filed a petition for certiorari under Rule 65 of the Rules of Court
with the Court of Appeals assailing the trial courts dismissal of the complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for
indirect contempt the officers of Meycauayan.
The Issues
The parties raised the following issues:
1. Whether this Courts Decision and Resolution in G.R. No. 118436
bind Meycauayan;
2. Whether Meycauayans act of filing with the trial court a complaint for
reconveyance, damages and quieting of title involving parcels of
 land, which were the subject of this Courts Decision and
Resolution in G.R. No. 118436, constitutes indirect contempt
under Section 3, Rule 71 of the Rules of Civil Procedure; and
3. Whether Meycauayan is guilty of forum shopping.
The Courts Ruling
The petition is meritorious. We find Meycauayans Executive Vice-
President Juan M. Lamson, Jr. guilty of indirect contempt. We also find that
Meycauayan committed forum shopping, and thus Meycauayan and its
Executive Vice President Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan
constitute indirect contempt under Section 3, Rule 71 of the Rules of Civil
Procedure: (1)Meycauayans defiance of the final and executory Decision
and Resolution of this Court in G.R. No. 118436; (2) its act of filing pleadings
before the land registration court to prevent execution of the Decision and
Resolution; (3) its act of filing a Complaint raising the same issues in its
Petition for Intervention which this Court had already denied and urging the
trial court to ignore and countermand the orders of this Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No.
118436 does not bind Meycauayan because it was not a party in the
case. According to Meycauayan, the Decision in G.R. No. 118436 may be
enforced against Maguesun but not against Meycauayan which is a stranger
to the case. Meycauayan insists that as a purchaser in good faith and for
value its rights cannot be prejudiced by the alleged fraudulent acquisition by
Maguesun of the subject properties. Meycauayan, therefore, is not liable for
contempt of court for filing an action for reconveyance, quieting of title and
damages.
The issue of whether the Decision in G.R. No. 118436 binds
Meycauayan was already addressed by this Court when it denied
Meycauayans Petition for Intervention. Furthermore, this Courts Resolution
dated 29 July 1998 clarified the Decision dated 21 March 1997 by ordering
the Register of Deeds to CANCEL OCT No. 0-515 and all its derivative
titles, namely, TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-
25689, and T-25690, the latter three already in the name of Meycauayan
Realty and Development Corporation (also designated as Meycauayan
Central Realty, Inc. and Meycauayan Realty Corporation). This Court
also found that there had been no intervening rights of an innocent
purchaser for value involving the lots in dispute.
Indirect Contempt
Meycauayans obstinate refusal to abide by the Courts Decision in G.R.
No. 118436 has no basis in view of this Courts clear pronouncement to the
contrary. The fact that this Court specifically ordered the cancelation of
Meycauayans titles to the disputed parcels of land in the Resolution dated
29 July 1998 should have laid to rest the issue of whether the Decision and
Resolution in G.R. No. 118436 is binding on Meycauayan. Clearly,
Meycauayans defiance of this Courts Decision and Resolution by filing an
action for reconveyance, quieting of title and damages involving the same
parcels of land which this Court already decided with finality constitutes
indirect contempt under Section 3(d), Rule 71 of the Rules of Civil
Procedure. Section 3(d) of Rule 71 reads:
SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge
in writing has been filed, and an opportunity given to the respondent to comment
thereon within such period as may be fixed by the court and to be heard by himself
or counsel, a person guilty of any of the following acts may be punished for indirect
contempt:
xxx
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice;
In Halili, et al. v. CIR, et al.,[8] this Court explained the concept of
contempt of court:
Contempt of court is a defiance of the authority, justice or dignity of the court; such
conduct as tends to bring the authority and administration of the law into disrespect
or to interfere with or prejudice parties litigant or their witnesses during litigation
(12 Am. Jur. 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the Court by acting in opposition
to its authority, justice and dignity. It signifies not only a willful disregard or
disobedience of the courts orders, but such conduct as tends to bring the authority of
the court and the administration of law into disrepute or in some manner to impede
the due administration of justice (17 C.J.S. 4).
This Court has thus repeatedly declared that the power to punish for contempt is
inherent in all courts and is essential to the preservation of order in judicial
proceedings and to the enforcement of judgments, orders, and mandates of the court,
and consequently, to the due administration of justice (Slade Perkins vs. Director of
Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs.
Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).
Meycauayans continuing resistance to this Courts judgment is an
affront to the Court and to the sovereign dignity with which it is
clothed.[9] Meycauayans persistent attempts to raise issues long since laid to
rest by a final and executory judgment of no less than the highest tribunal of
the land constitute contumacious defiance of the authority of this Court and
impede the speedy administration of justice.[10]
Well-settled is the rule that when a court of competent jurisdiction has
tried and decided a right or fact, so long as the decision remains unreversed,
it is conclusive on the parties and those in privity with them. [11] More so
where the Supreme Court has already decided the issue since the Court is
the final arbiter of all justiciable controversies properly brought before
it.[12] As held in Buaya v. Stronghold Insurance Co., Inc.:[13]
x x x An existing final judgment or decree rendered upon the merits, without fraud
or collusion, by a court of competent jurisdiction acting upon a matter within its
authority is conclusive of the rights of the parties and their privies. This ruling holds
in all other actions or suits, in the same or any other judicial tribunal of concurrent
jurisdiction, touching on the points or matters in issue in the first suit.
xxx
Courts will simply refuse to reopen what has been decided. They will not allow the
same parties or their privies to litigate anew a question, once it has been considered
and decided with finality. Litigations must end and terminate sometime and
somewhere. The effective and efficient administration of justice requires that once a
judgment has become final, the prevailing party should not be deprived of the fruits
of the verdict by subsequent suits on the same issues filed by the same parties.
This is in accordance with the doctrine of res judicata which has the
following elements: (1) the former judgment must be final; (2) the court which
rendered it had jurisdiction over the subject matter and the parties; (3) the
judgment must be on the merits; and (4) there must be between the first and
the second actions, identity of parties, subject matter and causes of
action.[14] The application of the doctrine of res judicata does not require
absolute identity of parties but merely substantial identity of parties.[15] There
is substantial identity of parties when there is community of interest
or privity of interest between a party in the first and a party in the
second case even if the first case did not implead the latter.[16]
The Court ruled in G.R. No. 118436 that Meycauayans predecessor-in-
interest, Maguesun, committed actual fraud in obtaining the decree of
registration of the subject properties.The Decision in G.R. No. 118436 binds
Meycauayan under the principle of privity of interest since it was a
successor-in-interest of Maguesun. Meycauayan, however, insists that it was
a purchaser in good faith because it had no knowledge of any pending case
involving the lots. Meycauayan claims that the trial court had already
canceled the notice of lis pendens on the titles when it purchased the lots
from Maguesun. In its Memorandum, Meycauayan stresses that to ensure
the authenticity of the titles and the annotations appearing on the titles,
particularly the cancelation of the notice of lis pendens, Meycauayan
checked with the Register of Deeds and the Regional Trial Court of
Tagaytay City.[17] Since Meycauayan checked with the Regional Trial Court
of Tagaytay City, Meycauayan then had actual knowledge, before it
purchased the lots, of the pending case involving the lots despite the
cancelation of the notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas
family has been in possession of the property uninterruptedly through their
caretaker, Jose Ramirez, who resided on the property.[18] Where the land
sold is in the possession of a person other than the vendor, the purchaser
must go beyond the certificates of title and make inquiries concerning the
rights of the actual possessor.[19] Meycauayan therefore cannot invoke the
right of a purchaser in good faith and could not have acquired a better right
than its predecessor-in-interest.This Court has already rejected
Meycauayans claim that it was a purchaser in good faith when it ruled in
G.R. No. 118436 that there had been no intervening rights of an innocent
purchaser for value involving the lots in dispute. As held in Heirs of Pael v.
Court of Appeals:[20]
In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R.
No. 106194, 276 SCRA 674 [1997]), petitioner maintained that as a
purchaser pendente lite of the land in litigation, it had a right to intervene under Rule
12, Section 2. We rejected this position and said that since petitioner is not a
stranger to the action between Quisumbing and the PNB, petitioner in fact having
stepped into the shoes of PNB in a manner of speaking, it follows that it cannot
claim any further right to intervene in the action. As in the instant Petition, it was
argued that the denial of the Motion to Intervene would be a denial likewise of due
process. But this, too, was struck down in Santiago Land where we held that
petitioner is not really denied protection. It is represented in the action by its
predecessor in interest. Indeed, since petitioner is a transferee pendente lite with
notice of the pending litigation between Reyes and private respondent Carreon,
petitioner stands exactly in the shoes of Reyes and is bound by any judgment or
decree which may be rendered for or against the latter.
Indeed, one who buys property with full knowledge of the flaws and
defects of the title of his vendor and of a pending litigation over the property
gambles on the result of the litigation and is bound by the outcome of his
indifference.[21] A purchaser cannot close his eyes to facts which should put
a reasonable man on guard and then claim that he acted in good faith
believing that there was no defect in the title of the vendor. [22]
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules
of Court provides:
SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of
indirect contempt committed against a Regional Trial Court or a court of equivalent
or higher rank, he may be punished by a fine not exceeding thirty thousand pesos or
imprisonment not exceeding six (6) months or both. x x x
In this case, Meycauayan Executive Vice President Juan M. Lamson,
Jr. caused the preparation and the filing of the Petition for Intervention in
G.R. No. 118436 and the Complaint for Reconveyance, Damages and
Quieting of Title with the trial court.[23] Juan M. Lamson, Jr. signed the
verification and certification of non-forum shopping for the Petition for
Intervention and the Complaint for Reconveyance, Damages and Quieting of
Title. Even though a judgment, decree, or order is addressed to the
corporation only, the officers, as well as the corporation itself, may be
punished for contempt for disobedience to its terms, at least if they
knowingly disobey the courts mandate, since a lawful judicial command to a
corporation is in effect a command to the officers.[24] Thus, for improper
conduct tending to impede the orderly administration of justice, Meycauayan
Executive Vice President Juan M. Lamson, Jr. should be fined ten thousand
pesos (P10,000).[25]
Direct Contempt
Meycauayans act of filing a Complaint for Reconveyance, Quieting of
Title and Damages raising the same issues in its Petition for Intervention,
which this Court had already denied, also constitutes forum shopping. Forum
shopping is the act of a party against whom an adverse judgment has been
rendered in one forum, seeking another and possibly favorable opinion in
another forum other than by appeal or special civil action of certiorari. There
is also forum shopping when a party institutes two or more actions based on
the same cause on the expectation that one or the other court might look
with favor on the party.[26]
In this case, the Court had already rejected Meycauayans claim on the
subject lots when the Court denied Meycauayans Petition for Intervention in
G.R. No. 118436. The Court ruled that there had been no intervening rights
of an innocent purchaser for value involving the lots in dispute. The Decision
of this Court in G.R. No. 118436 is already final and executory. The filing by
Meycauayan of an action to re-litigate the title to the same property, which
this Court had already adjudicated with finality, is an abuse of the courts
processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that if the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping,
the same shall be a ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as a cause for administrative sanctions.
The fact that Meycauayan did mention in its certification of non-forum
shopping its attempt to intervene in G.R. No. 118436, which this Court
denied,[27] does not negate the existence of forum shopping. This disclosure
does not exculpate Meycauayan for deliberately seeking a friendlier forum
for its case and re-litigating an issue which this Court had already decided
with finality.[28]
The general rule is that a corporation and its officers and agents may
be held liable for contempt. A corporation and those who are officially
responsible for the conduct of its affairs may be punished for contempt in
disobeying judgments, decrees, or orders of a court made in a case within its
jurisdiction.[29]
Under Section 1 of Rule 71 of the Rules of Court, direct contempt is
punishable by a fine not exceeding two thousand pesos (P2,000)
or imprisonment not exceeding ten (10) days, or both, if committed against a
Regional Trial Court or a court of equivalent or higher rank. Hence,
Meycauayan[30] and its Executive Vice President Juan M. Lamson, Jr. are
each fined P2,000 for direct contempt of court for forum shopping.
WHEREFORE, we find Meycauayan Central Realty Corporations
Executive Vice President Juan M. Lamson, Jr. GUILTY of INDIRECT
CONTEMPT and FINE him TEN THOUSAND PESOS
(P10,000). Furthermore, we find Meycauayan Central Realty Corporation
and its Executive Vice President Juan M. Lamson, Jr. GUILTY of DIRECT
CONTEMPT for forum shopping and FINE them TWO THOUSAND PESOS
(P2,000) each. The Court warns them that a repetition of the same or similar
offense shall merit a more severe penalty.
SO ORDERED.
G.R. No. L-28740 February 24, 1981
FERMIN Z. CARAM, JR., petitioner,
vs.
CLARO L. LAURETA, respondent.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals
promulgated on January 29, 1968 in CA-G. R. NO. 35721-R entitled "Claro
L. Laureta, plaintiff-appellee versus Marcos Mata, Codidi Mata and Fermin
Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-
appellants," affirming the decision of the Court of First Instance of Davao in
Civil Case No. 3083. 1
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of
Davao an action for nullity, recovery of ownership and/or reconveyance with
damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z.
Caram, Jr. and the Register of Deeds of Davao City. 2
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land
covered by Original Certificate of Title No. 3019 in favor of Claro Laureta,
plaintiff, the respondent herein. The deed of absolute sale in favor of the
plaintiff was not registered because it was not acknowledged before a notary
public or any other authorized officer. At the time the sale was executed,
there was no authorized officer before whom the sale could be
acknowledged inasmuch as the civil government in Tagum, Davao was not
as yet organized. However, the defendant Marcos Mata delivered to Laureta
the peaceful and lawful possession of the premises of the land together with
the pertinent papers thereof such as the Owner's Duplicate Original
Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and
other papers related thereto. 3 Since June 10, 1945, the plaintiff Laureta had
been and is stin in continuous, adverse and notorious occupation of said
land, without being molested, disturbed or stopped by any of the defendants
or their representatives. In fact, Laureta had been paying realty taxes due
thereon and had introduced improvements worth not less than P20,000.00 at
the time of the filing of the complaint. 4
On May 5, 1947, the same land covered by Original Certificate of Title No.
3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner
herein. The deed of sale in favor of Caram was acknowledged before Atty.
Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys.
Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First
Instance of Davao a petition for the issuance of a new Owner's Duplicate of
Original Certificate of Title No. 3019, alleging as ground therefor the loss of
said title in the evacuation place of defendant Marcos Mata in Magugpo,
Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao
issued an order directing the Register of Deeds of Davao to issue a new
Owner's Duplicate Certificate of Title No. 3019 in favor of Marcos Mata and
declaring the lost title as null and void. On December 9, 1947, the second
sale between Marcos Mata and Fermin Caram, Jr. was registered with the
Register of Deeds. On the same date, Transfer Certificate of Title No. 140
was issued in favor of Fermin Caram Jr. 5
On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed
their answer with counterclaim admitting the existence of a private absolute
deed of sale of his only property in favor of Claro L. Laureta but alleging that
he signed the same as he was subjected to duress, threat and intimidation
for the plaintiff was the commanding officer of the 10th division USFIP
operating in the unoccupied areas of Northern Davao with its headquarters
at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of
Tagum, Province of Davao; that Laureta's words and requests were laws;
that although the defendant Mata did not like to sell his property or sign the
document without even understanding the same, he was ordered to accept
P650.00 Mindanao Emergency notes; and that due to his fear of harm or
danger that will happen to him or to his family, if he refused he had no other
alternative but to sign the document. 6
The defendants Marcos Mata and Codidi Mata also admit the existence of a
record in the Registry of Deeds regarding a document allegedly signed by
him in favor of his co-defendant Fermin Caram, Jr. but denies that he ever
signed the document for he knew before hand that he had signed a deed of
sale in favor of the plaintiff and that the plaintiff was in possession of the
certificate of title; that if ever his thumb mark appeared in the document
purportedly alienating the property to Fermin Caram, did his consent was
obtained through fraud and misrepresentation for the defendant Mata is
illiterate and ignorant and did not know what he was signing; and that he did
not receive a consideration for the said sale. 7
The defendant Fermin Caram Jr. filed his answer on October 23, 1959
alleging that he has no knowledge or information about the previous
encumbrances, transactions, and alienations in favor of plaintiff until the
filing of the complaints. 8
The trial court rendered a decision dated February 29, 1964, the dispositive
portion of which reads: 9

1. Declaring that the deed of sale, Exhibit A, executed by
Marcos Mata in favor of Claro L. Laureta stands and
prevails over the deed of sale, Exhibit F, in favor of Fermin
Caram, Jr.;
2. Declaring as null and void the deed of sale Exhibit F, in
favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of
sale, Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the
Secretary of Agriculture and Natural Resources on the
deed, Exhibit A, after Marcos Mata shall have
acknowledged the same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register
of Deeds for the City and Province of Davao the Owner's
Duplicate of Original Certificate of Title No. 3019 and the
latter to cancel the same;
6. Ordering the Register of Deeds for the City and
Province of Davao to cancel Transfer Certificate of Title
No. T-140 in the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and
Province of Davao to issue a title in favor of Claro L.
Laureta, Filipino, resident of Quezon City, upon
presentation of the deed executed by Marcos Mata in his
favor, Exhibit A, duly acknowledged by him and approved
by the Secretary of Agriculture and Natural Resources,
and
8. Dismissing the counterclaim and cross claim of Marcos
Mata and Codidi Mata, the counterclaim of Caram, Jr., the
answer in intervention, counterclaim and cross-claim of
the Mansacas.
The Court makes no pronouncement as to costs.
SO ORDERED.
10
The defendants appealed from the judgment to the Court of Appeals. The
appeal was docketed as CA-G.R. NO. 35721- R.
The Court of Appeals promulgated its decision on January 29, 1968
affirming the judgment of the trial court.
In his brief, the petitioner assigns the following errors: 11
I
THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT IRESPE AND APORTADERA
WERE ATTORNEYS-IN-FACT OF PETITIONER CARAM
FOR THE PURPOSE OF BUYING THE PROPERTY IN
QUESTION.
II
THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT THE EVIDENCE ADDUCED IN
THE TRIAL COURT CONSTITUTE LEGAL EVIDENCE
OF FRAUD ON THE PART OF IRESPE AND
APORTADERA AT TRIBUTABLE TO PETITIONER.
III
THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ERROR OF LAW IN HOLDING THAT
KNOWLEDGE OF IRESPE AND APORTADERA OF A
PRIOR UNREGISTERED SALE OF A TITLED
PROPERTY ATTRIBUTABLE TO PETITIONER AND
EQUIVALENT IN LAW OF REGISTRATION OF SAID
SALE.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN
NOT HOLDING THAT AN ACTION FOR
RECONVEYANCE ON THE GROUND OF FRAUD
PRESCRIBES WITHIN FOUR (4) YEARS.
The petitioner assails the finding of the trial court that the second sale of the
property was made through his representatives, Pedro Irespe and Atty.
Abelardo Aportadera. He argues that Pedro Irespe was acting merely as a
broker or intermediary with the specific task and duty to pay Marcos Mata
the sum of P1,000.00 for the latter's property and to see to it that the
requisite deed of sale covering the purchase was properly executed by
Marcos Mata; that the Identity of the property to be bought and the price of
the purchase had already been agreed upon by the parties; and that the
other alleged representative, Atty. Aportadera, merely acted as a notary
public in the execution of the deed of sale.
The contention of the petitioner has no merit. The facts of record show that
Mata, the vendor, and Caram, the second vendee had never met. During the
trial, Marcos Mata testified that he knows Atty. Aportadera but did not know
Caram. 12 Thus, the sale of the property could have only been through
Caram's representatives, Irespe and Aportadera. The petitioner, in his
answer, admitted that Atty. Aportadera acted as his notary public and
attorney-in-fact at the same time in the purchase of the property. 13
The petitioner contends that he cannot be considered to have acted in bad
faith because there is no direct proof showing that Irespe and Aportadera,
his alleged agents, had knowledge of the first sale to Laureta. This
contention is also without merit.
The Court of Appeals, in affirming the decision of the trial court, said: 14
The trial court, in holding that appellant Caram. Jr. was not
a purchaser in good faith, at the time he bought the same
property from appellant Mata, on May 5, 1947, entirely
discredited the testimony of Aportadera. Thus it stated in
its decision:
The testimony of Atty. Aportadera quoted elsewhere in this
decision is hollow. There is every reason to believe that
Irespe and he had known of the sale of the property in
question to Laureta on the day Mata and Irespe,
accompanied by Leaning Mansaca, went to the office of
Atty. Aportadera for the sale of the same property to
Caram, Jr., represented by Irespe as attorney-in-fact. Ining
Mansaca was with the two — Irespe and Mata — to
engage the services 6f Atty. Aportadera in the annulment
of the sale of his land to Laureta. When Leaning Mansaca
narrated to Atty. Aportadera the circumstances under
which his property had been sold to Laureta, he must have
included in the narration the sale of the land of Mata, for
the two properties had been sold on the same occassion
and under the same circumstances. Even as early as
immediately after liberation, Irespe, who was the witness
in most of the cases filed by Atty. Aportadera in his
capacity as Provincial Fiscal of Davao against Laureta,
must have known of the purchases of lands made by
Laureta when he was regimental commander, one of
which was the sale made by Mata. It was not a mere
coincidence that Irespe was made guardian ad litem of
Leaning Mansaca, at the suggestion of Atty. Aportadera
and attorney-in-fact of Caram, Jr.
The Court cannot help being convinced that Irespe,
attorney-in-fact of Caram, Jr. had knowledge of the prior
existing transaction, Exhibit A, between Mata and Laureta
over the land, subject matter of this litigation, when the
deed, Exhibit F, was executed by Mata in favor of Caram,
Jr. And this knowledge has the effect of registration as to
Caram, Jr. RA pp. 123-124)
We agree with His Honor's conclusion on this particular
point, on two grounds — the first, the same concerns
matters affecting the credibility of a witness of which the
findings of the trial court command great weight, and
second, the same is borne out by the testimony of Atty.
Aportadera himself. (t.s.n., pp. 187-190, 213-215,
Restauro).
Even if Irespe and Aportadera did not have actual knowledge of the first
sale, still their actions have not satisfied the requirement of good faith. Bad
faith is not based solely on the fact that a vendee had knowledge of the
defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong
Machinery Co. and Williamson, this Court held: 15
One who purchases real estate with knowledge of a defect
or lack of title in his vendor can not claim that he has
acquired title thereto in good faith, as against the true
owner of the land or of an interest therein, and the same
rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and
 investigation as might be necessary to acquaint him with
the defects in the title of his vendor.
In the instant case, Irespe and Aportadera had knowledge of circumstances
which ought to have put them an inquiry. Both of them knew that Mata's
certificate of title together with other papers pertaining to the land was taken
by soldiers under the command of Col. Claro L. Laureta. 16 Added to this is
the fact that at the time of the second sale Laureta was already in
possession of the land. Irespe and Aportadera should have investigated the
nature of Laureta's possession. If they failed to exercise the ordinary care
expected of a buyer of real estate they must suffer the consequences. The
rule of caveat emptor requires the purchaser to be aware of the supposed
title of the vendor and one who buys without checking the vendor's title takes
all the risks and losses consequent to such failure. 17
The principle that a person dealing with the owner of the registered land is
not bound to go behind the certificate and inquire into transactions the
existence of which is not there intimated 18 should not apply in this case. It
was of common knowledge that at the time the soldiers of Laureta took the
documents from Mata, the civil government of Tagum was not yet
established and that there were no officials to ratify contracts of sale and
make them registerable. Obviously, Aportadera and Irespe knew that even if
Mata previously had sold t he Disputed such sale could not have been
registered.
There is no doubt then that Irespe and Aportadera, acting as agents of
Caram, purchased the property of Mata in bad faith. Applying the principle of
agency, Caram as principal, should also be deemed to have acted in bad
faith.
Article 1544 of the New Civil Code provides that:
Art. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred to
the person who may have first taken possession thereof in
good faith, if it should be movable property.
Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith first
recordered it in the Registry of Property.
Should there be no inscription, the ownership shag pertain
to the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith. (1473)
Since Caram was a registrant in bad faith, the situation is as if there was no
registration at all. 19
The question to be determined now is, who was first in possession in good
faith? A possessor in good faith is one who is not aware that there exists in
his title or mode of acquisition any flaw which invalidates it. 20 Laureta was
first in possession of the property. He is also a possessor in good faith. It is
true that Mata had alleged that the deed of sale in favor of Laureta was
procured by force. 21 Such defect, however, was cured when, after the lapse
of four years from the time the intimidation ceased, Marcos Mata lost both
his rights to file an action for annulment or to set up nullity of the contract as
a defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the second
deed of sale, Exhibit "F", is a voidable contract. Being a voidable contract,
the action for annulment of the same on the ground of fraud must be brought
within four (4) years from the discovery of the fraud. In the case at bar,
Laureta is deemed to have discovered that the land in question has been
sold to Caram to his prejudice on December 9, 1947, when the Deed of
Sale, Exhibit "F" was recorded and entered in the Original Certificate of Title
by the Register of Deeds and a new Certificate of Title No. 140 was issued
in the name of Caram. Therefore, when the present case was filed on June
29, 1959, plaintiff's cause of action had long prescribed.
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a
voidable contract is not correct. I n order that fraud can be a ground for the
annulment of a contract, it must be employed prior to or simultaneous to the,
consent or creation of the contract. The fraud or dolo causante must be that
which determines or is the essential cause of the contract. Dolo causante as
a ground for the annulment of contract is specifically described in Article
1338 of the New Civil Code of the Philippines as "insidious words or
machinations of one of the contracting parties" which induced the other to
enter into a contract, and "without them, he would not have agreed to".
The second deed of sale in favor of Caram is not a voidable contract. No
evidence whatsoever was shown that through insidious words or
machinations, the representatives of Caram, Irespe and Aportadera had
induced Mata to enter into the contract.
Since the second deed of sale is not a voidable contract, Article 1391, Civil
Code of the Philippines which provides that the action for annulment shall be
brought within four (4) years from the time of the discovery of fraud does not
apply. Moreover, Laureta has been in continuous possession of the land
since he bought it in June 1945.

A more important reason why Laureta's action could not have prescribed is
that the second contract of sale, having been registered in bad faith, is null
and void. Article 1410 of the Civil Code of the Philippines provides that any
action or defense for the declaration of the inexistence of a contract does not
prescribe.

In a Memorandum of Authorities 22 submitted to this Court on March 13,

1978, the petitioner insists that the action of Laureta against Caram has
prescribed because the second contract of sale is not void under Article
1409 23 of the Civil Code of the Philippines which enumerates the kinds of
contracts which are considered void. Moreover, Article 1544 of the New Civil
Code of the Philippines does not declare void a second sale of immovable
registered in bad faith.

The fact that the second contract is not considered void under Article 1409
and that Article 1544 does not declare void a deed of sale registered in bad
faith does not mean that said contract is not void. Article 1544 specifically
provides who shall be the owner in case of a double sale of an immovable
property. To give full effect to this provision, the status of the two contracts
must be declared valid so that one vendee may contract must be declared
void to cut off all rights which may arise from said contract. Otherwise,
Article 1544 win be meaningless.

The first sale in favor of Laureta prevails over the sale in favor of Caram.

WHEREFORE, the petition is hereby denied and the decision of the Court of
Appeals sought to be reviewed is affirmed, without pronouncement as to
costs.

SO ORDERED.
G.R. Nos. 91383-84 May 31, 1991
SOCORRO COSTA CRISOSTOMO, petitioner,
vs.
COURT OF APPEALS and NORMA SAN JOSE, DIANA J.
TORRES, respondents.
Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner.
Augusto J. Salas for Diana J. Torres.
PARAS, J.:
This is a petition for review on certiorari of the: (1) decision * of the Court of
Appeals dated July 31, 1989 in CA-G.R. CV Nos. 11816 and 11817, entitled
"Socorro Costa Crisostomo vs. Norma San Jose and Diana Torres", which
modified the decision of the Regional Trial Court, Branch 154, Pasig, Metro
Manila, and (2) resolution dated December 11, 1989, which denied the
motion for reconsideration.
As gathered from the records, the facts of the case are as follows:
Socorro Costa Crisostomo (Crisostomo for short) was the registered owner
of a residential house and lot known as Lot No. 6, Block 60, located in
Mandaluyong, Metro Manila and covered by Transfer Certificate of Title No.
39286 of the Register of Deeds of Pasig. Crisostomo has occupied the
property ever since she had the house built and has introduced other
improvements thereon like fruit bearing trees and ornamental plants (Rollo,
Petition, p. 9).
Sometime in 1978, Norma San Jose (San Jose for short) offered to buy the
above-mentioned parcel of land including the house thereon for the sum of
P300,000.00 which amount was agreed upon to be paid from the proceeds
of a loan that was to be obtained by said respondent San Jose from a bank
using petitioner Crisostomo's title as collateral. As payment, San Jose issued
three (3) post dated Far East Bank and Trust Company checks in the total
amount of P300,000.00 (Ibid., p. 4).
Crisostomo accepted the offer, lent her title to San Jose and on May 17,
1978 executed a Deed of Absolute Sale in favor of San Jose (Rollo,
Petitioner's Memorandum, p. 106).
On May 22, 1978, Crisostomo, upon San Jose's request, executed another
deed of sale over the same property with the understanding that said
document was for the purpose of reducing San Jose's registration fees and
tax liabilities (Ibid.).
On May 26, 1978, San Jose registered the second deed of absolute sale
with the Registry of Deeds of Pasig. At the same time, Transfer Certificate of
Title No. 39286 was cancelled, and in its place, Transfer Certificate of Title
No. 11835 was issued (Rollo, Petition, pp. 10-11).
After Crisostomo got tired of San Jose's unfulfilled promises to make good
the postdated checks, the former decided to encash the postdated checks
after their maturity dates with Far East Bank and Trust Company.
Unfortunately, the same were all dishonored and returned to Crisostomo
with the notation of the Bank as "Account Closed." (Ibid.).
Upon inquiry by Crisostomo, San Jose replied that when her application for a
loan with a second bank, the Philippine Commercial and Industrial Bank,
was not approved, she shifted to Security Bank and Trust Company. Soon
enough, Crisostomo discovered that San Jose's loan application was
disapproved because the collateral was insufficient for the amount of the
loan she was borrowing (Ibid.).
For Crisostomo's protection, San Jose signed a written undertaking for the
forfeiture of the earnest money in the amount of P20,000.00 in favor of
herein petitioner with a certification that the title to the property will be
returned within one (1) month after non-effectivity of its sale, duly registered
in petitioner's name. The aforementioned amount of P20,000.00 was the
only payment Crisostomo ever received from San Jose (Ibid.).
Upon Crisostomo's insistence for the return of the title, San Jose informed
Crisostomo that the title was in the possession of Diana J. Torres, the
mortgagee (Rollo, Memorandum for Petitioner, p. 108).
San Jose never returned the said title as she had promised nor did she ever
make any payment to the petitioner (Ibid.).
Crisostomo made a written demand to Diana J. Torres (Torres for short) to
reconvey the subject property to her. This demand was not satisfied (Ibid.).
Petitioner was thus compelled to file Civil Case No. 34356 on September 3,
1979 against San Jose but this was later amended to include Torres (Ibid.).
On the other hand, San Jose filed in an apparent attempt to forestall the
extra-judicial foreclosure and public auction sale scheduled on September
18, 1979, Civil Case No. 34489 on September 17, 1979 against respondent
Torres. On January 9, 1980 both actions were consolidated on motion of the
parties and were jointly tried thereafter (Ibid.).
In a decision dated March 31, 1986, the Regional Trial Court of Pasig,
Branch CLIV (154) decided in favor of the petitioner, the dispositive portion
of which decision reads:
WHEREFORE, judgment is hereby rendered against the
defendants in favor of the plaintiff as follows:
In Civil Case No. 34356—
1) The Deed of Absolute Sale executed by plaintiff over the
property covered by Transfer Certificate of Title No. 39286 of the
Register of Deeds of Pasig, Metro Manila, is hereby ordered
rescinded;
2) Transfer Certificate of Title No. 11835 of the Register of Deeds
of Pasig, Metro Manila, in the name of defendant Norma San Jose
is hereby ordered cancelled;
3) Defendant Norma San Jose is hereby ordered to reconvey the
title covering subject property within twenty (20) days from the
finality of this judgment;
4) Defendants are also hereby ordered, jointly and severally, to pay
plaintiff (a) the amount of P100,000.00 representing moral
damages, (b) P20,000.00 as attorney's fees, and (c) the costs;
5) As a consequence of the rescission of the sale, plaintiff is
ordered to return the amount of P20,000.00 which she received as
earnest money. However, this amount shall be off-set against the
amount of damages assessed against defendants;
6) The Deed of Real Estate Mortgage executed by defendant
Norma San Jose in favor of defendant Diana Torres is hereby order
(sic) nullified. The Register of Deeds of Pasig, Metro Manila is
authorized to cancel the annotation of said mortgage on the title to
be issued in favor of plaintiff.
In Civil Case No. 34489—
1) Defendant Norma San Jose is hereby ordered to pay defendant
Diana Torres the amount of P100,000.00.
SO ORDERED. (Rollo, Annex "A", pp. 37-38).
Torres appealed the above-stated decision to the Court of Appeals which
modified the judgment of the trial court in a decision, the dispositive portion
of which reads as follows:
WHEREFORE, the decision appealed from is hereby MODIFIED in
that the Deed of Real Estate Mortgage in favor of appellant Diana
Torres be noted on the Certificate of Title which is to be re-issued
to the appellee, and, appellant Diana Torres is hereby excluded
from indemnifying the appellee the amounts representing moral
damages, attorney's fees, and costs, but is AFFIRMED in all other
respects.
SO ORDERED. (Rollo, Annex "A", p. 41).
Petitioner filed a motion for partial reconsideration of the appellate court's
decision but the same was denied in a Resolution dated December 11, 1989
(Rollo, Annex "B", p. 45).
Hence, the petition.
The Court in its resolution dated June 27, 1990 gave due course to the
petition and required both parties to submit their respective memoranda
(Rollo, Resolution, p. 78).
The only issue to be resolved in the instant case is whether or not private Thus, petitioner Crisostomo and Atty. Flor Martinez testified as follows in the
respondent Diana Torres is a mortgagee in good faith. trial court:

The petition is impressed with merit. TESTIMONY OF PETITIONER SOCORRO COSTA

CRISOSTOMO:
While it is settled that the jurisdiction of the Supreme Court in cases brought
to it from the Court of Appeals is limited to reviewing and revising errors of Atty. Beltran —
law imputed to the latter, the findings of fact of the Court of Appeals may be
set aside, among others, on the following grounds: ". . . (2) the inference Q Do you know Atty. Martinez here, have you ever met Atty.
made is manifestly mistaken; . . . (6) the findings of fact of the Court of Martinez?
Appeals are contrary to those of the trial court; . . .," (Tolentino vs. De Jesus,
56 SCRA 167 [1974]; Villamor vs. Court of Appeals, 162 SCRA 574 [1988];
Layugan vs. Intermediate Appellate Court, 167 SCRA 363 [1988]). A I met her June 17, 1978.

A careful study of the records shows that the Court of Appeals erred in Q Where did you meet Atty. Martinez?
finding that private respondent Diana Torres is a mortgagee in good faith on
the basis of the evidence. A She came at home that evening with Norma San Jose.

There are strong indications that Atty. Flor Martinez, the lawyer of Diana J. Q Where were you when Atty. Martinez and Norma San Jose came
Torres, the mortgagee, knew of the defect of San Jose's title. to your house?

Atty. Martinez is a close acquaintance of Norma San Jose, their long A I was at home.
relationship dating back to 1974 (Rollo, p. 60). When the subject property
was offered by San Jose as collateral for a loan, Atty. Martinez referred her Q Did you have any companion there?
to a client, Diana Torres. For her part, Torres instructed and authorized Atty.
Martinez to view and inspect the property as well as to ascertain the
genuineness and authenticity of San Jose's title (Hearing of October 6, 1989, A I was with my maid.
TSN, p. 6; Rollo, p. 113).
Q Before that date, did you have occasion to meet Atty. Martinez?
While feigning ignorance of the owner of subject property, she admitted later
on cross-examination that Socorro Crisostomo was the owner from whom A Yes. (sic) That was my first time to meet her.
San Jose allegedly bought the property (Hearing of April 20, 1983, TSN, pp.
6-11).
Q Was there any introduction made to you?

Even more persuasive is the fact that when Atty. Martinez personally
A She was introduced as a Bank Inspector of Private Development
inspected the property with San Jose for her client Torres, she allowed
Bank of Meycauayan, Bulacan. (Emphasis supplied)
herself to be introduced to Socorro Crisostomo who was then actually
occupying the house, as a Bank Inspector of the Development Bank
of Meycauayan, Bulacan from whom the loan was being obtained, obviously Q Who introduced her to you?
to convince Crisostomo that the procedure is in accordance with her
agreement with San Jose. A Norma San Jose.
 Q You mean she was introduced to you to inspect that property in Q Will you please tell the Honorable Court what was the
question? main purpose of your visit at the premises?

A Yes. A As the lawyer of the prospective mortgagee, I was duty

bound to make a fair assessment as to whether the
Q Why was that supposed inspection to be made on behalf of proposed collateral (sic) commensurate to the amount
the Meycauayan Bank? applied for. In other words, it was in connection with the
mortgage.
A She claimed that that was the bank wherein she was borrowing
her loan. xxx xxx xxx

Q In connection with that inspection supposed to be made, what Q And did you inquire from the plaintiff why was she there
was the purpose, if you know? at the moment?

A To facilitate to (sic) processing, according to them." (T.S.N., pp. A She was introduced to me as the Tia Coring.
16-17, Feb. 5, 1981)
Q And from your conversation, did you come to know that
xxx xxx xxx the plaintiff here, Socorro Crisostomo, is the same Tia
Coring whom she mentioned to you she bought the
property from? (Emphasis supplied)
On cross-examination of Atty. Flor Martinez by Atty. Beltran, she stated:
A Yes, the same Tia Coring who sold the property to her.
xxx xxx xxx (Emphasis supplied)

Q But your visit of the premises was purposely for the xxx xxx xxx
benefit of this Diana Torres, am I right?
Q And under these circumstances, you never inquired
A Of course, because she is my client. from the plaintiff whom you personally saw why she was
there in the property or until when she would remain in
Q And so in that visit of yours, you saw the plaintiff here that place? (Emphasis supplied)
personally?
A No, because it would be unethical to ask that question,
A Yes, I saw her then. she being the Tia Coring of (sic) the owner. (Emphasis
supplied) (T.S.N., pp. 81-85, April 28, 1983)
Q And you had a conversation with her?
xxx xxx xxx
A I had.
Finally, when Torres herself visited the property she carefully evaded seeing
xxx xxx xxx Crisostomo personally, the actual occupant thereof, who could have easily
enlightened her as to the true owner (Rollo, p. 116). Such unnatural behavior
points more convincingly to the fact that she was aware that San Jose was
not its real owner.

In Philippine National Bank vs. Court of Appeals (153 SCRA 435 [1987]), the
Supreme Court had the occasion to rule that a person dealing with
registered land has a right to rely upon the fact of the 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
would impel a reasonably cautious man to make further inquiries (Gonzales
vs. Intermediate Appellate Court, 157 SCRA 587 [1988]).

Even assuming that Torres does not in fact know the circumstances of the
sale, she is bound by the knowledge of Atty. Martinez or by the latter's
negligence in her haphazard investigation because the negligence of her
agents is her own negligence (PCIB vs. Villalva, 48 SCRA 37 [1972]).

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes

to facts which should put a reasonable man upon his guard, and then claim
that he acted in good faith under the belief that there was no defect in the
title of the vendor or mortgagor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the existence of a
defect in the vendor's or mortgagor's title, will not make him an innocent
purchaser or mortgagee for value, if it afterwards develops that the title was
in fact defective, and it appears that he had such notice of the defects as
would have led to its discovery had he acted with the measure of precaution
which may be required of a prudent man in a like situation (Leung Yee vs.
Strong Machinery Co., 37 Phil. 644; RFC vs. Javillonar,57 O.G. 39,
September 25, 1961; C.N. Hodges vs. Dy Buncio and Co., Inc., 116 Phil.
595; Manacop vs. Cansino, 61 O.G. 21, August 2, 1965, 1 SCRA 527;
Gaticana vs. Gaffud, 27 SCRA 706 [1969]).

The appellate court, therefore, gravely erred in the appreciation of evidence

on the good faith of private respondent Diana Torres.1âwphi1 Consequently,
because respondent Torres was not a mortgagee in good faith, there is no
sufficient basis for the appellate court to order the notation of the Deed of
Real Estate Mortgage in favor of private respondent Diana Torres on the
Certificate of title which is to be re-issued to herein petitioner.

PREMISES CONSIDERED, the decision of the respondent appellate court is

REVERSED and SET ASIDE, and the decision of the trial court is
REINSTATED.

SO ORDERED.
G.R. No. 91797 August 28, 1991
WIDOWS AND ORPHANS ASSOCIATION, INC., petitioner,
vs.
COURT OF APPEALS and ORTIGAS & COMPANY LIMITED
PARTNERSHIP, respondents.
Quijano & Padilla for petitioner.
Santiago & Santiago for private respondent.
Jose Teodorico V. Molina for intervenor-oppositor.
BIDIN, J.:
From the decision rendered by respondent court dated November 27, 1989,
declaring respondent Ortigas and Company Limited Partnership (Ortigas) as
the registered owner of the disputed parcel of land, petitioner Widows and
Orphans Association, Inc. (Widora), interposes this petition for review
seeking ng to annul the aforesaid judgment and prays that the case be
remanded to the trial court and there be tried on the merits. The facts, as
found by respondent court, are as follows:
On August 27, 1974, respondent Widora filed LRC Case No. Q-336
before the respondent (trial) court an application for registration of
title of a parcel of land as shown in Plan No. LRC (SWO)-l5352.
Widora alleged that the parcel of land is covered by Titulo de
Propriedad Numero 4136, dated April 25, 1894, issued in the name
of the deceased Mariano San Pedro y Esteban. Later, on June 14,
1978, Widora filed an amended application for registration of the
said parcel of land. It alleged that the parcel of land is situated at
Malitlit-Uoogong, Quezon City, with an area of 156 hectares, more
or less, described in Plan No. LRC (SWO)-15352; and that the
applicant acquired said property from the heirs of Don Mariano San
Pedro on December 12, 1954. The amended application prayed
that said parcel of land be ordered registered in the name of
Widora.
On August 25, 1978, respondent Dolores Molina filed an
opposition, claiming ownership over 12 to 14 hectares of Lot 8
(LRC) SWO-15352, and praying for a decree of registration over
said portions of Lot 8.
On October 24, 1978, petitioner Ortigas filed a motion to dismiss
the case alleging, among others, that respondent court had no
jurisdiction over the case, the land being applied for having been
already registered under the Torrens System and in the name of
Ortigas under TCT 77652 and TCT 77653.
On April 20, 1979, the respondent (trial) court issued an order
directing the applicant to prove its contention that TCT 77652 and
TCT 77653 are not proper derivatives of the original certificates of
titles from which they were purportedly issued, and setting the case
for hearing on June 28, 1979, at 8:30 a.m.
On June 27, 1979, petitioner Ortigas filed a motion for
reconsideration of said order of April 20, 1979, alleging that a
Torrens title becomes indefeasible after a year and that the same
becomes conclusive upon the entire world; that the Land
Registration Commission itself has advised the court that the 156
hectare property sought to be registered is covered by valid and
subsisting titles in the name of Ortigas; that Courts of First Instance
and the appellate courts in previous cases had sustained the
Ortigas titles over the land in question.
On October 3, 1979, the motion for reconsideration of petitioner
Ortigas was denied by the respondent (trial) court, but the latter set
the motion to dismiss for hearing on October 18 and 19, 1979 at
8:30 a.m., for the purpose of enabling the applicant to prove its
contention that TCT Nos. 77652 and 77653 are not proper
derivatives of the original certificates of title from which they were
purportedly issued.
The parties presented their testimonial and documentary evidence
before the respondent (trial) court in support of their respective
positions.
On March 30, 1988, the respondent (trial) court denied the motion
to dismiss of petitioner Ortigas, holding, among others, that TCT
77652 and TCT 77653 on their face show that they were derived
from OCT 337, 19, 336, 334, pursuant to Decree 1425; that if there
was error in the correct number of OCT on said titles, no step or
measure to rectify the same was taken; that Decree No. 1425
shows that it covers a total area of only 17 hectares, more or less,
located in Sta. Ana, Manila, which was four kilometers away from
the land subject of the application for registration which covers an
area of 156 hectares, more or less, described in Plan No. LRC
(SWO)-15352 situated at Malitlit-Uoogong, Quezon City; that the
contention of Ortigas that Decree No. 1425 covers an area in
Manila and also a part of Rizal is not credible, for if this were true
then the area of said Rizal portion should appear on the face of
said decree of registration, which is not the case; that TCT 77652
and TCT 77653 were not derived from any decree of registration,
and that the said TCTs being null and void, cannot be used as
basis to contest the right of the applicant to apply for registration
over the subject land. The order of March 30, 1988, in its
dispositive portion stated:
"WHEREFORE, premises considered, the Omnibus
Motion dated October 4, 1978 and Motion to Dismiss,
dated, October 23, 1978 filed by oppositor Ortigas &
Company, Limited Partnership are both DENIED for lack
of merit; while this Court's order of September 15, 1978
directing the City Assessor of Quezon City to issue a
separate tax declaration corresponding to the 12 or 14
hectares which is an undivided portion of the land applied
for registration and now belonging to the said Dolores V.
Molina; further, authorizing the City Treasurer of Quezon
City to accept the corresponding realty taxes due thereon;
and further the said Dolores V. Molina is allowed to
intervene in these proceedings, is hereby affirmed;
likewise, the City Treasurer is directed to accept the whole
of the taxes due on the property subject of the instant
petition from applicants Widows & Orphans Association,
Inc., as prayed for in its Manifestation with Motion subject
to the right of the oppositor Dolores V. Molina as
contained in this Court's order of September 15, 1978."
On April 26, 1988, petitioner Ortigas filed a motion for reconsider
consideration of the said order of March 30, 1988, taking exception
to the ruling that TCT Nos. 77652 and 77653 are null and void, and
alleging, among others, that respondent (trial) court had no
jurisdiction to hear an application for registration of a previously
registered land; that the parcels of land applied for are covered by
TCT 77652 and TCT 77653 in the name of Ortigas; that the parcels
of land covered by TCT 77652 and TCT 77653 are within the parcel
of land covered by OCT 351; and that OCT 351 is a copy of Decree
No. 1425 issued on April 26, 1905. The motion for reconsideration
prayed the respondent court to reconsider its order of March 30,
1988 on the ground that it had no jurisdiction over the application
for registration, the parcels of land subject thereof being already
covered by Torrens Certificates of Title.
On May 19, 1989, the respondent (trial) court issued an order,
denying the motion for reconsideration of Ortigas, and setting the
hearing on the merits on July 26, 1989, ... for the "eventual
presentation of the parties' respective evidence respecting their
alleged ownership of the property subject of this petition." (Rollo,
pp. 24-26)
Not satisfied, respondent Ortigas instituted an action for certiorari, prohibition
and mandamus before respondent court praying for the annulment of the
March 30, 1988 and May 19, 1989 orders of the trial court. It also prayed
that the trial court be ordered to dismiss the land registration case.
On November 27, 1989, respondent court rendered the decision sought to
be reviewed, the decretal portion of which reads:
WHEREFORE, the petition for certiorari, prohibition
and mandamus of petitioner Ortigas & Company Limited
Partnership is GRANTED. The orders of March 30, 1988 and May
19, 1989 of the Regional Trial Court of Quezon City, Branch 83, in
LRC Case No. Q-336, are REVERSED and ANNULLED, and said
LRC Case No. Q-336 is DISMISSED. The injunction issued by the
Court, per Resolution of August 8, 1989, is made permanent.
(Rollo, p. 35)
Based on the plan and other evidence submitted by respondent Ortigas at
the hearing of its application for preliminary injunction to enjoin the trial court
from proceeding with the hearing of LRC Case No. Q-336, respondent court
held that TCT Nos. 77652 and 77653, albeit reflecting their origins as OCT
Nos. 337, 19, 336 and 334, are actually derivatives of OCT No. 351, the
latter having been issued pursuant to Decree 1425 and that since OCT 351
is allegedly a copy of Decree 1425, the mere fact that the original copy of
Decree 1425, or a certified copy thereof, can no longer be located or
produced, does not mean that Decree 1425 covering the lots embraced in
TCT Nos. 77652 and 77653 was not issued. Concluding, respondent court
said:
 It may be that TCT 77652 and 77653 do not show on their face (sic)
that they were derived from OCT 351. But the fact remains, as
shown above, that the parcel of land covered by OCT 351
embraced the parcels of land, Lots 7 and 8, of TCT 77652 and
77653. There was, therefore a mistake in the entries in TCT 77652
and 77653 when the same referred to OCTs 337, 19, 336, 337 (sic)
and 334, as their source, for the correct OCT insofar as Lots 7 and
8 are concerned, should be OCT 351. (Rollo, p. 27)
In this petition, petitioner WIDORA avers that the respondent Court of
Appeals has decided questions of substance contrary to law and the
applicable decisions of this Court because:
I
THE COURT OF APPEALS INSISTED IN UPHOLDING THE
EXISTENCE OR VALIDITY OF TCTs 77652 and 77653 DESPITE
THE ABSENCE OF A SUPPORTING DECREE OF
REGISTRATION.
II
THE QUESTIONED DECISION UTILIZED SECONDARY
EVIDENCE DESPITE THE EXISTENCE AND AVAILABILITY OF
THE ORIGINAL DOCUMENT.
III
THE RESPONDENT COURT HAS NO POWER OR AUTHORITY
TO ENJOIN THE TRIAL ON THE MERITS OF LRC NO. Q-336
SINCE JURISDICTION RESIDES WITH THE RTC ACTING AS A
LAND REGISTRATION COURT.
In essence, it is the contention of petitioner that respondent court's grounds
and reasoning in support of its findings that respondent Ortigas is the
registered owner of the disputed property are baseless in law and fact.
Petitioner argues that respondent court erred in sustaining the validity of
TCTs Nos. 77652 and 77653 despite the absence of a supporting decree of
registration and instead utilized secondary evidence, OCT 351 which is
supposedly a copy of Decree 1425. Petitioner maintains that Decree 1425 is
itself existing and available at the Register of Deeds of Manila and on its
face shows that it covers a parcel of land with an area of only 17 hectares in
Sta. Ana, Manila while the parcel of land applied for contains an area of 156
hectares, located at Malitlit-Uoogong Quezon City, four (4) kilometers away
from Sta. Ana, Manila and is certified by the Bureau of Lands and the
Bureau of Forestry as alienable and disposable.
Respondent Ortigas claims that respondent court committed no error in
rectifying the mistake in the entries in TCT Nos. 77652 and 77653 as
regards their sources and/or origins arguing that the correction was justified
by the fact that the plan of OCT 351 coincides with the parcels of land
covered by TCT Nos. 77652 and 77653; that OCT 351 was issued pursuant
to Decree 1425 and that OCT 351 is a copy of the Decree itself.
We find the petition impressed with merit.
Undoubtedly, the evidence (i.e., plan submitted by respondent Ortigas,
testimony of its surveyor and OCT 351) adduced by private respondent to
prove the contents of Decree 1425 and admitted by respondent court is
merely secondary and should not have been admitted in the first place.
Before secondary evidence may be admitted, there must be 1) proof of the
execution of the original writing and 2) that it has been lost or destroyed or
cannot be produced in court or that it is in the possession of the adverse
party who has failed to produce it after reasonable notice (Michael and Co.
v. Enriquez, 33 Phil. 87 [1915]; Republic v. Court of Appeals, 73 SCRA 146
[1976]). Private respondent has not shown compliance with the above
requisites which would justify the admission of the secondary evidence used
and erroneously relied upon by respondent court.
Furthermore, the unilateral action of respondent court in substituting its own
findings regarding the extent of the coverage of the land included in TCT
Nos. 77652 and 77653, ostensibly to correct the error in, and conform with,
the technical description found in OCT 351 based on the plan and other
evidence submitted by respondent Ortigas cannot be sustained. That
function is properly lodged with the office of the trial court sitting as a land
registration court and only after a full-dress investigation of the matter on the
merits. It is before the land registration court that private respondent must
adduce the proof that the disputed parcels of land is legally registered in its
favor.
In Dioquino v. Intermediate Appellate Court (179 SCRA 163 [1989]), this
Court held that "(w)hile it is true that the Court of Appeals is vested with the
'power to try cases and conduct hearings, receive evidence and perform any
and all acts necessary to resolve factual issues raised ..." (Sec. 9 [3], BP
129), there was not even a request for evidentiary hearing filed in this case.
The Court of Appeals therefore should not have admitted said evidence
without giving the adverse party opportunity to present counter evidence, if
any. Besides, "evidence necessary in regards to factual issues raised in
cases falling within the Appellate Court's original and appellate jurisdiction
contemplates incidental facts which were not touched upon, or fully heard by
the trial or respondent Court. The law could not have intended that the
Appellate Court would hold an original and full trial of a main factual issue in
a case, which properly pertains to trial courts" (citing Lingner & Fisher GMBH
v. IAC, 125 SCRA 522 [1983]). In the case at bar, it appears that the parties
have yet to fully present their respective evidence in support of their claims
before the trial court. As a matter of fact, the trial court had set the case for
hearing on the merits in its order dated May 19, 1989. What is more, the
case involves a vast tract of land consisting of 156 hectares, separately
situated in two outlaying localities (i.e., Quezon City and Sta. Ana, Manila.)
The resolution of this controversy calls for a full-blown trial on the merits if
only to afford the contending parties their respective days in court. Further, a
ground for dismissal based on disputed facts, as in this case is not proper in
a motion to dismiss (Spouses Jayme and Solidarios v. Alampay, 62 SCRA
131 [1975]).
In the case at bar, respondent Ortigas alleges that Decree 1425 embraces
the lots covered by its TCT Nos. 77652 and 77653 which are identical to the
lots applied for by petitioner. On the other hand, petitioner maintains that
Decree 1425 covers a 17-hectare lot located at Sta. Ana, Manila while the lot
applied for is alienable and disposable as certified by the Bureau of Lands
and by the Bureau of Forestry and has an area of 156 hectares located in
Quezon City four (4) kilometers away from Sta. Ana, Manila. Hence, the
necessity of a trial on the merits to ascertain the disputed facts, i.e., whether
the lot applied for is covered by Decree No. 1425 or is alienable and
disposable. Under Act 496, it is the decree of registration issued by the Land
Registration Commission which is the basis for the subsequent issuance of
the certificate of title by the corresponding Register of Deeds that quiets the
title to and binds the land (De la Merced v. Court of Appeals, 5 SCRA 240
[1962]). Consequently, if no decree of registration had been issued covering
the parcel of land applied for, then the certificate of title issued over the said
parcel of land does not quiet the title to nor bind the land and is null and
void.
Besides, an order denying a motion to dismiss is merely interlocutory and,
unless it constitutes clearly a grave abuse of discretion or was issued
without or in excess of jurisdiction, the error, if any, should be corrected by
appeal in due time, after trial and judgment on the merits and not by the
extraordinary writ of prohibition (Moreno v. Macadaeg, 7 SCRA 700 [1963];
National Investment and Development Corporation v. Aquino, 163 SCRA 53
[1988]).
Furthermore, on grounds of pre-maturity, interlocutory orders cannot be
decided by the appellate courts until the lower court shall have decided the
merit of the case. Thus, in Villegas v. Fernando (27 SCRA 1119 [1969]), this
Court held:
This first assigned error (assailing the personality of the appellees
to ask for a review of the decision and decree in the registration
case) is actually directed at an earlier order dated 26 April 1961
denying appellants heirs' motion to dismiss the petitions for review
filed by the present appellees. And inasmuch as said order of 26
April 1961 is interlocutory, there being as yet no trial and decision
on the merits of the petition for review, it is premature to raise said
assigned error in appellants heirs' instant appeal. We shall rule
thereon only when the proper time comes, i. e., after the lower court
shall have settled not only the still unresolved status and rights of
the parties, particularly those of petitioners (sic) for review, now
appellees herein, almost all of whom are claiming that they are not
mere homestead or free patent applicants but patent or title
holders, but also whether the original decision should be
maintained or not. For the court below, after receiving and hearing
the parties, may still conclude in favor of appellants
herein. (Emphasis supplied)
But not only that. Respondent court committed a procedural lapse in
correcting the alleged error in the questioned TCTs.1âwphi1 A certificate of
title cannot be altered, amended or cancelled except in a direct proceeding
in accordance with law (Sec. 48, PD 1529; Natalia Realty Corp. v. Vallez,
173 SCRA 534 [1989]; Legarda v. Saleeby, 31 Phil. 590 [1915]). Also, no
correction of certificate of title shall be made except by order of the court in a
petition filed for the purpose and entitled in the original case in which the
decree of registration was entered (Sec. 112, Act 496; now Sec. 108, PD
1529). While the law fixes no prescriptive period therefor, the court,
however, is not authorized to alter or correct the certificate of title if it would
mean the reopening of the decree of registration beyond the period allowed
by law (Rodriguez, v. Tirona, 68 Phil. 264 [1939]).
Respondent Ortigas, on the other hand, argues that this Court has already
recognized the fact that the parcel of land under TCT No. 227758 from which
TCT Nos. 77652 and 77653 were issued, are covered by, among others,
Decree 1425 issued in GLRO Record No. 917 (Rollo, p. 94).
The argument is without merit True this Court declared in Ortigas &
Company, Limited Partnership v. Ruiz (148 SCRA 326 [1987]) that
"petitioner is the duly registered owner of the land * (then) in dispute as
evidenced by OCT Nos. 13, 33, 334, and 337 by virtue of Decrees Nos. 240,
1942 and 1925 issued in GLRO Record Nos. 699, 875 and 917 ..." Nowhere
in said decision, however, is a pronouncement that TCT Nos. 77652 and
77653 were issued from TCT No. 227758. On the contrary, it is not disputed
by the parties that TCT Nos. 77652 and 77653 themselves show that they
were derived from OCT No. 337, 19, 336 and 334 and not from OCT 351 or
TCT 227758. If indeed, the real origin thereof is OCT No. 351, what
respondent Ortigas should have done was to file a petition for the correction
of the TCTs in question as stated earlier.
case, a certificate of title cannot be considered conclusive evidence of
ownership where the certificate itself is faulty as to its purported origin.
Further, the fact that respondent Ortigas' motion to dismiss was denied does
not mean that it could no longer participate in the resolution of the case and
factual determination of the parties' allegations. As correctly stated by the
trial court, "(i)t is to be stressed, however, that the denial of oppositor
Ortigas' instant motion for reconsideration does not necessarily mean that it
is deprived of any participation in the instant petition. For as already stated,
what follows after its denial is the eventual presentation of all the parties'
respective evidence respecting their alleged ownership of the property
subject of this petition." (Rollo, p. 65)

While it may be true, as respondent Ortigas argues, that a land registration
court has no jurisdiction over parcels of land already covered by a certificate
of title, it is nevertheless true that the aforesaid rule only applies where there
exists no serious controversy as to the certificate's authenticity visa vis the
land covered therein. In the case at bar, the claimed origin of the questioned
TCTs evidently appear to be different from what is stated therein. It does not
appear indubitable that the disputed parcels of land are properly reflected in
the TCTs relied upon by private respondent. Off-hand, and as the parties
admit, the TCTs do not show that they are actually derivatives of OCT 351.
Such being the case, the rule relied upon cannot therefore apply. One who
relies on a document evidencing his title to the property must prove not only
the genuineness thereof but also the identity of the land therein referred to
(CF. Lasam v. Director of Lands, 65 Phil. 637 [1938]). In the case at bar,
private respondent's TCT Nos. 77652 and 77653 trace their origins from
OCT Nos. 337, 19, 336 and 334 and not from OCT 351 as it is now claimed
by respondent Ortigas.
WHEREFORE, the assailed judgment of respondent court is SET ASIDE
and the orders of the trial court in LRC Case No. Q336 entitled, "In Re-
Application for Registration of Title, WIDOWS and ORPHANS
ASSOCIATION, Inc., Applicant, ORTIGAS & COMPANY LIMITED
PARTNERSHIP and DOLORES V. MOLINA, Oppositors", dated March 30,
1988 and May 19, 1989 are hereby REINSTATED insofar as the denial of
oppositor Ortigas' motion to dismiss and motion for reconsideration,
respectively, are concerned and the case remanded to the trial court for trial
and adjudication on the merits.
SO ORDERED.

The trial court cannot be faulted for not having granted respondent Ortigas'
motion to dismiss simply because the TCTs relied upon by the latter do not
accurately reflect their supposed origin. Thus, in Ledesma v. Municipality of
Iloilo (49 Phil. 769 [1926]) this Court held that the "simple possession of a
certificate of title, under the Torrens System, does not make the possessor
the true owner of all the property described therein. If a person obtains a
title, under the Torrens System, which includes by mistake or oversight land
which cannot be registered under the Torrens System, he does not, by virtue
of said certificate alone, become the owner of the lands illegally included
(citing Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915])." TMs
pronouncement was reiterated by the Court in Caragay-Layno v. Court of
Appeals (133 SCRA 718 [1984]; Coronel v. Intermediate Appellate Court
(155 SCRA 270 [1987]; Goloy v. Court of Appeals (173 SCRA 26 [1989];
and Miranda v. Court of Appeals (177 SCRA 303 [1989]). As it is in this
[G.R. No. 128531. October 26, 1999]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS
and VICENTE L. YUPANGCO, JR., respondents.
DECISION
MENDOZA, J.:
The question for decision in this case is whether in a proceeding for the
issuance of an owners duplicate certificate of title, the Solicitor General is required
to be notified, such that failure to give such notice would render the proceedings
void. Both the Regional Trial Court and the Court of Appeals ruled in the
negative. Hence, this petition for review on certiorari.
The facts are as follows:
Private respondent Vicente Yupangco is the owner of a unit in a condominium
building in Legaspi Street, Makati City, as evidenced by Certificate of Title No.
7648. Because his aforesaid certificate could not be located, he filed, on January 28,
1994, in the Regional Trial Court, Branch 136, Makati, a petition for the issuance of
a new duplicate certificate of title in lieu of his lost copy, pursuant to 109 of P.D.
No. 1529 (Property Registration Decree). The trial court ordered the Register of
Deeds of Makati to comment on the petition and thereafter set the case for initial
hearing.
On February 11, 1994, the Registrar of Deeds of Makati filed a manifestation
that she had no objection to the petition. After hearing private respondents evidence,
the trial court rendered, on December 15, 1995, its decision granting the petition,
declaring as invalid the missing copy of the certificate of title, and ordering the
Registrar of Deeds of Makati to issue a new owners duplicate certificate of title in
the name of private respondent. A copy of this decision was furnished the Solicitor
General.
On February 5, 1996, the Solicitor General moved for reconsideration of the
trial courts decision on the ground that no copy of private respondents petition or
notice thereof had been given to him. His motion was, however, denied. The Office
of the Solicitor General then elevated the case to the Court of Appeals, which, in a
decision[1] dated March 5, 1997, affirmed the order of the trial court. Hence, this
petition.
Private respondents petition before the trial court was anchored on 109 of P.D.
No. 1529 (Property Registration Decree) which provides:
SEC. 109. Notice and replacement of lost duplicate certificate. In case of lost or
theft of an owners duplicate certificate of title, due notice under oath shall be sent by
the owner or by someone in his behalf to the Register of Deeds of the province or
city where the land lies as soon as the loss or theft is discovered. If a duplicate
certificate is lost or destroyed, or cannot be produced by a person applying for the
entry of a new certificate to him or for the registration of any instrument, a sworn
statement of the facts of such loss or destruction may be filed by the registered
owner or other person in interest and registered.
Upon the petition of the registered owner or other person in interest, the court
may, after notice and due hearing, direct the issuance of a new duplicate certificate,
which shall contain a memorandum of the fact that it is issued in place of the lost
duplicate certificate, but shall in all respects be entitled to like faith and credit as the
original duplicate, and shall thereafter be regarded as such for all purposes of this
decree.[2] (Emphasis added)
Nothing in the law, however, requires that the Office of the Solicitor General
be notified and heard in proceeding for the issuance of an owners duplicate
certificate of title. In contrast, 23 of the same law, involving original registration
proceedings, specifically mentions the Solicitor General as among those who must
be notified of the petition. Similarly, 36 provides that the petition for registration in
cadastral proceedings must be filed by the Solicitor General, in behalf of the
Director of Lands.
The Solicitor General, on the other hand, invokes 35(5), Chapter 12, Title III,
Book IV of the 1987 Administrative Code which provides:
SEC. 35. Powers and Functions. The Office of the Solicitor General shall represent
the Government of the Philippines, its agencies and instrumentalities and its officials
and agents in any litigation, proceeding, investigation or matter requiring the
services of lawyers. When authorized by the President or head of the office
concerned, it shall also represent government owned or controlled corporations.The
Office of the Solicitor General shall discharge duties requiring the services of
lawyers. It shall have the following specific powers and functions:
....
(5) Represent the Government in all land registration and related proceedings. . .
He contends that, in view of this provision, it was mandatory for the trial court to
notify him of private respondents petition and that its failure to do so rendered the
proceedings before it null and void.[3]
 The contention has no merit. The provision of the Administrative Code relied The important role of the Office of the solicitor General as the governments
upon by the Solicitor General is not new. It is simply a codification of 1(e) of P.D. law office cannot be overemphasized. Its powers and functions, however, should not
No. 478 (Defining the Powers and Functions of the Office of the Solicitor General) be rigidly applied in such a manner that innocuous omissions, as in the case at bar,
which similarly provided: should be visited with so grave a consequence as the nullification of
proceedings. After all, no prejudice to the government has been shown.
SECTION 1. Powers and Functions. (1) The Office of the Solicitor General shall WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
represent the Government of the Philippines, its agencies and instrumentalities and
its officials and agents in any litigation, proceeding, investigation or matter requiring SO ORDERED.
the services of a lawyer. When authorized by the President or head of the Office
concerned, it shall also represent government owned or controlled corporations. The
Office of the Solicitor General shall constitute the law office of the Government and,
as such, shall discharge duties requiring the services of a lawyer. It shall have the
following specific powers and functions:

....

e. Represent the Government in all land registration and related proceedings. . . .

It is only now that the Solicitor General is claiming the right to be notified of
proceedings for the issuance of the owners duplicate certificate of title. Indeed, the
only basis for such claim is that the Office of the Solicitor General represents the
government in land registration and related proceedings. Even so, however, the
request for representation should have come from the Registrar of Deeds of Makati
who was the proper party to the case. Here, there is no dispute that the Registrar of
Deeds of Makati was notified of private respondents petition, but she manifested
that her office had no objection thereto. The Solicitor General does not question the
propriety of the action and manifestation of the Registrar of Deeds, nor does he give
any reason why private respondents petition for the issuance of a new owners
duplicate certificate of title should be denied. Instead, he claims that the fact that he
was given a copy of the decision is an admission that he is entitled to be notified of
all incidents relating to the proceedings.
This is not correct. Considering that the law does not impose such notice
requirement in proceedings for the issuance of a new owners duplicate certificate of
title, the lack of notice to the Solicitor General, as counsel for the Registrar of
Deeds, was at most only a formal and not a jurisdictional defect.
This case should be distinguished from our rulings in cadastral registration
cases[4] and original land registration proceedings[5] which require that the Solicitor
General be notified of decisions and hold as decisive, for the purpose of determining
the timeliness of the appeal filed by the government, the date of his receipt of the
decisions therein and not that of the Director of Lands or of his other
representatives.[6] The issue and the applicable laws in those cases are different.
G.R. No. 107653 February 5, 1996
FELIPA GARBIN, petitioner,
vs.
THE HONORABLE COURT OF APPEALS (FORMER TENTH DIVISION)
and SPOUSES ANTONIO JULIAN and CASIMIRA GARBIN, respondents.
DECISION
ROMERO, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals reversing the Regional Trial Court of Tarlac, Tarlac which had
earlier dismissed the complaint for annulment of sale filed by private
respondents.
The facts are the following:
Pablo Garbin and Leoncia Garbin are the parents of petitioner Felipa Garbin
(Felipa) and private respondent Casimira Garbin (Casimira) married to
private respondent Antonio Julian. Pablo Garbin is the original owner of Lot
12712, Camiling, Tarlac Cadastre with an area of 25,681 square meters, title
thereto being evidenced by Original Certificate of Title No. 33251.
On October 31, 1955, Pablo Garbin and his wife Leoncia executed a "Deed
of Absolute Sale of Real Estate" purportedly conveying to private respondent
Casimira Garbin the undivided northern half of the said lot. Casimira then
registered an adverse claim over the property.
On May 24, 1970, Pablo Garbin sold the entire Lot 12712, including the
northern portion, to petitioner Felipa by virtue of a Deed of Sale.
Consequently, Transfer Certificate of Title No. 88932 was issued in favor of
Felipa. On July 29, 1974, Felipa and Pablo Garbin filed an ejectment case
against private respondent spouses. In that case, the Municipal Trial Court
of Camiling, Tarlac decided against private respondents. They appealed the
case to the Regional Trial Court of Tarlac which affirmed the questioned
decision. Private respondents then filed a petition for review with the Court of
Appeals, but said petition was dismissed. They questioned the dismissal in
this Court docketed as G.R. No. 59817 but the petition was denied due
course.
On March 1, 1982, before judgment could become final in the ejectment
case, private respondents filed a complaint for annulment of sale, partition
and damages with the Regional Trial Court of Tarlac. The issue presented
therein was whether or not private respondents, as the alleged first vendees
in a double sale, (who annotated the same as an adverse claim on the
covering title) have a superior right over petitioner, the subsequent vendee
(who received a transfer certificate of title for the entire lot despite prior
inscription of the adverse claim).
The RTC ruled in favor of petitioner and dismissed the complaint. Aggrieved,
private respondents went to the Court of Appeals which reversed and set
aside the decision of the trial court.
The appellate court said:
. . . it is Our view, and so We hold, that, at the very least, the
inscription of the adverse claim of plaintiffs-appellants on vendor
Pablo Garbin's OCT No. 33251 did constitute a sufficient notice to
the whole world, defendant-appellee Felipa Garbin included, that
the northern half of subject Lot 12712 was deeded out by the
registered owner to plaintiffs-appellants. Therefore, defendant-
appellee is a buyer in bad faith, with full awareness of the prior sale
of the northern half of Lot 12712 to her sister Casimira Garbin, and
consequently, the registration of the sale in favor of defendant-
appellee did not cleanse her bad faith and the legal consequences
thereof, and did not vest in her (appellee) the ownership over the
northern half of Lot 12712, as against the first buyer thereof,
plaintiff-appellant Casimira Garbin.
It is well-settled that in a double sale of real property, ownership
thereof "shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property" (2nd paragraph, Article
1544, New Civil Code of the Philippines). Under this applicable
provision of law, mere registration of the sale of real or immovable
property is not enough. The good faith of the buyer registering the
sale must concur. In the case of defendant-appellee she cannot be
considered in good faith, within legal contemplation, and her
profession of innocence or lack of knowledge of the prior sale is
incredible and unworthy of belief. To be sure, the annotation of
plaintiffs-appellants' adverse claim on the title of vendor Pablo
Garbin made defendant-appellee fully aware of such earlier sale.
As regards the defense of prescription or laches invoked by
defendant-appellee to defeat the claim of plaintiffs-appellants over
the portion of land in question; We find the same equally
undeserving of serious consideration. Considering that before
instituting this action on March 2, 1982, plaintiffs-appellants were
pre-occupied with the ejectment proceedings commenced against
them by defendant-appellee on July 29, 1970; it cannot be said,
then, that plaintiffs-appellants slumbered on their rights and had
failed to assert their claim seasonably. As a matter of fact, even
during the pendency of the ejectment case they did find time to
initiate this case under consideration. Plaintiffs-appellants having
been busy defending themselves in said ejectment case against
them; their inability to file the present action sooner is
understandable. It should be borne in mind that the running of the
period of prescription is capable of interruption. And, to repeat;
during the pendency of the ejectment case aforementioned; We
believe that the running of the period of prescription of plaintiffs-
appellants' cause of action had been interrupted.
As regards the equitable principle of laches, the attendant facts and
circumstances come to the fore. Whether or not laches set in
depends on the surrounding facts and circumstances. Here, We
believe that plaintiffs-appellants have not faltered or failed for an
unreasonable length of time to assert their claim of ownership.
With respect to the southern half of Lot 12712; plaintiffs-appellants'
stance is also meritorious. When the wife of Pablo Garbin died, her
estate was transmitted by operation of the law on intestate
succession to plaintiff-appellant Casimira Garbin, defendant-
appellee Felipa-Garbin, and surviving spouse Pablo Garbin. So,
when Pablo Garbin executed the deed of sale in favor of defendant-
appellee, he could only convey to the latter his undivided share
therein, which was 4/6 of the southern portion of Lot 12712
because as hereinabove pointed out, the northern half of the said
lot was effectively conveyed to plaintiffs-appellants, so that he could
only dispose of 4/6 of the southern portion. Plaintiff-appellant
Casimira Garbin inherited 1/6, and the remaining 1/6 of the
southern portion went to defendant-appellee as her inheritance
from their mother. Therefore, plaintiffs-appellants own 7/12 of Lot
12712 while defendant-appellee owns 5/12; the northern half being
equivalent to 6/12, and out of the other 6/12, Pablo Garbin
conveyed 4/12 to appellee Felipa Garbin, who inherited 1/12 in her
own right. Plaintiff-appellant Casimira Garbin also inherited 1/12
which portion added to what appellants bought from Pablo Garbin,
made appellant's area 7/12 of Lot 12712.
WHEREFORE, the decision appealed from is hereby SET ASIDE;
the sale by Pablo Garbin to defendant-appellee Felipa Garbin of the
entire Lot 12712, Camiling, Tarlac Cadastre (Exh. "B") is hereby
declared null and void and without force and effect, and the
resulting TCT No. T-88932 of the latter (Exh. "C") is ordered
canceled; plaintiffs-appellants are adjudged the owners pro-
indiviso of seven-twelfth (7/12), including the northern half, of the
said lot, with defendant-appellee as the owner of the remaining five-
twelfth (5/12) southern portion thereof.
To avoid multiplicity of suits; the plaintiffs-appellants and defendant-
appellee are hereby given thirty (30) days from finality of this
disposition, to submit to the trial court of origin a scheme of partition
for subject lot on the basis of their undivided co-ownership of
seven-twelfth (7/12) and five-twelfth (5/12), respectively; otherwise,
pursuant to Rule 69, Revised Rules of Court, the lower court shall
by order appoint not more than three (3) competent and
disinterested commissioners to effect the partition in accordance
herewith. Costs against defendant-appellee.
SO ORDERED.
Petitioner, before this Court, now questions the appellate court's decision
stating that:
1. No evidence has been presented by private respondents to
prove the validity of the "Deed of Absolute Sale of Real Estate"
executed in their favor by Pablo Garbin.
2. The annotation on the title of the adverse claim is not sufficient to
prove validity of the said claim.
3. Pablo Garbin himself repudiated the alleged sale to private
respondent spouses in testimony before the trial court in the
ejectment case, denying knowledge of the sale of subject property
to them.
 4. Pablo Garbin solely owned the subject lot, as shown by the
Original Certificate of Title, and thus the property could not be
considered conjugal.
5. Private respondents' cause of action had already prescribed.
We find the petition meritorious.
The central issue to be resolved here is: does the registration of the said
adverse claim by private respondents prevail over the title of petitioner which
was registered subsequent to the adverse claim?
Considering the circumstances peculiar to the present case, we must rule in
the negative.
Sec. 110 of Act No. 496 (otherwise known as the Land Registration Act)
states:
whoever claims any right or interest in registered land adverse to
the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in the Land
Registration Act for registering the same, make a statement in
writing setting forth fully his alleged right or interest, and how or
under whom acquired, and a reference to the volume and page of
the certificate of title of the registered owner, and a description of
the land in which the right or interest is claimed. The statement
shall be signed and sworn to, and shall state the adverse claimant's
residence, and designate a place at which all notices may be
served upon him. This statement shall be entitled to registration as
an adverse claim, and the court, upon a petition of any party in
interest, shall grant a speedy hearing upon the question of the
validity of such adverse claim and shall enter such decree therein
as justice and equity may require. If the claim is adjudged to be
invalid, the registration shall be canceled. If in any case the court
after notice and hearing finds that a claim thus registered was
frivolous or vexatious, it may tax the adverse claimant double or
treble costs in its discretion. (Emphasis supplied)
The purpose of the annotation of an adverse claim is to protect the interest
of a person over a piece of real property where the registration of such
interest or right is not otherwise provided for by the Land Registration Act,
and serve as a notice and warning to third parties dealing with said property
that someone is claiming an interest on the same or a better right than the
registered owner.1
It is undisputed that the adverse claim of private respondents was registered
pursuant to Sec. 110 of Act No. 496, the same having been accomplished by
the filing of a sworn statement with the Register of Deeds of the province
where the property was located. However, what was registered was merely
the adverse claim and not the Deed of Sale, which supposedly conveyed the
northern half portion of the subject property. Therefore, there is still need to
resolve the validity of the adverse claim in separate proceedings, as there is
an absence of registration of the actual conveyance of the portion of land
herein claimed by private respondents.
From the provisions of the law, it is clear that mere registration of an adverse
claim does not make such claim valid, nor is it permanent in character. More
importantly, such registration does not confer instant title of ownership since
judicial determination on the issue of the ownership is still necessary. 2
Regarding the alleged Deed of Sale by Pablo Garbin in favor of private
respondents, the trial court correctly observed:
On the assumption that the deed in favor of the plaintiffs was
presented for registration as claimed, it should, however, be
underscored that the entry in the day book is but a preliminary step
of registration, the actual annotation of the memorandum or the
issuance of a new certificate of title being the final step to
accomplish registration.
In Pilapil v. CA,3 we said:
To affect the land sold, the presentation of the Deed of Sale and its
entry in the day book must be done with the surrender of the
owner's duplicate of the certificate of title.
Considering further that Pablo Garbin himself denied the sale of the subject
property, it is evident that the sale never transpired.
In view of the above, the entry in the day book automatically loses force and
effect. Thus, it is the Deed of Sale that petitioner registered in her favor and
the Transfer Certificate of Title subsequently obtained over the property,
which has a superior right thereon.
As regards the issue of the ownership by Pablo Garbin of the property, the
Original Certificate of Title clearly states that he is the sole owner thereof.
There is no basis, therefore, for the ruling of the appellate court that said
property is conjugal in character and also for its computation of the shares
that Pablo Garbin could dispose of when he executed the Deed of Sale on
May 24, 1970 to Felipa.

Lastly, on the issue of prescription, we agree with the trial court which found
that the action for annulment of sale had already prescribed.

. . . the title of the defendant must be upheld for failure or the

neglect of the plaintiffs for an unreasonable and unexplained length
of time of more than fifteen (15) years since they registered their
adverse claim, or for a period of more than three (3) decades since
the execution of the deed of sale in their favor upon which their
adverse claim is based, to do that which, by exercising diligence,
could or should have been done earlier. For it is this negligence or
omission to assert a right within reasonable time that is construed
that plaintiffs had abandoned their right to claim ownership under
the deed of sale, or declined to assert it. Thus, when a person slept
in his rights for 28 years from the time of the transaction, before
filing the action amounts to laches which cannot be excused even
by ignorance resulting from unexcusable negligence (Vda. de Lima
vs. Tiu, 52 SCRA 516 [1970].

Private respondents, having waited for 36 long years before filing an action
to annul the sale to Felipa in the trial court we hold that this constitutes
laches.

The unexplained interval of 29 years that the plaintiffs allowed to

elapse before making any claim or instituting action constitutes
laches that places them in estoppel to question the validity of the
probate court's order and of the sale executed in pursuant thereof. 4

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE

and that of the Regional Trial Court REINSTATED. Private respondents'
complaint for annulment of sale is hereby DISMISSED.

SO ORDERED.
G.R. No. L-33360 April 25, 1977
MAXIMINO CARANTES (Substituted by Engracia Mabanta
Carantes), petitioner,
vs.
COURT OF APPEALS, BILAD CARANTES, LAURO CARANTES,
EDUARDO CARANTES and MICHAEL TUMPAO, respondents,
Sinforoso Fingonil and Sinai C. Hamada for petitioner.
Ruben C. Ayson for private respondents.
CASTRO, C.J:
This is an appeal by certiorari from the decision of the Court of Appeals in
CA-G.R. 36078-R promulgated on December 23, 1970 reversing the
judgment of the Court of First Instance of Baguio City, Branch II, in Civil
Case 804, and from the appellate court's resolution dated March 7, 1971
denying herein petitioner's motion for reconsideration.
Mateo Carantes was the original owner of Lot No. 44 situated at Loakan,
Baguio City, as evidenced by Original Certificate of Title No. 3 issued in his
name on September 22, 1910 by virtue of Free Patent No. 5 granted to him
on the same date. In 1913 Mateo died. He was survived by his widow
Ogasia and six children, namely, Bilad, Lauro, Crispino, Maximino, Apung
and Sianang, all surnamed Carantes.
In 1930 construction of the Loakan Airport was commenced by the
Government. Because a portion of Lot No. 44 was needed for the landing
field, the Government instituted proceedings (Civil Case 338) for its
expropriation. For the purpose, Lot No. 44 was subdivided into Lots Nos. 44-
A, 44-B, 44-C, 44-D and 44-E. The portion expropriated by the Government
was Lot No. 44-A.
In 1933 Special Proceedings Nos. 409 to 413 were filed with the court for the
settlement of the estate of the late Mateo Carantes. One of his sons, herein
petitioner Maximino Carantes, was appointed and qualified as judicial
administrator of the estate. In his capacity as administrator, Maximino filed
on June 20, 1939 a project of partition wherein he listed as the heirs of
Mateo Carantes who were entitled to inherit the estate, himself and his
brothers and sisters, or the latter's surviving children Apparently because
negotiations were, by that time, under way for the purchase by the
Government of Lots Nos. 44-B and 44-C for the purpose of widening the
Loakan Airport, the only property listed by Maximino in the project of partition
was the remaining portion of Lot No. 44.
On October 23, 1939 a deed denominated "Assignment of Right to
Inheritance" was executed by four of Mateo Carantes children, namely,
Bilad, Sianang, Lauro and Crispino, and the heirs of Apung Carantes (also a
son of Mateo who died in 1923), namely, Pitag, Bill, Alson, Eduardo and
Juan, assigning to Maximino Carantes their rights to inheritance in Lot No.
44. The stated monetary consideration for the assignment was P1.00.
However, the document contains a recital to the effect that the said lots, "by
agreement of all the direct heirs and heirs by representation of the deceased
Mateo Carantes as expressed and conveyed verbally. by him during his
lifetime, rightly and exclusively belong to the particular heir, Maximino
Carantes, now and in the past in the exclusive, continuous, peaceful and
notorious possession of the same for more than ten years."
On the same date Maximino Carantes sold to the Government Lots Nos. 44-
B and 44-C and divided the proceeds of the sale among himself and the
other heirs of Mateo.
On February 6, 1940, upon joint petition of the heirs of Mateo Carantes, the
Court of First Instance of Baguio City issued an Order in another proceeding
— Administrative Case No. 368 — cancelling O.C.T. No. 3. Pursuant thereto
the said title was cancelled, and in its place Transfer Certificate of Title No.
2533 was issued in the joint names of the five children of Mateo Carantes
and the children of Apung Carantes (representing their deceased father) as
co-owners pro indiviso, or one-sixth share for each child.
On March 16, 1940 Maximino Carantes registered the deed of "Assignment
of Right to Inheritance." Accordingly, T.C.T. No. 2533 in the names of the
heirs was cancelled, and in lieu thereof Transfer Certificate of Title No. 2540
was issued on the same date in the name of Maximino Carantes. Also on
the same date, Maximino, acting as exclusive owner of the land covered by
T.C.T. No. 2540, executed a formal deed of sale in favor of the Government
over Lots Nos. 44-B and 44-C.
On February 21, 1947, as a result of the approval of the Subdivision Survey
Plan psd-16786, and pursuant to the deed of sale executed in 1940 by
Maximino Carantes in favor of the Government, T.C.T. No. 2540 in
Maximino's name was cancelled, and in lieu thereof Transfer Certificate of
Title No. T98, covering Lots Nos. 44-A, 44-B arid 44-C, was issued in the
name of the Government, while Transfer Certificate of Title No. T-99,
covering the remaining Lots Nos. 44-D (100, 345 square meters) and 44-E
(10,070 square meters) was issued in the name of Maximino Carantes, who
has up to the present remained the registered owner of said lots.
On September 4, 1958 the present complaint was filed by three children of
the late Mateo Carantes, namely, Bilad, Lauro and Crispino, and by some of
the surviving heirs of Apung and of Sianang ('also children of Mateo
Carantes). Maximino Carantes was named principal defendant, and some of
the heirs of Apung and Sianang were impleaded as parties-defendants in
view of their alleged reluctance to join as parties-plaintiffs.
In their complaint the plaintiffs alleged inter alia that they and/or their
predecessors-in-interest executed the deed of "Assignment of Right to
Inheritance" on October 23, 1939, only because they were made to believe
by the defendant Maximino Carantes that the said instrument embodied the
understanding among the parties that it merely authorized the defendant
Maximino to convey portions of Lot No. 44 to the Government in their behalf
to minimize expenses and facilitate the transaction; and that it was only on
February 18, 1958, when the plaintiffs secured a copy of the deed, that they
came to know that the same purported to assign in favor of Maximino their
rights to inheritance from Mateo Carantes. The plaintiffs prayed that the
deed of "Assignment of Right to Inheritance" be declared null and void; that
Lots Nos. 44-D and 44-E covered by T.C.T. No. T99 be ordered partitioned
into six (6) equal shares and the defendant Maximino Carantes be
accordingly ordered to execute the necessary deeds of conveyance in favor
of the other distributees and that the said defendant be ordered to pay the
plaintiffs the sum of P1,000 as attorney's fees and the sum of P200 as costs
of suit.
On September 10, 1958 the defendants filed a motion to dismiss on the
grounds (1) that the plaintiffs' cause of action is barred by the statute of
limitations because the deed of assignment was recorded in the Registry of
Property at the latest on February 21, 1947, hence, plaintiffs' cause of action
accrued from the said date, and since pursuant to article 1144 of the new
Civil Code an action based on a written contract must be brought within ten
years from the time the right of action accrues, plaintiffs' right to file the
complaint had already prescribed on September 4, 1958; and (2) that the
complaint states no cause of action because ownership over the property
became vested in Maximino Carantes by acquisitive prescription ten years
from its registration in his name on February, 21, 1947.
In an Order dated September 30, 1958, the trial court denied the motion to
dismiss on the grounds that there are allegations of co-ownership and trust
in the complaint, and, therefore, prescription did not lie, and that the
complaint alleges that the plaintiffs discovered the alleged fraud only in
February, 1958.
In their answer filed on October 7, 1958, the defendants traversed the
material averments of the complaint and alleged inter alia that the property
of the deceased Mateo Carantes and his wife had been divided and
distributed among their six children; that the deed of "Assignment of Right to
Inheritance" was an acknowledgment of the fact of designation of the
property therein described as specifically pertaining or belonging by right of
inheritance to the defendant Maximino Carantes: that there was never any
agreement between the assignors and the assignee authorizing the latter to
merely represent his co-heirs in negotiations with the Government; and that
the assignors knew fully well that the deed of assignment contained what, on
its face, it represented, By way of special defenses, the defendants alleged
that any supposed agreement between the plaintiffs and/or their
predecessors-in-interest and the defendant Maximino Carantes, other than
the deed of assignment, is barred by the statute of frauds and is null and
void because not in writing, much less, in a public instrument; that the only
agreement between the parties is what appears in the deed of assignment;
that the plaintiffs' right of action has already prescribed; that the defendant
Maximino Carantes acquired absolute ownership over the property in
question by acquisitive prescription and registration; and that any obligation
on the part of the defendants in relation to the property had been discharged
by novation, condonation and compensation. The defendants set up the
counterclaim that in the event the rights of the heirs are disturbed, the
produce from the lands inherited by the plaintiffs from Mateo Carantes as
well as the real estate taxes on the land paid by the defendant Maximino
Carantes should be collated; and that the filing of the complaint being
malicious, the defendants should be awarded the sum of P4,500 by way of
nominal, compensatory, moral and corrective damages, including attorney's
fees and expenses of litigation. The defendants prayed for the dismissal of
the complaint and payment of damages to them.
An answer to the counterclaim was filed by the plaintiffs on November 7,
1958 denying the material allegations of the counterclaim.
After trial, the court rendered its decision on January 28, 1965. It was the
trial court's opinion that since an action based on fraud prescribes in four
years from the discovery of the fraud, and in this case the fraud allegedly
perpetrated by the defendant Maximino Carantes must be deemed to have
been discovered on March 16, 1940 when the deed of assignment was
registered, the plaintiffs' right of action had already prescribed when they
filed the action in 1958; and even assuming that the land remained the
common property of the plaintiffs and the defendant Maximino Carantes
notwithstanding the execution of the deed of assignment, the co-ownership
was completely repudiated by the said defendant by performance of several
acts, the first of which was his execution of a deed of sale in favor of the
Government on October 23, 1939, hence, ownership had vested in the
defendant Maximino Carantes by acquisitive prescription. The court
accordingly dismissed the complaint. It likewise dismissed the counterclaim.
The plaintiffs moved for reconsideration. Their motion having been denied in
an Order dated March 8, 1965, they appealed to the Court of Appeals.
As adverted to above, the Court of Appeals reversed the judgment of the
trial court, hence the present recourse.
-I-
In her brief filed with this Court, the petitioner argues that the private
respondents' action is not actually one for annulment of the deed of
"Assignment of Right to Inheritance" but for the reformation thereof, hence,
the said action has prescribed long before the filing of the complaint.
The petitioner's theory that the private respondents' action is for reformation
of an instrument is a new one, adopted by the petitioner for the first time on
appeal to this Court. Her husband did not raise it as a defense in his answer
filed with the trial court, where, consequently, trial proceeded on the theory
that the action sought the declaration of nullity of the deed of assignment.
When the case reached the respondent court the petitioner likewise did not
raise this issue, although in truth, even had she done so, it would have been
a belated and futile exercise. She cannot be allowed to change her theory of
the case at this stage of the proceedings.
The settled rule is that defenses not pleaded in the answer may not be
raised for the first time on appeal. 1 A party cannot, on appeal, change
fundamentally the nature of the issue in the case. 2 When a party
deliberately adopts a certain theory and the case is decided upon that theory
in the court below, he will not be permitted to change the same on appeal,
because to permit him to do so would be unfair to the adverse party. 3
Consequently, we have to disregard the petitioner's theory that the action is
for reformation of an instrument, and must proceed on the basis of the
issues properly raised and ventilated before the trial court.
- II -
We do not agree with the respondent court's legal conclusion that the deed
of "Assignment of Right to Inheritance" is void ab initio and inexistent on the
grounds that real consent was wanting and the consideration of P1.00 is so
shocking to the conscience that there was in fact no consideration, hence,
the action for the declaration of the contract's inexistence does not prescribe
pursuant to article 1410 of the new Civil Code.
Article 1409 (2) of the new Civil Code relied upon by the respondent court
provides that contracts "which are absolutely simulated or fictitious" are
inexistent and void from the beginning. The basic characteristic of simulation
is the fact that the apparent contract is not really desired or intended to
produce legal effects or in any way alter the juridical situation of the parties. 4
The respondents' action may not be considered as one to declare the
inexistence of a contract for lack of consideration. It is total absence of
cause or consideration that renders a contract absolutely void and
inexistent. 5 In the case at bar consideration was not absent. The sum of
P1.00 appears in the document as one of the considerations for the
assignment of inheritance. In addition — and this of great legal import — the
document recites that the decedent Mateo Carantes had, during his lifetime,
expressed to the signatories to the contract that the property subject-matter
thereof rightly and exclusively belonged to the petitioner Maximino Carantes.
This acknowledgment by the signatories definitely constitutes valuable
consideration for the contract.
- III -
The present action is one to annul the contract entitled "Assignment of Right
to Inheritance" on the ground of fraud.
Article 1390 of the new Civil code provides that a contract "where the
consent is vitiated by mistake, violence, intimidation, undue influence or
fraud," is voidable or annullable. Even article 1359, which deals on
reformation of instruments, provides in its paragraph 2 that "If mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the
parties, the proper remedy is not reformation of the instrument but
annulment of the contract," When the consent to a contract was fraudulently
obtained, the contract is avoidable. 6 Fraud or deceit does not render a
contract void ab initio and can only be a ground for rendering the contract
voidable or annullable pursuant to article 1390 of the new Civil Code by a
proper action in court. 7
The present action being one to annul a contract on the ground of fraud, its
prescriptive period is four years from the time of the discovery of the fraud. 8
The next question that must be resolved is: from what time must fraud,
assuming that there was fraud, be deemed to have been discovered in the
case at bar? From February, 1958, when, according to the private
respondents, and as found by the respondent court, the private respondents
actually discovered that they were defrauded by the petitioner Maximino
Carantes when rumors spread that he was selling the property for half a
million pesos? Or from March 16, 1940, when, as admitted by the parties
and found by both the trial court and the respondent court, the deed of
"Assignment of Right to Inheritance" was registered by the petitioner in the
Office of the Register of Deeds?
The weight of authorities is to the effect that the registration of an instrument
in the Office of the Register of Deeds constitutes constructive notice to the
whole world, and, therefore, discovery of the fraud is deemed to have taken
place at the time of the registration. 9 In this case the deed of assignment
was registered on March 16, 1940, and in fact on the same date T.C.T. No.
2533 in the names of the heirs of Mateo Carantes was cancelled, and T.C.T.
No. 2540 in the name of the petitioner was issued in lieu thereof. The four-
year period within which the private respondents could have filed the present
action consequently commenced on March 16, 1940; and since they filed it
only on September 4, 1958, it follows that the same is barred by the statute
of limitations.
The respondent court refused to accord recognition to the rule of
constructive notice, because, according to it, there was a fiduciary
relationship between the parties. Upon this premise it concluded that the
four-year prescriptive period should be deemed to have commenced in
February, 1958 when private respondents had actual notice of the fraud.
Without resolving the question of whether or not constructive notice applies
when a fiduciary relationship exists between the parties — a point which is
not in issue in this case — we hold that the respondent court's conclusion,
lacking the necessary premise upon which it should be predicated, is
erroneous.
Definitely, no express trust was created in favor of the private respondents. If
trust there was, it could only be — as held by respondent court — a
constructive trust, which is imposed by law. In constructive trusts there is
neither promise nor fiduciary relations; the so-called trustee does not
recognize any trust and has no intent to hold the property for the
beneficiary. 10 In at least two cases, the rule of constructive notice was
applied by this Court although a constructive trust had been created. Thus,
in Lopez, et al. vs. Gonzaga, et al., 11 where the plaintiffs and the defendants
were co-heirs and the decedent owner of the lands had merely allowed the
principal defendant to use the products and rentals of the lands for purposes
of coconut oil experimentation, but said defendant later caused the transfer
of the certificates of title in his own name through the registration of certain
judicial orders, this Court held that the recording of the judicial orders
sufficed as notice to the other heirs, for the rule is that knowledge of what
might have been revealed by proper inquiry is imputable to the inquirer.
In Gerona, et al. vs. De Guzman, et a., supra, the petitioners and the private
respondents were co-heirs, and the petitioners' action for partition and
reconveyance was based upon a constructive trust resulting from fraud. This
Court held that the discovery of the fraud "is deemed to have taken place, in
the case at bar, on June 25, 1948, when said instrument was filed with the
Register of Deeds and new certificates of title were issued in the name of
respondents exclusively, for the registration of the deed of extra-judicial
settlement constituted constructive notice to the whole world."
- IV -
The decision under review found that a constructive trust was created in
favor of the private respondents, and, holding that an action for
reconveyance based on constructive trust is imprescriptible, recognized the
right of the private respondents to file an action for reconveyance regardless
of the lapse of time, citing Gayandato vs. Treasurer of the Philippine Islands,
et al. 12
We have examined Gayandato, and have failed to find support therein for
the holding of the respondent court. In any event, it is now settled that an
action for reconveyance based on implied or constructive trust is
prescriptible it prescribes in ten years. 13 In this case the ten-year
prescriptive period began on March 16, 1940, when the petitioner registered
the deed of "Assignment of Right to Inheritance" and secured the
cancellation of the certificate of title in the joint names of the heirs of Mateo
Carantes, and, in lieu thereof, the issuance of a new title exclusively in his
name. 14 Since the present action was commenced only on September 4,
1958, it is clear that the same is barred by extinctive prescription.
-V-

It was also held by the respondent court that the petitioner was merely
holding the property in trust for the benefit of his co-heirs as administrator,
hence, there was a continuing and subsisting trust, and pursuant to section
38 of the Code of Civil Procedure, the provisions of the said Code on
prescription (Secs. 40-41) do not apply. It is our view, however, that there
was no continuing and subsisting trust.

From March 16, 1940, when the petitioner registered the deed of assignment
and had the Certificate of title in the names of the heirs cancelled and a new
certificate of title issued in his own name, he began to hold the property in
open and clear repudiation of any trust. 15 It will be noted that on the same
date, the petitioner also executed a formal deed of sale over portions of Lot
No. 44 in favor of the Government. In 1948 he mortgaged Lot No. 44-D with
the Philippine National Bank as his exclusive property. The petitioner's
exercise of such rights of dominion is anathema to the concept of a
continuing and subsisting trust. The circumstances, found by the respondent
court, that the name of Mateo Carantes still appeared in the tax declaration
as owner of the land and the name of the petitioner as administrator, that the
real estate taxes, were shared by the other heirs with the petitioner, and that
some of the heirs are living in houses erected by them on the land, wane in
legal significance in the face of the petitioner's aforesaid uncontroverted acts
of strict dominion. In connection with the payment of real estate taxes, it is to
be noted that the respondent court also found that all the receipts were
issued in the name of the petitioner. The circumstances mentioned above do
not make out a case of a continuing and subsisting trust.

ACCORDINGLY, the judgment of the Court of Appeals appealed from is set

aside, and another entered dismissing the complaint in Civil Case No. 804 of
the Court of First Instance of Baguio. No costs.

Makasiar, Muñoz-Palma and Martin, JJ., concur.

[G.R. No. 137887. February 28, 2000]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAMIAN ERMITAO DE
GUZMAN, DEOGRACIAS ERMITAO DE GUZMAN, ZENAIDA ERMITAO
DE GUZMAN, ALICIA ERMITAO DE GUZMAN, SALVADOR ERMITAO DE
GUZMAN, DOMINGA ERMITAON, NATIVIDAD ENCARNACION, MELBA
E. TORRES, FLORA MANALO, SOCORRO DELA ROSA, JOSE
ERMITAO, ESMERANDO ERMITAO, TRICOM DEVELOPMENT
CORPORATION and FILOMENO ERMITAO, respondents. francis
DECISION
YNARES_SANTIAGO, J.:
Before us is a Petition for Review on Certiorari of a decision of the Court of
Appeals[1] affirming the judgment of the Regional Trial Court of Tagaytay,
Branch 18, in LRC Cases No. TG-362 and TG-396.[2]
The facts are simple:
Conflicting applications for confirmation of imperfect title were filed by Norma
Almanzor and private respondent Salvador De Guzman over parcels of land
located in Silang, Cavite. After trial on the merits, the lower court rendered
judgment in favor of private respondent De Guzman, to wit -
"WHEREFORE, judgment is hereby rendered by this
Court as follows: nigel
(1) In LRC Case No. TG-362, this Court hereby denies the
application for registration of the parcels of land mentioned
therein by applicant Norma R. Almanzor for lack of factual
and legal bases;
(2) In LRC Case No. 396, this Court hereby approves the
petition for registration and thus places under the
operation of Act 141, Act 946 and/or P.D. 1529, otherwise
known as the Property Registration Law, the land
described in Plan Psu-67537-Amd-2 and containing an
area of 308,638 square meters, as supported by its
technical descriptions now forming parts of the records of
these cases, in addition to other proofs adduced in the
names of petitioners Damian Ermitao De Guzman,
Deogracias Ermitao De Guzman, Zenaida Ermitao De
Guzman, Alicia Ermitao De Guzman and Salvador De
Guzman, all married, of legal age and with residence and
postal addresses at Magallanes Street, Carmona, Cavite,
subject to the claims of oppositors Dominga Ermitao,
Natividad Encarnacion, Melba E. Torres, Flora Manalo,
Socorro de la Rosa, Jose Ermitao and Esmeranso Ermitao
under an instrument entitled 'Waiver of Rights with
Conformity" the terms and conditions of which are hereby
ordered by this Court to be annotated at the back of the
certificates of title to be issued to the petitioners pursuant
to the judgment of this Court. brnado
SO ORDERED."[3]
As earlier mentioned, on appeal to the Court of Appeals, said judgment was
affirmed and the petition for registration of private respondents over the
subject parcels of land was approved.
Hence, the instant Petition, anchored upon the following assignments of
error
I
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
DE GUZMANS HAVE NOT SUBMITTED PROOF OF
THEIR FEE SIMPLE TITLE OR POSSESSION IN THE
MANNER AND FOR THE LENGTH OF TIME REQUIRED
BY LAW TO JUSTIFY CONFIRMATION OF AN
IMPERFECT TITLE. novero
II
THE TRIAL COURT ERRED IN NOT DECLARING THAT
THE DE GUZMANS HAVE NOT OVERTHROWN THE
PRESUMPTION THAT THE LANDS ARE PORTIONS OF
THE PUBLIC DOMAIN BELONGING TO THE REPUBLIC
OF THE PHILIPPINES.[4]
We find merit in the instant Petition.
It is not disputed that the subject parcels of land were released as
agricultural land only in 1965[5] while the petition for confirmation of imperfect
title was filed by private respondents only in 1991.[6] Thus the period of
occupancy of the subject parcels of land from 1965 until the time the
application was filed in 1991 was only twenty six (26) years, four (4) years
short of the required thirty (30) year period possession requirement
under Sec. 14, P.D. 29 and R.A. No. 6940.
In finding that private respondents' possession of the subject property
complied with law, the Court of Appeals reasoned out that - nigel
"(W)hile it is true that the land became alienable and
disposable only in December, 1965, however, records
indicate that as early as 1928, Pedro Ermitao, appellees'
predecessor-in-interest, was already in possession of the
property, cultivating it and planting various crops thereon.
It follows that appellees' possession as of the time of the
filing of the petition in 1991 when tacked to Pedro
Ermitao's possession is 63 years or more than the
required 30 years period of possession. The land, which is
agricultural, has been converted to private property ." [7]
We disagree.
The Court of Appeals' consideration of the period of possession prior to the
time the subject land was released as agricultural is in direct contravention
of the pronouncement in Almeda vs. Court of Appeals,[8] to wit -
"The Court of Appeals correctly ruled that the private
respondents had not qualified for a grant under Section
48(b) of the Public Land Act because their possession of
the land while it was still inalienable forest land, or
before it was declared alienable and disposable land
of the public domain on January 13, 1968, could not
ripen into private ownership, and should be excluded
from the computation of the 30-year open and
continuous possession in concept of owner required
under Section 48(b) of Com. Act 141. It accords with our
ruling in Director of Lands vs. Court of Appeals, Ibarra
Bishar, et al., 178 SCRA 708, that: marinella
'Unless and until the land classified as forest is released in
an official proclamation to that effect so that it may form
part of the disposable lands of the public domain, the rules
on confirmation of imperfect title do not apply (Amunategui
vs. Director of Forestry, 126 SCRA 69; Director of Lands
vs. Court of Appeals, 129 SCRA 689; Director of Lands vs.
Court of Appeals, 133 SCRA 701; Republic vs. Court of
Appeals, 148 SCRA 480; Vallarta vs. Intermediate
Appellate Court, 151 SCRA 679).
'Thus possession of forest lands, however long, cannot
ripen into private ownership (Vamo vs. Government, 41
Phil. 161 [1920]; Adorable vs. Director of Forestry, 17 Phil.
410 [1960]). A parcel of forest land is within the exclusive
jurisdiction of the Bureau of Forestry and beyond the
power and jurisdiction of the cadastral court to register
under the Torrens System (Republic vs. Court of Appeals,
89 SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983];
Director of Lands vs. Court of Appeals, 129 SCRA 689
[1984])." (emphasis ours)
So, too, is the Court of Appeals' reliance on the case of Director of Land
Management vs. Court of Appeals[9] misplaced. There, while the period of
possession of the applicant's predecessor-in-interest was tacked to his own
possession to comply with the required thirty year period possession
requirement, the land involved therein was not forest land but alienable
public land. On the other hand, in the case before us, the property subject of
private respondents' application was only declared alienable in 1965. Prior to
such date, the same was forest land incapable of private appropriation. It
was not registrable and possession thereof, no matter how lengthy, could
not convert it into private property, (unless) and until such lands were
reclassified and considered disposable and alienable.[10] alonzo
In summary, therefore, prior to its declaration as alienable land in 1965, any
occupation or possession thereon cannot be considered in the counting of
the thirty year possession requirement. This is in accord with the ruling
in Almeda vs. Court of Appeals, (supra), and because the rules on the
confirmation of imperfect titles do not apply 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.[11]
While we acknowledge the Court of Appeals' finding that private respondents
and their predecessors-in-interest have been in possession of the subject
land for sixty three (63) years at the time of the application of their petition,
our hands are tied by the applicable laws and jurisprudence in giving
practical relief to them. The fact remains that from the time the subject land
was declared alienable until the time of their application, private
respondents' occupation thereof was only twenty six (26) years. We cannot
consider their thirty seven (37) years of possession prior to the release of the
land as alienable because absent the fact of declassification prior to the
possession and cultivation in good faith by petitioner, the property occupied
by him remained classified as forest or timberland, which he could not have
acquired by prescription. Further, jurisprudence is replete with cases which
reiterate that forest lands or forest reserves are not capable of private
appropriation and possession thereof, however long, cannot convert them
into private property. Possession of the land by private respondents, whether
spanning decades or centuries, could never ripen into ownership. This Court
is constrained to abide by the latin maxim "(d)ura lex, sed lex".[12] iska

WHEREFORE, the instant Petition is GRANTED and the February 26, 1998
decision of the Court of Appeals in CA-G.R. CV No. 48785 as well as that of
the Regional Trial Court of Cavite, Branch 38, in LRC Case No. TG-396 are
both REVERSED. Judgment is rendered dismissing LRC Case No. 396 for
failure of the applicants therein to comply with the thirty year occupancy and
possessory requirements of law for confirmation of imperfect title. No
pronouncement as to costs.

SO ORDERED.